Registration Nos. 33-43390
811-2441
As filed with the Commission on August 16, 1996
-----------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 9 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 54 [X]
AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT D
(Exact Name of Registrant)
AMERICAN GENERAL LIFE INSURANCE COMPANY
(Name of Depositor)
2727-A Allen Parkway
Houston, Texas 77019-2191
(Address of Depositor's Principal Executive Officers) (Zip Code)
(713) 831-3632
(Depositor's Telephone Number, including Area Code)
Steven A. Glover, Esq.
Associate General Counsel and Assistant Secretary
American General Life Insurance Company
2727-A Allen Parkway, Houston, Texas 77019
(Name and Address of Agent for Service)
Copies of all communications to
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue,
N.W., Suite 825
Washington, D.C. 20036
Attention: Gary O. Cohen, Esq.
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective (check appropriate box)
|_| Immediately upon filing pursuant to paragraph (b) of Rule 485
|_| On (date) pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(1) of Rule 485
<PAGE>
|X| On November 4, 1996 pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, Registrant has elected to register an indefinite number or amount of its
securities under the Securities Act of 1933. That election was previously
filed in Registrant's Form N-4 registration statement (File No. 2-49805).
Registrant filed a Rule 24f-2 Notice on February 21, 1996, for its most recent
fiscal year ended December 31, 1995.
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY OF DELAWARE
SEPARATE ACCOUNT D
FORM N-4
Cross Reference Sheet
Pursuant to Rule 495(a)
Under the Securities Act of 1933
PART A
<TABLE>
Showing Location of Information in Prospectuses(1)
Form N-4
Item No. Prospectus Caption
- -------- ------------------
<S> <C>
1. Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . .
3. Synopsis or Highlights. . . . . . . . . . . . . . . . . . . Synopsis of Contract Provisions
4. Condensed Financial Information . . . . . . . . . . . . . . Synopsis of Contract Provisions - Financial
and Performance Information; Cover Page;
Selected Accumulation Unit Data(2); Financial
Information(3)
5. General Description of Registrant,
Depositor and Portfolio Companies . . . . . . . . . . . . . AG Life; Separate Account D; The Funds(3);
Cover Page
6. Deductions and Expenses . . . . . . . . . . . . . . . . . . Charges Under the Contracts; Long-Term
Care, Catastrophic Medical Expenses and
Terminal Illness
7. General Description of Variable
Annuity Contracts . . . . . . . . . . . . . . . . . . . . . Synopsis of Contract Provisions - Communi-
cations to Us; Owner Account Value; Transfer,
Automatic Rebalancing, Surrender and Partial
Withdrawal of Owner Account Value(2); Transfer,
Automatic Rebalancing, Surrender and Partial
Withdrawal of Owner Account Value(3), Owners,
Annuitants and Beneficiaries; Assignments;
Rights Reserved by Us
- --------
<FN>
(1) This registration statement contains two prospectuses that relate to
successive versions of the same form of variable annuity contract. Each
successive version generally reflects enhancements made to the form of
contract over time. Except as otherwise noted, the information required
by Part A of Form N-4 is located under the captions identified below in
each prospectus contained herein.
(2) Contained in the Prospectus relating to Contract Form No. 93020 and
Contract Form No. 93021 (See Part C, Item 24. 4(f)(i) and (f)(ii)).
</FN>
<FN>
(3) Contained in the Prospectus relating to Contract Form No. 95020 Rev 896
and Contract Form No. 95021 Rev 896 (See Part C, Item 24. 4(g)(i) and
(g)(ii)).
</FN>
</TABLE>
i
<PAGE>
PART A
<TABLE>
Form N-4
Item No. Prospectus Caption
- -------- ------------------
<S> <C>
8. Annuity Period. . . . . . . . . . . . . . . . . . . . . . . Annuity Period and Annuity
Payment Options
9. Death Benefit . . . . . . . . . . . . . . . . . . . . . . . Death Proceeds
10. Purchases and Contract Value. . . . . . . . . . . . . . . . Contract Issuance and Pur-
chase Payments; Variable Ac-
count Value; Distribution
Arrangements; One-Time Re-
instatement Privilege
11. Redemptions . . . . . . . . . . . . . . . . . . . . . . . . Transfer, Surrender and Partial
Withdrawal of Owner Account
Value(2); Transfer, Automatic
Rebalancing, Surrender and
Partial Withdrawal of Owner
Account Value(3); Annuity
Payment Options; Contract
Issuance and Purchase
Payments; Synopsis of
Contract Provisions -
Surrenders, Withdrawals and
Cancellations; Payment and
Deferment
12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal Income Tax Matters;
Synopsis of Contract
Provisions - Limitations
Imposed by Retirement Plans
and Employers
13. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . Not Applicable
14. Table of Contents of Statement
of Additional Information . . . . . . . . . . . . . . . . . Contents of Statement of
Additional Information
- --------
<FN>
(2) Contained in the Prospectus relating to Contract Form No. 93020 and
Contract Form No. 93021 (See Part C, Item 24. 4(f)(i) and (f)(ii)).
</FN>
<FN>
(3) Contained in the Prospectus relating to Contract Form No. 95020 Rev 896
and Contract Form No. 95021 Rev 896 (See Part C, Item 24. 4(g)(i) and
(g)(ii)).
</FN>
</TABLE>
ii
<PAGE>
PART B
<TABLE>
Showing Location of Information in Statement of Additional Information(4)
<CAPTION>
Caption in
Form N-4 Statement of
Item No. Additional Information
- -------- ----------------------
<S> <C>
15. Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
16. Table of Contents . . . . . . . . . . . . . . . . . . . . . Cover Page
17. General Information and
History . . . . . . . . . . . . . . . . . . . . . . . . . . General Information; Regula-
tion and Reserves
18. Services. . . . . . . . . . . . . . . . . . . . . . . . . . Independent
Auditors; Services
19. Purchase of Securities
Being Offered . . . . . . . . . . . . . . . . . . . . . . . Not Applicable(5)
20. Underwriters. . . . . . . . . . . . . . . . . . . . . . . . Principal Underwriters
21. Calculation of Performance
Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Data for the Divi-
sions; Effect of Tax-Deferred
Accumulation
22. Annuity Payments. . . . . . . . . . . . . . . . . . . . . . Not Applicable(5)
23. Financial Statements. . . . . . . . . . . . . . . . . . . . Financial Statements
PART C
Information required to be set forth in Part C is set forth under the
appropriate item, so numbered, in Part C of the Registration Statement.
- --------
<FN>
(4) This registration statement contains two statements of additional
information that relate to successive versions of the same form of
variable annuity contract. Each successive version generally reflects
enhancements made to the contract over time. Except as otherwise noted,
the information required by Part B of Form N-4 is located under the
captions identified below in each statement of additional information
contained herein.
(5) All required information is included in Prospectus.
</FN>
</TABLE>
iii
<PAGE>
Registrant is filing this Post-Effective Amendment No. 9 for the
principal purpose of adding to the Registration Statement a prospectus and a
statement of additional information with respect to an enhanced version of the
Fixed and Variable Annuity Contract offered by American General Life Insurance
Company.
Registrant does not intend for this Post-Effective Amendment No. 9 to
delete, from the Registration Statement, any document included in the
Registration Statement, including any currently effective prospectus,
supplement thereto, or statement of additional information.
iv
<PAGE>
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS
OFFERED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY
ANNUITY ADMINISTRATION DEPARTMENT
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-247-6584 713/831-3505
American General Life Insurance Company ("AG Life") is offering the flexible
payment deferred individual annuity contracts (the "Contracts") described in
this Prospectus.
You may use AG Life's Separate Account D for a variable investment return
under the Contracts based on: one or more of the following mutual fund series
of the Van Kampen American Capital Life Investment Trust ("Trust") - the
Emerging Growth Fund, the Enterprise Fund, the Global Equity Fund, the Real
Estate Securities Fund, the Growth and Income Fund, the Asset Allocation Fund,
the Domestic Income Fund, the Government Fund, and the Money Market Fund; and
one or more of the following mutual fund series of the Morgan Stanley
Universal Funds, Inc. ("Fund") - the International Magnum Portfolio, the
Emerging Markets Portfolio, and the High Yield Portfolio.
You may also use AG Life's guaranteed interest accumulation option. This
option has five different guarantee periods, each with its own guaranteed
interest rate.
This Prospectus is designed to provide information about the Contracts that
you should know before investing. Please read it carefully and keep it for
future reference. Information about certain aspects of the Contracts, in
addition to that found in this Prospectus, has been filed with the Securities
and Exchange Commission in the Statement of Additional Information (the
"Statement"). The Statement, dated November 4, 1996, is incorporated by
reference into this Prospectus. The "Table of Contents" of the Statement
appears at page ___ of this Prospectus. You may obtain a free copy of the
Statement upon written or oral request to AG Life's Annuity Administration
Department in our Home Office, which is located at 2727-A Allen Parkway,
Houston, Texas 77019-2191. The mailing address and telephone numbers are set
forth above.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE RELATED
STATEMENT (OR ANY SALES LITERATURE APPROVED BY AG LIFE) IN CONNECTION WITH THE
OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE
CONTRACTS ARE NOT AVAILABLE IN ALL STATES AND THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD
BE UNLAWFUL THEREIN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF THE
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST AND THE MORGAN STANLEY
UNIVERSAL FUNDS, INC.
Prospectus dated November 4, 1996
<PAGE>
CONTENTS
Glossary...............................................................
Fee Table..............................................................
Synopsis of Contract Provisions........................................
Financial Information..................................................
AG Life................................................................
Separate Account D.....................................................
The Series.............................................................
The Fixed Account......................................................
Contract Issuance and Purchase Payments................................
Owner Account Value....................................................
Variable Account Value...............................................
Fixed Account Value..................................................
Transfer, Automatic Rebalancing, Surrender and Partial
Withdrawal of Owner Account Value....................................
Transfers............................................................
Automatic Rebalancing................................................
Surrenders and Partial Withdrawals...................................
Annuity Period and Annuity Payment Options.............................
Annuity Commencement Date............................................
Application of Owner Account Value...................................
Fixed and Variable Annuity Payments..................................
Annuity Payment Options..............................................
Transfers............................................................
Death Proceeds.........................................................
Death Proceeds Prior to the Annuity Commencement Date................
Death Proceeds After the Annuity Commencement Date...................
Proof of Death.......................................................
Charges Under the Contracts............................................
Premium Taxes........................................................
Surrender Charge.....................................................
Transfer Charges.....................................................
Annual Contract Fee..................................................
Charge to Separate Account D.........................................
Miscellaneous........................................................
Systematic Withdrawal Plan ..........................................
One-Time Reinstatement Privilege.....................................
Reduction in Surrender Charges and Administrative Charges............
Long-Term Care and Terminal Illness....................................
Long-Term Care.......................................................
Terminal Illness.....................................................
Other Aspects of the Contracts.........................................
Owners, Annuitants and Beneficiaries; Assignments....................
Reports..............................................................
Rights Reserved by Us................................................
Payment and Deferment................................................
2
<PAGE>
Federal Income Tax Matters.............................................
General..............................................................
Non-Qualified Contracts..............................................
Individual Retirement Annuities ("IRAs").............................
Simplified Employee Pension Plans....................................
Other Qualified Plans................................................
Private Employer Unfunded Deferred Compensation Plans................
Excess Distributions - 15% Tax.......................................
Federal Income Tax Withholding and Reporting.........................
Taxes Payable by AG Life and Separate Account D......................
Distribution Arrangements..............................................
Legal Matters..........................................................
Other Information on File..............................................
Contents of Statement of Additional Information........................
3
<PAGE>
GLOSSARY
WE, OUR AND US - American General Life Insurance Company ("AG Life").
YOU AND YOUR - a reader of this Prospectus who is contemplating making
purchase payments or taking any other action in connection with a Contract.
This would generally be the Owner.
ACCOUNT VALUE - the sum of your Fixed Account Value and Variable Account
Value after deduction of any fees.
ACCUMULATION UNIT - a measuring unit used in calculating your interest in a
Division of Separate Account D prior to the Annuity Commencement Date.
ANNUITANT - the person named as such in the application for a Contract and on
whose life annuity payments may be based.
ANNUITY COMMENCEMENT DATE - the date on which we begin making payments under
an Annuity Payment Option, unless a lump-sum distribution is elected instead.
ANNUITY PAYMENT OPTION - one of the several forms in which you can request us
to make annuity payments.
ANNUITY PERIOD - the period during which we make annuity payments under an
Annuity Payment Option.
ANNUITY UNIT - a measuring unit used in calculating the amount of Variable
Annuity Payments.
BENEFICIARY - the person that you designate to receive any proceeds due under
a Contract following the death of an Owner or an Annuitant.
CODE - the Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT - a person that you designate under a Non-Qualified
Contract to become the Annuitant if the Annuitant dies before the Annuity
Commencement Date and the Contingent Annuitant survives the Annuitant.
CONTINGENT BENEFICIARY - a person that you designate to receive any proceeds
due under a Contract following the death of an Owner or an Annuitant, if the
Beneficiary has died but the Contingent Beneficiary survives at the time such
proceeds become payable.
CONTRACT - an individual annuity Contract offered by this Prospectus.
CONTRACT ANNIVERSARY - each anniversary of the date of issue of the Contract.
CONTRACT YEAR - each year beginning with the date of issue of the Contract.
DIVISION - one of the several different investment options into which Separate
Account D is divided.
4
<PAGE>
FIXED ACCOUNT - the name of the investment alternative under which purchase
payments are allocated to AG Life's General Account.
FIXED ACCOUNT VALUE - the amount of your Account Value which is in the Fixed
Account.
FIXED ANNUITY PAYMENTS - annuity payments that are fixed in amount and do not
vary with the investment experience of any Division of Separate Account D.
GENERAL ACCOUNT - all assets of AG Life other than those in Separate Account D
or any other legally-segregated separate account established by AG Life.
GUARANTEED INTEREST RATE - the rate of interest we credit during any Guarantee
Period, on an effective annual basis.
GUARANTEE PERIOD - the period for which a Guaranteed Interest Rate is
credited.
HOME OFFICE - our office at the following addresses and phone numbers:
American General Life Insurance Company, Annuity Administration Department,
2727-A Allen Parkway, Houston, Texas 77019-2191; mailing address - P.O. Box
1401, Houston, Texas 77251-1401; 1-800-247-6584 or 713-831-3505.
INVESTMENT COMPANY ACT OF 1940 ("1940 ACT") - a federal law governing the
operations of investment companies such as the Funds and Separate Account D.
NON-QUALIFIED - not eligible for the special federal income tax treatment
applicable in connection with retirement plans pursuant to Sections 401, 403,
or 408 of the Code.
OWNER - the holder of record of a Contract, except that the employer or
trustee may be the Owner of the Contract in connection with a retirement plan.
QUALIFIED - eligible for the special federal income tax treatment applicable
in connection with retirement plans pursuant to sections 401, 403, or 408 of
the Code.
SEPARATE ACCOUNT D - the segregated asset account referred to as American
General Life Insurance Company Separate Account D established to receive and
invest purchase payments under the Contracts.
SERIES - an individual portfolio of a mutual fund available for investment
under the Contracts. Currently, the series available under the Contracts are
part of either the Van Kampen American Capital Life Investment Trust or the
Morgan Stanley Universal Funds, Inc.
SURRENDER CHARGE - a charge for sales expenses that may be assessed upon
surrenders of and payments of certain other amounts from a Contract.
VALUATION DATE - all days on which we are open for business except, with
respect to any Division, days on which the related Fund does not value its
shares.
5
<PAGE>
VALUATION PERIOD - the period that starts at the close of regular trading on
the New York Stock Exchange on a Valuation Date and ends at the close of
regular trading on the exchange on the next succeeding Valuation Date.
VARIABLE ANNUITY PAYMENTS - annuity payments that vary in amount based on the
investment experience of one or more of the Divisions of Separate Account D.
VARIABLE ACCOUNT VALUE - the amount of your Account Value that is in Separate
Account D.
WRITTEN - signed, dated, in form and substance satisfactory to us and received
at our Home Office. See "Synopsis of Contract Provisions - Communications to
Us." You must use special forms provided by us or your sales representative to
authorize telephone transfers, elect an Annuity Option or exercise your
one-time reinstatement privilege.
6
<PAGE>
FEE TABLE
The purpose of this Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or indirectly pursuant
to a Contract and in connection with the Series. The table reflects expenses
of the Separate Account as well as the Series. Amounts for state premium taxes
or similar assessments may also be deducted, where applicable.
<TABLE>
PARTICIPANT TRANSACTION CHARGES
<S> <C>
Front-End Sales Charge Imposed on Purchases.............................. 0%
Maximum Surrender Charge (1)............................................. 6%
(computed as a percentage of purchase payments surrendered)
Transfer Fee............................................................. $0 (2)
ANNUAL CONTRACT FEE(3)...................................................... $30
SEPARATE ACCOUNT D ANNUAL EXPENSES (as a percentage of average daily net asset value)
Mortality and Expense Risk Charge........................................ 1.25%
Administrative Expense Charge............................................ 15%
Total Separate Account D Annual Expenses............................... 1.40%
- --------
<FN>
(1) This charge does not apply or is reduced under certain circumstances. See
"Surrender Charge."
(2) This charge is $25 after the twelfth transfer during each Contract Year
prior to the Annuity Commencement Date. There is an exception to this
charge. See "Automatic Rebalancing."
(3) This charge is not imposed during the Annuity Period.
</FN>
</TABLE>
7
<PAGE>
<TABLE>
THE SERIES' ANNUAL EXPENSES(1) (as a percentage of average net assets)
<CAPTION>
Management Other
Fees After Expenses Total Fund
Expense Re- After Expense Operating
imbursement(2) Reimbursement(2) Expenses
<S> <C> <C> <C>
Emerging Growth
Enterprise
Global Equity
Real Estate Securities
Growth and Income
Asset Allocation
Domestic Income
Government
Money Market
International Magnum Portfolio
Emerging Markets Portfolio
High Yield Portfolio
</TABLE>
Example(3) If you surrender your Contract (or if you annuitize under
circumstances where a surrender charge is payable)(4) at the end of
the applicable time period, a $1,000 investment would be subject to
the following expenses, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years 10 years
in one of the following ------ ------- ------- --------
<S> <C> <C> <C> <C>
Series:
Emerging Growth N/A N/A
Enterprise
Global Equity N/A N/A
Real Estate Securities N/A N/A
Growth and Income N/A N/A
Asset Allocation
Domestic Income
Government
Money Market
International Magnum Portfolio N/A N/A
Emerging Markets Portfolio N/A N/A
High Yield Portfolio N/A N/A
<FN>
(1) The annual expenses are estimated for the current fiscal year for the
Emerging Growth, Global Equity, Real Estate Securities, and Growth and
Income Funds, and International Magnum, Emerging Markets, and High Yield
Portfolios, because none of the Series has financial statements covering
a period of at least ten months.
</FN>
<FN>
(2) If certain voluntary expense reimbursements from the investment adviser
were terminated, management fees and other expenses (including estimated
fees and charges) would have been as set out in the following table.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Management Other Total
Fees Expenses Expenses
---------- -------- --------
<S> <C> <C> <C>
Emerging Growth
Enterprise
Global Equity
Real Estate Securities
Growth and Income
Asset Allocation
Domestic Income
Government
Money Market
International Magnum Portfolio
Emerging Markets Portfolio
High Yield Portfolio
<FN>
(3) In this Example and the Example that follows, "N/A" indicates that SEC
rules require that the Emerging Growth, Global Equity, Real Estate
Securities, and Growth and Income Funds, and International Magnum,
Emerging Markets and High Yield Portfolios, complete the Example for only
the one and three year periods.
(4) For a description of the circumstances under which the Surrender Charge
may be payable under annuitization, See "Surrender Charge."
</FN>
</TABLE>
8
<PAGE>
Example If you do not surrender your Contract (or if you annuitize under
circumstances where a surrender charge is not payable)(5) at the end
of the applicable time period, a $1,000 investment would be subject
to the following expenses, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years 10 years
in one of the following ------ ------- ------- --------
<S> <C> <C> <C> <C>
Series:
Emerging Growth N/A N/A
Enterprise
Global Equity N/A N/A
Real Estate Securities N/A N/A
Growth and Income N/A N/A
Asset Allocation
Domestic Income
Government
Money Market
International Magnum Portfolio N/A N/A
Emerging Markets Portfolio N/A N/A
High Yield Portfolio N/A N/A
<FN>
(5) For a description of the circumstances under shich the Surrender Charge
may be payable under annuitization, see "Surrender Charge."
</FN>
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Similarly,
the assumed 5% annual rate of return is not an estimate or a guarantee of
future investment performance. The Examples are based, with respect to all of
the Series, on an estimated Average Account Value of $40,000.
SYNOPSIS OF CONTRACT PROVISIONS
This synopsis should be read together with the other information set
forth in this Prospectus. Variations due to requirements particular to your
state are described in supplements which are attached to this Prospectus, or
in endorsements to your Contract, as appropriate.
The Contracts are designed to provide retirement benefits through the
accumulation of purchase payments on a fixed or variable basis, and by the
application of such accumulations to provide Fixed or Variable Annuity
Payments.
MINIMUM INVESTMENT REQUIREMENTS
Your initial purchase payment must be at least $5,000. The amount of any
subsequent purchase payment that you make must be at least $100. If your
Account Value falls below $500, we may cancel your interest in the Contract
and treat it as a full surrender. We also may transfer funds from a Division
(other than the Money Market Division) or Guarantee Period under your Contract
without charge to the Money Market Division if the Account Value of that
Division or Guarantee Period falls below $500. See "Contract Issuance and
Purchase Payments."
PURCHASE PAYMENT ACCUMULATION
Purchase payments will be accumulated on a variable or fixed basis until
the Annuity Commencement Date. For variable accumulation, you may allocate
part or all of your Account Value to one or more of the twelve available
Divisions of Separate Account D. Each such Division invests solely in shares
of one of twelve corresponding Series. See "The Series." As the value of the
investments in a Series's shares increases or decreases, the value of
accumulated purchase payments allocated to the corresponding Division
increases or decreases, subject to applicable charges and deductions. See
"Variable Account Value."
9
<PAGE>
For fixed accumulation, you may allocate part or all of your Account
Value to one or more of the five Guarantee Periods currently available in our
Fixed Account. Each Guarantee Period is for a different period of time and has
a different Guaranteed Interest Rate. While allocated to a Guarantee Period,
the value of accumulated purchase payments increases at the Guaranteed
Interest Rate applicable to that Guarantee Period. See "The Fixed Account."
FIXED AND VARIABLE ANNUITY PAYMENTS
You may elect to receive Fixed or Variable Annuity Payments, or a
combination thereof, commencing on the Annuity Commencement Date. Fixed
Annuity Payments are periodic payments from AG Life, the amount of which is
fixed and guaranteed by AG Life. The amount of the payments will depend on the
Annuity Payment Option chosen, the age and, in some cases, sex of the
Annuitant, and the total amount of Account Value applied to the fixed Annuity
Payment Option.
Variable Annuity Payments are similar to Fixed Annuity Payments, except
that the amount of each periodic payment from AG Life will vary reflecting the
net investment return of the Division or Divisions chosen in connection with a
variable Annuity Payment Option. If the net investment return for a given
month exceeds the assumed interest rate used in the Contract's annuity tables,
the monthly payment will be greater than the previous payment. If the net
investment return for a month is less than the assumed interest rate, the
monthly payment will be less than the previous payment. The assumed interest
rate used in the Contract's annuity tables is 3.5%. AG Life may in the future
offer other forms of Contract with a lower assumed interest rate, and reserves
the right to discontinue the offering of the higher interest rate form of
Contract. See "Annuity Period and Annuity Payment Options."
CHANGES IN ALLOCATIONS AMONG DIVISIONS AND GUARANTEE PERIODS
Prior to the Annuity Commencement Date, you may modify your election with
respect to the allocation of future purchase payments to each of the various
Divisions and Guarantee Periods, without charge.
In addition, you may reallocate your Account Value among the Divisions
and Guarantee Periods prior to the Annuity Commencement Date. Transfers out of
a Guarantee Period, however, are subject to limitations as to amount. For
these and other terms and conditions of transfer, see "Transfer, Surrender and
Partial Withdrawal of Owner Account Value - Transfers."
After the Annuity Commencement Date, you may make transfers among the
Divisions or to a fixed Annuity Payment Option, but you may not make transfers
from a fixed Annuity Payment Option. See "Annuity Period and Annuity Payment
Options - Transfers."
SURRENDERS, WITHDRAWALS AND CANCELLATIONS
You may make a total surrender of or partial withdrawal from your
Contract at any time prior to the Annuity Commencement Date, by Written
request to us. A Surrender Charge may be assessed and some surrenders and
withdrawals may subject you to tax penalties. See "Surrenders and Partial
Withdrawals."
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You may cancel your Contract by delivering it or mailing it with a
Written cancellation request to our Home Office or to the sales representative
through whom it was purchased, before the close of business on the tenth day
after you receive the Contract. (In some cases, the Contract may provide for a
20 or 30-day, rather than a ten-day period.) If the foregoing items are sent
by mail, properly addressed and postage prepaid, they will be deemed to be
received by us on the date actually received.
We will refund to you the Owner Account Value plus any premium taxes and
Annual Contract Fee that have been deducted. In states where the law so
requires, however, we will refund the greater of that amount or the amount of
your purchase payments, or, if the law permits, the amount of your purchase
payments.
DEATH PROCEEDS
In the event that the Annuitant or Owner dies prior to the Annuity
Commencement Date, a benefit is payable to the Beneficiary. See "Death
Proceeds Prior to the Annuity Commencement Date."
LIMITATIONS IMPOSED BY RETIREMENT PLANS AND EMPLOYERS
Certain rights you would otherwise have under a Contract may be limited
by the terms of any applicable employee benefit plan. These limitations may
restrict such things as total and partial surrenders, the amount or timing of
purchase payments that may be made, when annuity payments must start and the
type of annuity options that may be selected. Accordingly, you should
familiarize yourself with these and all other aspects of any retirement plan
in connection with which a Contract is used. We are not responsible for
monitoring or assuring compliance with the provisions of any retirement plan.
COMMUNICATIONS TO US
All communications to us should include your Contract number, your name
and, if different, the Annuitant's name. Communications may be directed to the
addresses and phone numbers on the cover of this Prospectus.
Except as otherwise specified in this Prospectus, purchase payments or
other communications are deemed received at our Home Office on the actual date
of receipt there in proper form unless received (1) after the close of regular
trading on The New York Stock Exchange or (2) on a date that is not a
Valuation Date. In either of these two cases, the date of receipt will be
deemed to be the next Valuation Date.
FINANCIAL AND PERFORMANCE INFORMATION
Financial statements of AG Life and Separate Account D, including
financial information about the Divisions which invest in the Series of the
Trust and the Fund, are included in the Statement. See "Contents of Statement
of Additional Information."
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From time to time, Separate Account D may include in advertisements and
other sales materials several types of performance information for the
Divisions, including "average annual total return," "total return," and
"cumulative total return." The Domestic Income Division, the Government
Division, and the Growth and Income Division may also advertise "yield." The
Money Market Division may advertise "yield" and "effective yield."
Each of these figures is based upon historical information and is not
necessarily representative of the future performance of a Division. Moreover,
these performance figures do not represent the actual experience of amounts
invested by a particular Owner. The investment experience for each Division
reflects the investment performance of the separate investment Series
currently funding such Division for the periods stated, except that for
periods prior to the time when the Contract became available, the results were
calculated by applying all applicable charges and fees at the Separate Account
level for the Contract, as noted below, to the historical Series performance
results for such periods.
Average annual total return, total return, and cumulative total return
calculations measure the net income of a Division plus the effect of any
realized or unrealized appreciation or depreciation of the underlying
investments in the Division for the period in question. Average annual total
return figures are annualized and, therefore, represent the average annual
percentage change in the value of an investment in a Division over the
applicable period. Total return figures are also annualized, but do not, as
described below, include the effect of any applicable Surrender Charge or
Annual Contract Fee. Cumulative total return figures represent the cumulative
change in value of an investment in a Division for various periods.
Yield is a measure of the net dividend and interest income earned over a
specific one month or 30-day period (seven-day period for the Money Market
Division) expressed as a percentage of the value of the Division's
Accumulation Units. Yield is an annualized figure, which means that it is
assumed that the Division generates the same level of net income over a one
year period which is compounded on a semi-annual basis. The effective yield
for the Money Market Division is calculated similarly but includes the effect
of assumed compounding. The Money Market Division's effective yield will be
slightly higher than its yield due to this compounding effect.
Average annual total return figures include the deduction of all
recurring charges and fees applicable under the Contract to all Owner
accounts, including the Mortality and Expense Risk Charge, the Administrative
Expense Charge, the applicable Surrender Charge that may be imposed at the end
of the period in question, and a pro-rated portion of the Annual Contract Fee.
Yield, effective yield, total return, and cumulative total return figures do
not include the effect of any Surrender Charge that may be imposed upon the
redemption of Accumulation Units, and thus may be higher than if such charge
were deducted. Total return and cumulative total return figures also do not
include the effect of the Annual Contract Fee. We may waive or reimburse
certain fees or charges applicable to the Contract and such waivers or
reimbursements will affect each Division's performance results. Additional
information concerning a Division's performance appears in the Statement.
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AG Life may also advertise its ratings by independent financial rating
services, such as A.M. Best Company, Standard & Poor's, and Duff & Phelps.
Best's Insurance Reports, Life-Health Edition, 1996 reaffirmed AG Life's
rating of A++ (Superior) as of June, 1996 for financial position and operating
performance. AG Life has received the highest rating of AAA (Superior) from
Standard & Poor's Corporation, reaffirmed as of November, 1995, and the
highest rating of AAA from Duff & Phelps Credit Rating Co., reaffirmed as of
August, 1996. The ratings from these three nationally recognized rating
organizations reflect the claims paying ability and financial strength of AG
Life and are not a rating of investment performance that purchasers of
insurance products have experienced or are likely to experience in the future.
In addition, AG Life may include in certain advertisements endorsements
in the form of a list of organizations, individuals or other parties that
recommend the Company or the Contracts. AG Life may occasionally include in
advertisements comparisons of currently taxable and tax-deferred investment
programs, based on selected tax brackets, or discussions of alternative
investment vehicles and general economic conditions.
FINANCIAL INFORMATION
The financial statements of AG Life are located in the Statement. See the
cover page of the Prospectus for information on how to obtain a copy of the
Statement. The financial statements of AG Life should be considered only as
bearing on the ability of AG Life to meet its contractual obligations under
the Contracts; they do not bear on the investment performance of Separate
Account D.
No financial information is available for Separate Account D because none
of the Divisions available under the Contracts had commenced operations as of
the date of this Prospectus.
AG LIFE
AG Life is a stock life insurance company organized under the laws of the
State of Texas, which is a successor in interest to a company originally
organized under the laws of the State of Delaware in 1917. AG Life is an
indirect, wholly-owned subsidiary of American General Corporation (formerly
American General Insurance Company), a diversified financial services holding
company engaged primarily in the insurance business. The commitments under the
Contracts are AG Life's, and American General Corporation has no legal
obligation to back those commitments.
SEPARATE ACCOUNT D
Separate Account D was originally established on November 19, 1973 and
consists of forty-one Divisions, nine of which are available under the
Contracts offered by this Prospectus. Separate Account D is registered with
the Securities and Exchange Commission as a unit investment trust under the
1940 Act. Each Division of Separate Account D is part of AG Life's general
business and the assets of Separate Account D belong to AG Life. Under Texas
law and the terms of the Contracts, the assets of Separate Account D will not
be chargeable with liabilities arising out of any other business which AG Life
may conduct, but will be held exclusively to meet AG Life's obligations under
variable
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annuity contracts. Furthermore, the income, gains, and losses, whether or not
realized, from assets allocated to Separate Account D, are, in accordance with
the Contracts, credited to or charged against the Separate Account without
regard to other income, gains, or losses of AG Life.
THE SERIES
The variable benefits under the Contracts are funded by twelve Divisions
of the Separate Account. These Divisions invest in shares of nine separate
investment Series of the Trust and three separate Series of the Fund. The
Trust and the Fund offer shares of these Series, without sales charges,
exclusively to life insurance company variable annuity and variable life
insurance separate accounts and not directly to the public. The Trust and the
Fund offer shares to variable annuity and variable life insurance separate
accounts of insurers that are not affiliated with AG Life. We do not see any
conflict between Owners of Contracts and owners of variable life insurance
policies or variable annuity contracts issued by insurance companies not
affiliated with AG Life. Nevertheless, the Board of Trustees of the Trust and
the Board of Directors of the Fund will monitor to identify any material
irreconcilable conflicts that may develop and determine what, if any, action
should be taken in response. If it becomes necessary for any separate account
to replace shares of any Series with another investment, the Series may have
to liquidate securities on a disadvantageous basis.
Any dividends or capital gain distributions attributable to Contracts are
automatically reinvested in shares of the series from which they are received
at the Series' net asset value on the date payable. Such dividends and
distributions will have the effect of reducing the net asset value of each
share of the corresponding Series and increasing, by an equivalent value, the
number of shares outstanding of the Series. However, the value of your
interest in the corresponding Division will not change as a result of any such
dividends and distributions.
The names of the Series of the Trust in which the available Divisions
invest, are as follows:
Van Kampen American Capital Life Investment Trust
Emerging Growth Fund
Enterprise Fund
Global Equity Fund
Real Estate Securities Fund
Growth and Income Fund
Asset Allocation Fund
Domestic Income Fund
Government Fund
Money Market Fund
Van Kampen American Capital Asset Management, Inc. is the investment
adviser of each Series of the Trust. Van Kampen American Capital Distributors,
Inc., is the distributor of shares of each Series of the Trust. The investment
adviser and the distributor are wholly-owned indirect subsidiaries of Morgan
Stanley Group Inc. Morgan Stanley Group Inc. and various of its directly or
indirectly owned subsidiaries, including Morgan Stanley & Co. Incorporated, a
registered broker-dealer and investment adviser and Morgan Stanley
International, are engaged in a wide range of financial services. Their
principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring and other corporate finance
advisor activities; merchant banking; stock brokerage and research services;
asset management; trading of futures, options, foreign exchange, commodities
and swaps (involving foreign exchange, commodities, indices and interest
rates); real estate advice, financing and investing; and global custody,
securities clearance services and securities lending. John Govett & Co.
Limited is the investment sub-adviser for the Global Equity Fund. Hines
Interests Realty Advisors Limited Partnership is the sub-adviser for the Real
Estate Securities Fund.
The names of the Series of the Fund in which the available Divisions
invest are as follows:
Morgan Stanley Universal Funds, Inc.
International Magnum Portfolio
Emerging Markets Portfolio
High Yield Portfolio
Morgan Stanley Asset Management Inc. is the investment adviser of the
International Magnum and the Emerging Markets Portfolios. Miller Anderson &
Sherrerd, LLP is the investment adviser of the High Yield Portfolio.
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Before selecting any Division, you should carefully read the prospectus
that includes more complete information about the Series in which that
Division invests, including investment objectives and policies, charges and
expenses. You may obtain additional copies of such a prospectus by contacting
AG Life's Annuity Administration Department at the addresses and phone number
set forth on the cover page of this Prospectus. When making your request,
please specify the single or the several Series in which you are interested.
High yielding fixed-income securities such as those in which the Domestic
Income Fund invests are subject to greater market fluctuations and risk of
loss of income and principal than investments in lower yielding fixed-income
securities. Potential investors in this Division should carefully read the
prospectus and related statement of additional information that pertains to
this Series and consider their ability to assume the risks of making an
investment in this Division.
VOTING PRIVILEGES
The Owner prior to the Annuity Commencement Date and the Annuitant or
other payee during the Annuity Period will be entitled to give us instructions
as to how Series shares held in the Divisions of Separate Account D
attributable to their Contract should be voted at meetings of shareholders of
the Series. Those persons entitled to give voting instructions and the number
of votes for which they may give directions will be determined as of the
record date for a meeting. Separate Account D will vote all shares of each
Series that it holds of record in accordance with instructions received with
respect to all AG Life annuity contracts participating in that Series.
Separate Account D will also vote all shares of each Series for which no
instructions have been received for or against any proposition in the same
proportion as the shares for which voting instructions were received.
Prior to the Annuity Commencement Date, the number of votes each Owner is
entitled to direct with respect to a particular Series is equal to (a) the
Owner's Variable Account Value attributable to that Series divided by (b) the
net asset value of one share of that Series. In determining the number of
votes, fractional votes will be recognized. While a variable Annuity Payment
Option is in effect, the number of votes an Annuitant or payee is entitled to
direct with respect to a particular Series will be computed in a comparable
manner, based on our liability for future Variable Annuity Payments with
respect to that Annuitant or payee as of the record date. Such liability for
future payments will be calculated on the basis of the mortality assumptions
and the assumed interest rate used in determining the number of Annuity Units
under a Contract and the applicable value of an Annuity Unit on the record
date.
Series shares held by insurance company separate accounts other than
Separate Account D will generally be voted in accordance with instructions of
participants in such other separate accounts.
We believe that AG Life's voting instruction procedures comply with
current federal securities law requirements and interpretations thereof.
However, AG Life reserves the right to modify these procedures in any manner
consistent with applicable legal requirements and interpretations as in effect
from time to time.
THE FIXED ACCOUNT
AMOUNTS IN THE FIXED ACCOUNT OR SUPPORTING FIXED ANNUITY PAYMENTS BECOME
PART OF OUR GENERAL ACCOUNT. BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE
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GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR
IS THE GENERAL ACCOUNT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT.
WE HAVE BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS THAT RELATE TO THE FIXED
ACCOUNT OR FIXED ANNUITY PAYMENTS. DISCLOSURES REGARDING THESE MATTERS,
HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY-APPLICABLE PROVISIONS OF THE
FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF
STATEMENTS IN PROSPECTUSES.
Our obligations with respect to the Fixed Account are legal obligations
of AG Life and are supported by our General Account assets, which also support
obligations incurred by us under other insurance and annuity contracts.
Investments purchased with amounts allocated to the Fixed Account are the
property of AG Life, and Owners have no legal rights in such investments.
Account Value that is allocated by the Owner to the Fixed Account earns a
Guaranteed Interest Rate commencing with the date of such allocation. This
Guaranteed Interest Rate continues for a number of years selected by the Owner
from among the Guarantee Periods that we then offer. At the end of a Guarantee
Period, the Owner's Account Value in that Guarantee Period, including interest
accrued thereon, will be allocated to a new Guarantee Period of the same
length unless AG Life has received a Written request from the Owner to
allocate this amount to a different Guarantee Period or periods or to one or
more of the Divisions of Separate Account D. We must receive this Written
request at least three business days prior to the end of the Guarantee Period.
If the Owner has not provided such Written request and the renewed Guarantee
Period extends beyond the scheduled Annuity Commencement Date, we will
nevertheless contact the Owner regarding the scheduled Annuity Commencement
Date. If the Owner elects to annuitize in this circumstance, the Surrender
Charge may be waived. (See "Annuity Payment Options" and "Surrender Charge.")
The first day of the new Guarantee Period (or other reallocation) will be the
day after the end of the prior Guarantee Period. We will notify the Owner at
least 30 days and not more than 60 days prior to the end of any Guarantee
Period. If the Owner's Account Value in a Guarantee Period is less than $500,
we reserve the right to automatically transfer without charge, the balance to
the Money Market Division at the end of that Guarantee Period, unless we have
received in good order Written instructions to transfer such balance to a
different Division.
We declare the Guaranteed Interest Rates from time to time as market
conditions dictate. We advise an Owner of the Guaranteed Interest Rate for a
chosen Guarantee Period at the time a purchase payment is received, a transfer
is effectuated or a Guarantee Period is renewed. A different rate of interest
may be credited to one Guarantee Period than to another Guarantee Period that
is the same length but that began on a different date. The minimum Guaranteed
Interest Rate is an effective annual rate of 3%.
Currently we make available Guarantee Periods of one, three, five, seven
and ten years. Each Guarantee Period has its own Guaranteed Interest Rate,
which may differ from those for other Guarantee Periods. From time to time we
will, at our discretion, change the Guaranteed Interest Rate for future
Guarantee Periods of various lengths. These changes will not affect the
Guaranteed Interest Rates being paid on Guarantee Periods that have already
commenced. Each allocation or transfer of an amount to a Guarantee Period
commences the running of a new Guarantee Period with respect to that amount,
which will earn a Guaranteed Interest Rate that will continue unchanged until
the end of that period. The Guaranteed Interest Rate will never be less than
the minimum Guaranteed Interest Rate stated in your Contract. We reserve the
right to change the Guarantee Periods that we are making available at any
time.
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AG LIFE'S MANAGEMENT MAKES THE FINAL DETERMINATION OF THE GUARANTEED
INTEREST RATES TO BE DECLARED. AG LIFE CANNOT PREDICT OR ASSURE THE LEVEL OF
ANY FUTURE GUARANTEED INTEREST RATES IN EXCESS OF THE MINIMUM GUARANTEED
INTEREST RATE STATED IN YOUR CONTRACT.
Information concerning the Guaranteed Interest Rates applicable to the
various Guarantee Periods at any time may be obtained from your sales
representative or from the addresses or phone numbers set forth on the cover
page of this Prospectus.
CONTRACT ISSUANCE AND PURCHASE PAYMENTS
The minimum initial purchase payment is $5,000. The amount of any
subsequent purchase payment allocated to any Division or Guarantee Period must
be at least $100. We reserve the right to modify these minimums, in our
discretion.
An application to purchase a Contract must be made by signed Written
application form provided by AG Life or by such other medium or format as may
be agreed to by AG Life and Van Kampen American Capital Distributors, Inc. as
distributor of the Contracts. When a purchase payment accompanies an
application to purchase a Contract and the application is properly completed,
we will either process the application, credit the purchase payment, and issue
the Contract or reject the application and return the purchase payment within
two Valuation Dates after receipt of the application at our Home Office.
If the application is not complete or is incorrectly completed, we will
request additional documents or information within five Valuation Dates after
receipt of the application at our Home Office. If a correctly-completed
application is not received within five Valuation Dates after receipt of the
purchase payment at our Home Office, we will return the purchase payment
immediately unless the prospective purchaser specifically consents to our
retaining the purchase payment until the application is made complete, in
which case the initial purchase payment is credited as of the end of the
Valuation Period in which we receive at our Home Office the last information
required to process the application. Subsequent purchase payments are credited
as of the end of the Valuation Period in which they and any required Written
identifying information, are received at our Home Office. We reserve the right
to reject any application or purchase payment for any reason.
If the Owner's Account Value in any Division falls below $500 because of
a partial withdrawal from the Contract, we reserve the right to transfer,
without charge, the remaining balance to the Money Market Division. If the
Owner's Account value in any Division falls below $500 because of a transfer
to another Division or to the Fixed Account, we reserve the right to transfer
the remaining balance in that Division, without charge and pro rata, to the
Division, Divisions or Fixed Account to which the transfer was made. These
minimum requirements are waived for transfers under the Automatic Rebalancing
program. See "Automatic Rebalancing." If the Owner's total Account Value falls
below $500, we may cancel the Contract. Such a cancellation would be
considered a full surrender of the Contract. We will provide you with 60 days'
advance notice of any such cancellation.
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So long as the Account Value does not fall below $500, you need make no
further purchase payments. You may, however, elect to make subsequent purchase
payments at any time prior to the Annuity Commencement Date and while the
Owner and Annuitant are still living. Checks for subsequent purchase payments
should be made payable to American General Life Insurance Company and
forwarded directly to our Home Office. We also accept purchase payments by
wire or by exchange from another insurance company. You may obtain further
information about how to make purchase payments by either of these methods
from your sales representative or from us at the addresses and telephone
numbers on the cover page of this Prospectus. Purchase payments pursuant to
salary reduction plans may be made only with our agreement.
Your purchase payments begin to earn a return in the Divisions of
Separate Account D or the Guarantee Periods of the Fixed Account as of the
date we credit the purchase payments to your Contract. In your application
form, you select (in whole percentages) the amount of each purchase payment
that is to be allocated to each Division and each Guarantee Period. You can
change these allocation percentages at any time by Written notice to us.
OWNER ACCOUNT VALUE
Prior to the Annuity Commencement Date, your Account Value under a
Contract is the sum of your Variable Account Value and Fixed Account Value, as
discussed below.
VARIABLE ACCOUNT VALUE
Your Variable Account Value as of any Valuation Date prior to the Annuity
Commencement Date is the sum of your Variable Account Values in each Division
of Separate Account D as of that date. Your Variable Account Value in any such
Division is the product of the number of your Accumulation Units in that
Division multiplied by the value of one such Accumulation Unit as of that
Valuation Date. There is no guaranteed minimum Variable Account Value. To the
extent that your Account Value is allocated to Separate Account D, you bear
the entire risk of investment losses.
Accumulation Units in a Division are credited to you when you allocate
purchase payments or transferred amounts to that Division. Similarly, such
Accumulation Units are cancelled to the extent you transfer or withdraw
amounts from a Division or to the extent necessary to pay certain charges
under the Contract. The crediting or cancellation of Accumulation Units is
based on the value of such Accumulation Units at the end of the Valuation Date
as of which the related amounts are being credited to or charged against your
Variable Account Value, as the case may be.
The value of an Accumulation Unit for a Division on any Valuation Date is
equal to the previous value of that Division's Accumulation Unit multiplied by
that Division's net investment factor for the Valuation Period ending on that
Valuation Date.
The net investment factor for a Division is determined by dividing (1)
the net asset value per share of the Series shares held by the Division,
determined at the end of the current Valuation Period, plus the per share
amount of any dividend or capital gains distribution made with respect to the
Series shares held by the Division during the current Valuation Period, by (2)
the net asset value per share of the Series shares held in the Division as
determined at the end of the previous Valuation Period, and subtracting from
that result a factor representing the mortality risk, expense risk and
administrative
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expense charge.
FIXED ACCOUNT VALUE
Your Fixed Account Value as of any Valuation Date prior to the Annuity
Commencement Date is the sum of your Fixed Account Value in each Guarantee
Period as of that date. Your Fixed Account Value in any Guarantee Period is
equal to the following amounts, in each case increased by accrued interest at
the applicable Guaranteed Interest Rate: (1) the amount of net purchase
payments, renewals and transferred amounts allocated to the Guarantee Period
less (2) the amount of any transfers or withdrawals out of the Guarantee
Period, including withdrawals to pay applicable charges.
The Fixed Account Value is guaranteed by AG Life. Therefore, AG Life
bears the investment risk with respect to amounts allocated to the Fixed
Account, except to the extent that AG Life may vary the Guaranteed Interest
Rate for future Guarantee Periods (subject to the minimum Guaranteed Interest
Rate stated in your Contract).
TRANSFER, AUTOMATIC REBALANCING, SURRENDER AND PARTIAL
WITHDRAWAL OF OWNER ACCOUNT VALUE
TRANSFERS
Commencing 30 days after the Contract's date of issue and prior to the
Annuity Commence ment Date, you may transfer your Account Value at any time
among the available Divisions of Separate Account D and Guarantee Periods,
subject to the conditions described below. Such transfers will be effective at
the end of the Valuation Period in which we receive your Written or telephone
transfer request.
If a transfer would cause your Account Value in any Division or Guarantee
Period to fall below $500, we reserve the right to also transfer the remaining
balance in that Division or Guarantee Period in the same proportions as the
transfer request.
Prior to the Annuity Commencement Date and after the first 30 days
following the date the Contract was issued, you may make up to twelve
transfers each Contact Year without charge, but additional transfers will be
subject to a $25 charge. Also, no more than 25% of the Account Value you
allocated to a Guarantee Period at its inception may be transferred during any
Contract Year. This 25% limitation does not apply to transfers from the
one-year Guarantee Period, to transfers within 15 days before or after the end
of the Guarantee Period in which the transferred amounts were being held or to
a renewal at the end of the Guarantee Period to the same Guarantee Period.
Subject to the above general rules concerning transfers, you may
establish an automatic transfer plan, whereby amounts are automatically
transferred by us from the Money Market Division or the one-year Guarantee
Period to one or more other Divisions or Guarantee Periods on a monthly,
quarterly, semi-annual or annual basis. Transfers under such automatic
transfer plan will not count towards the twelve free transfers each Contract
Year, and will not incur a $25 charge. You may obtain additional information
about how to establish an automatic transfer program from your sales
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representative or from us at the telephone numbers and addresses on the front
cover of this Prospectus.
If the person or persons that are entitled to make transfers have
provided a Written request for the Telephone Transfer Privilege form that is
on file with us, transfers may be made pursuant to telephone instructions,
subject to the terms of the Telephone Transfer Privilege authorization. We
will honor telephone transfer instructions from any person who provides the
correct information, so there is a risk of possible loss to you if
unauthorized persons use this service in your name. Currently we attempt to
limit the availability of telephone transfer instructions only to the Owner of
the Contract for which instruction is received. Under the Telephone Transfer
Privilege we are not liable for any acts or omissions based upon instructions
that we reasonably believe to be genuine, including losses arising from errors
in the communication of transfer instructions. We have established procedures
for accepting telephone transfer instructions, which include verification of
the Contract number, the identity of the caller, both the Annuitant's and
Owner's names, and a form of personal identification from the caller. We will
mail to the Owner a written confirmation of the transaction. If several
persons seek to effect telephone transfers at or about the same time, or if
our recording equipment malfunctions, it may be impossible for you to make a
telephone transfer at the time you wish. If this occurs, you should submit a
Written transfer request. Also, if, due to malfunction or other circumstances,
the recording of your telephone request is incomplete or not fully comprehensi
ble, we will not process the transaction. The phone number for telephone
exchanges is 1-800-247-6584.
The Contracts are not designed for professional market timing organizations or
other entities utilizing programmed and frequent transfers. We reserve the
right at any time and without prior notice to any party to terminate, suspend,
or modify our policy regarding transfers.
AUTOMATIC REBALANCING
Automatic Rebalancing within the Separate Account is available for
Contracts with an Account Value of $25,000 and larger at the time the
application for Automatic Rebalancing is received. Application for Automatic
Rebalancing can be made either at issue or after issue, and may subsequently
be discontinued.
Automatic Rebalancing occurs when funds are transferred by us among the
Separate Account Divisions so that the values in each Division match the
Owner's percentage allocation for Automatic Rebalancing then in effect.
Automatic Rebalancing is available on a quarterly, semi-annual or annual
basis, measured from the Contract Anniversary date. A Contract Anniversary
date which falls on the 29th, 30th, or 31st of the month will result in
Automatic Rebalancing as of the 1st of the next month. Automatic Rebalancing
does not permit transfers to or from any Guarantee Period. Transfers under
Automatic Rebalancing will not count towards the twelve free transfers each
Contract Year, and will not incur a $25 charge.
SURRENDERS AND PARTIAL WITHDRAWALS
At any time prior to the Annuity Commencement Date and while the
Annuitant is still living, the Owner may make a full surrender of or partial
withdrawal from his or her Contract.
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The amount payable to the Owner upon full surrender is the Owner's
Account Value at the end of the Valuation Period in which we receive a Written
surrender request in good order, minus any applicable Surrender Charge, minus
the amount of any uncollected Contract Fee (see "Annual Contract Fee") and
minus any applicable premium tax. Our current practice is to require that you
return the Contract with any request for a full surrender. After a full
surrender, or if the Owner's Account Value falls to zero, all rights of the
Owner, Annuitant or any other person with respect to the Contract will
terminate, subject to a right to reinstate the Contract. (See "One-Time
Reinstatement Privilege.") All collateral assignees of record must consent to
any full surrender or partial withdrawal.
Your Written request for a partial withdrawal should specify the
Divisions of Separate Account D, or the Guarantee Periods of the Fixed
Account, from which you wish the partial withdrawal to be made. If you do not
specify, or if the withdrawal cannot be made in accordance with your
specification, to the extent necessary the withdrawal will be taken pro-rata
from the Divisions and Guarantee Periods, based on your Account Value in each.
Partial withdrawal requests must be for at least $100 or, if less, all of your
Account Value. If your remaining Account Value in a Division or Guarantee
Period would be less than $500 as a result of the withdrawal (except for the
Money Market Division), we reserve the right to transfer, without charge, the
remaining balance to the Money Market Division. Unless you request otherwise,
upon a partial withdrawal, your Accumulation Units and Fixed Account interests
that are cancelled will have a total value equal to the amount of the
withdrawal request, and the amount payable to you will be the amount of the
withdrawal request less any Surrender Charge, and premium tax if applicable,
payable upon the partial withdrawal.
We also make available a systematic withdrawal plan under which you may
make automatic partial withdrawals at periodic intervals in a specified
amount, subject to the terms and conditions applicable to other partial
withdrawals. Additional information about how to establish such a systematic
withdrawal program may be obtained from your sales representative or from us
at the addresses and phone numbers set forth on the cover page of this
Prospectus. We reserve the right to modify or terminate our procedures for
systematic withdrawals at any time.
The Code provides that a penalty tax will be imposed on certain premature
surrenders or withdrawals. For a discussion of this and other tax implications
of total surrenders and systematic and other partial withdrawals, including
withholding requirements, see "Federal Income Tax Matters."
ANNUITY PERIOD AND ANNUITY PAYMENT OPTIONS
ANNUITY COMMENCEMENT DATE
The Owner may select the Annuity Commencement Date when applying to
purchase a Contract and may change a previously-selected date at any time
prior to the beginning of an Annuity Payment Option by submitting a Written
request, subject to Company approval. The Annuity Commencement Date may be any
day of any month up to the Annuitant's one hundredth birthday inclusive. See
"Federal Income Tax Matters" for a description of the penalties that may
attach to distributions
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prior to the Annuitant's attaining age 59 1/2 under any Contract or after
April 1 of the year following the calendar year in which the Annuitant attains
age 70 1/2 under Qualified Contracts.
APPLICATION OF OWNER ACCOUNT VALUE
We will automatically apply your Variable Account Value in any Division
to provide Variable Annuity Payments based on that Division and your Fixed
Account Value to provide Fixed Annuity Payments. However, if you give us other
Written instructions at least thirty days prior to the Annuity Commencement
Date, we will apply your Account Value in different proportions.
We deduct any applicable state and local premium taxes from the amount of
Account Value being applied to an Annuity Payment Option. In some cases, we
may deduct a Surrender Charge from the amount being applied. See "Surrender
Charge." Subject to any such adjustments, your Variable and Fixed Account
Value are applied to an Annuity Payment Option, as discussed below, as of the
end of the Valuation Period that contains the tenth day prior to the Annuity
Commencement Date.
FIXED AND VARIABLE ANNUITY PAYMENTS
The amount of the first monthly Fixed or Variable Annuity Payment will be
at least as favorable as that produced by the annuity tables set forth in the
Contract, based on the amount of your Account Value that is applied to provide
the Fixed or Variable Annuity Payments. Thereafter, the amount of each monthly
Fixed Annuity Payment is fixed and specified by the terms of the Annuity
Payment Option selected.
The Account Value that is applied to provide Variable Annuity Payments is
converted to a number of Annuity Units by dividing the amount of the first
Variable Annuity Payment by the value of an Annuity Unit of the relevant
Division as of the end of the Valuation Period that includes the tenth day
prior to the Annuity Commencement Date. This number of Annuity Units
thereafter remains constant with respect to any Annuitant, and the amount of
each subsequent Variable Annuity Payment is determined by multiplying this
number by the value of an Annuity Unit as of the end of the Valuation Period
that contains the tenth day prior to the date of each payment. If the Variable
Annuity Payments are based on more than one Division, these calculations are
performed separately for each Division. The value of an Annuity Unit at the
end of a Valuation Period is the value of the Annuity Unit at the end of the
previous Valuation Period, multiplied by the net investment factor (see
"Variable Account Value") for the Valuation Period, with an offset for the
3.5% assumed interest rate used in the Contract's annuity tables.
As a result of the foregoing computations, if the net investment return
for a Division for any month is at an annual rate of more than the assumed
interest rate used in the Contract's annuity tables, any Variable Annuity
Payment based on that Division will be greater than the Variable Annuity
Payment based on that Division for the previous month. If the net investment
return for a Division for any month is at an annual rate of less than the
assumed interest rate used in the Contract's annuity
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tables, any variable annuity payment based on that Division will be less than
the Variable Annuity Payment based on that Division for the previous month.
ANNUITY PAYMENT OPTIONS
The Owner may elect to have annuity payments made beginning on the
Annuity Commence ment Date under any one of the Annuity Payment Options
described below. We will notify the Owner 60 to 90 days prior to the scheduled
Annuity Commencement Date that the Contract is scheduled to mature, and
request that an Annuity Payment Option be selected. If the Owner has not
selected an Annuity Payment Option ten days prior to the Annuity Commencement
Date, we will proceed as follows: (1) if the scheduled Annuity Commencement
Date is any date prior to the Annuitant's one hundredth birthday, we will
extend the Annuity Commencement Date to the Annuitant's one hundredth
birthday; or (2) if the scheduled Annuity Commencement Date is the Annuitant's
one hundredth birthday, the Account Value less any applicable charges and
premium taxes will be paid in one sum to the Owner.
The Code imposes minimum distribution requirements that have a bearing on
the Annuity Payment Option that should be chosen in connection with Qualified
Contracts. See "Federal Income Tax Matters." We are not responsible for
monitoring or advising Owners as to whether the minimum distribution
requirements are being met, unless we have received a specific written request
to do so.
No election of any Annuity Payment Option may be made unless an initial
annuity payment of at least $100 would be provided, where only a Fixed or only
Variable Annuity Payments are elected, and $50 on each basis when a
combination of Variable and Fixed Annuity Payments is elected. If these
minimums are not met, we will first reduce the frequency of annuity payments,
and if the minimums are still not met, we will make a lump-sum payment to the
Annuitant or other properly-designated payee in the amount of the Owner's
Account Value, less any applicable Surrender Charge, any uncollected Annual
Contract Fee, and any applicable premium tax.
The Owner, or if the Owner has not done so, the Beneficiary may, within
60 days after the death of the Owner or Annuitant, elect that any amount due
to the Beneficiary be applied under any option described below, subject to
certain tax law requirements. See "Death Proceeds." Thereafter, the
Beneficiary will have all the remaining rights and powers under the Contract
and be subject to all the terms and conditions thereof. The first annuity
payment will be made at the beginning of the second month following the month
in which we approve the settlement request. Annuity Units will be credited
based on Annuity Unit Values at the end of the Valuation Period that contains
the tenth day prior to the beginning of said second month.
When an Annuity Payment Option becomes effective, the Contract must be
delivered to our Home Office, in exchange for a payment contract providing for
the option elected.
Information about the relationship between the Annuitant's sex and the
amount of annuity payments, including requirements for gender-neutral annuity
rates in certain states and in connection with certain employee benefit plans
is set forth under "Gender of Annuitant" in the Statement. See "Contents of
Statement of Additional Information."
OPTION 1 - LIFE ANNUITY - Annuity payments are payable monthly during the
lifetime of the Annuitant, ceasing with the last payment due prior to the
death of the Annuitant. It would be possible under this arrangement for the
Annuitant or other payee to receive only one annuity payment if the Annuitant
died prior to the second annuity payment, since no minimum number of payments
is guaranteed.
OPTION 2 - LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS CERTAIN -
Annuity payments are
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payable monthly during the lifetime of an Annuitant; provided, that if the
Annuitant dies during the period certain, the Beneficiary is entitled to
receive monthly payments for the remainder of the period certain.
OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY - Annuity payments are payable
monthly during the lifetime of the Annuitant and another payee and continue
during the lifetime of the survivor, ceasing with the last payment prior to
the death of the survivor. It is possible under this option for the Annuitant
or other payee to receive only one annuity payment if both die before the
second annuity payment, since no minimum number of payments is guaranteed. If
one of these persons dies before the Annuity Commencement Date, the election
of this option is revoked, the survivor becomes the sole Annuitant, and no
death proceeds are payable by virtue of the death of the other Annuitant.
OPTION 4 - PAYMENTS FOR DESIGNATED PERIOD - Annuity payments are payable
monthly to an Annuitant or other properly-designated payee, or at his or her
death, the Beneficiary, for a selected number of years ranging from five to
forty. If this option is selected on a variable basis, the designated period
may not exceed the life expectancy of such Annuitant or other
properly-designated payee.
OPTION 5 - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The amount due is paid in
equal monthly installments of a designated dollar amount (not less than $125
nor more than $200 per annum per $1,000 of the original amount due) until the
remaining balance is less than the amount of one installment. If the person
receiving these payments dies, the remaining payments continue to be made to
the Beneficiary. Payments under this option are available on a fixed basis
only. To determine the remaining balance at the end of any month, such balance
at the end of the previous month is decreased by the amount of any installment
paid during the month and the result will be accumulated at an interest rate
not less than 3.5% compounded annually. If the remaining balance at any time
is less than the amount of one installment, such balance will be paid and will
be the final payment under the option.
Under the fourth option there is no mortality guarantee by us, even
though Variable Annuity Payments will be reduced as a result of a charge to
Separate Account D which is partially for mortality risks. See "Charge to
Separate Account D."
A payee receiving Variable (but not Fixed) Annuity Payments under the
fourth option can elect at any time to commute (terminate) such option and
receive the current value of the annuity, which would be based on the values
next determined after the Written request for payment is received by us. The
current value of the annuity under the fourth option is the value of all
remaining annuity payments, assumed to be level, discounted to present value
at an annual rate of 3.5%. Other than by election of such a lump-sum payment
under the fourth option, an Annuity Payment Option may not be terminated once
annuity payments have commenced.
Under federal tax regulations, the election of the fourth or fifth
options may be treated in the same manner as a surrender of the total account.
For tax consequences of such treatment, see "Federal Income Tax Matters."
Also, in such a case, tax-deferred treatment of subsequent earnings may not be
available.
ALTERNATIVE AMOUNT UNDER FIXED LIFE ANNUITY OPTIONS - Each Contract
provides that when
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Fixed Annuity Payments are to be made under one of the first three Annuity
Payment Options described above, the Owner (or if the Owner has not elected a
payment option, the Beneficiary) may elect monthly payments to the Annuitant
or other properly-designated payee equal to the monthly payment available
under similar circumstances based on single payment immediate fixed annuity
rates then in use by us. The purpose of this provision is to assure the
Annuitant that, at retirement, if the fixed annuity purchase rate then offered
by us for new single payment immediate annuity contracts is more favorable
than the annuity rates guaranteed by the Contract, the Annuitant or other
properly-designated payee will be given the benefit of the new annuity rates.
In lieu of monthly payments, payments may be elected on a quarterly,
semi-annual or annual basis, in which case the amount of each annuity payment
will be determined on a basis consistent with that described above for monthly
payments.
TRANSFERS
After the Annuity Commencement Date, the Annuitant or other
properly-designated payee may make one transfer every 180 days among the
available Divisions of Separate Account D or from the Divisions to a fixed
Annuity Payment Option. No charge will be assessed for such transfer. No
transfers from a fixed to a variable Annuity Payment Option are permitted. If
a transfer would cause the value that is attributable to a Contract in any
Division to fall below $500, we reserve the right to transfer the remaining
balance in that Division in the same proportion as the transfer request.
Transfers will be effected at the end of the Valuation Period in which we
receive the Written transfer request at our Home Office. We reserve the right
to terminate or restrict transfers at any time.
DEATH PROCEEDS
DEATH PROCEEDS PRIOR TO THE ANNUITY COMMENCEMENT DATE
The death proceeds described below are payable to the Beneficiary under
the Contract if, prior to the Annuity Commencement Date, any of the following
events occurs: (a) the Annuitant dies and no Contingent Annuitant has been
named under a Non-Qualified contract; (b) the Annuitant dies and we also
receive proof of death of any named Contingent Annuitant; or (c) the Owner
(including the first to die in the case of joint Owners) of a Non-Qualified
Contract dies, regardless of whether said deceased Owner was also the
Annuitant (however, if the Beneficiary is the Owner's surviving spouse, the
Beneficiary may elect to continue the Contract as described in the second
paragraph below). The death proceeds, prior to deduction of any applicable
premium taxes, will equal the greatest of (1) the sum of all net purchase
payments made (less any previously-deducted premium taxes and all prior
partial withdrawals), (2) the Owner's Account Value as of the end of the
Valuation Period in which we receive, at our Home Office, proof of death and
the Written request as to the manner of payment, or (3) the Highest
Anniversary Value prior to the date of death, as defined below: THE AMOUNT
SPECIFIED IN (3) ABOVE IS NOT AN AVAILABLE OPTION IN ALL STATES, AND YOU
SHOULD THEREFORE CONSULT YOUR SALES REPRESENTATIVE OR OUR HOME OFFICE AS TO
WHETHER IT WILL APPLY TO YOU. IN THOSE STATES WHERE (3) IS NOT AVAILABLE, THE
DEATH PROCEEDS WILL EQUAL THE GREATER OF (1) OR (2) ABOVE.
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The Highest Anniversary Value prior to the date of death will be
determined as follows:
First, we will calculate the Account Values at the end of each of the
past Contract Anniversaries that occurred prior to the deceased's 81st
birthday;
Second, each of the Account Values will be increased by the amount of net
purchase payments made since the end of such Contract Years; and
Third, the result will be reduced by the amount of any withdrawals made
since the end of such Contract Years.
The Highest Anniversary Value will be an amount equal to the highest of
such values. The Highest Anniversary Value will not be calculated on or after
the 81st birthday. Net purchase payments are purchase payments less applicable
premium tax.
We will pay the death proceeds to the Beneficiary as of the date the
proceeds become payable. Such date is the end of the Valuation Period in which
we receive proof of the Owner's or Annuitant's death and a Written request in
good order from the Beneficiary as to the manner of payment.
If the Owner has not already done so, the Beneficiary may, within sixty
days after the date the death proceeds become payable, elect to receive the
death proceeds as a lump sum or in the form of one of the Annuity Payment
Options provided in the Contract. See "Annuity Payment Options." If we receive
no request as to the manner of payment, we will make a lump-sum payment, based
on values determined at that time.
If the Owner under a Non-Qualified Contract dies prior to the Annuity
Commencement Date, the Code requires that all amounts payable under the
Contract be distributed (a) within five years of the date of death or (b) as
annuity payments beginning within one year of the date of death and continuing
over a period not extending beyond the life expectancy of the Beneficiary. If
the Beneficiary is the Owner's surviving spouse, the spouse may elect to
continue the Contract as the new Owner and, if the original Owner was the
Annuitant, as the new Annuitant. If the Owner is not a natural person, these
requirements apply upon the death of the primary Annuitant within the meaning
of the Code. Failure to satisfy these Code distribution requirements may
result in serious adverse tax consequences. Under a parallel section of the
Code, similar requirements apply to retirement plans in connection with which
Qualified Contracts are issued.
DEATH PROCEEDS AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies following the Annuity Commencement Date, the only
amounts payable to the Beneficiary or other properly-designated payee are any
continuing payments provided for under the Annuity Payment Option selected.
See "Annuity Payment Options." In such a case, the payee will have all the
remaining rights and powers under a Contract and be subject to all the terms
and conditions thereof. Also, if the Annuitant dies following the Annuity
Commencement Date, no previously named Contingent Annuitant can become the
Annuitant.
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If the payee under a Non-Qualified Contract dies after the Annuity
Commencement Date, any remaining amounts payable under the terms of the
Annuity Payment Option must be distributed at least as rapidly as under the
method of distribution then in effect. If the payee is not a natural person,
this requirement applies upon the death of the primary Annuitant within the
meaning of the Code. Failure to satisfy these requirements of the Code may
result in serious adverse tax consequences. Under a parallel section of the
Code, similar requirements apply to the retirement plans in connection with
which Qualified Contracts are issued.
PROOF OF DEATH
We accept the following as proof of any person's death: a copy of a
certified death certificate; a copy of a certified decree of a court of
competent jurisdiction as to the finding of death; a written statement by a
medical doctor who attended the deceased at the time of death; or any other
proof satisfactory to us.
Once we have paid the death proceeds, the Contract terminates and we have
no further obligations thereunder.
CHARGES UNDER THE CONTRACTS
PREMIUM TAXES
When applicable, we will deduct an amount to cover premium taxes imposed by
certain states. Such deduction will be made, in accordance with applicable
state law:
(1) from purchase payment(s) when received; or
(2) from the Owner's Account Value at the time annuity payments begin; or
(3) from the amount of any partial withdrawal; or
(4) from proceeds payable upon termination of the Contract for any other
reason, including death of the Annuitant or Owner, or surrender of the
Contract.
If premium tax is paid, AG Life may reimburse itself for such tax when
deduction is being made under items 2, 3, or 4 above calculated by multiplying
the sum of Purchase Payments being withdrawn by the applicable premium tax
percentage.
Applicable premium tax rates depend upon the Owner's then-current place
of residence. Applicable rates currently range from 0% to 3.5% and are subject
to change by legislation, administrative interpretations or judicial acts. We
will not make a profit on this charge.
SURRENDER CHARGE
The Surrender Charge reimburses us for part of our expenses related to
distributing the Contracts. We believe, however, that the amount of such
expenses will exceed the amount of revenues generated by the Surrender Charge.
We will pay such excess out of our general surplus, which might include
profits from the charge for the assumption of mortality and expense risks.
Unless a withdrawal is exempt from the Surrender Charge (as discussed
below), the Surrender Charge is a percentage of the amount of each purchase
payment that is withdrawn during the first
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seven years after it was received. The percentage declines depending on how
many years have passed since the withdrawn purchase payment was originally
credited to your Account Value, as follows:
<TABLE>
<CAPTION>
Surrender Charge as a
Year of Purchase Percentage of Purchase
Payment Withdrawal Payment Withdrawn
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
Only for the purpose of computing the Surrender Charge, the earliest
purchase payments are deemed to be withdrawn first, and before any amounts in
excess of purchase payments are withdrawn from your Account Value. The
following transactions will be considered as withdrawals for purposes of
assessing the Surrender Charge: total surrender, partial withdrawal,
commencement of an Annuity Payment Option, and termination due to insufficient
Account Value.
Nevertheless, the Surrender Charge will NOT apply to withdrawals in the
following circumstances:
The amount of withdrawals that exceeds the cumulative amount of your
purchase payments;
Death of the Annuitant, at any age, after the Annuity Commencement
Date;
Death of the Annuitant, at any age, prior to the Annuity
Commencement Date, provided no Contingent Annuitant survives;
Death of the Owner, including the first to die in the case of joint
Owners of a Non-Qualified Contract;
Annuitization over at least 10 years, or life contingent
annuitization where the life expectancy is at least 10 years;
Within the 30 day window under the One-Time Reinstatement Privilege;
If the Annuitant has been confined to a long-term care facility or
is subject to a terminal illness (to the extent that the rider for
these matters is available in your state), as set forth under
"Long-Term Care and Terminal Illness".
In the State of Washington, beginning after the Annuitant has attained
age 63, surrender charges which would otherwise be assessed against any
withdrawal may be reduced.
The Surrender Charge also does NOT apply to the surrender of a Contract,
or to the withdrawal of Contract Value (limited to the Variable Account Value
and the one year Guarantee Period) of a
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Contract, issued to owners who are: (1) employees or registered
representatives (or the spouses or minor children of employees or registered
representatives) of any broker-dealer authorized to sell the Contracts, or (2)
officers, directors, or bona-fide full-time employees of AG Life or American
General Securities Incorporated, the principal underwriter of the Contracts,
or their affiliated companies, or Van Kampen American Capital Distributors,
Inc., the distributor of the Contracts. These waivers of Surrender Charge are
based upon the Contract Owner's status at the time the Contract was purchased.
In addition, the Surrender Charge does NOT apply to the portion of your
first withdrawal or total surrender in any Contract Year that does not exceed
10% of the amount of your purchase payments that (a) have not previously been
withdrawn and (b) have been credited to the Contract for at least one year. If
multiple withdrawals are made during a Contract Year, the amount eligible for
the free withdrawal will be recalculated at the time of each withdrawal. After
the first Contract Year, non-automatic and automatic withdrawals may be made
in the same Contract Year subject to the 10% limitation. For withdrawals under
a systematic withdrawal plan, Purchase Payments credited for 30 days or more
are eligible for the 10% free withdrawal.
The Surrender Charge will not apply to any amounts withdrawn which are in
excess of the amount permitted by the 10% free withdrawal privilege, described
above, if such amounts are required to be withdrawn to obtain or retain
favorable tax treatment. This exception is subject to our approval.
A free withdrawal pursuant to any of the foregoing Surrender Charge
exceptions is not deemed to be a withdrawal of purchase payments, except for
purposes of computing the 10% free withdrawal described in the preceding
paragraph. A penalty tax may be imposed on distributions if the recipient is
under age 59 1/2. See "Penalty Tax on Premature Distributions."
TRANSFER CHARGES
The charges to defray the expense of effecting transfers are described
under "Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of
Owner Account Value - Transfers" and "Annuity Period and Annuity Payment
Options - Transfers." These charges are designed not to yield a profit to us.
ANNUAL CONTRACT FEE
An Annual Contract Fee of $30 will be deducted from each Owner's Account
Value at the end of each Contract Year prior to the Annuity Commencement Date.
This Fee is for administrative expenses (which do not include expenses of
distributing the Contracts), and we do not expect that the revenues we will
derive from this Fee will exceed such expenses. Unless paid directly, the Fee
will be allocated among the Guarantee Periods and Divisions in proportion to
your Account Value in each. The entire Fee for the year will be deducted from
the proceeds of any full surrender. We reserve the right to waive the Fee.
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CHARGE TO SEPARATE ACCOUNT D
To offset other administrative expenses not covered by the Annual
Contract Fee discussed above, and to compensate us for assuming mortality and
expense risks under the Contracts, Separate Account D will incur a daily
charge at an annualized rate of 1.40% of the average daily net asset value of
Separate Account D attributable to the Contracts. Of this amount, .15% is for
administrative expenses and 1.25% is for the assumption of mortality and
expense risks. We do not expect to earn a profit on that portion of the charge
which is for administrative expenses, but we do expect to derive a profit from
the portion which is for the assumption of mortality and expense risks. There
is no necessary relationship between the amount of administrative charges
imposed on a given Contract and the amount of expenses actually attributable
to that Contract.
In assuming the mortality risk, we are subject to the risk that our
actuarial estimate of mortality rates may prove erroneous and that Annuitants
will live longer than expected, or that more Owners or Annuitants than
expected will die at a time when the death benefit guaranteed by us is higher
than the net surrender value of their interests in the Contracts. In assuming
the expense risk, we are subject to the risk that the revenues from the
expense charges under the Contracts (which charges are guaranteed not to be
increased) will not cover our expense of administering the Contracts.
MISCELLANEOUS
Charges and expenses are paid out of the assets of each Series, as
described in the prospectus relating to that Series. We reserve the right to
impose charges or establish reserves for any federal or local taxes incurred
or that may be incurred by us, and that may be deemed attributable to the
Contracts.
SYSTEMATIC WITHDRAWAL PLAN
Automatic partial withdrawals, with minimum payments of $100, may be made
at periodic intervals through a systematic withdrawal program and the Contract
Owner may choose from payment schedules of monthly, quarterly, semi-annually,
or annually, and may start, stop, increase or decrease payments. Withdrawals
may start as early as 30 days after the issue date of the Contract and may be
taken from the Fixed Account or any Division, as specified by the Owner.
Systematic withdrawals are subject to the terms and conditions applicable to
other partial withdrawals, including Surrender Charges and exceptions to
Surrender Charges.
ONE-TIME REINSTATEMENT PRIVILEGE
If the Account Value is at least $500, the Owner may elect to reinvest
all of the proceeds that were previously liquidated from the Contract within
the past 30 days and have the Surrender Charge and any Annual Contract Fee not
then due credited back to the Contract. The funds will be reinvested at the
value next following the date of receipt of the reinstated Account Value.
Unless you request otherwise, the reinstated Account Value will be allocated
among the Divisions and Guarantee Periods in the same proportions as the prior
surrender. You may use this privilege only once.
REDUCTION IN SURRENDER CHARGES OR ADMINISTRATIVE CHARGES
We may reduce the Surrender Charges or administrative charges imposed
under certain Qualified Contracts in connection with employer-sponsored plans.
Any such reductions will reflect differences in costs or services (due to such
factors as reduced sales expenses or administrative efficiencies relating to
serving a large number of employees of a single employer and functions assumed
by the
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employer that we otherwise would have to perform) and will not be unfairly
discriminatory as to any person.
LONG-TERM CARE AND TERMINAL ILLNESS
THE RIDER DESCRIBED BELOW IS NOT AVAILABLE IN ALL STATES, AND YOU SHOULD
THEREFORE CONSULT YOUR SALES REPRESENTATIVE OR OUR HOME OFFICE AS TO WHETHER
IT WILL APPLY TO YOU. THERE IS NO SEPARATE CHARGE FOR THIS RIDER.
LONG-TERM CARE
Pursuant to a special Contract rider, no Surrender Charge will apply to a
partial withdrawal or total surrender made during any period of time that the
Annuitant is confined for 30 days or more (or within 30 days after discharge)
in a hospital or state-licensed in-patient nursing facility. We must receive
Written proof of such confinement that is satisfactory to us.
TERMINAL ILLNESS
The rider also provides that no Surrender Charge will apply to a partial
withdrawal or total surrender if we have received a physician's Written
certification that the Annuitant is considered to be terminally ill and not
expected to live more than twelve months and have considered to be waived or
exercised our right to a second physician's opinion.
OTHER ASPECTS OF THE CONTRACTS
Only an officer of AG Life can agree to change or waive the provisions of
any Contract. The Contracts are non-participating and are not entitled to
share in any dividends, profits or surplus of AG Life.
OWNERS, ANNUITANTS, AND BENEFICIARIES; ASSIGNMENTS
The Owner of a Contract will be the same as the Annuitant, unless the
purchaser designates a different Owner when applying to purchase a Contract.
In the case of joint ownership, both Owners must join in the exercise of any
rights or privileges under the Contract. The Annuitant and any
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Contingent Annuitant are designated in the application for a Contract and may
not thereafter be changed.
The Beneficiary and any Contingent Beneficiary are designated when
applying to purchase a Contract. A Beneficiary or Contingent Beneficiary may
be changed by the Owner prior to the Annuity Commencement Date, while the
Annuitant is still alive, and by the payee following the Annuity Commencement
Date. Any designation of a new Beneficiary or Contingent Beneficiary is
effective as of the date it is signed but will not affect any payments we make
or action we take before receiving the Written request. We also need the
Written consent of any irrevocably-named Beneficiary or Contingent Beneficiary
before making a change. Under certain retirement programs, spousal consent may
be required to name a Beneficiary other than the spouse or to change a
Beneficiary to a person other than the spouse. We are not responsible for the
validity of any designation of a Beneficiary or Contingent Beneficiary.
If no named Beneficiary or Contingent Beneficiary is living at the time
any payment is to be made, the Owner will be the Beneficiary, or if the Owner
is not then living, the Owner's estate will be the Beneficiary.
Rights under a Qualified Contract may be assigned only in certain narrow
circumstances referred to therein. Owners and other payees may assign their
rights under Non-Qualified Contracts, including their ownership rights. We
take no responsibility for the validity of any assignment. A change in
ownership rights must be made in Writing and a copy must be sent to our Home
Office. The change will be effective on the date it was made, although we are
not bound by a change until the date we record it. The rights under a Contract
are subject to any assignment of record at our Home Office. An assignment or
pledge of a Contract may have adverse tax consequences. See "Federal Income
Tax Matters."
REPORTS
We will mail to Owners (or persons receiving payments following the
Annuity Commencement Date), at their last known address of record, any reports
and communications required by applicable law or regulation. You should
therefore give us prompt written notice of any address change.
RIGHTS RESERVED BY US
Upon notice to the Owner, a Contract may be modified by us, to the extent
necessary in order to (1) operate Separate Account D in any form permitted
under the 1940 Act or in any other form permitted by law; (2) transfer any
assets in any Division to another Division, or to one or more separate
accounts, or the Fixed Account; (3) add, combine or remove Divisions in
Separate Account D, or combine the Separate Account with another separate
account; (4) add, restrict or remove Guarantee Periods of the Fixed Account;
(5) make any new Division available to you on a basis to be determined by us;
(6)substitute, for the shares held in any Division, the shares of another
Series or the shares of another investment company or any other investment
permitted by law; (7) make any changes required by the Code or by any other
applicable law, regulation or interpretation in order to continue treatment of
the Contract as an annuity; or (8) make any changes required to comply with
the rules of any Series. When required by law, we will obtain your approval of
changes and the approval of any appropriate regulatory authority.
PAYMENT AND DEFERMENT
Amounts surrendered or withdrawn from a Contract will normally be paid
within seven calendar
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days after the end of the Valuation Period in which we receive the Written
surrender or withdrawal request in good order. In the case of payment of death
proceeds, if we do not receive a Written request as to the manner of payment
within 60 days after the death proceeds become payable, any death benefit
proceeds will be paid as a lump sum, normally within seven calendar days after
the end of the Valuation Period that contains the last day of said 60 day
period. We reserve the right, however, to defer payment or transfers of
amounts out of the Fixed Account for up to six months. Also, we reserve the
right to defer payment of that portion of your Account Value that is
attributable to a purchase payment made by check for a reasonable period of
time (not to exceed 15 days) to allow the check to clear the banking system.
Finally, we reserve the right to defer payment of any surrender and
annuity payment amounts or death benefit amounts of any portion of the
Variable Account Value if (a) the New York Stock Exchange is closed other than
customary weekend and holiday closings, or trading on the New York Stock
Exchange is restricted; (b) an emergency exists, as a result of which disposal
of securities is not reasonably practicable or it is not reasonably
practicable to fairly determine the Variable Account Value; or (c) the
Securities and Exchange Commission by order permits the delay for the
protection of Owners. Transfers and allocations of Account Value among the
Divisions and the Fixed Account may also be postponed under these
circumstances.
FEDERAL INCOME TAX MATTERS
GENERAL
It is not possible to comment on all of the federal income tax
consequences associated with the Contracts. Federal income tax law is complex
and its application to a particular person may vary according to facts
peculiar to such person. Consequently, this discussion is not intended as tax
advice, and you should consult with a competent tax adviser before purchasing
a Contract.
The discussion is based on the law, regulations and interpretations
existing on the date of this Prospectus. These authorities, however, are
subject to change by Congress, the Treasury Department and judicial decisions.
The discussion does not address state or local tax or estate and gift tax
consequences associated with the Contracts.
NON-QUALIFIED CONTRACTS
Purchase Payments. Purchasers of a Contract that does not qualify for
special tax treatment and is therefore "Non-Qualified" may not deduct from
their gross income the amount of purchase payments made.
Tax Deferral Prior to Annuity Commencement Date. Owners who are natural
persons are not taxed currently on increases in their Account Value resulting
from interest earned in the Fixed Account or, if certain diversification
requirements are met, the investment experience of Separate Account D. This
treatment applies to Separate Account D only if it invests in Series that are
"adequately diversified" in accordance with Treasury Department regulations.
Although we do not control the Series, the investment advisers to the Series
have undertaken to use their best efforts to operate the Series in compliance
with these diversification requirements. A Contract investing in a Series that
failed to meet the diversification requirements would subject Owners to
current taxation of income in the Contract that has not previously been taxed.
Income means the excess of the Account Value over the Owner's investment in
the Contract (discussed below).
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Current regulations do not provide guidance as to any circumstances in
which control over allocation of values among different investment
alternatives may cause Owners or persons receiving annuity payments to be
treated as the owners of Separate Account D assets for tax purposes. We
reserve the right to amend the Contracts in any way necessary to avoid any
such result. The Treasury Department has stated that it may establish
standards in this regard through regulations or rulings. Such standards may
apply only prospectively, although retroactive application is possible if such
standards are considered not to embody a new position.
Owners that are not natural persons -- that is, Owners such as
corporations -- are taxed currently on annual increases in their Account Value
unless an exception applies. Exceptions exist for, among other things, Owners
that are not natural persons but that hold the Contract as an agent for a
natural person.
TAXATION OF ANNUITY PAYMENTS. Each annuity payment received after the
Annuity Commencement Date is excludible from gross income in part. In the case
of Fixed Annuity Payments, the excludible portion is determined by multiplying
the amount paid by the ratio of the investment in the Contract (discussed
below) to the expected return under the fixed Annuity Payment Option. In the
case of Variable Annuity Payments, the amount paid is multiplied by the ratio
of the investment in the Contract to the number of expected payments. In both
cases, the remaining portion of each annuity payment, and all payments made
after the investment in the Contract has been reduced to zero, are included in
the payee's income. Should annuity payments cease on account of the death of
the Annuitant before the investment in the Contract has been fully recovered,
the payee is allowed a deduction for the unrecovered amount. If the payee is
the Annuitant, the deduction is taken on the final tax return. If the payee is
a Beneficiary, that Beneficiary may recover the balance of the total
investment as payments are made or on the Beneficiary's final tax return. An
Owner's "investment in the Contract" is the amount equal to the portions of
purchase payments made by or on behalf of the Owner that have not been
excluded or deducted from the individual's gross income, less amounts
previously received under the Contract that were not included in income.
TAXATION OF PARTIAL WITHDRAWALS AND TOTAL SURRENDERS. Partial withdrawals
from a Contract are includible in income to the extent that the Owner's
Account Value exceeds the investment in the Contract. In the event a Contract
is surrendered in its entirety, any amount received in excess of the
investment in the Contract is includible in income, and any remaining amount
received is excludible from income. All annuity contracts issued by us to the
same Owner during any calendar year are to be aggregated for purposes of
determining the amount of any distribution that is includible in gross income.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A penalty tax is imposed on
distributions under a Contract equal to 10% of the amount includible in
income. The penalty tax will not apply, however, to (1) distributions made
after the recipient attains age 59 1/2, (2) distributions on account of the
recipient's becoming disabled, (3) distributions that are made after the death
of the Owner prior to the Annuity Commencement Date or the payee after the
Annuity Commencement Date (or if such person is not a natural person, that are
made after the death of the primary Annuitant, as defined in the Code), and
(4) distributions that are part of a series of substantially equal periodic
payments made over the life (or life expectancy) of the Annuitant or the joint
life (or joint life expectancies) of the Annuitant and the Beneficiary.
Premature distributions may result, for example, from an early Annuity
Commencement Date, an early surrender, partial withdrawal from or assignment
of a Contract, or the early death of an Annuitant, unless clause (3) above
applies.
PAYMENT OF DEATH PROCEEDS. Special rules apply to the distribution of any
death proceeds payable
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under the Contract. See "Death Proceeds."
ASSIGNMENTS AND LOANS. An assignment, loan, or pledge with respect to a
Non-Qualified Contract is taxed in the same manner as a partial withdrawal, as
described above. Repayment of a loan or release of an assignment or pledge is
treated as a new purchase payment.
INDIVIDUAL RETIREMENT ANNUITIES ("IRAS")
PURCHASE PAYMENTS. Individuals who are not active participants in a
taxqualified retirement plan may, in any year, deduct from their taxable
income purchase payments for an IRA equal to the lesser of $2,000 or 100% of
the individual's earned income, plus $250 for the benefit of a noncompensated
spouse. No more than $2,000 may be contributed to either spouse's IRA for any
year. Single persons who participate in a tax-qualified retirement plan and
who have adjusted gross income not in excess of $25,000 may fully deduct their
IRA purchase payments. Those who have adjusted gross income in excess of
$35,000 will not be able to deduct purchase payments, and for those with
adjusted gross income between $25,000 and $35,000 the deduction is phased out
based on the amount of income. Similarly, the otherwise deductible portion of
an IRA purchase payment will be phased out, in the case of married individuals
filing joint tax returns, with adjusted gross income between $40,000 and
$50,000, and in the case of married individuals filing separately, with
adjusted gross income between $0 and $10,000. Individuals who are precluded
from deducting all or a portion of their purchase payments because of
participation in a tax-qualified retirement plan may still make non-deductible
contributions on which earnings will be tax deferred. The total of deductible
and non-deductible contributions may not exceed the lesser of $2,000 or 100%
of earned income, plus $250 for the benefit of a noncompensated spouse.
DISTRIBUTIONS FROM AN IRA. Amounts received under an IRA as annuity
payments, upon partial withdrawal or total surrender, or on the death of the
Annuitant, are included in the Annuitant's or other recipient's income. If
nondeductible purchase payments have been made, a pro rata portion of such
distributions may not be included in income. A 10% penalty tax is imposed on
the amount includible in gross income from distributions that occur before the
Annuitant attains age 59 1/2 and that are not made on account of death or
disability, with certain exceptions. These exceptions include distributions
that are part of a series of substantially equal periodic payments made over
the life (or life expectancy) of the Annuitant or the joint lives (or joint
life expectancies) of the Annuitant and the Beneficiary. Distributions of
minimum amounts specified by the Code must commence by April 1 of the calendar
year following the calendar year in which the Annuitant attains age 70 1/2.
Additional distribution rules apply after the death of the Annuitant. These
rules are similar to those governing distributions on the death of an Owner
(or other payee during the Annuity Period) under a Non-Qualified Contract. See
"Death Proceeds." Failure to comply with the minimum distribution rules will
result in the imposition of a penalty tax of 50% of the amount by which the
minimum distribution required exceeds the actual distribution.
TAX FREE ROLLOVERS. Amounts may be transferred in a tax-free rollover
from a tax-qualified plan to an IRA (and from one IRA to another IRA) if
certain conditions are met. All taxable distributions ("eligible rollover
distributions") from tax qualified plans are eligible to be rolled over with
the exception of (1) annuities paid over a life or life expectancy, (2)
installments for a period of ten years or more, and (3) required minimum
distributions under section 401(a)(9) of the Code.
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Rollovers may be accomplished in two ways. First, an eligible rollover
distribution may be paid directly to an IRA (a "direct rollover"). Second, the
distribution may be paid directly to the Annuitant and then, within 60 days of
receipt, the amount may be rolled over to an IRA. However, any amount that was
not distributed as a direct rollover will be subject to 20% income tax
withholding.
SIRAS. Spousal individual retirement annuities ("SIRAs") are subject to
the same federal income tax treatment and rules that are discussed above with
respect to IRAs generally.
SIMPLIFIED EMPLOYEE PENSION PLANS
Employees and employers may establish an IRA plan known as a simplified
employee pension plan ("SEP"), if certain requirements are met. An employee
may make contributions to a SEP in accordance with the rules applicable to
IRAs discussed above. Employer contributions to an employee's SEP are
deductible by the employer and are not currently includible in the taxable
income of the employee. However, total employer contributions are limited to
15% of an employee's compensation or $30,000, whichever is less.
OTHER QUALIFIED PLANS
PURCHASE PAYMENTS. Purchase payments made by an employer under a pension,
profit-sharing, or annuity plan qualified under section 401 or 403(a) of the
Code, not in excess of certain limits, are deductible by the employer. Such
purchase payments are also excluded from the current income of the employee.
DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE. To the extent that
purchase payments are includible in an employee's taxable income, they (less
any amounts previously received that were not includible in the employee's
taxable income) represent his or her "investment in the Contract." Amounts
received prior to the Annuity Commencement Date under a Contract in connection
with a section 401 or 403(a) plan are generally allocated on a pro-rata basis
between the employee's investment in the Contract and other amounts. With
respect to the taxable portion of a lump-sum distribution (as defined in the
Code), an averaging rule may be applicable that allows computation of tax as
if the amount were received over a period of five years. A lump-sum
distribution will not be includible in income in the year of distribution if
the employee transfers, within 60 days of receipt, all amounts received, less
the employee's investment in the Contract), to another tax-qualified plan or
to an individual retirement account or an IRA in accordance with the rollover
rules under the Code. However, any amount that is not distributed as a direct
rollover will be subject to 20% income tax withholding. See "Tax Free
Rollovers." Special tax treatment may be available in the case of certain
lump-sum distributions that are not rolled over to another plan or IRA.
A 10% penalty tax is imposed on the amount includible in gross income
from distributions that occur before the employee's attaining age 59 1/2 and
that are not made on account of death or disability, with certain exceptions.
These exceptions include distributions that are (1) part of a series of
substantially equal periodic payments beginning after the employee separates
from service and made over the life (or life expectancy) of the employee or
the joint lives (or joint life expectancies) of the employee and the
Beneficiary, (2) made after the employee's separation from service on account
of early retirement after attaining age 55, or (3) made to an alternate payee
pursuant to a qualified domestic relations order.
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ANNUITY PAYMENTS. A portion of annuity payments received under Contracts
in connection with section 401 and 403(a) plans after the Annuity Commencement
Date may be excludible from the employee's income, in the manner discussed
above under "Non-Qualified Contracts - Taxation of Annuity Payments."
Distributions of minimum amounts specified by the Code generally must commence
by April 1 of the calendar year following the calendar year in which the
employee attains age 70 1/2. Failure to comply with the minimum distribution
rules will result in the imposition of a penalty tax of 50% of the amount by
which the minimum distribution required exceeds the actual distribution.
SELF-EMPLOYED INDIVIDUALS. Various special rules apply to tax-qualified
plans established by self-employed individuals.
PRIVATE EMPLOYER UNFUNDED DEFERRED COMPENSATION PLANS
PURCHASE PAYMENTS. Private taxable employers may establish unfunded,
Non-Qualified deferred compensation plans for a select group of management or
highly compensated employees and/or for independent contractors.
These types of programs allow individuals to defer receipt of up to 100%
of compensation that would otherwise be includible in income and therefore to
defer the payment of federal income taxes on such amounts, as well as earnings
thereon. Purchase payments made by the employer, however, are not immediately
deductible by the employer, and the employer is currently taxed on any
increase in Account Value.
Deferred compensation plans represent a contractual promise on the part
of the employer to pay current compensation at some future time. The Contract
is owned by the employer and is subject to the claims of the employer's
creditors. The individual has no right or interest in the Contract and is
entitled only to payment from the employer's general assets in accordance with
plan provisions.
TAXATION OF DISTRIBUTIONS. Amounts received by an individual from a
private employer deferred compensation plan are includible in gross income for
the taxable year in which such amounts are paid or otherwise made available.
EXCESS DISTRIBUTIONS - 15% TAX
Certain persons, particularly those who participate in more than one
tax-qualified retirement plan, may be subject to an additional tax of 15% on
certain excess aggregate distributions from those plans. In general, excess
distributions are taxable distributions for all tax qualified plans in excess
of a specified annual limit for payments made in the form of an annuity
(currently $150,000) or five times the annual limit for lump-sum
distributions.
FEDERAL INCOME TAX WITHHOLDING AND REPORTING
Amounts distributed from a Contract, to the extent includible in taxable
income, are subject to federal income tax withholding. The payee may, however,
elect to have no income tax withheld by submitting a withholding exemption
certificate to us.
In some cases, if you own more than one Qualified annuity contract, such
contracts may be aggregated for purposes of determining whether the federal
tax law requirement for minimum distributions after age 70 1/2 has been
satisfied. If, under this aggregation procedure, you are relying on
distributions pursuant to another annuity contract to satisfy the minimum
distribution requirement
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under a Qualified Contract issued by us, you must sign a waiver releasing us
from any liability to you for not calculating and reporting the amount of
taxes and penalties payable for failure to make required minimum distributions
under the Contract.
TAXES PAYABLE BY AG LIFE AND SEPARATE ACCOUNT D
AG Life is taxed as a life insurance company under the Code. The
operations of Separate Account D are part of the total operations of AG Life
and are not taxed separately. Under existing federal income tax laws, AG Life
is not taxed on investment income derived by Separate Account D (including
realized and unrealized capital gains) with respect to the Contracts. AG Life
reserves the right to allocate to the Contracts any federal, state or other
tax liability that may result in the future from maintenance of Separate
Account D or the Contracts.
Certain Series may elect to pass through to AG Life any taxes withheld by
foreign taxing jurisdictions on foreign source income. Such an election will
result in additional taxable income and income tax to AG Life. The amount of
additional income tax, however, may be more than offset by credits for the
foreign taxes withheld which are also passed through. These credits may
provide a benefit to AG Life.
DISTRIBUTION ARRANGEMENTS
The Contracts will be sold by individuals who, in addition to being
licensed by state insurance authorities to sell the Contracts of AG Life, are
also registered representatives of American General Securities Incorporated
("AGSI"), the principal underwriter of the Contracts, or registered
representatives of Van Kampen American Capital Distributors, Inc. or other
broker-dealer firms or representatives of other firms that are exempt from
broker-dealer regulation. AGSI, Van Kampen American Capital Distributors, Inc.
and any such other broker-dealer firms are registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 as
broker-dealers and are members of the National Association of Securities
Dealers, Inc. AGSI is a wholly-owned subsidiary of AG Life. AGSI's principal
business address is the same as that of our Home Office. The interests under
the Contracts are offered on a continuous basis. AGSI and Van Kampen American
Capital Distributors, Inc. have entered into certain revenue and cost-sharing
arrangements in connection with the marketing of the Contracts.
AG Life compensates Van Kampen American Capital Distributors, Inc. ("VKAC
Distributors") and other broker-dealers that sell the Contracts according to
one or more compensation schedules. The schedules provide for commissions
ranging from 4.75% up to 6% of first year purchase payments received pursuant
to the Contracts. In addition, depending on the schedule selected, AG Life may
pay continuing "trail" commissions ranging from 0.25% to 0.50% of Contract
Account Value. AG Life also has agreed to pay VKAC Distributors for its
promotional activities such as the solicitation of selling group agreements
between broker-dealers and AG Life, agent appointments with AG Life, printing
and development of sales literature to be used by AG Life appointed agents as
well as related marketing support and related special promotional campaigns.
These distribution expenses do not result in any additional charges under the
Contracts that are not described under "Charges under the Contracts."
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LEGAL MATTERS
The legality of the Contracts described in this Prospectus has been
passed upon by Steven A. Glover, Esquire, with the law department of AG Life.
Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised AG Life on
certain federal securities law matters.
OTHER INFORMATION ON FILE
A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 with respect to the Contracts
discussed in this Prospectus. Not all of the information set forth in the
Registration Statement and exhibits thereto has been included in this
Prospectus. Statements contained in this Prospectus concerning the Contracts
and other legal instruments are intended to be summaries. For a complete
statement of the terms of these documents, reference should be made to the
instruments filed with the Securities and Exchange Commission.
A Statement is available from us on request. Its contents are as follows:
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
General Information .....................................................
Regulation and Reserves .................................................
Independent Auditors.....................................................
Services.................................................................
Underwriters.............................................................
Annuity Payments.........................................................
A. Gender of Annuitant................................................
B. Misstatement of Age or Sex and Other Errors .......................
Change of Investment Adviser or Investment Policy .......................
Terms of Exemptive Relief in Connection with Mortality
and Expense Risk Charge ...............................................
Performance Data for the Divisions ......................................
Effect of Tax-Deferred Accumulation .....................................
Financial Statements.....................................................
Index to Financial Statements ...........................................
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AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT D
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS
OFFERED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY
ANNUITY ADMINISTRATION DEPARTMENT
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-247-6584 713-831-3102 (IN TEXAS)
STATEMENT OF ADDITIONAL INFORMATION
Dated November 4, 1996
This Statement of Additional Information is not a prospectus. It should
be read with the Prospectus, dated November 4, 1996, for American General Life
Insurance Company Separate Account D ("Separate Account D") concerning
flexible payment deferred individual annuity Contracts investing in certain
Series of the Van Kampen American Capital Life Investment Trust and the Morgan
Stanley Universal Funds, Inc. You can obtain a copy of the Prospectus for the
Contracts, and any supplements thereto, by contacting American General Life
Insurance Company ("AG Life") at the address or telephone numbers given above.
You have the option of receiving benefits on a fixed basis through AG Life's
Fixed Account or on a variable basis through AG Life's Separate Account D.
Terms used in this Statement of Additional Information have the same meanings
as are defined in the Prospectus under the heading "Glossary."
TABLE OF CONTENTS
General Information.......................................................
Regulation and Reserves ..................................................
Independent Auditors......................................................
Services..................................................................
Principal Underwriter.....................................................
Annuity Payments..........................................................
A. Gender of Annuitant..................................................
B. Misstatement of Age or Sex and Other Errors..........................
Change of Investment Adviser or Investment Policy.........................
Terms of Exemptive Relief in Connection With Mortality
and Expense Risk Charge..................................................
Performance Data for the Divisions........................................
Effect of Tax-Deferred Accumulation.......................................
Financial Statements......................................................
Index to Financial Statements.............................................
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GENERAL INFORMATION
AG Life (formerly American General Life Insurance Company of Delaware) is a
successor in interest to a company previously organized as a Delaware
corporation in 1917. Effective December 31, 1991, AG Life redomesticated as a
Texas insurer and changed its name to American General Life Insurance Company.
AG Life is a wholly-owned subsidiary of AGC Life Insurance Company, a Missouri
corporation ("AG Missouri") engaged primarily in the life insurance business
and annuity business. AG Missouri, in turn, is a wholly-owned subsidiary of
American General Corporation, a Texas holding corporation engaged primarily in
the insurance business.
REGULATION AND RESERVES
AG Life is subject to regulation and supervision by the insurance departments
of the states in which it is licensed to do business. This regulation covers a
variety of areas, including benefit reserve requirements, adequacy of
insurance company capital and surplus, various operational standards, and
accounting and financial reporting procedures. AG Life's operations and
accounts are subject to periodic examination by insurance regulatory
authorities.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for insurance contract losses,
if covered, incurred by insolvent companies. The amount of any future
assessments of AG Life under these laws cannot be reasonably estimated. Most
of these laws do provide, however, that an assessment may be excused or
deferred if it would threaten an insurer's own financial strength.
Although the federal government generally has not directly regulated the
business of insurance, federal initiatives often have an impact on the
business in a variety of ways. Federal measures that may adversely affect the
insurance business include employee benefit regulation, tax law changes
affecting the taxation of insurance companies or of insurance products,
changes in the relative desirability of various personal investment vehicles,
and removal of impediments on the entry of banking institutions into the
business of insurance. Also, both the executive and legislative branches of
the federal government have under consideration various insurance regulatory
matters, which could ultimately result in direct federal regulation of some
aspects of the insurance business. It is not possible to predict whether this
will occur or, if so, what the effect on AG Life would be.
Pursuant to state insurance laws and regulations, AG Life is obligated to
carry on its books, as liabilities, reserves to meet its obligations under
outstanding insurance contracts. These reserves are based on assumptions
about, among other things, future claims experience and investment returns.
Neither the reserve requirements nor the other aspects of state insurance
regulation provide absolute protection to holders of insurance contracts,
including the Contracts, if AG Life were to incur claims or expenses at rates
significantly higher than expected, for example, due to acquired immune
deficiency syndrome or other infectious diseases or catastrophes, or
significant unexpected losses on its investments.
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INDEPENDENT AUDITORS
The consolidated financial statements of AG Life and the financial statements
of Separate Account D included in this Statement of Additional Information
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their respective reports thereon appearing elsewhere herein. Such financial
statements have been included in this Statement of Additional Information in
reliance upon such reports of Ernst & Young LLP given upon the authority of
such firm as experts in accounting and auditing. Ernst & Young LLP is located
at One Houston Center, 1221 McKinney, Suite 2400, Houston, TX 77010-2007.
SERVICES
A Service Agreement exists between AG Life and Continuum Computer Systems,
Inc. ("Continuum") to provide certain services in connection with Separate
Account D. Continuum has developed a computerized data processing record
keeping system for annuity accounting and has the necessary data processing
equipment and personnel to provide and support remote terminal access to its
system for the maintenance of annuity records, processing information, and the
generation of output with respect to the records and information. AG Life has
contracted with Continuum for the right to use Continuum's system. For these
services AG Life paid Continuum $28,080 in 1995, $78,840 in 1994, and $62,691
in 1993.
PRINCIPAL UNDERWRITER
American General Securities Incorporated ("AGSI") is the principal underwriter
with respect to the Contracts. AGSI also serves as principal underwriter to
American General Life Insurance Company of New York Separate Account E and AG
Life's Separate Account A, both of which are unit investment trusts registered
under the Investment Company Act of 1940. AGSI, a Texas corporation, is a
wholly owned subsidiary of AG Life and a member of the National Association of
Securities Dealers, Inc.
As principal underwriter, with respect to Separate Account D, AGSI received
from AG Life less than $1,000 of compensation for each of the last three
fiscal years.
The securities offered pursuant to the Contracts are offered on a continuous
basis.
ANNUITY PAYMENTS
A. GENDER OF ANNUITANT
When annuity payments are based on life expectancy, the amount of each annuity
payment ordinarily will be higher if the Annuitant or other measuring life is
a male, as compared with a female under an otherwise identical Contract. This
is because, statistically, females tend to have longer life expectancies than
males.
However, there will be no differences between males and females in any
jurisdiction, including Montana, where such differences are not permitted. We
will also make available Contracts with no such differences in connection with
certain employer-sponsored benefit plans. Employers should be aware that,
under most such plans, Contracts that make distinctions based on gender are
prohibited by law.
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B. MISSTATEMENT OF AGE OR SEX AND OTHER ERRORS
If the age or sex of an Annuitant has been misstated to us, any amount payable
will be that which the purchase payments paid would have purchased at the
correct age and sex. If we made any overpayments because of incorrect
information about age or sex, or any error or miscalculation, we will deduct
the overpayment from the next payment or payments due. We will add any
underpayments to the next payment. The amount of any adjustment will be
credited or charged with interest at the assumed interest rate used in the
Contract's annuity tables.
CHANGE OF INVESTMENT ADVISER OR INVESTMENT POLICY
Unless otherwise required by law or regulation, neither the investment adviser
to any Series nor any investment policy may be changed without the consent of
AG Life. If required, approval of or change of any investment objective will
be filed with the insurance department of each state where a Contract has been
delivered. The Owner (or, after annuity payments start, the payee) will be
notified of any material investment policy change that has been approved. You
will be notified of any investment policy change prior to its implementation
by Separate Account D if your comment or vote is required for such change.
TERMS OF EXEMPTIVE RELIEF IN CONNECTION WITH MORTALITY
AND EXPENSE RISK CHARGE
AG Life and AGSI have obtained exemptive relief from the Securities and
Exchange Commission ("SEC") in connection with deducting the mortality and
expense risk charge pursuant to the Contracts. In the application for the
exemption, AG Life and AGSI have represented and undertaken, among other
things, that:
o The level of the mortality and expense risk charge is within the
range of industry practice for comparable annuity contracts;
o This conclusion is based upon a review that AG Life and AGSI have
conducted of publicly-available information regarding annuity
contracts of other companies which they will maintain at their Home
Office, and make available on request to the Commission or its
staff, a memorandum setting forth the variable annuity products
analyzed and the methodology and results of the comparative review;
o There is a reasonable likelihood that the proposed distribution
financing arrangements with respect to the Contracts will benefit
Separate Account D and investors in the Contracts, and the basis for
this conclusion is set forth in a memorandum which will be
maintained by AG Life at its Home Office and will be available to
the Commission or its staff on request.
PERFORMANCE DATA FOR THE DIVISIONS
AVERAGE ANNUAL TOTAL RETURN CALCULATIONS
Each Division may advertise its average annual total return. Each
Division's average annual total return quotation is computed in accordance
with a standard method prescribed by the SEC. The average annual total return
for a Division for a specific period is found by first taking a hypothetical
$1,000 investment in the Division's Accumulation Units on the first day of the
period at the maximum offering price, which is the Accumulation Unit value per
unit ("initial investment"), and computing
4
<PAGE>
the ending redeemable value ("redeemable value") of that investment at the end
of the period. The redeemable value reflects the effect of the applicable
Surrender Charge that may be imposed at the end of the period as well as all
other recurring charges and fees applicable under the Contract to all Owner
accounts. Such other charges and fees include the Mortality and Expense Risk
Charge, and the Administrative Expense Charge. Any premium taxes are not
reflected. The redeemable value is then divided by the initial investment and
this quotient is taken to the Nth root (N represents the number of years in
the period) and 1 is subtracted from the result, which is then expressed as a
percentage.
TOTAL RETURN CALCULATIONS (WITHOUT SURRENDER CHARGE OR CONTRACT FEE)
Each Division may also advertise its non-standardized total return, which
is calculated in the same manner and for the same time periods as the
standardized average annual total returns described immediately above, except
that the redeemable value does not reflect the deduction of any applicable
Surrender Charge that may be imposed at the end of the period, since it is
assumed that the Contract will continue through the end of each period, or the
deduction of the Annual Contract Fee. If reflected, these charges would reduce
the performance results presented.
CUMULATIVE TOTAL RETURN CALCULATIONS
No standardized formula has been prescribed by the SEC for calculating
cumulative total return performance. Cumulative total return performance is
the compound rate of return on a hypothetical initial investment of $1,000 in
each Division's Accumulation Units on the first day of the period at the
maximum offering price, which is the Accumulation Unit value per unit
("initial investment"). Cumulative total return figures (and the related
"Growth of a $1,000 Investment" figures set forth below) do not include the
effect of any premium taxes or any applicable Surrender Charge or the Annual
Contract Fee. Cumulative total return quotations reflect changes in
Accumulation Unit value and are calculated by finding the cumulative rates of
return of the hypothetical initial investment over various periods, according
to the following formula, and then expressing that as a percentage:
C = (ERV/P) - 1
Where:
C = cumulative total return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value is the value at the end of the
applicable period of a hypothetical $1,000 investment made
at the beginning of the applicable period.
HYPOTHETICAL PERFORMANCE
The tables below provide hypothetical performance information for eight
of the available Divisions of Separate Account D based on the actual
historical performance of the corresponding Series in which each of these
Divisions invests. This information reflects all actual charges and deductions
of these Series and all Separate Account charges and deductions, with respect
to the Contracts, that hypothetically would have been made had the Separate
Account, with respect to the Contracts, been invested in these Series for all
the periods indicated. No comparable hypothetical information is shown for the
remaining Divisions of Separate Account D, because the corresponding Series in
which they invest had not commenced operating as of the date of this Statement
of Additional Information.
5
<PAGE>
Hypothetical Historical Average Annual Total Returns
(Through December 31, 1995)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
<S> <C> <C> <C>
Emerging Growth
Enterprise
Global Equity
Real Estate Securities
Asset Allocation
Domestic Income
Government
Money Market
</TABLE>
Hypothetical Historical Total Returns
(Through December 31, 1995)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
<S> <C> <C> <C>
Emerging Growth
Enterprise
Global Equity
Real Estate Securities
Asset Allocation
Domestic Income
Government
Money Market
</TABLE>
Hypothetical Historical Cumulative Total Returns
(Through December 31, 1995)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
<S> <C> <C> <C>
Emerging Growth
Enterprise
Global Equity
Real Estate Securities
Asset Allocation
Domestic Income
Government
Money Market
</TABLE>
6
<PAGE>
Hypothetical Historical Growth of a $1,000 Investment in the Divisions
(Through December 31, 1995)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
<S> <C> <C> <C>
Emerging Growth
Enterprise
Global Equity
Real Estate Securities
Asset Allocation
Domestic Income
Government
Money Market
The Money Market Division's hypothetical historical yield for the
seven-day period ended December 31, 1995 was _____%. The Money Market
Division's hypothetical historical effective yield for the seven day period
ended December 31, 1995 was _____%.
<FN>
* The inception dates for each Series funding the Divisions are: April 4, 1986
for the Money Market, Enterprise, and Government Divisions; June 30, 1987 for
the Asset Allocation Division; November 4, 1987 for the Domestic Income
Division; July 3, 1995 for the Emerging Growth, Global Equity, and Real Estate
Securities Divisions.
</FN>
</TABLE>
YIELD CALCULATIONS
The yields for the Domestic Income Division and the Government Division are
each computed in accordance with a standard method prescribed by the SEC. The
yield quotation is computed by dividing the net investment income per
Accumulation Unit earned during the specified one month or 30-day period by
the Accumulation Unit values on the last day of the period, according to the
following formula that assumes a semi-annual reinvestment of income:
a - b (6)
YIELD = 2[(------- +1) - 1]
cd
a= net dividends and interest earned during the period by the Portfolio
attributable to the Division
b= expenses accrued for the period (net of reimbursements)
c= the average daily number of Accumulation Units outstanding during the
period
d= the Accumulation Unit value per unit on the last day of the period
The yield of each Division reflects the deduction of all recurring fees and
charges applicable to each Division, such as the Mortality and Expense Risk
Charge, and the Administrative Expense Charge but does not reflect the
deduction of Surrender Charges or premium taxes.
7
<PAGE>
MONEY MARKET DIVISION YIELD AND EFFECTIVE YIELD CALCULATIONS
The Money Market Division's yield is computed in accordance with a
standard method prescribed by the SEC. Under that method, the current yield
quotation is based on a seven-day period and computed as follows: the net
change in the Accumulation Unit value during the period is divided by the
Accumulation Unit value at the beginning of the period to obtain the base
period return; the base period return is then multiplied by the fraction 365/7
to obtain the current yield figure, which is carried to the nearest
one-hundredth of one percent. Realized capital gains or losses and unrealized
appreciation or depreciation of the Division's Portfolio are not included in
the calculation.
The Money Market Division's effective yield is determined by taking the
base period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is:
365/7
(base period return +1) -1
Yield and effective yield do not reflect the deduction of Surrender Charges or
premium taxes that may be imposed upon the redemption of Accumulation Units.
PERFORMANCE COMPARISONS
The performance of each or all of the available Divisions of Separate
Account D may be compared in advertisements and sales literature to the
performance of other variable annuity issuers in general or to the performance
of particular types of variable annuities investing in mutual funds, or series
of mutual funds, with investment objectives similar to each of the Divisions
of Separate Account D. Lipper Analytical Services, Inc. ("Lipper") and the
Variable Annuity Research and Data Service ("VARDS(R)") are independent
services which monitor and rank the performance of variable annuity issuers in
each of the major categories of investment objectives on an industry-wide
basis. Lipper's rankings include variable life issuers as well as variable
annuity issuers. VARDS(R) rankings compare only variable annuity issuers. The
performance analyses prepared by Lipper and VARDS(R) rank such issuers on the
basis of total return, assuming reinvestment of dividends and distributions,
but do not take sales charges, redemption fees or certain expense deductions
at the separate account level into consideration. In addition, VARDS(R) prepares
risk adjusted rankings, which consider the effects of market risk on total
return performance.
In addition, each Division's performance may be compared in
advertisements and sales literature to the following benchmarks: (1) the
Standard & Poor's 500 Composite Stock Price Index, an unmanaged weighted index
of 500 leading domestic companies that represents approximately 80% of the
market capitalization of the United States equity market; (2) the Dow Jones
Industrial Average, an unmanaged unweighted average of thirty blue chip
industrial corporations listed on the New York Stock Exchange and generally
considered representative of the United States stock market; (3) the Consumer
Price Index, published by the U.S. Bureau of Labor Statistics, a statistical
measure of change, over time, in the prices of goods and services in major
expenditure groups and generally is considered to be a measure of inflation;
(4) the Lehman Brothers Government and Domestic Strategic Income Index, the
Salomon Brothers High Grade Domestic Strategic Income Index, and the Merrill
Lynch Government/Corporate Master Index, unmanaged indices that are generally
considered to represent the performance of intermediate and long term bonds
during various market cycles; and (5) the Morgan Stanley Capital International
Europe Australia Far East Index, an unmanaged index that is considered to be
generally representative of major non-United States stock markets.
8
<PAGE>
EFFECT OF TAX-DEFERRED ACCUMULATION
The Contracts qualify for tax-deferred treatment on earnings. This
tax-deferred treatment increases the amount available for accumulation by
deferring taxes on any earnings until the earnings are withdrawn. The longer
the taxes are deferred, the more the accumulation potential effectively grows
over the term of the Contracts.
The hypothetical tables set out below illustrate this potential. The
tables compare accumulations based on a single initial purchase payment of
[$100,000] compounded annually under (1) a Contract, under which earnings are
not taxed until withdrawn in connection with a full surrender, partial
withdrawal, or annuitization, or termination due to insufficient Account Value
("withdrawal of earnings") and (2) an investment under which earnings are
taxed on a current basis ("Taxable Investment"), based on an assumed tax rate
of 28%, and the assumed earning rates specified.
<TABLE>
<CAPTION>
[5 Years] [10 Years] [20 Years]
[(7.50% earnings rate)]
<S> <C> <C> <C>
Contract $_______ $_______ $_______
Contract (after Taxes) $_______ $_______ $_______
Taxable Investment $_______ $_______ $_______
</TABLE>
<TABLE>
<CAPTION>
[(10.00% earnings rate)]
<S> <C> <C> <C>
Contract $_______ $_______ $_______
Contract (after Taxes) $_______ $_______ $_______
Taxable Investment $_______ $_______ $_______
</TABLE>
The hypothetical tables do not reflect any fees or charges imposed under
a Contract or Taxable Investment. However, the Contracts impose a Mortality
and Expense Risk Charge of 1.25%, a Surrender Charge (applicable to withdrawal
of earnings for the first seven Contract years) up to a maximum of 6%, an
Administrative Expense Charge of .15%, and an Annual Contract Fee of $30. A
Taxable Investment could incur comparable fees or charges. Fees and charges
would reduce the return from a Contract or Taxable Investment.
Under the Contracts, a withdrawal of earnings is subject to tax, and may
be subject to an additional 10% penalty before age 59-1/2.
These tables are only illustrations of the effect of tax-deferred
accumulations and are not a guarantee of future performance.
FINANCIAL STATEMENTS
The financial statements for Separate Account D that are included herein
relate to 5 of its Divisions. Separate Account D has 28 other Divisions for
which no financial statements are included, because 21 of those Divisions are
available only pursuant to contracts other than the Contracts that are the
subject of this Statement of Additional Information, and 7 of those Divisions,
which are available pursuant to the Contracts that are the subject of this
Statement of Additional Information, had not commenced operations as of the
date of this Statement of Additional Information.
The financial statements of AG Life that are included in this Statement of
Additional Information should be considered primarily as bearing on the
ability of AG Life to meet its obligations under the Contracts.
[Financial Statements to be Filed by Amendment.]
9
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
PART A: None
PART B:
(1) Financial Statements of American General Life Insurance
Company Separate Account D (to be filed by amendment):
Report of Ernst & Young LLP, Independent Auditors
Statement of Net Assets as of December 31, 1995
Statement of Operations for the year ended December 31, 1995
Statements of Changes in Net Assets for the years ended December
31, 1995 and 1994
Notes to Financial Statements
(2) Consolidated Financial Statements of American General Life
Insurance Company (to be filed by amendment):
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Income for the years ended December
31, 1995, 1994 and 1993
Consolidated Statements of Shareholder's Equity for the years
ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
PART C: None
(b) Exhibits
1(a) American General Life Insurance Company of Delaware Board of
Directors resolution authorizing the establishment of Separate
Account D. (1)
(b) Resolution of the Board of Directors of American General Life
Insurance Company of Delaware authorizing, among other things, the
redomestication of that company in Texas and the renaming of that
company as American General Life Insurance Company. (2)
C-1
<PAGE>
(c) Resolution of the Board of Directors of American General Life
Insurance Company of Delaware providing, inter alia, for Registered
Separate Accounts' Standards of Conduct. (3)
2 None
3(a)(i) Distribution Agreement dated October 3, 1991, between American
General Securities Incorporated and American General Life Insurance
Company. (2)
(ii) Form of Master Marketing and Distribution Agreement, by and among
American General Life Insurance Company, American General Securities
Incorporated, and Van Kampen American Capital Distributors, Inc.
(b)(i) Form of Selling Group and General Agent Agreement utilizing American
Capital Marketing, Inc. as distributor.(4)
(ii) Form of Selling Group and General Agent Agreement utilizing American
General Securities Incorporated as distributor. (4)
(iii) Concession Schedule A, attached to and forming a part of each form of
Selling Group Agreement. (4)
(iv) Form of Selling Group Agreement by and among American General Life
Insurance Company, American General Securities Incorporated, and Van
Kampen American Capital Distributors, Inc.
(c)(i)(A)Fund Participation Agreement, dated March 27, 1992, between American
General Life Insurance Company and American Capital Life Investment
Trust. (4)
(B) Form of Participation Agreement, by and among American General Life
Insurance Company, American General Securities Incorporated, Van
Kampen American Capital Life Investment Trust, Van Kampen American
Capital Asset Management, Inc., and Van Kampen American Capital
Distributors, Inc.
(ii) Sales Agreement, dated July 7, 1994, among Neuberger & Berman
Advisers Management Trust, Neuberger & Berman Management
Incorporated, and American General Life Insurance Company. (6)
(iii) Participation Agreement, dated February 2, 1994, among Variable
Insurance Products Fund, Fidelity Distributors Corporation, and
American General Life Insurance Company. (5)
(iv) Participation Agreement, dated February 2, 1994, among Variable
Insurance Products Fund II, Fidelity Distributors Corporation, and
American General Life Insurance Company. (5)
(v) Participation Agreement by and among American General Life Insurance
Company, American General Securities Incorporated, Morgan Stanley
Universal Funds, Inc., and Van Kampen American Capital
Distributors (to be filed by amendment).
(d) Form of Agreement between American General Life Insurance Company and
Dealer regarding exchange and allocation transaction requests. (4)
4(a) Specimen form of Combination Fixed and Variable Annuity Contract
(Form No. 93010). (2)
C-2
<PAGE>
(b) Form of Waiver of Surrender Charge Rider. (2)
(c) Form of Qualified Contract Endorsement. (2)
(d)(i) Revised pages to Specimen form of Combination Fixed and Variable
Annuity Contract. (3)
(ii) Revised Schedule Page to Specimen form of Combination Fixed and
Variable Annuity Contract. (4)
(e)(i)(A)Specimen form of Individual Retirement Annuity Disclosure Statement
available under Contract Form Nos. 93020 and 93021. (9)
(B) Specimen form of Individual Retirement Annuity Disclosure Statement
available under Contract Form Nos. 95020 and 95021. (8)
(ii) Specimen form of Individual Retirement Annuity Endorsement. (6)
(iii) Specimen form of IRA Instruction Form. (4)
(f)(i) Specimen form of Combination Fixed and Variable Annuity Contract
(Form No. 93020). (7)
(ii) Specimen form of Combination Fixed and Variable Annuity Contract
(Form No. 93021). (7)
(iii) Specimen form of pages for Contract Forms 93020 and 93021, filed in
the following states: California, Minnesota, North Carolina, North
Dakota, Oklahoma. (7)
(g)(i) Specimen form of Combination Fixed and Variable Annuity Contract
(Form No. 95020 Rev 896).
(ii) Specimen form of Combination Fixed and Variable Annuity contract
(Form No. 95021 Rev 896).
(iii) Specimen form of pages for Contract Forms 95020 Rev 896 and 95021 Rev
896, filed in the following states: California, Idaho, Kansas,
Massachusetts, Minnesota, North Carolina, North Dakota, Oklahoma,
Pennsylvania, South Carolina, Texas, Utah, and West Virginia.
(iv) Specimen form of Waiver of Surrender Charges Rider for Contract Form
Nos. 95020 Rev 896 and 95021 Rev 896.
5(a)(i) Specimen form of Application for Contract Form Nos. 93020 and 93021.
(4)
(ii) Specimen form of Application for Contract Form Nos. 95020 Rev 896 and
95021 Rev 896 (to be filed by amendment).
(b)(i) Specimen form of Separate Account D Election of Annuity Payment
Option/Change Form. (4)
(ii) Specimen form of Absolute Assignment to Effect Section 1035(a)
Exchange and Rollover of a Life Insurance Policy or Annuity Contract.
(4)
(c)(i) Specimen form of VAriety Plus Service Request, including telephone
transfer authorization. (4)
(ii) Form of Authorization Limited to Execution of Transaction Requests
for VAriety Plus Variable Annuity. (4)
C-3
<PAGE>
(iii) Form of Transaction Request Form. (4)
6(a) Amended and Restated Articles of Incorporation of American General
Life Insurance Company, effective December 31, 1991. (2)
(b) Bylaws of American General Life Insurance Company, adopted January
22, 1992. (4)
7 None
8 None
9 Opinion and consent of Counsel. (4)
10 Consent of Independent Auditors (to be filed by amendment).
11 None
12 None
13(a)(i) Computations of standardized average annual total returns for each
Division available under Contract Form Nos. 93020 and 93021 for the
one and five year periods ended December 31, 1994, and since
inception. (6)
(ii) Computations of non-standardized total returns for each Division
available under Contract Form Nos. 93020 and 93021 for the one and
five year periods ended December 31, 1994, and since inception. (6)
(iii) Computations of non-standardized cumulative total returns for each
Division available under Contract Form Nos. 93020 and 93021 for the
one and five year periods ended December 31, 1994, and since
inception. (6)
(iv) Computations of 30 day yield for the Domestic Income Division, the
Government Division, and the Multiple Strategy Division available
under Contract Form Nos. 93020 and 93021 for the one month period
ended December 31, 1993. (5)
(v) Computations of seven day yield and effective yield for the Money
Market Division available under Contract Form Nos. 93020 and 93021
for the seven day period ended December 31, 1993. (5)
(b)(i) Computations of hypothetical historical standardized average annual
total returns for the Emerging Growth, Enterprise, Global Equity,
Real Estate Securities, Asset Allocation, Domestic Income,
Government, and Money Market Divisions, available under Contract Form
Nos. 95020 Rev 896 and 95021 Rev 896 for the one and five year
periods ended December 31, 1995, and since inception (to be filed by
amendment).
(ii) Computations of hypothetical historical non-standardized total
returns for the Emerging Growth, Enterprise, Global Equity, Real
Estate Securities, Asset Allocation, Domestic Income, Government, and
Money Market Divisions, available under Contract Form Nos. 95020 Rev
896 and 95021 Rev 896 for the one and five year periods ended
December 31, 1995, and since inception (to be filed by amendment).
C-4
<PAGE>
(iii) Computations of hypothetical historical non-standardized cumulative
total returns for the Emerging Growth, Enterprise, Global Equity,
Real Estate Securities, Asset Allocation, Domestic Income,
Government, and Money Market Divisions, available under Contract Form
Nos. 95020 Rev 896 and 95021 Rev 896 for the one and five year
periods ended December 31, 1995, and since inception (to be filed by
amendment).
(iv) Computations of hypothetical historical 30 day yield for the Domestic
Income Division, the Government Division, and the Asset Allocation
Division, available under Contract Form Nos. 95020 and 95021 for the
one month period ended December 31, 1995 (to be filed by amendment).
(v) Computations of hypothetical historical seven day yield and effective
yield for the Money Market Division, available under Contract Form
Nos. 95020 and 95021 for the seven day period ended December 31, 1995
(to be filed by amendment).
14 A Financial Data Schedule meeting the requirements of Rule 483(e) of
the Securities Act of 1933 is filed as Exhibit 27 hereof.
15(a) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by the following persons in their
capacities as directors and, where applicable, officers of American
General Life Insurance Company: Messrs. Devlin, Rashid, Reddick and
Luther. (2)
(b) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by Robert S. Cauthen, Jr. in his capacity
as a director and officer of American General Life Insurance
Company. (4)
(c) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by James R. Tuerff in his capacity as a
director or officer of American General Life Insurance Company. (6)
(d) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by Peter V. Tuters in his capacity as a
director or officer of American General Life Insurance Company. (5)
(e) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by the following persons in their
capacities as directors and, where applicable, officers of American
General Life Insurance Company: Messrs. Kelley, Pulliam, and Young.
(6)
(f) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by George W. Bentham in his capacity as a
director or officer of American General Life Insurance Company. (7)
(g) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by the following persons in their
capacities as directors and, where applicable, officers of American
General Life Insurance Company : Messrs. Atnip and Newton. (9)
(h) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by Rodney O. Martin Jr. and Robert F.
Herbert, Jr.
16 Amended Statement of Exemptive Relief Relied Upon.
27 Financial Data Schedule (to be filed by amendment).
C-5
<PAGE>
(1) Incorporated herein by reference to the initial filing of
Registrant's Form N-4 Registration Statement (File No. 2-49805) on
December 6, 1973.
(2) Previously filed in the initial filing of this Registration Statement
(File No. 33-43390) on October 16, 1991.
(3) Previously filed in Pre-Effective Amendment No. 1 to this
Registration Statement (File No. 33-43390), filed on December 31,
1991.
(4) Previously filed in Post-Effective Amendment No. 1 to this
Registration Statement (File No. 33-43390), filed on April 30, 1992.
(5) Previously filed in Post-Effective Amendment No. 3 to this
Registration Statement (File No. 33-43390), filed on March 2, 1994.
(6) Previously filed in Post-Effective Amendment No. 4 to this
Registration Statement (File No. 33-43390), filed on April 28, 1995.
(7) Previously filed in Post-Effective Amendment No. 5 to this
Registration Statement (File No. 33-43390), filed on December 27,
1995.
(8) Included in Part A of Post-Effective Amendment No. 6 to this
Registration Statement (File No. 33-43390), filed on March 14, 1996.
(9) Included in Part A of Post-Effective Amendment No. 7 to this
Registration Statement (File No. 33-43390), filed on April 30, 1996.
C-6
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The directors, executive officers, and, to the extent responsible for
variable annuity operations, other officers of the depositor are listed
below.
<TABLE>
<CAPTION>
Positions and Offices
Name and Principal with the
Business Address Depositor
------------------ ---------------------
<S> <C>
Harold S. Hook Senior Chairman
2929 Allen Parkway
Houston, TX 77019
Robert M. Devlin Chairman
2929 Allen Parkway
Houston, TX 77019
Rodney O. Martin, Jr. Director, President, &
2727-A Allen Parkway Chief Executive Officer
Houston, TX 77019
Michael G. Atnip Director
2929 Allen Parkway
Houston, TX 77019
George W. Bentham Director, Senior Vice President &
2727-A Allen Parkway Chief Marketing Officer
Houston, TX 77019
Bill B. Luther Director, Senior Vice President &
2727-A Allen Parkway Chief Systems Officer
Houston, TX 77019
Jon P. Newton Director
2929 Allen Parkway
Houston, TX 77019
Robert F. Herbert, Jr. Director, Senior Vice President,
2727-A Allen Parkway Chief Financial Officer, Treasurer
Houston, TX 77019 & Controller
Peter V. Tuters Director, Vice President, &
2929 Allen Parkway Chief Investment Officer
Houston, TX 77019
Austin P. Young Director
2929 Allen Parkway
Houston, TX 77019
C-7
<PAGE>
Thomas B. Phillips Vice President, General
2727-A Allen Parkway Counsel & Secretary
Houston, TX 77019
Wayne A. Barnard Vice President & Chief Actuary
2727-A Allen Parkway
Houston, Texas 77019
Timothy W. Still Vice President
2727-A Allen Parkway
Houston, Texas 77019
Steven A. Glover Associate General Counsel &
2727-A Allen Parkway Assistant Secretary
Houston, TX 77019
Joyce R. Bilski Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Farideh Farrokhi Assistant Controller
2727-A Allen Parkway
Houston, TX 77019
Kenneth D. Nunley Associate Tax Officer
2727-A Allen Parkway
Houston, TX 77019
</TABLE>
C-8
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
SUBSIDIARIES OF AMERICAN GENERAL CORPORATION1
The following is a list of American General Corporation's subsidiaries as of
June 30, 1996. All subsidiaries listed are corporations, unless otherwise
indicated. Subsidiaries of subsidiaries are indicated by indentations and
unless otherwise indicated, all subsidiaries are wholly owned. Inactive
subsidiaries are denoted by an asterisk (*).
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
---------------------------------------------------------------- ----------------
<S> <C>
AGC Life Insurance Company (2)................................... Missouri
The Franklin Life Insurance Company............................. Illinois
The American Franklin Life Insurance Company.................. Illinois
Franklin Financial Services Corporation....................... Delaware
American General Life and Accident Insurance Company............ Tennessee
American General Exchange, Inc................................ Tennessee
American General Life Insurance Company......................... Texas
American General Annuity Service Corporation.................. Texas
American General Life Insurance Company of New York........... New York
The Winchester Agency Ltd................................... New York
American General Securities Incorporated (3).................. Texas
American General Insurance Agency, Inc...................... Missouri
American General Insurance Agency of Hawaii, Inc............ Hawaii
American General Insurance Agency of
Massachusetts, Inc.......................................... Mass.
The Variable Annuity Life Insurance Company................... Texas
The Variable Annuity Marketing Company...................... Texas
Independent Investment Advisory Services, Inc................... Florida
The Independent Life and Accident Insurance Company............. Florida
Independent Fire Insurance Company............................ Florida
Herald Underwriters, Inc.................................... Florida
Independent Fire Insurance Company of Florida............... Florida
Independent Service Company................................. Florida
Old Faithful General Agency, Inc............................ Texas
Thomas Jefferson Insurance Company............................ Florida
Independent Property & Casualty Insurance Company............... Florida
Independent Real Estate Management Corporation.................. Florida
Allen Property Company........................................... Delaware
Florida Westchase Corporation.................................. Delaware
Greatwood Development, Inc..................................... Delaware
Greatwood Golf Club, Inc....................................... Texas
Highland Creek Golf Club, Inc.................................. No. Carolina
Hunter's Creek Communications Corporation...................... Florida
Pebble Creek Corporation....................................... Delaware
Pebble Creek Development Corporation........................... Florida
Westchase Development Corporation.............................. Delaware
Westchase Golf Corporation..................................... Florida
American General Capital Services, Inc........................... Delaware
American General Delaware Management Corporation (1)............. Delaware
American General Finance, Inc.................................... Indiana
AGF Investment Corp............................................ Indiana
American General Auto Finance, Inc............................. Delaware
American General Finance Corporation (4)....................... Indiana
C-9
<PAGE>
American General Finance Group, Inc.......................... Delaware
American General Financial Services, Inc. (5).............. Delaware
The National Life and Accident
Insurance Company ....................................... Texas
Merit Life Insurance Co...................................... Indiana
Yosemite Insurance Company................................... California
American General Finance, Inc.................................. Alabama
American General Financial Center.............................. Utah
American General Financial Center, Inc.*....................... Indiana
American General Financial Center, Incorporated*............... Indiana
American General Financial Center Thrift Company*.............. California
Thrift, Incorporated*.......................................... Indiana
American General Investment Corporation.......................... Delaware
American General Mortgage Company.............................. Delaware
American General Realty Investment Corporation................. Texas
American Athletic Club, Inc.................................. Texas
Hope Valley Farms Recreation Association, Inc................ No. Carolina
Ontario Vineyard Corporation................................. Delaware
Pebble Creek Country Club Corporation........................ Florida
Pebble Creek Service Corporation............................. Florida
SR/HP/CM Corporation......................................... Texas
American General Mortgage and Land Development, Inc.............. Delaware
American General Land Development, Inc......................... Delaware
American General Realty Advisors, Inc.......................... Delaware
American General Property Insurance Company...................... Tennessee
Bayou Property Company........................................... Delaware
AGLL Corporation (6)........................................... Delaware
American General Land Holding Company.......................... Delaware
AG Land Associates, LLC (6).................................. California
Hunter's Creek Realty, Inc.*................................. Florida
Summit Realty Company, Inc................................... So. Carolina
Financial Life Assurance Company of Canada....................... Canada
Florida GL Corporation........................................... Delaware
GPC Property Company............................................. Delaware
Cinco Ranch Development Corporation............................ Texas
Cinco Ranch East Development, Inc.............................. Delaware
Cinco Ranch West Development, Inc.............................. Delaware
The Colonies Development, Inc.................................. Delaware
Fieldstone Farms Development, Inc.............................. Delaware
Hickory Downs Development, Inc................................. Delaware
Lake Houston Development, Inc.................................. Delaware
South Padre Development, Inc................................... Delaware
Green Hills Corporation.......................................... Delaware
INFL Corporation................................................. Delaware
Knickerbocker Corporation........................................ Texas
Lincoln American Corporation..................................... Delaware
Pavilions Corporation............................................ Delaware
American General Finance Foundation, Inc. is not included on this list. It is
a non-profit corporation.
C-10
<PAGE>
<FN>
(1) The following limited liability companies were formed in the State of
Delaware on March 28, 1995. The limited liability interests of each are
jointly owned by AGC and AGDMC and the business and affairs of each are
managed by AGDMC:
American General Capital, L.L.C.
American General Delaware, L.L.C.
(2) The following companies became approximately 40% owned by AGCL on
December 23, 1994:
Western National Corporation ("WNC") (DE)
WNL Holding Corporation
Western National Life Insurance Company (TX)
WesternSave (401K Plan)
Independent Advantage Financial & Insurance Services, Inc.
WNL Investment Advisory Services, Inc.
Conseco Annuity Guarantee Corp.
WNL Brokerage Services, Inc.
WNL Insurance Services, Inc.
Accordingly, these companies became AGCL affiliates under insurance
holding company laws. However the WNC stock is held for investment
purposes by AGCL and there are no plans for AGCL to direct the operations
of any of these companies.
(3) The following companies are indirectly controlled by, or related to,
AGSI:
American General Insurance Agency of Ohio, Inc.
American General Insurance Agency of Texas, Inc.
American General Insurance Agency of Oklahoma, Inc.
Insurance Masters Agency, Inc.
(4) American General Finance Corporation is the parent of an additional 41
wholly owned subsidiaries incorporated in 26 states for the purpose of
conducting its consumer finance operations.
(5) American General Financial Services, Inc. is the parent of an additional
7 wholly owned subsidiaries incorporated in 4 states and Puerto Rico for
the purpose of conducting its consumer finance operations.
(6) AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a
98.75% managing interest and AGLL owns a 1.25% managing interest.
</FN>
</TABLE>
All of the subsidiaries of AG Life are included in its consolidated financial
statements, which are filed in Part B of this Registration Statement.
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of July 31, 1996, there were 360 owners of Contracts of the class presently
offered by this registration statement.
C-11
<PAGE>
ITEM 28. INDEMNIFICATION
Article VII, section 1, of the Company's By-Laws provides, in part, that the
Company shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the Company) by reason of the fact that such person is or was
serving at the request of the Company, against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with such proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in the best interest of the Company and, in
the case of a criminal proceeding, had no reasonable cause to believe the
conduct of such person was unlawful.
Article VII, section 1 (in part), section 2, and section 3, provide that the
Company shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
by or in the right of the Company to procure a judgment in its favor by reason
of the fact that such person is or was acting in behalf of the Company,
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such action if such person acted in good
faith, in a manner such person believed to be in the best interests of the
Company, and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances. No
indemnification shall be made under section 1: (a) in respect of any claim,
issue, or matter as to which such person shall have been adjudged to be liable
to the Company, unless and only to the extent that the court in which such
action was brought shall determine upon application that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for the expenses which such court shall determine; (b) of amounts
paid in settling or otherwise disposing of a threatened or pending action with
or without court approval; or (c) of expense incurred in defending a
threatened or pending action which is settled or otherwise disposed of without
court approval.
Article VII, section 3, provides that, with certain exceptions, any
indemnification under Article VII shall be made by the Company only if
authorized in the specific case, upon a determination that indemnification of
the person is proper in the circumstances because the person has met the
applicable standard of conduct set forth in section 1 of Article VII by (a) a
majority vote of a quorum consisting of directors who are not parties to such
proceeding; (b) approval of the shareholders, with the shares owned by the
person to be indemnified not being entitled to vote thereon; or (c) the court
in which such proceeding is or was pending upon application made by the
Company or the indemnified person or the attorney or other persons rendering
services in connection with the defense, whether or not such application by
the attorney or indemnified person is opposed by the Company.
Article VII, section 7, provides that for purposes of Article VII, those
persons subject to indemnification include any person who is or was a
director, officer, or employee of the Company, or is or was serving at the
request of the Company as a director, officer, or employee of another foreign
or domestic corporation which was a predecessor corporation of the Company or
of another enterprise at the request of such predecessor corporation.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the
C-12
<PAGE>
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.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, American General Securities
Incorporated, also acts as principal underwriter for American General
Life Insurance Company of New York Separate Account E and American
General Life Insurance Company Separate Account A.
(b) The directors and principal officers of the principal underwriter
are:
<TABLE>
<CAPTION>
Position and Offices
with Underwriter,
Name and Principal American General
Business Address Securities Incorporated
------------------ -----------------------
<S> <C>
Rodney O. Martin, Jr. Chairman
American General Life
2727-A Allen Parkway
Houston, TX 77019
F. Paul Kovach, Jr. Director & President
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
George W. Bentham Director, Senior Vice President &
American General Life Chief Marketing Officer
2727-A Allen Parkway
Houston, TX 77019
Robert F. Herbert, Jr. Director, Vice President &
American General Life Treasurer
2727-A Allen Parkway
Houston, TX 77019
Bill B. Luther Director & Vice President
American General Life
2727-A Allen Parkway
Houston, TX 77019
C-13
<PAGE>
Thomas B. Phillips Director & Secretary
American General Life
2727-A Allen Parkway
Houston, TX 77019
Fred G. Fram Vice President
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
Steven A. Glover Assistant Secretary
American General Life
2727-A Allen Parkway
Houston, TX 77019
Carole D. Hlozek Administrative Officer
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
J. Andrew Kalbaugh Administrative Officer
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
Kenneth D. Nunley Associate Tax Officer
American General Life
2727-A Allen Parkway
Houston, TX 77019
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF RECORDS
All records referenced under Section 31(a) of the 1940 Act, and Rules 31a-1
through 31a-3 thereunder, are maintained and in the custody of American
General Life Insurance Company at its principal executive office located at
2727-A Allen Parkway, Houston, TX 77019.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
C-14
<PAGE>
ITEM 32. UNDERTAKINGS
The Registrant undertakes: A) to file a post-effective amendment to this
registration as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16
months old for so long as payments under the Contracts may be accepted; B) to
include either (1) as part of any application to purchase a Contract offered
by these prospectuses, a space that an applicant can check to request a
Statement of Additional Information, or (2) a toll-free number or a post card
or similar written communication affixed to or included in the applicable
prospectus that the applicant can remove to send for a Statement of Additional
Information; C) to deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly
upon written or oral request.
C-15
<PAGE>
SIGNATURES As required by the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, American General Life Insurance Company
Separate Account D, certifies that it meets the requirements of Securities Act
Rule 485(a), for effectiveness of this Amendment to the Registration Statement
and has duly caused this Amendment to the Registration Statement to be signed
on its behalf, in the City of Houston, and State of Texas on this 15th day of
August, 1996.
AMERICAN GENERAL LIFE INSURANCE AMERICAN GENERAL LIFE INSURANCE
COMPANY SEPARATE ACCOUNT D COMPANY
(Registrant) (Depositor)
By: /s/ROBERT F. HERBERT, JR. By: /s/ROBERT F. HERBERT, JR.
------------------------- -------------------------
ROBERT F. HERBERT, JR. ROBERT F. HERBERT, JR.
Senior Vice President of Senior Vice President
American General Life
Insurance Company
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
RODNEY O. MARTIN, JR.* Principal Executive August 15, 1996
------------------------- Officer
(Rodney O. Martin, Jr.)
ROBERT F. HERBERT, JR.* Principal Financial and August 15, 1996
------------------------- Accounting Officer
(Robert F. Herbert, Jr.)
</TABLE>
<TABLE>
Directors
<S> <C>
ROBERT F. HERBERT, JR.*
------------------------- -------------------------
(Harold S. Hook) (Robert F. Herbert, Jr.)
RODNEY O. MARTIN, Jr.* BILL B. LUTHER*
------------------------- -------------------------
(Rodney O. Martin, Jr.) (Bill B. Luther)
MICHAEL G. ATNIP* JON P. NEWTON*
------------------------- -------------------------
(Michael G. Atnip) (Jon P. Newton)
ROBERT M. DEVLIN* PETER V. TUTERS*
------------------------- -------------------------
(Robert M. Devlin) (Peter V. Tuters)
GEORGE W. BENTHAM* AUSTIN P. YOUNG*
------------------------- -------------------------
(George W. Bentham) (Austin P. Young)
/s/Steven A. Glover August 15, 1996
--------------------
*By Steven A. Glover, Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
3(a)(ii) Form of Master Marketing and Distribution Agreement, by and among
American General Life Insurance Company, American General
Securities Incorporated, and Van Kampen American Capital
Distributors, Inc.
3(b)(iv) Form of Selling Group Agreement by and among American General Life
Insurance Company, American General Securities Incorporated, and
Van Kampen American Capital Distributors, Inc.
3(c)(i)(B) Form of Participation Agreement, by and among American General Life
Insurance Company, American General Securities Incorporated, Van
Kampen American Capital Life Investment Trust, Van Kampen American
Capital Asset Management, Inc., and Van Kampen American Capital
Distributors, Inc.
4(g)(i) Specimen form of Combination Fixed and Variable Annuity Contract
(Form No. 95020 Rev 896).
4(g)(ii) Specimen form of Combination Fixed and Variable Annuity contract
(Form No. 95021 Rev 896).
4(g)(iii) Specimen form of pages for Contract Forms 95020 Rev 896 and 95021
Rev 896, filed in the following states: California, Florida, Idaho,
Kansas, Maryland, Massachusetts, Minnesota, North Carolina, North
Dakota, Oklahoma, Pennsylvania, South Carolina, Texas, Utah, and
West Virginia.
4(g)(iv) Specimen form of Waiver of Surrender Charges Rider for Contract
Form Nos. 95020 Rev 896 and 95021 Rev 896.
15(h) Power of Attorney with respect to Registration Statements and
Amendments thereto signed by Rodney O. Martin Jr. and Robert F.
Herbert, Jr.
16 Amended Statement of Exemptive Relief Relied Upon.
EXHIBIT 3(a)(ii)
FORM OF
MASTER MARKETING AND DISTRIBUTION AGREEMENT
BY AND AMONG
AMERICAN GENERAL LIFE INSURANCE COMPANY,
AMERICAN GENERAL SECURITIES INCORPORATED,
AND VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Description Page
<S> <C>
SECTION 1. AVAILABLE CONTRACTS........................................... 1
1.1 Availability. ............................................ 1
1.2 Modification of Contracts.................................. 2
1.3 Suspension or Restriction of Sales. ....................... 2
1.4 Reinsurance of Contracts................................... 2
SECTION 2. CONTRACT DISTRIBUTION.......................................... 2
2.1 Exclusive Appointment. .................................... 2
2.2 Best Efforts............................................... 3
2.3 Selling Groups. .......................................... 3
2.4 Suitability Determinations................................. 3
2.5 Sales Persons/Associated Agencies.......................... 4
2.6 Insurance Agent Licensing.................................. 4
2.7 Compliance, Training, and Supervision...................... 5
2.8 Marketing Materials. ..................................... 5
2.9 Marketing Services. ...................................... 6
2.10 Non-Marketing Materials.................................... 7
2.11 Information About AGL and DISTRIBUTOR..................... 8
2.12 Complaints................................................. 8
2.13 Premium Payments........................................... 8
2.14 Limitations on Authority................................... 8
2.15 Independent Contractor..................................... 9
SECTION 3. ADMINISTRATION AND RECORDKEEPING.............................. 9
3.1 Contract Administration.................................... 9
3.2 Performance Standards...................................... 9
3.3 Recordkeeping.............................................. 10
SECTION 4. REPRESENTATIONS AND WARRANTIES................................ 10
4.1 By AGL..................................................... 10
4.2 By AGSI.................................................... 12
4.3 By DISTRIBUTOR ............................................ 12
SECTION 5. COMPENSATION; COSTS AND EXPENSES.............................. 13
5.1 Compensation............................................... 13
5.2 Registration Fees. ....................................... 13
5.3 Each Party To Bear Own Costs............................... 13
i
<PAGE>
Description Page
SECTION 6. INDEMNIFICATION............................................... 14
6.1 Indemnification by AGL and AGSI............................ 14
6.2 Indemnification by DISTRIBUTOR............................. 15
6.3 Limitation on Liability.................................... 16
6.4 Injunctive Relief.......................................... 16
SECTION 7. TERM AND TERMINATION.......................................... 17
7.1 Term....................................................... 17
7.2 Events of Termination...................................... 17
7.3 Remedy of Events of Default................................ 18
7.4 Parties to Cooperate Respecting Termination................ 18
SECTION 8. ASSIGNMENT.................................................... 18
SECTION 9. CONTRACT LAPSE, TERMINATION, SURRENDER, ETC................... 19
SECTION 10. CONFIDENTIALITY............................................... 19
SECTION 11. ARBITRATION OF DISPUTES....................................... 19
11.1 Arbitration Binding. ..................................... 19
11.2 Initiation of Arbitration. ............................... 19
11.3 Selection of Arbitrators................................... 20
11.4 Impartiality............................................... 20
11.5 Hearing Date and Time...................................... 20
SECTION 12. TRADEMARKS.................................................... 21
12.1 DISTRIBUTOR Trademarks..................................... 21
12.2 AGL Trademarks............................................. 21
12.3 Grant of License........................................... 21
12.4 Prior Approval............................................. 22
12.5 Sample Materials........................................... 22
12.6 Trademarks Valid and Enforceable. ......................... 22
SECTION 13. BONDING AND INSURANCE........................................ 22
SECTION 14. NOTICES...................................................... 22
14.1 Manner of Notices.......................................... 22
14.2 Notice of Regulatory Proceedings........................... 23
SECTION 15. MISCELLANEOUS................................................ 23
15.1 Amendment.................................................. 23
15.2 Governing Law.............................................. 23
15.3 Survival of Provisions..................................... 23
ii
<PAGE>
Description Page
15.4 Severability............................................... 24
15.5 Waiver..................................................... 24
15.6 Force Majeure.............................................. 24
15.7 Parties to Cooperate....................................... 24
15.8 Entire Agreement........................................... 24
</TABLE>
iii
<PAGE>
MASTER MARKETING AND DISTRIBUTION AGREEMENT
This Master Marketing and Distribution Agreement (the "Agreement") is
made on this ________ day of ___________________, 1996, by and among AMERICAN
GENERAL LIFE INSURANCE COMPANY, a Texas insurance company ("AGL"), on behalf
of itself and each of its separate accounts listed on Schedule A hereto, as
the same may be amended from time to time (each, an "Account"), AMERICAN
GENERAL SECURITIES INCORPORATED, a Texas corporation ("AGSI"), and VAN KAMPEN
AMERICAN CAPITAL DISTRIBUTORS, INC., a Delaware corporation ("DISTRIBUTOR")
(each, a "Party," collectively, the "Parties").
RECITALS
WHEREAS, AGL and DISTRIBUTOR (including certain affiliates of
DISTRIBUTOR) are jointly developing a variable annuity contract known as the
Generations Annuity ("New Contract"), which is to be issued through AGL's
Separate Account D ("Separate Account D");
WHEREAS, AGL and DISTRIBUTOR (including certain affiliates of
DISTRIBUTOR) may in the future jointly develop other annuity and/or life
insurance contracts (collectively referred to, together with the New Contract
and any certificates under any group contract, as the "Contracts") to be
issued through one or more separate accounts established by AGL for such
purposes (collectively referred to, together with Separate Account D, as the
"Accounts");
WHEREAS, AGL has appointed AGSI the principal underwriter of the New
Contract and currently intends to appoint AGSI the principal underwriter of
all other Contracts;
WHEREAS, AGL and AGSI desire to retain DISTRIBUTOR, on an exclusive
basis, to market and distribute the Contracts and DISTRIBUTOR desires to
provide such services; and
WHEREAS, AGL, AGSI, and DISTRIBUTOR desire to allocate among themselves
certain functions relating to the administration of the Contracts.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and of the mutual expectations of benefit occurring from the
activities herein contemplated, the Parties hereto agree as follows:
SECTION 1. AVAILABLE CONTRACTS
1.1 AVAILABILITY. AGL shall make available for offer and sale by
DISTRIBUTOR, pursuant to the terms and conditions of this Agreement, the
Contracts described in Schedule A attached hereto and incorporated by
reference herein, as the Parties may amend from time to time by mutual
agreement.
1.2 MODIFICATION OF CONTRACTS. AGL, in its sole discretion, may modify or
delete the
1
<PAGE>
terms of any Contract, to the extent permitted by the Contracts and applicable
law. DISTRIBUTOR may, from time to time, propose modifications to the terms of
any Contract, and AGL agrees to consider any such proposed modification in
good faith, provided, however, that any implementation of such proposed
modification shall remain in AGL's sole discretion.
1.3 SUSPENSION OR RESTRICTION OF SALES. AGL, in its sole discretion, may
suspend or restrict the sale of any Contract in any state or other
jurisdiction upon 30 days' prior written notice to DISTRIBUTOR or upon such
shorter notice period as may be required by applicable law, without incurring
any liability or obligation to DISTRIBUTOR. Upon such notice, DISTRIBUTOR
agrees to immediately cease, and shall instruct all Selling Group Members (as
defined below) to immediately cease, all solicitation activity with respect to
the Contracts in those states or other jurisdictions where AGL has suspended
or restricted the sale of Contracts. In addition, notwithstanding any
provision herein to the contrary, AGL may refuse to sell any Contract to any
applicant for any reason.
1.4 REINSURANCE OF CONTRACTS. AGL may reinsure any of the Contracts with
a reinsurer of its choice at any time, to the extent permitted by applicable
law.
SECTION 2. CONTRACT DISTRIBUTION
2.1 EXCLUSIVE APPOINTMENT.
(a) AGL, as the issuer of the Contracts, and AGSI, as the principal
underwriter of the Contracts, hereby appoint DISTRIBUTOR the exclusive
distributor, during the term of this Agreement, for the marketing and
distribution of the Contracts.
(b) The foregoing appointment shall be limited to those states and other
jurisdictions in which the Contracts may lawfully be offered and sold and in
which DISTRIBUTOR and any Associated Agency (as defined below) are properly
licensed as provided in Section 2.5 below, registered or otherwise qualified
to offer and sell the Contracts under the applicable federal securities laws
and the applicable insurance and other laws and regulations of each such state
or other jurisdiction. AGL shall periodically provide DISTRIBUTOR with notice
pursuant to Section 14 hereof of all states and other jurisdictions in which
the Contracts may lawfully be offered and sold.
(c) As exclusive distributor for the Contracts, DISTRIBUTOR shall:
(i) assist in servicing the Contracts by either (A) communicating,
as appropriate, with Contract owners, annuitants, beneficiaries, and
participants (collectively, "Contract owners") regarding such matters as
the exercise of rights and privileges available to them under the terms
of the Contracts or offered to them by AGL; or by (B) referring Contract
owners to AGL as appropriate; and
(ii) enter into agreements ("selling group agreements") with other
persons ("Selling Group Members"), pursuant to which such Selling Group
Members will offer, sell,
2
<PAGE>
and service Contracts in those states and other jurisdictions where they
and their Associated Agencies (as defined below) are properly licensed,
registered or otherwise qualified to offer and sell the Contracts under
the applicable insurance and other laws of each such state or other
jurisdiction.
(d) DISTRIBUTOR hereby expressly acknowledges and consents to the offer,
sale, and servicing of Contracts directly by AGSI and AGSI's own Sales Persons
(as defined below). The Parties hereby agree to enter into a selling group
agreement in order to support such activity. This Agreement does not limit the
rights of AGL or AGSI to offer or sell insurance contracts, including, without
limitation, variable annuity contracts and variable life insurance policies,
other than the Contracts.
In addition, DISTRIBUTOR authorizes AGSI to enter into agreements to sell
the Contracts with persons who are qualified to sell as described in Section
2.3. DISTRIBUTOR shall bear no responsibility or liability for any activity
related to sales under such agreements, and in this regard shall be held
harmless by AGL and AGSI. AGSI shall receive DISTRIBUTOR's specific written
consent before entering into any such agreement, which consent shall be
provided within ten calendar days after AGSI has given notice of its intent to
enter into the agreement. Notwithstanding the foregoing, DISTRIBUTOR, in its
sole discretion, may refuse to consent to the appointment of any Selling Group
Member or any Sales Person (as defined below), or may require revocation of
such appointment for any reason. DISTRIBUTOR shall consult with AGL prior to
refusing to consent to an appointment or renewal of an appointment, or
requiring a revocation, as to the reasons for such decision. DISTRIBUTOR shall
not incur any obligation to compensate or reimburse any expenses of AGL or
AGSI as a result of any such refusal to approve the appointment of any Selling
Group Member or Sales Person for which AGSI seeks approval.
2.2 BEST EFFORTS. DISTRIBUTOR shall use its best efforts to recruit
Selling Group Members to offer, sell, and service Contracts.
2.3 SELLING GROUPS. Each Selling Group Member shall be registered with
the Securities and Exchange Commission ("SEC") as a broker-dealer under the
Securities Exchange Act of 1934 ("1934 Act") and shall be a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD"),
unless the Selling Group Member is exempt from the broker-dealer registration
requirements of the 1934 Act. In addition, each Selling Group Member shall
have received an appropriate appointment or license by or through AGL and,
unless exempt, a level of qualification with the NASD appropriate to enable it
to offer and sell Contracts. Each Selling Group Member shall enter into a
selling group agreement the form of which shall be as agreed to by the Parties
from time to time. DISTRIBUTOR shall not enter into any selling group
agreement unless and until AGL has given written approval of the Selling Group
Member, which approval shall be provided within ten calendar days after
DISTRIBUTOR has given notice of its intent to enter into the agreement.
2.4 SUITABILITY DETERMINATIONS. AGL, AGSI and DISTRIBUTOR wish to ensure
that the Contracts, the applications for which will be solicited by Selling
Group Members and their respective registered sales representatives (Selling
Group Members and registered sales representatives may be referred to
collectively as "Sales Persons"; if the context so warrants, registered sales
representatives may be referred to as "Sales Persons.") will be issued to
persons for whom the Contracts will be suitable. Each Selling Group Member
shall take reasonable steps to ensure that neither it nor any other Sales
Person makes recommendations to an applicant to purchase any of the Contracts,
or to select any investment option thereunder, in the absence of reasonable
3
<PAGE>
grounds to believe that the purchase of the Contracts or selection of that
option is suitable for such applicant in compliance with federal securities
law requirements governing suitability obligations. While not limited to the
following, a determination of suitability shall be based on information
furnished to Sales Persons after reasonable inquiry of such applicant
concerning the applicant's insurance and investment objectives and financial
situation and needs, including the likelihood that the applicant will make
sufficient premium payments to derive the benefits thereof, and tax status.
The responsibility of Sales Persons to take such reasonable steps and make
such determinations of suitability shall be a requirement of each selling
group agreement entered into by DISTRIBUTOR.
2.5 SALES PERSONS/ASSOCIATED AGENCIES. DISTRIBUTOR shall enter into a
separate selling agreement whereby Selling Group Members will represent that
such Selling Group Member and its Sales Persons are duly registered and
qualified pursuant to the 1934 Act, NASD regulations, and any other securities
regulatory requirements. DISTRIBUTOR shall assist in ensuring that any
insurance agency associated with DISTRIBUTOR and to whom it may assign certain
rights or obligations under this Agreement pursuant to Section 8 of this
Agreement and any insurance agency associated with a Selling Group Member
(each, an "Associated Agency") is and remains properly licensed under the
applicable insurance laws and regulations of each state or jurisdiction in
which the Associated Agency is engaged in the offer or sale of the Contracts.
2.6 Insurance Agent Licensing.
(a) Neither DISTRIBUTOR nor any Selling Group Member or other Sales
Person thereof, shall engage in any activities with respect to the offer or
sale of Contracts that would require insurance agent licensing in the state or
jurisdiction where such activities are performed, unless and until such Sales
Persons are properly licensed to perform such services in the particular state
or other jurisdiction.
(b) DISTRIBUTOR shall immediately notify AGL if its license is revoked,
suspended, or terminated, and shall immediately notify AGL at such time
DISTRIBUTOR becomes aware that the license of any Sales Person has been
revoked, suspended, or terminated.
(c) AGL agrees to take all actions necessary to effect the appointment of
the Sales Persons as insurance agents of AGL, and to effect renewals thereof,
all as required for the business of this Agreement.
(d) DISTRIBUTOR shall, from time to time, advise AGL of the Sales Persons
that DISTRIBUTOR wishes AGL to appoint as AGL insurance agents. AGL shall
forward all approved agent appointment forms that it receives in a timely
manner to the appropriate state insurance departments.
(e) DISTRIBUTOR and AGL shall cooperate in making arrangements with each
Selling Group Member in order to help to keep costs associated with the
appointment of Sales Persons at reasonable levels. Notwithstanding the
foregoing, AGL, in its sole discretion, may refuse to appoint or renew the
appointment of any Sales Person, or may revoke such appointment for any
reason. AGL shall consult with DISTRIBUTOR prior to refusing to appoint, renew
appointment, or revoking an appointment, as to the reasons for such decision.
Neither AGL nor AGSI shall incur any obligation to compensate or reimburse any
expenses of DISTRIBUTOR as a result of any such refusal to
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appoint or renew an appointment of a Sales Person.
2.7 Compliance, Training, and Supervision.
(a) COMPLIANCE. DISTRIBUTOR shall be responsible for ensuring that all
Sales Persons comply with all applicable federal and state laws and
regulations and the rules of the NASD relating to the offer and sale of the
Contracts.
(b) TRAINING. DISTRIBUTOR agrees to conduct initial and periodic training
and education of the Sales Persons in their solicitations of applications for
the Contracts and all of their activities relating to this Agreement.
DISTRIBUTOR agrees to train the Sales Persons as to the Contracts in
accordance with any guidelines furnished by AGL or AGSI. AGL or AGSI may
assist DISTRIBUTOR by assisting in the training and education of DISTRIBUTOR's
training personnel in product specifications and markets.
(c) SUPERVISION. Selling Group Members shall be responsible for the
supervision of the Sales Persons in their solicitation of applications for the
Contracts and all of their activities relating to this Agreement and that are
provided for under the Selling Group Agreement. DISTRIBUTOR shall establish
and implement reasonable procedures for periodic inspection and supervision of
sales practices of the Sales Persons and submit reports to AGL or AGSI as may
be requested from time to time on the result of such inspections and the
compliance with such procedures.
2.8 MARKETING MATERIALS.
(a) DISTRIBUTOR, at its sole cost, shall be responsible for developing
(with the assistance of AGL), printing and distributing all marketing
materials to be used in connection with the offer and sale of the Contracts,
except for (i) any prospectus for the Contracts, including any related
statement of additional information ("SAI"), and any amendments or supplements
to the foregoing (collectively, as the context requires, "Contract
Prospectus") and (ii) any annual or semi-annual reports for an Account
("Account Reports"), the preparation of which shall be the sole responsibility
of AGL. As used herein, "marketing materials" shall mean any "advertisement"
or "sales literature," as those terms are defined in Section 35(a) of the
NASD's Rules of Fair Practice, as amended from time to time, including,
without limitation, any so-called "dealer only" materials.
(b) The responsibility for (i) printing and distributing Contract
Prospectuses (including any related SAI) and Account Reports used as marketing
materials and (ii) the costs of printing and distributing such Contract
Prospectuses and Account Reports shall be set forth in the Amended and
Restated Fund Participation Agreement by and among AGL, Van Kampen American
Capital Distributors, Inc., and other parties thereto ("Participation
Agreement"). DISTRIBUTOR shall deliver the current Contract Prospectus
together with the current prospectus of the investment vehicles available
under the Contracts, including any supplements thereto ("Fund Prospectus")
(generally attached thereto) to every applicant for the related Contract at or
prior to the time that an application form or other marketing materials are
submitted to the applicant (other than materials submitted in compliance with
Rules 134 or 482 of the Securities Act of 1933 ("1933 Act"). DISTRIBUTOR shall
deliver the current SAI related to the Contracts promptly to any applicant or
Selling Group Member who requests one and AGL shall promptly forward all such
requests that it receives to DISTRIBUTOR. AGL shall at all times keep
DISTRIBUTOR informed of the dates of
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the appropriate current Contract Prospectus and SAI.
(c) AGL and DISTRIBUTOR shall submit by telecopy or overnight delivery
definitive copies of all marketing materials to the other for its approval,
which approval shall be provided within at least ten (10) business days of
receipt or such period to which the Parties may agree from time to time.
(d) DISTRIBUTOR shall, to the extent required, file in a timely manner
all marketing materials with the NASD, the SEC, and any other regulatory body
(other than state insurance regulatory bodies), as appropriate, and shall
obtain any necessary approval of these regulatory bodies of such marketing
materials. AGL shall, to the extent required, file in a timely manner all
marketing materials with the various state insurance regulatory bodies, as
appropriate, and shall obtain any necessary approval of these regulatory
bodies of such marketing materials.
(e) Notwithstanding the foregoing, AGL acknowledges that Selling Group
Members, at their own cost, may from time to time develop, print, and
distribute marketing materials that are not jointly developed by AGL and
DISTRIBUTOR ("supplemental marketing materials"). In no event shall
DISTRIBUTOR utilize, or permit or encourage Selling Group Members to utilize,
any supplemental marketing materials unless AGL has provided its written
approval of such materials prior to their intended first use. The
responsibility of Selling Group Members to obtain AGL's prior written approval
of supplemental marketing materials shall be a requirement of each selling
group agreement entered into by DISTRIBUTOR.
2.9 MARKETING SERVICES. In connection with the offer and sale of
Contracts, DISTRIBUTOR agrees to:
(a) develop a marketing plan for the introduction and continuing sale of
the Contracts through Selling Group Members;
(b) provide AGL on an ongoing basis with information concerning the
marketability of the Contracts and the usefulness of the marketing materials
jointly prepared by AGL and DISTRIBUTOR or any other documents prepared by
AGL, and advise AGL with regard to the desirability of revising or redesigning
the same;
(c) provide AGL on an ongoing basis with comparative data regarding
products offered by other life insurance companies and mutual fund groups;
(d) initiate and maintain contact with existing and potential Selling
Group Members for purposes of advising AGL on the desirability of developing
and implementing new Contract features;
(e) receive written and oral inquiries from Selling Group Members with
respect to the Contracts and coordinate responses to the same with AGL;
(f) provide assistance to Selling Group Members in arranging for the
insurance licensing and appointment of the Members' Sales Persons;
(g) distribute to Selling Group Members copies of all marketing and
non-marketing materials, described herein, that are approved or prepared by
AGL pursuant to this Agreement;
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(h) maintain a toll-free number and support and service unit to render
assistance to Selling Group Members in connection with the offer and sale of
Contracts;
(i) provide Selling Group Members, to the extent requested, with
technical assistance at the time of sale of the Contracts;
(j) hold seminars for customers and potential customers of Selling Group
Members; and
(k) provide such other marketing services and support as AGL may
reasonably request from time to time.
2.10 NON-MARKETING MATERIALS.
(a) AGL, at its sole cost, shall be responsible for preparing, printing
in quantity and delivering to DISTRIBUTOR: (i) all Contract forms,
applications and related materials, (ii) all documents pertaining to the
processing of premium payments, refunds and other monies, and (iii) all
documents pertaining to transactions, claims, and other features available
under the Contracts, including, but not limited to, full or partial
surrenders, exchanges, transfers, loans, systematic purchases, death claims,
changes in premium allocations, and changes in beneficiary.
(b) AGL, at its sole cost, shall be responsible for preparing, printing,
and distributing all correspondence with Contract owners, except for
correspondence prepared, printed, and distributed by DISTRIBUTOR pursuant to
AGL'S prior approval.
(c) The responsibility for printing and distributing Contract
Prospectuses to existing Contract owners shall be set forth in the
Participation Agreement.
(d) AGL, at its sole cost, shall be responsible for preparing, printing,
distributing to existing Contract owners, and, to the extent required, filing
with any appropriate regulatory body, in a timely manner, or causing the same
to be done: (i) all Contract owner account statements, (ii) Account Reports,
(iii) voting cards, as appropriate; and (iv) all reports, forms, and other
information necessary to comply with applicable federal and state tax law.
(e) AGL shall provide to DISTRIBUTOR or its designated agent at least one
complete copy of all SEC registration statements, Contract Prospectuses,
Account Reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(f) AGL, as agent for AGSI and DISTRIBUTOR shall, upon or prior to the
completion of each Contract transaction for which a confirmation is legally
required, send a written confirmation to the Contract owner for each such
transaction, in a form and manner which complies with the requirements of the
1934 Act, state laws and regulations, and the disclosure requirements of the
NASD. Such confirmations shall be furnished to all Contract owners in
accordance with securities laws, shall reflect the facts of the transaction,
and, if applicable, shall show that they are being sent by AGL on behalf of
AGSI and DISTRIBUTOR.
2.11 INFORMATION ABOUT AGL AND DISTRIBUTOR
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(a) Neither AGL nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning DISTRIBUTOR
or its affiliates in connection with the sale of the Contracts other than the
information or representations provided by or on behalf of DISTRIBUTOR and its
affiliates that are contained (i) in the registration statement, including the
Contract Prospectus contained therein, as such registration statement and
Prospectus may be amended from time to time; (ii) in Account Reports or voting
instruction solicitation materials for each Account; or (iii) marketing
materials prepared, except with the express written permission of DISTRIBUTOR.
As used herein, the term "affiliate" shall have the same meaning as defined in
Section 2(a)(3) of the Investment Company Act of 1940 ("1940 Act").
(b) Neither DISTRIBUTOR nor any of its affiliates will give any
information or make any representations or statements on behalf of or
concerning AGL, AGSI, or their respective affiliates in connection with the
sale of the Contracts other than the information or representations provided
by or on behalf of AGL, AGSI, or their respective affiliates that are
contained in (i) the registration statement, including the Contract Prospectus
contained therein, as such registration statement and Prospectus may be
amended from time to time; (ii) in Account Reports or voting instruction
solicitation materials for each Account; or (iii) in marketing material,
except with the express written permission of AGL.
2.12 COMPLAINTS.
In the case of an oral or written consumer or regulatory agency
complaint, AGL, AGSI, and DISTRIBUTOR shall each promptly notify the others
and shall coordinate and fully cooperate in responding to such complaints.
AGL, AGSI, and DISTRIBUTOR shall jointly develop procedures to coordinate,
investigate and respond to such complaints.
AGL, AGSI and DISTRIBUTOR agree to consult with one another with respect
to the disposition of any complaints or grievances and DISTRIBUTOR shall use
its best efforts to obtain the cooperation of any Sales Person in the
disposition thereof. AGSI and DISTRIBUTOR shall maintain customer complaint
files pursuant to applicable NASD rules.
2.13 PREMIUM PAYMENTS. DISTRIBUTOR and AGL shall enter into separate
agreements with Selling Group Members setting forth the method for, and
responsibilities with respect to, the handling and processing of premium
payments or other monies received in connection with the sale of the
Contracts.
2.14 LIMITATIONS ON AUTHORITY. DISTRIBUTOR and Sales Persons shall have
no authority to, and shall not:
(a) alter or substitute AGL's Contract applications or forms in any
manner;
(b) guarantee the issuance of any Contract or the reinstatement of any
lapsed Contract (in the case of life insurance Contracts), or the reinvestment
of any Contract (in the case of annuity Contracts);
(c) add, alter, waive or discharge any Contract provision, including,
without limitation, any forfeiture provision, or represent that such can be
done by AGL;
(d) make any settlement of any claim or claims or bind AGL or any of its
affiliates in any
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way;
(e) extend the time of making any premium payments, or pay or allow any
inducement not specified in the Contracts to any Contract owner or applicant,
or rebate any portion of a premium payment, in any manner whatsoever;
(f) incur any indebtedness or liability on behalf of or expend or
contract for the expenditure of the funds by AGL;
(g) enter into legal proceedings in connection with any matter pertaining
to the business of AGL without the prior written consent of AGL, unless
DISTRIBUTOR or any Sales Person, as the case may be, is named in such
proceedings;
(h) give or offer to give, on behalf of AGL, any tax or legal advice
related to the purchase of a Contract; or
(i) exercise any authority on behalf of AGL other than that expressly
conferred on DISTRIBUTOR or any Sales Person by this Agreement.
2.15 INDEPENDENT CONTRACTOR. DISTRIBUTOR shall at all times function as,
and be deemed to be, an independent contractor. Nothing contained herein shall
be construed as creating the relationship of employer and employee between or
among AGL, AGSI, and DISTRIBUTOR (or any Sales Person or Associated Agency
thereof).
SECTION 3. ADMINISTRATION AND RECORDKEEPING
3.1 CONTRACT ADMINISTRATION. Each Party agrees to perform the
administrative duties assigned to such Party under Schedule B attached hereto
and incorporated by reference herein, as the Parties may amend from time to
time by mutual agreement. DISTRIBUTOR acknowledges that AGL may subcontract
its rights and responsibilities enumerated in Schedule B to one or more third
party vendors. Although such duties may be delegated, AGL agrees that it is
legally liable for the performance of the same.
3.2 PERFORMANCE STANDARDS. Each Party agrees to meet or exceed the
standards for performing the various administrative duties set out in Schedule
B attached hereto and incorporated by reference herein, as the Parties may
amend from time to time by mutual agreement.
3.3 RECORDKEEPING.
(a) Each Party agrees to keep, at its principal office, all accounts,
books and other records (collectively, "records") required by and in
accordance with applicable federal and state law, and the regulations of any
regulatory body having jurisdiction over such records, including, without
limitation, Rules 31a-1 and 31a-2 under the 1940 Act and Rules 17a-3 and 17a-4
under the 1934 Act.
(b) Each Party agrees to maintain any and all records as may pertain to
the Contracts and this Agreement in a manner that clearly and accurately
discloses the precise nature and details of Contract transactions or any
transactions related thereto.
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(c) Each Party agrees to assist the others in the timely preparation of
records. In this regard, each Party shall promptly furnish to any other Party
hereto any reports and information that such other Party may request for the
purpose of meeting reporting and recordkeeping requirements under the
insurance laws of the state of Texas or any other state and under the federal
or state securities laws or the rules of the NASD.
(d) To the extent that records maintained by AGL, AGSI or DISTRIBUTOR
(each, a "Maintaining Party" as the case may be) are necessary to satisfy the
recordkeeping requirements imposed by federal securities laws and regulations
on any other Party to this Agreement (the "Responsible Party"), the
Responsible Party hereby appoints the Maintaining Party as its agent for the
purpose of keeping and maintaining such records. As required by 1940 Act Rule
31a-3(a) and 1934 Act Rule 17a-4(i), such records will be the exclusive
property of the Responsible Party, but this shall not preclude the Maintaining
Party from having access to such records or keeping copies of such records for
its own files. In addition, as required by 1940 Act Rule 31a-3(a) and 1934 Act
Rule 17a-4(i), the Maintaining Party shall, promptly upon the request of the
Responsible Party, surrender or provide reasonable access to, as requested,
all records held by it for the Responsible Party pursuant to this Agreement in
a form mutually agreed to by such Parties. In order to comply with 1934 Act
Rule 17a-4(i), with respect to books and records maintained or preserved
subject thereto, the Maintaining Party hereby undertakes to permit examination
of such books and records at any time or from time to time during business
hours by representatives or designees of the SEC, and to promptly furnish to
the SEC or its designee true, correct, complete and current hard copy of any
or all of any part of such books and records.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 BY AGL
AGL represents and warrants that:
(a) it is an insurance company duly organized, validly existing and in
good standing under the laws of the State of Texas and has full corporate
power, authority and legal right to execute, deliver and perform its duties
and comply with its obligations under this Agreement,
(b) it has legally and validly established and maintains each Account as
a segregated asset account under the Texas Insurance Code and the regulations
thereunder,
(c) the Contracts comply in all material respects with all other
applicable federal and state laws and regulations,
(d) interests in each Account pursuant to the Contracts will be
registered under the 1933 Act to the extent required by the 1933 Act,
(e) the Contracts will be duly authorized for issuance and sold in
compliance with all applicable federal and state laws, including, without
limitation, the 1933 Act, the 1934 Act, the 1940 Act, Texas law, and the laws
of any other state in which the Contracts are offered and sold,
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(f) each Account is and will remain registered under the 1940 Act, to the
extent required by the 1940 Act, and each Account does and will comply in all
material respects with the requirements of the 1940 Act and the rules
thereunder, to the extent required,
(g) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder,
(h) AGL will amend the registration statement for its Contracts under the
1933 Act and for its Accounts under the 1940 Act from time to time as required
in order to effect the continuous offering of its Contracts or as may
otherwise be required by applicable law, and
(i) each Contract Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder, but
excluding information contained or omitted in reliance upon and in conformity
with information furnished to AGL or AGSI by or on behalf of DISTRIBUTOR.
AGL further represents that:
(a) the Contracts currently are and will be treated as annuity,
endowment, or life insurance contracts under applicable provisions of the
Internal Revenue Code of 1986, as amended ("Code"), that it will use its best
efforts to maintain such treatment, and that it will notify DISTRIBUTOR
immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future, and
(b) that each Account is a "segregated asset account," that interests in
the Account are offered exclusively through the purchase of or transfer into a
"variable contract," within the meaning of such terms under Section 817 of the
Code and the regulations thereunder, that it will use its best efforts to
continue to meet such definitional requirements, and that it will notify
DISTRIBUTOR immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the
future.
4.2 BY AGSI
AGSI represents and warrants that:
(a) it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas and has full power, authority,
and legal right to execute, deliver, and perform its duties and comply with
its obligations under this Agreement,
(b) it is a member in good standing of the NASD and that it has obtained
all approvals necessary to offer the Contracts and otherwise enter into and
carry out all transactions contemplated by this Agreement, has obtained or
will obtain all approvals, licenses, authorizations, orders or consents, and
shall be duly registered or otherwise qualified under the securities laws of
any state or other jurisdiction where offers or sales of the Contracts may be
made,
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(c) it is bonded as required by all applicable laws and regulations and
that it will carry out its sales and underwriting obligations hereunder in
continued compliance with the NASD Rules of Fair Practice and federal and
state securities laws and regulations and state insurance laws and
regulations,
(d) it is duly registered with the SEC as a broker-dealer under the 1934
Act, and that the activities of DISTRIBUTOR and Sales Persons in connection
with the offer and sale of Contracts shall be in compliance with applicable
federal and state securities laws and regulations in all material respects,
and
(e) it shall take all actions necessary to obtain and maintain all
regulatory approvals required to underwrite the Contracts for sale in all
states and jurisdictions in which the Contracts may be sold.
4.3 BY DISTRIBUTOR
DISTRIBUTOR represents and warrants that:
(a) it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has full power,
authority, and legal right to execute, deliver, and perform its duties and
comply with its obligations under this Agreement,
(b) it is a member in good standing of the NASD and that it has obtained
all approvals necessary to offer the Contracts and otherwise enter into and
carry out all transactions contemplated by this Agreement, has obtained or
will obtain all approvals, licenses, authorizations, orders or consents, and
shall be duly registered or otherwise qualified under the securities and
insurance laws of any state or other jurisdiction where offers or sales of the
Contracts may be made,
(c) it is bonded as required by all applicable laws and regulations and
that it will carry out its sales and underwriting obligations hereunder in
continued compliance with the NASD Rules of Fair Practice and federal and
state securities laws and regulations and state insurance laws and
regulations,
(d) it is duly registered with the SEC as a broker-dealer under the 1934
Act, and that the activities of DISTRIBUTOR and the Sales Persons in
connection with the offer and sale of Contracts shall be in compliance with
applicable federal and state securities laws and regulations in all material
respects,
(e) neither it nor its Associated Persons shall make any representations
concerning the Contracts, except those contained in or reasonably derived from
the Contract Prospectus, registration statements, annual or semi-annual
reports of each Account, or in other written materials prepared by or on
behalf of AGL, and
(f) to the extent that DISTRIBUTOR assigns rights or obligations under
this Agreement to an Associated Agency pursuant to Section 8 hereof,
DISTRIBUTOR represents and warrants that such Associated Agency will have and
maintain all governmental approvals, licenses, authorizations, orders or
consents that are necessary for it to be assigned such rights and perform any
such
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obligations. In addition, the representations and warranties made by
DISTRIBUTOR in this Section 4.3 shall be read to apply to the Associated
Agency where the context so requires.
SECTION 5. COMPENSATION; COSTS AND EXPENSES
5.1 COMPENSATION.
(a) AGL agrees to compensate DISTRIBUTOR for its services hereunder in
accordance with Schedule C attached hereto and incorporated herein by
reference, as the Parties may amend from time to time by mutual agreement.
(b) DISTRIBUTOR agrees that neither it nor any Sales Person or Associated
Agency will pay any commission, or portion thereof, or other compensation
based upon a percentage of premium payments or other valuable consideration
for services rendered in soliciting the sale of the Contracts to any person or
entity (i) that is not duly licensed or appointed by AGL to sell the Contracts
under the applicable laws of any state or jurisdiction or (ii) that is not
duly registered or otherwise qualified under the 1934 Act and rules thereunder
or under any applicable state laws and rules governing broker-dealers and
their Sales Persons, unless exempt therefrom; provided, however, that this
representation shall not prohibit the payment of compensation to the widow(er)
or other beneficiary of a person lawfully entitled to receive such
compensation pursuant to a bona fide contract that calls for such payment.
5.2 REGISTRATION FEES. The fees imposed by the SEC pursuant to Rule 24f-2
under the 1940 Act in connection with the registration of an Account's units
of interest under the 1933 Act shall be borne equally by AGL and DISTRIBUTOR.
5.3 EACH PARTY TO BEAR OWN COSTS. Except as otherwise expressly provided,
each Party to this Agreement shall bear all expenses of fulfilling its duties
and obligations hereunder. To the extent one Party initially bears any costs
or expenses that are the responsibility of another Party, that other Party
shall reimburse the Party that initially bore such expenses promptly upon
request.
SECTION 6. INDEMNIFICATION
6.1 INDEMNIFICATION BY AGL AND AGSI
(a) Except as limited by and in accordance with the provisions of
Sections 6.1(c) and 6.1(d) below, AGL and AGSI shall indemnify and hold
harmless DISTRIBUTOR against any loss, claim, damage or liability (including
amounts paid in settlement with the written consent of AGL and AGSI), or
litigation (including reasonable counsel fees and other costs of investigating
or defending any alleged loss, claim, damage, or liability) to which
DISTRIBUTOR may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, or liabilities are related
to the sale of the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue
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statements of any material fact contained in the Contract, the
registration statement relating to the Contracts, the Contract
Prospectus, or in any published marketing materials or communications
with any Contract owner (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 or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as
to any Indemnified Party, as defined below, if such statement or omission
or such alleged statement or omission was made in reliance upon and in
conformity with information furnished to AGL or AGSI by or on behalf of
DISTRIBUTOR or any Associated Agency thereof for use in the foregoing
materials; or
(ii) arise out of the failure of AGL, AGSI, or any of their
respective affiliates, officers, directors, or employees, to comply with
any applicable securities or other laws and regulations in connection
with its rendering of Contract issue, recordkeeping, confirmation or
other services under this Agreement; or
(iii) arise out of AGL's or AGSI's negligence or misconduct, or that
of their respective affiliates, officers, directors, or employees in the
performance of its duties hereunder; or
(iv) arise as a result of any failure by AGL or AGSI to
substantially 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 or warranty made by AGL or AGSI in this Agreement or arise
out of or result from any other material breach of this Agreement by AGL
or AGSI.
(b) The indemnities in this Section 6.1 shall, upon the same terms and
conditions, extend to and inure to the benefit of each director, officer, or
Sales Person of DISTRIBUTOR and any person controlling DISTRIBUTOR within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (each an
"Indemnified Party").
(c) Neither AGL nor AGSI shall 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.
(d) Neither AGL or AGSI shall be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified AGL and AGSI, if appropriate, 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 AGL and AGSI of any such claim shall not relieve AGL and AGSI 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, AGL and AGSI
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from AGL and AGSI to such party of
AGL's and AGSI's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
AGL will not be liable to such party under
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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.
6.2 INDEMNIFICATION BY DISTRIBUTOR
(a) Except as limited by and in accordance with the provisions of
Sections 6.2(c) and 6.2(d) below, DISTRIBUTOR shall indemnify and hold
harmless AGL and AGSI against any loss, claim, damage or liability (including
amounts paid in settlement with the written consent of AGL and AGSI), or
litigation (including reasonable counsel fees and other costs of investigating
or defending any alleged loss, claim, damage, or liability) to which AGL or
AGSI may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, or liabilities are related
to the sale of 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 Contract, the
registration statement relating to the Contracts, the Contract
Prospectus, or in any published marketing materials or communications
with any Contract owner (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 or necessary to make the statements therein not
misleading, if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to AGL or AGSI by or on behalf of DISTRIBUTOR or any Associated
Agency thereof for use in the foregoing materials; or
(ii) arise out of the failure of DISTRIBUTOR or any Sales Person or
Associated Agency, including affiliates, officers, directors, or
employees of the foregoing, to comply with any applicable securities or
other laws and regulations in connection with its rendering of Contract
marketing, distribution, recordkeeping, or other services under this
Agreement; or
(iii) arise out of the negligence or misconduct of DISTRIBUTOR or
any Sales Person or Associated Agency, or that of any affiliate, officer,
director, or employee of the foregoing, in the performance of its duties
hereunder; or
(iv) arise as a result of any failure by DISTRIBUTOR to
substantially 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 or warranty made by DISTRIBUTOR in this Agreement or arise
out of or result from any other material breach of this Agreement by
DISTRIBUTOR.
(b) The indemnities in this Section 6.2 shall, upon the same terms and
conditions, extend to and inure to the benefit of each director, officer, and
affiliate of AGL or AGSI and any person controlling AGL or AGSI within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (each an
"Indemnified Party").
(c) DISTRIBUTOR 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.
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(d) DISTRIBUTOR 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 DISTRIBUTOR 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 DISTRIBUTOR of
any such claim shall not relieve DISTRIBUTOR 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, DISTRIBUTOR shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the
action. After notice from DISTRIBUTOR to such party of DISTRIBUTOR's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and DISTRIBUTOR 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.
6.3 LIMITATION ON LIABILITY. In no event shall any Party under this
Agreement be liable for lost profits or for exemplary, special, punitive or
consequential damages alleged to have been sustained by the other Party, as
opposed to a third party.
6.4 INJUNCTIVE RELIEF. The Parties each agree that monetary damages may
be an inadequate remedy in the event of a breach by any Party of any of the
covenants in this Agreement, and that any such breach by a Party may cause the
other Parties great and irreparable injury and damage. Accordingly, the
Parties agree that the non-breaching Parties shall be entitled, without
waiving any additional rights or remedies otherwise available to it at law or
in equity or by statute, to injunctive and other equitable relief in the event
of a breach or intended or threatened breach by any other Party of any of said
covenants.
SECTION 7. TERM AND TERMINATION
7.1 TERM. This Agreement shall be effective as of the date first above
written and shall, unless earlier terminated pursuant to Section 7.2 or 7.3,
remain in full force and effect thereafter with respect to all Contracts of
each particular form type until no Contracts of that particular form type
remain outstanding.
7.2 EVENTS OF TERMINATION.
(a) This Agreement shall terminate at any Party's option, without
penalty:
(i) with or without cause, on not less than 180 days' written notice
to the other Parties;
(ii) upon the mutual written consent of the Parties;
(iii) upon written notice of one Party to the other Parties in the
event of bankruptcy or insolvency of such party to which notice is given;
or
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(iv) in the event of an assignment of this Agreement, subject to the
provisions of Section 8.
(b) This Agreement shall terminate at the option of DISTRIBUTOR, subject
to Section 7.3, in the event of:
(i) fraud, misrepresentation, conversion or unlawful withholding of
funds by AGL or AGSI;
(ii) the dissolution or disqualification of AGL or AGSI to do
business under any applicable state or federal law where AGL or AGSI's
ability to perform is materially impaired; however, such termination
shall extend only to the jurisdiction(s) where AGL or AGSI is prohibited
from doing business;
(iii) the suspension or revocation of any material license or permit
held by AGL or AGSI by the appropriate governmental agency or authority;
however, such termination shall extend only to the jurisdiction(s) where
AGL or AGSI is prohibited from doing business;
(iv) the sale (without the prior written consent of DISTRIBUTOR,
which consent shall not be unreasonably withheld) of the AGL or AGSI
business relating to the Contracts, which sale is to an unaffiliated
person or entity, whether by merger, consolidation, or sale of
substantially all of AGL or AGSI's assets, during the term of, and any
extension of, this Agreement; or
(v) upon the institution of formal proceedings against AGL or AGSI
by the NASD, SEC, or any other regulatory body regarding AGL or AGSI's
duties under this Agreement, the sale of the Contracts, or the operation
of any Account, provided that such proceedings result in a finding of
material wrongdoing by AGL or AGSI.
(c) This Agreement shall terminate at the option of AGL or AGSI, subject
to Section 7.3, in the event of:
(i) fraud, misrepresentation, conversion or unlawful withholding of
funds by DISTRIBUTOR;
(ii) the dissolution or disqualification of DISTRIBUTOR to do
business under any applicable state or federal law where DISTRIBUTOR's
ability to perform is materially impaired; however, such termination
shall extend only to the jurisdiction(s) where DISTRIBUTOR is prohibited
from doing business;
(iii) the suspension or revocation of any material license or permit
held by DISTRIBUTOR by the appropriate governmental agency or authority;
however, such termination shall extend only to the jurisdiction(s) where
DISTRIBUTOR is prohibited from doing business;
(iv) the sale (without the prior written consent of AGL, which
consent shall not be unreasonably withheld) of DISTRIBUTOR's business to
an unaffiliated person or entity, whether by merger, consolidation, or
sale of substantially all of DISTRIBUTOR'S assets
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during the term of, and any extension of, this Agreement; or
(v) upon the institution of formal disciplinary proceedings against
DISTRIBUTOR by the NASD, SEC, or any other regulatory body, regarding
DISTRIBUTOR's duties under this Agreement or the sale of the Contracts,
provided that such proceedings result in a finding of material wrongdoing
by DISTRIBUTOR.
7.3 REMEDY OF EVENTS OF DEFAULT. If any Party breaches this Agreement or
is in default in the performance of any of its duties and obligations
hereunder (the "defaulting Party"), including, without limitation, a breach in
any representation or warranty made by the defaulting Party, the
non-defaulting Parties may give written notice thereof to the defaulting
Party, and if such breach is not remedied within 30 days after such written
notice is given, then the non-defaulting Parties may terminate this Agreement
by giving 30 days' written notice of such termination to the defaulting Party.
7.4 PARTIES TO COOPERATE RESPECTING TERMINATION. The Parties agree to
cooperate and give reasonable assistance to each other in effecting an orderly
transition following termination.
SECTION 8. ASSIGNMENT
This Agreement is not assignable by DISTRIBUTOR and shall terminate
automatically in the event of a purported assignment; provided, however, that
DISTRIBUTOR may, with the prior written consent of AGL, assign its rights or
obligations under this Agreement to an Associated Agency of DISTRIBUTOR to the
extent necessary or appropriate in order to comply with applicable laws or
regulations. If obligations under this Agreement are assigned to an Associated
Agency as permitted herein, DISTRIBUTOR shall not be relieved of any of such
obligations.
SECTION 9. CONTRACT LAPSE, TERMINATION, SURRENDER, ETC.
During the term of this Agreement and for five (5) years following the
termination of this Agreement, neither DISTRIBUTOR nor any of its Associated
Agencies or Sales Persons, or any affiliate, director, officer or employee of
the foregoing, shall induce or cause, or attempt to induce or cause, directly
or indirectly, any Contract owner (a) to lapse, terminate, surrender,
exchange, or cancel his or her Contract, (b) to cease or discontinue making
premium payments thereunder, or (c) to direct cash value or premium payments
thereunder to any other financial product without the prior written consent of
AGL, unless such act is in response to an enactment of federal or state
legislation, order or decision of any court or regulatory authority, or a
change in circumstances that makes the Contracts or insurance contracts of
that type (e.g., annuity contracts or life insurance contracts) an unsuitable
investment for existing Contract owners. AGL shall have the right to cease
compensation payments to DISTRIBUTOR in the event this provision is violated.
SECTION 10. CONFIDENTIALITY
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Each Party to this Agreement shall keep confidential any information
about each other Party, or its operations obtained pursuant to this Agreement
or the transactions contemplated herein and shall disclose such information
only if such other Party has authorized such disclosure, or if such disclosure
is required by federal or state regulatory bodies. If any Party hereto
receives a request from such regulatory body requiring such disclosure, that
Party shall immediately notify the other Parties of the request.
SECTION 11. ARBITRATION OF DISPUTES
11.1 ARBITRATION BINDING. Any controversy or claim arising out of or
relating to this Agreement, or the breach hereof, shall be settled by
arbitration under the rules of the NASD in effect at that time. If the NASD
refuses jurisdiction, or the Parties mutually agree in writing, the
arbitration procedure described herein shall be used. In either event, the
decision of the arbitrator(s) shall be final and judgment upon the award
rendered may be entered in any court having jurisdiction thereof.
11.2 INITIATION OF ARBITRATION. To initiate arbitration, the Party
seeking arbitration ("Claimant") shall notify the Party(ies) (each, a
"Respondent") in writing of its desire to arbitrate, stating the nature of its
dispute and the remedy sought. The Respondent(s) shall respond to the
notification in writing within 10 days of its receipt.
11.3 SELECTION OF ARBITRATORS.
(a) The arbitration hearing shall be before a panel of three arbitrators,
each of whom must be (i) a present or former officer of a life insurance or
reinsurance company and/or (ii) an officer and principal of a registered
broker-dealer. The panel must contain at least one representative from each of
(i) and (ii). An arbitrator may not be a present or former affiliate,
director, officer, employee, attorney, or consultant of AGL, AGSI, and
DISTRIBUTOR (or any Associated Agency or Sales Person thereof).
(b) Claimant and Respondent shall each name five (5) candidates to serve
as an arbitrator. Claimant and Respondent shall each choose one candidate from
the other Party's list, and these two candidates shall serve as the first two
arbitrators. Claimant and Respondent shall each present their initial lists of
five (5) candidates by written notification to the other Party within 25 days
of the date of the mailing of the notification initiating the arbitration. Any
subsequent additions to the list that are required shall be presented within
10 days of the date the naming Party receives notice that a candidate that has
been chosen declines to serve.
(c) The two arbitrators shall then select the third arbitrator from the
eight (8) candidates remaining on the lists of the Claimant and Respondent
within 14 days of the acceptance of their positions as arbitrators. If the two
arbitrators cannot agree on the choice of a third, then this choice shall be
referred back to the Parties. Claimant and Respondent shall take turns
striking the name of one of the remaining candidates from the initial eight
(8) candidates until only one candidate remains. If the candidate so chosen
shall decline to serve as the third arbitrator, the candidate whose name was
stricken last shall be nominated as the third arbitrator. This process shall
continue until a candidate has been chosen and accepted. This candidate shall
serve as the third arbitrator. The first turn at
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striking the name of a candidate shall belong to the Respondent. Once chosen,
the arbitrators are empowered to decide all substantive and procedural issues
by a majority of votes.
11.4 IMPARTIALITY. The Parties agree that each of the three arbitrators
should be impartial regarding the dispute. Therefore, at no time will any
Party contact or otherwise communicate with any person who is to be or who has
been designated as a candidate to serve as an arbitrator concerning the
dispute, except upon the basis of jointly drafted communications provided by
the Parties to inform those candidates actually chosen as arbitrators of the
nature and facts of the dispute. Likewise, any written or oral arguments
provided to the arbitrators concerning the dispute shall be coordinated with
the other Party(ies) and shall be provided simultaneously to the other
Party(ies) or shall take place in the presence of the other Party(ies).
Further, at no time shall any arbitrator be informed that the arbitrator has
been named or chosen by one Party or another.
11.5 HEARING DATE AND TIME. The arbitration hearing shall be held on a
date fixed by the arbitrators. In no event shall this date be later than six
(6) months after the appointment of the third arbitrator. As soon as possible,
the arbitrators shall establish pre-arbitration procedures as warranted by the
facts and issues of the particular case. At least 10 days prior to the
arbitration hearing, each Party shall provide the other Party(ies) and the
arbitrators with a detailed statement of the facts and arguments that it will
present at the arbitration hearing. The arbitrators may consider any relevant
evidence; they shall give the evidence such weight as they deem it entitled to
after consideration of any objections raised concerning it. The Claimant shall
have the burden of proving its case by a preponderance of the evidence. Each
Party may examine any witnesses who testify at the arbitration hearing. Each
Party shall bear its own costs of arbitration, except that the arbitrators
shall apportion their own reasonable fees and expenses between or among the
Parties, as they deem appropriate.
SECTION 12. TRADEMARKS
12.1 DISTRIBUTOR TRADEMARKS. DISTRIBUTOR has filed for a service mark in
order to establish ownership to all right, title and interest in and to the
name, trademark and service mark "Van Kampen," and such other tradenames,
trademarks and service marks identified in Schedule D hereto, as the Parties
hereto may amend from time to time (the "DISTRIBUTOR licensed marks" or the
"licensor's licensed marks"). DISTRIBUTOR hereby grants to AGL (including its
affiliates) a non-exclusive license to use the DISTRIBUTOR licensed marks in
connection with AGL's performance of the services contemplated under this
Agreement, subject to the terms and conditions set forth in this Section 12.
12.2 AGL TRADEMARKS. AGL owns all right, title and interest in and to the
tradename, trademarks and service mark "American General Life Insurance
Company," and such other tradenames, trademarks and service marks identified
in Schedule D hereto, as the Parties hereto may amend from time to time (the
"AGL licensed marks" or the "licensor's licensed marks"). AGL hereby grants to
DISTRIBUTOR (including its affiliates) a non-exclusive license to use the AGL
licensed marks in connection with DISTRIBUTOR's performance of the services
contemplated by this Agreement, subject to the terms and conditions set forth
in this Section 12.
12.3 GRANT OF LICENSE. The grant of license by DISTRIBUTOR and AGL (each,
a
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"licensor") to the other and affiliates thereof (the "licensees") shall
terminate automatically when the Contracts (or any particular form of
Contract) cease to be outstanding or by either Party at its election upon
termination of this Agreement. Upon automatic termination, each licensee shall
cease to use a licensor's licensed marks. Upon AGL's elective termination of
this license, DISTRIBUTOR (including its affiliates) shall immediately cease
to distribute marketing material relating to any Contract and shall likewise
cease any activity that suggests that it has any right under the AGL licensed
marks or that it has any association with AGL or any affiliate of AGL in
connection with any such Contracts. Similarly, upon DISTRIBUTOR's elective
termination of this license, AGL (including its affiliates) shall cease to
issue as soon as reasonably practicable, any new Contracts bearing any of the
DISTRIBUTOR licensed marks and shall likewise cease any activity which
suggests that it has any right under any of the DISTRIBUTOR licensed marks or
that it has any association with DISTRIBUTOR or any affiliate of DISTRIBUTOR,
except that AGL shall have the right to continue to administer any outstanding
Contracts bearing any of the DISTRIBUTOR licensed marks and in connection
therewith to use the DISTRIBUTOR licensed marks.
12.4 PRIOR APPROVAL. Notwithstanding any provision in this Agreement to
the contrary, a licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor's licensed marks. The licensor's approval shall not be unreasonably
withheld.
12.5 SAMPLE MATERIALS. During the term of this grant of license, a
licensor may request that a licensee submit samples of any materials bearing
any of the licensor's licensed marks that were previously approved by the
licensor but, due to changed circumstances, the licensor may wish to
reconsider, or that were not previously approved in the manner set forth
above. If, on the reconsideration or on initial review, respectively, any such
samples fail to meet with the written approval of the licensor, then the
licensee shall immediately cease distributing such disapproved materials. The
licensor's approval shall not be unreasonably withheld. The licensee shall
obtain the prior written approval of the licensor for the use of any new
materials developed to replace the disapproved materials, in the manner set
forth above.
12.6 TRADEMARKS VALID AND ENFORCEABLE. Each licensee hereunder: (a)
acknowledges and stipulates that the licensor's licensed marks are valid and
enforceable trademarks and/or service marks and that such licensee does not
own the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (b) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (c) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license
shall inure to the benefit of the licensor.
SECTION 13. BONDING AND INSURANCE
Each Party shall maintain sufficient fidelity bond coverage (including
coverage for larceny and embezzlement) and errors and omissions insurance
coverage as may be required by applicable law or as such Party seems necessary
in light of its obligations under this Agreement. DISTRIBUTOR shall maintain
errors and omissions coverage from a reputable insurance company in an amount
and form acceptable to AGL at all times during the term of this Agreement.
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SECTION 14. NOTICES
14.1 MANNER OF NOTICES. Unless otherwise provided in this Agreement, any
notice required or permitted to be sent under this Agreement shall be given to
the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
American General Life Insurance Company
2727-A Allen Parkway
Houston, Texas 77019
Attn: Steven A. Glover
Telecopier: (713) 831-3071
American General Securities Incorporated
2727 Allen Parkway, Suite 290
Houston, Texas 77019
Attn: F. Paul Kovach, Jr.
Telecopier: (713) 831-3366
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 601801
Attn: Ronald A. Nyberg
Telecopier: (708) 684-6155
14.2 NOTICE OF REGULATORY PROCEEDINGS.
(a) AGL and AGSI shall immediately notify DISTRIBUTOR of: (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to any Contract or to any Account's
registration statement under the 1933 Act relating to the Contracts or any
Contract Prospectus, (ii) any request by the SEC or other regulatory body for
any amendment to such registration statement or Contract Prospectus, (iii) the
initiation of any proceeding for that purpose or for any other purpose
relating to the offering of any Contract, or the registration or offering of
the Account's interests pursuant to the Contracts, or (iv) any other action or
circumstances that may prevent or otherwise materially affect the lawful offer
or sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and,
in all material respects, issued and sold in accordance with applicable state
and federal law. AGL and AGSI shall make every reasonable effort to prevent
the issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) DISTRIBUTOR shall immediately notify AGL of: (i) the issuance by any
court or regulatory body of any order having a material effect with respect to
DISTRIBUTOR's ability to perform its obligations hereunder, (ii) the
initiation of any proceeding for any purpose relating to the sale of the
Contracts, and (iii) any other actions or circumstances that may prevent the
lawful offer or sale of any of the Contracts in any state or jurisdiction.
DISTRIBUTOR shall also immediately notify AGL if any of its Sales Persons or
Associated Agencies is or becomes subject to any proceedings or is sanctioned
or suspended (i) by the SEC or NASD, (ii) by any court for securities law
violations, or (iii) by any state regulatory authority.
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SECTION 15. MISCELLANEOUS
15.1 AMENDMENT. This Agreement may be amended at any time by a writing
executed by the parties.
15.2 GOVERNING LAW. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of Texas.
15.3 SURVIVAL OF PROVISIONS. Upon termination of this Agreement, the
following provisions shall survive: Sections 2.4, 2.5, 2.6, 2.10, 2.11, 2.12,
2.13, 2.14, 3, 4, 5, 6, 8, 9, 10, 11, 12, 14, and 15.
15.4 SEVERABILITY. Should any provision of this Agreement be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby.
15.5 WAIVER. Any failure or delay by any Party to enforce at any time any
of the provisions of this Agreement, or to exercise any right or option which
is herein provided, or to require at any time the performance of any of the
provisions hereof, shall in no way be construed to be a waiver of such
provision of this Agreement. If any Party waives the breach of any provision
of this Agreement by another Party, the waiving Party still has the right to
require performance of that provision and its conduct shall not be construed
to waive succeeding breaches of that provision or any breaches of any other
provision.
15.6 FORCE MAJEURE. No Party shall be liable for damages due to delay or
failure to perform any obligation under this Agreement where such delay or
failure results directly or indirectly from circumstances beyond the control
and without the fault or negligence of such Party.
15.7 PARTIES TO COOPERATE.
(a) AGL, AGSI, DISTRIBUTOR, and any necessary Associated Agencies and
Selling Group Members shall cooperate fully in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial
proceeding with respect to AGL, AGSI, DISTRIBUTOR, and their respective
affiliates, agents and representatives to the extent that such examination,
investigation, or proceeding arises in connection with Contracts distributed
under this Agreement. DISTRIBUTOR shall furnish applicable federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement that authorities may request in order to
ascertain whether AGL's operations are being conducted in a manner consistent
with any applicable law or regulations.
(b) DISTRIBUTOR shall execute such papers and do such acts and things as
shall from time to time be reasonably requested by AGL for the purpose of
qualifying and maintaining qualification of the Contracts for sale under the
applicable laws of any state, and maintaining the registration of the
Contracts under the 1933 Act and any Account under the 1940 Act.
15.8 ENTIRE AGREEMENT. This Agreement shall be the sole and only
agreement among AGL, AGSI, and DISTRIBUTOR regarding the marketing and
distribution of Contracts, and it supersedes all prior and contemporaneous
agreements. The Parties recognize that AGL and DISTRIBUTOR may be parties to
other agreements, the terms and conditions of which may pertain
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to their respective duties and obligations under this Agreement. To the extent
anything in those other agreements contradicts the terms of this Agreement,
this Agreement shall control. This Agreement may not be amended, supplemented,
or modified, except as expressly permitted herein, without the written
agreement of the Parties.
-------------------------
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the day and year first written above.
AMERICAN GENERAL LIFE INSURANCE COMPANY
on behalf of itself and each Account
named in Schedule A hereto,
as amended from time to time
__________________________________
BY:
AMERICAN GENERAL SECURITIES INCORPORATED
__________________________________
BY:
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
__________________________________
BY:
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SCHEDULE A
NAMES OF SEPARATE ACCOUNTS
American General Life Insurance Company Separate Account D
AVAILABLE CONTRACTS (IDENTIFIED BY FORM NUMBER)
Generations Variable Annuity
Contract form numbers: 95020 Rev 896
95021 Rev 896
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SCHEDULE B
AGL Administrative Responsibilities
1. CONTRACT MAINTENANCE
(a) File and obtain state approvals for the Contracts being issued, and
any amendments thereof.
(b) Notify DISTRIBUTOR of the effective date for each state in which the
Contracts become available for issue.
(c) Customize and support state specific requirements where
administratively feasible.
2. CONTRACT SERVICING
(a) Issue and maintain master records for Contracts applied for and
accepted.
(b) Provide maintenance support for all Contract features:
(i) Purchase Payments (new issues, 1035 Exchanges, EFT, additions);
(ii) Withdrawals (SAFEs, partial, full, cancellations, and death
claims);
(iii)Exchanges among Divisions, change of allocations;
(iv) Title Changes (beneficiary, ownership, name, assignments);
(v) Rebalancing, Dollar-Cost Averaging;
(vi) Annuitization.
3. CUSTOMER CORRESPONDENCE
(a) Generate and provide various customer correspondence documents:
(i) Contract (with appropriate riders and endorsements);
(ii) Confirmations of financial transactions;
(iii)Quarterly statements of account activity and balances;
(iv) Billing forms, in a manner agreed to between Owner and AGL.
4. CUSTOMER SERVICE FUNCTIONS
(a) Provide a telephone staff or other medium to respond to customer
inquiries.
(b) Prepare and update service forms necessary to support the Contract.
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(c) Respond to written inquiries from Contract Owners.
(d) Coordinate complaint resolution (formal and informal).
5. COMPLIANCE
(a) Coordinate the printing and mailing of the following documents:
(i) Separate Account semiannual and annual reports;
(ii) Evergreen prospectus.
(b) Coordinate proxy solicitations as outlined in the Participation
Agreement.
(c) Prepare updates and regulatory filings as warranted.
(d) Generate tax reporting for Contract Owners as warranted by account
activity.
(e) Maintain appropriate books and records.
6. FINANCIAL
(a) Calculate unit values on business days of the separate account.
(b) Place trades with corresponding Trust funds and settle such trades as
defined in the Participation Agreement.
(c) Prepare Separate Account semiannual and annual reports .
7. LICENSING/CONTRACTING AND COMPENSATION
(a) Establish the initial record and perform ongoing maintenance for
representatives appointed to sell the product.
(b) Maintain copies of all approved Selling Group Agreements.
(c) Arrange for payment of appointment fees.
(d) Pay compensation based on arrangements of marketing and Selling Group
Agreements.
8. REPORTING
(a) Provide sales or other reports as mutually agreed upon by AGL and
Distributor or Selling Group Member.
9. COMMUNICATIONS
(a) Provide review and feedback/approval for all marketing pieces
associated with the Contract.
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DISTRIBUTOR Administrative Responsibilities
1. DISTRIBUTION
(a) Solicit and obtain Selling Group Agreements.
(b) Assist in appointing Sales Persons.
(c) Assist in arranging for payment of appointment fees as required.
2. MARKETING SUPPORT
(a) Provide wholesaling support to prospective and current Selling Group
Members.
(b) Draft and distribute approved marketing and product literature as
well as all forms associated with the Contract (applications, service
forms, etc.).
(c) Provide sales reporting data to wholesalers.
(d) Provide training on Contract features and procedures.
(e) Provide hypothetical data and illustrations for Fund performance.
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SCHEDULE C
This Schedule governs the compensation to be paid by AGL in connection
with the Contracts issued in accordance with the Agreement. The defined terms
used herein shall have the same meaning as in the Agreement to which this
Schedule C is attached or as in the Contracts, whichever is applicable.
1. DISTRIBUTION FEE TO DISTRIBUTOR.
AGL shall pay or cause to be paid to DISTRIBUTOR, each semi-monthly
period, a Distribution Fee ("Fee") equal to one percent (1%) of Purchase
Payments received by AGL during such period that are attributable to Contracts
solicited by Sales Persons. All Purchase Payments upon which the Fee may be
based must be received by AGL in accordance with the Agreement and such other
requirements that AGL and DISTRIBUTOR may, from time to time, establish. The
Fee shall constitute the sole and exclusive payment by AGL to DISTRIBUTOR with
respect to the Contracts issued pursuant to the Agreement and all services
rendered under or in contemplation of this Agreement.
2. COMPENSATION TO SELLING GROUP MEMBERS.
AGL shall remit to DISTRIBUTOR, or cause to be remitted, the amounts set
out in the schedules below, which DISTRIBUTOR agrees to pay as compensation to
the appropriate Selling Group Members who have submitted applications for
Contracts that AGL has approved for issuance ("Sales Commissions"). The
Parties agree that more than one schedule may be in effect at a time with
respect to a Selling Group Member.
SALES COMMISSION SCHEDULES
Schedule 1: 6% commission, 0% trail commission
Schedule 2: 4.75% commission, plus a 0.25% trail commission commencing
at the end of the 15th month after receipt of the Purchase
Payment and continuing through the end of the seventh year
following receipt of the Purchase Payment, followed by a
0.50% trail commission commencing at the end of the third
month of the eighth year following receipt of the Purchase
Payment.
Schedule 3: 5.5% commission plus a 0.50% trail commission commencing
at the end of the third month of the eighth year following
receipt of the Purchase Payment.
Commissions shall be paid semi-monthly (unless otherwise agreed). As used
in the above schedules, the term "commission" refers to an amount equal to a
fixed percentage of Purchase Payments received by AGL during each semi-monthly
period that are attributable to Contracts
C-1
<PAGE>
solicited by Sales Persons. All Purchase Payments upon which the commission
may be based must be received by AGL in accordance with the Agreement and such
other requirements that AGL and DISTRIBUTOR may, from time to time, establish.
As used in the above schedules, the term "trail commission" refers to an
amount equal to an annual percentage of that portion of Contract Account Value
attributable to Purchase Payments eligible for a trail commission. Trail
commissions shall be computed by multiplying 0.0625% (in the case of a 0.25%
trail commission) or 0.125% (in the case of a 0.50% trail commission) and such
portion of Contract Account Value at the end of the relevant three month
period following receipt of the Purchase Payment. Trail commissions shall be
paid at the end of the calendar quarter immediately following the computation
of the trail commission. Trail commissions shall begin as of the date
specified in the above schedules, and shall continue until annuitization,
surrender, or death which requires distribution of the Contract Account Value.
3. COMMISSION REDUCTIONS.
Notwithstanding the foregoing, the following commission reductions shall
apply to all DISTRIBUTOR Commissions and Sales Commissions, except as
otherwise noted, under the circumstances described below.
(a) REDUCTIONS FOR PURCHASE PAYMENTS AT AGE 81 AND LATER. A 50%
commission reduction shall apply with respect to Purchase Payments made on or
after the Annuitant's eighty-first birthday (regardless of whether the
Contract has a Contingent Annuitant). Such commission reduction is not
applicable to trail commissions.
(b) CHARGEBACKS FOR WITHDRAWALS. The following commission chargebacks
shall apply on full or partial withdrawals (excluding withdrawals made
pursuant to the Systematic Withdrawal Program that are within the 10% Free
Withdrawal Privilege):
o 100% for full or partial withdrawal of a Purchase Payment made
during the first six months following its receipt; and
o 50% for full or partial withdrawal of a Purchase Payment made during
the next six months following its receipt.
The foregoing chargebacks shall not apply in the event of the death of
the Annuitant or Owner during the periods specified above.
4. NO COMPENSATION PAYABLE.
Notwithstanding the foregoing, no compensation shall be payable, and any
compensation already paid by AGL hereunder shall either be promptly returned
by check payable to AGL on request or will be deducted by AGL from future
payments due under this Schedule C, under each of the following conditions:
C-2
<PAGE>
(a) if AGL, in its sole discretion, determines not to issue the Contract
applied for or rescinds the Contract;
(b) if the Contract owner returns the Contract pursuant to the "Free
Look" provision of the Contract;
(c) if a Purchase Payment is received within 60 days following a prior
partial withdrawal, and such Purchase Payment is reasonably believed to be a
reinvestment of part or all of the prior partial withdrawal;
(d) if AGL refunds all or any portion of the Purchase Payment as a result
of a complaint or grievance;
(e) if the Contract owner, at the time the Contract is purchased, is (i)
an employee or registered representative (or the spouse or minor child of an
employee or registered representative) of any broker-dealer authorized to sell
the Contracts, or (ii) is an officer, director, or bona-fide employee of AGL,
AGSI, or any of their company affiliates, or DISTRIBUTOR; provided, however,
that the owner shall have completed, at the time the Contract is purchased,
appropriate documents supplied by AGL which provide for a waiver of all
surrender charges; or
(f) if AGL or AGSI determines that any Sales Person signing an
application or any person or entity receiving compensation for soliciting
purchases of the Contracts is not duly licensed to sell the Contracts in the
state or jurisdiction of such attempted sale and registered or otherwise
qualified under the 1934 Act and rules thereunder and any applicable state
laws and rules governing broker-dealers and their related persons.
In addition, if AGL determines that any Contract applied for is a
replacement of any insurance or annuity product issued by AGL or any of its
affiliates, AGL reserves the right not to pay any compensation and to require
the return of any compensation already paid.
5. MISCELLANEOUS.
The Parties may also supplementally agree that AGL will directly pay
Sales Commissions to the appropriate Selling Group Member. AGL, in its
discretion, may offset against compensation payable by it pursuant to this
paragraph any due and unpaid amounts owed to AGL by DISTRIBUTOR.
C-3
<PAGE>
SCHEDULE D
DISTRIBUTOR TRADEMARKS
[DESCRIBE DISTRIBUTOR TRADEMARKS]
AGL TRADEMARKS
[DESCRIBE AGL TRADEMARKS]
D-1
EXHIBIT 3(b)(iv)
FORM OF
SELLING GROUP AGREEMENT
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC. AND
AMERICAN GENERAL LIFE INSURANCE COMPANY
This Selling Group Agreement ("Agreement") is made among Van Kampen American
Capital Distributors, Inc., a registered broker - dealer and the distributor
for the variable life insurance policies and/or annuity contracts set forth in
Schedule A ("Distributor"),
-----------------------------------------------------------------------------
("Selling Group Member")
-----------------------------------------------------------------------------
("Associated Agency")
and, as the fourth party, American General Life Insurance Company ("AGL").
Selling Group Member is registered with the Securities and Exchange Commission
("SEC") as a broker-dealer under the Securities Exchange Act of 1934 ("1934
Act") and under any appropriate regulatory requirements of state law, and is a
member in good standing of the National Association of Securities Dealers,
Inc. ("NASD"), unless Selling Group Member is exempt from the broker-dealer
registration requirements of the 1934 Act. Unless exempt, Selling Group Member
maintains a level of qualification with the NASD appropriate to enable it to
offer and sell the products set forth in Schedule A. Selling Group Member is
affiliated with Associated Agency, which is properly licensed under the
insurance laws of the state(s) in which Selling Group Member will act under
this Agreement.
This Agreement is for the purpose of providing for the distribution of certain
variable life insurance policies and/or annuity contracts set forth in
Schedule A and any successor or additional SEC registered insurance products
(as discussed in Part (1) "NEW PRODUCTS" of this Agreement) to be issued by
AGL and distributed through Distributor through representatives who are state
insurance licensed and appointed agents of AGL and associated with Associated
Agency and are also NASD registered representatives of Selling Group Member
("Sales Persons"). The policies and/or annuity contracts set forth in Schedule
A, along with any successor or additional SEC registered insurance products,
are referred to collectively herein as the "Contracts".
In consideration of the mutual promises and covenants contained in this
Agreement, AGL and Distributor appoint Selling Group Member and those persons
associated with Associated Agency who are NASD registered representatives of
Selling Group Member and state insurance licensed agents of AGL to solicit and
procure applications for the Contracts. This appointment is not deemed to be
exclusive in any manner and only extends to those jurisdictions where the
Contracts have been approved for sale. Selling Group Member is authorized to
collect the first purchase payment or
<PAGE>
premium (collectively "Premiums") on the Contracts and, unless Selling Group
Member and AGL have otherwise agreed, must remit such premiums in full dollar
amount to AGL. Unless Selling Group Member and AGL have otherwise agreed,
applications shall be taken only on preprinted application forms supplied by
AGL. All completed applications and supporting documents are the sole property
of AGL and must be promptly delivered to AGL. All applications are subject to
acceptance by AGL at its sole discretion.
(1) NEW PRODUCTS
AGL and Distributor may propose, and AGL may issue additional or successor
products, in which event Selling Group Member will be informed of the product
and its related concession schedule. If Selling Group Member does not agree to
distribute such product(s), it must notify Distributor in writing within 30
days of receipt of the Concession Schedule for such product(s). If Selling
Group Member does not indicate disapproval of the new product(s) or the terms
contained in the related Concession Schedule, Selling Group Member will be
deemed to have thereby agreed to distribute such product(s) and agreed to the
related Concession Schedule which shall be attached to and made a part of this
Agreement.
(2) SALES PERSONS
Associated Agency is authorized to recommend Sales Persons for appointment by
AGL to solicit sales of the Contracts. Associated Agency warrants that all
such Sales Persons shall not commence solicitation nor aid, directly or
indirectly, in the solicitation of any application for any Contract until that
Sales Person is appropriately licensed for such product under applicable
insurance laws and is a currently NASD registered representative of Selling
Group Member. Associated Agency shall be responsible for all fees required to
obtain and/or maintain any licenses or registrations required by state or
federal law, for Associated Agency and its Sales Persons. From time to time,
AGL will provide Associated Agency and Selling Group Member with informati in
which AGL is authorized to solicit applications for the Contracts and any
limitations on the availability of such Contracts in any jurisdiction.
(3) SALES MATERIAL
Associated Agency and Selling Group Member shall not utilize in their efforts
to market the Contracts, any written brochure, prospectus, descriptive
literature, printed and published material, audio-visual material or standard
letters unless such material has been provided preprinted by AGL or
Distributor or unless AGL and Distributor have provided written approval for
the use of such literature. In accordance with the requirements of the laws of
the several states, Associated Agency and Selling Group Member shall maintain
complete records indicating the manner and extent of distribution of any such
solicitation material, shall make such records and files available to staff of
AGL and/or Distributor in field inspections and shall make such material
available to personnel of state insurance departments, the NASD or other
regulatory agencies, including the SEC, which have regulatory authority over
AGL or Distributor. Associated Agency and Selling Group Member jointly and
severally hold AGL, Distributor and their affiliates harmless from any
liability arising from the use of any material which either (a) has not been
specifically approved in writing by AGL, or (b) although previously approved,
has been disapproved by AGL or Distributor, in writing for further use.
2
<PAGE>
(4) PROSPECTUSES
Selling Group Member and Associated Agency warrant that solicitation for the
sale of SEC registered insurance products will be made by use of a currently
effective prospectus, that a prospectus will be delivered concurrently with
each sales presentation and that no statements shall be made to a client
superseding or controverting any statement made in the prospectus. AGL and
Distributor shall furnish Selling Group Member and Associated Agency, at no
cost to Selling Group Member or Associated Agency, reasonable quantities of
prospectuses to aid in the solicitation of Contracts.
(5) SELLING GROUP MEMBER COMPLIANCE
Selling Group Member shall be responsible for making suitability
determinations in compliance with federal and state securities laws and shall
supervise Associated Agency and Sales Persons in determining client
suitability.
Selling Group Member will fully comply with the requirements of the NASD and
of the 1934 Act and such other applicable federal and state laws and will
establish rules, procedures, and supervisory and inspection techniques
necessary to diligently supervise the activities of its NASD registered
representatives who are state insurance licensed agents or solicitors of AGL,
in connection with offers and sales of the Contracts. Such supervision shall
include providing, or arranging for, initial and periodic training in
knowledge of the Contracts. Upon request by Distributor or AGL, Selling Group
Member will furnish appropriate records as are necessary to establish diligent
supervision and client suitability.
Selling Group Member shall fully cooperate in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial
proceeding with respect to AGL, Distributor, Selling Group Member, and
Associated Agency and their respective affiliates, agents and representatives
to the extent that such examination, investigation, or proceeding arises in
connection with the Contracts. Selling Group Member shall immediatelyts
broker-dealer registration or the registration of any of its Sales Persons is
revoked, suspended, or terminated.
(6) ASSOCIATED AGENCY AND SALES PERSON COMPLIANCE
Associated Agency will fully comply with the requirements of state insurance
laws and applicable federal laws and will establish rules and procedures
necessary to diligently supervise the activities of the Sales Persons. Upon
request by Distributor or AGL, Selling Group Member will furnish appropriate
records as are necessary to establish such supervision. Associated Agency and
Sales Persons shall be responsible for making suitability determinations in
compliance with federal and state securities laws.
Associated Agency shall fully cooperate in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial
proceeding with respect to AGL, Distributor, Selling Group Member, and
Associated Agency and their respective affiliates, agents and representatives
to the extent that such examination, investigation, or proceeding arises in
connection with the Contracts.
3
<PAGE>
Associated Agency shall immediately notify Distributor if its insurance
license or the license of any of its Sales Persons is revoked, suspended, or
terminated.
(7) AGL COMPLIANCE
AGL represents that the prospectus(es) and registration statement(s) relating
to the Contracts contain no untrue statements of material fact or omission to
state a material fact, the omission of which makes any statement contained in
the prospectus and registration statement misleading. AGL agrees to indemnify
Associated Agency and Selling Group Member from and against any claims,
liabilities and expenses which may be incurred by any of those parties under
the Securities Act of 1933, the 1934 Act, the Investment Company Act of 1940,
common law, or otherwise, and that arises out of a breach of this paragraph.
(8) COMPENSATION
AGL will remit to Associated Agency compensation as set forth in Schedule B
hereto.
(9) CUSTOMER SERVICE, COMPLAINTS, AND INDEMNIFICATION
The parties agree that AGL may contact by mail or otherwise, any client,
agent, account executive, or employee of Associated Agency or other individual
acting in a similar capacity if deemed appropriate by AGL, in the course of
normal customer service for existing Contracts, in the investigation of
complaints, or as required by law.
Selling Group Member, Associated Agency, and Sales Persons agree to hold
harmless and indemnify Distributor and AGL against any and all claims,
liabilities and expenses incurred by either Distributor or AGL, and arising
out of or based upon any alleged or untrue statement of Selling Group Member,
Associated Agency or Sales Person other than statements contained in the
approved sales material for any Contract, or in the registration statement or
prospectus for any Contract.
(10) FIDELITY BOND
Associated Agency represents that all directors, officers, employees and Sales
Persons of Associated Agency licensed pursuant to this Agreement or who have
access to funds of AGLt fidelity bond including coverage for larceny,
embezzlement and other defalcation, issued by a reputable bonding company.
This bond shall be maintained at Associated Agency's expense. Such bond shall
be at least equivalent to the minimal coverage required under the NASD Rules
of Fair Practice, and endorsed to extend coverage to life insurance and
annuity transactions. Associated Agency acknowledges that AGL may require
evidence that such coverage is in force and Associated Agency shall promptly
give notice to AGL of any notice of cancellation or change of coverage.
4
<PAGE>
Associated Agency assigns any proceeds received from the fidelity bond company
to AGL to the extent of AGL's loss due to activities covered by the bond. If
there is any deficiency, Associated Agency will promptly pay AGL that amount
on demand. Associated Agency indemnifies and holds harmless AGL from any
deficiency and from the cost of collection.
(11) LIMITATIONS OF AUTHORITY
The Contract forms are the sole property of AGL. No person other than AGL has
the authority to make, alter or discharge any policy, Contract, certificate,
supplemental contract or form issued by AGL. No party has the right to waive
any provision with respect to any Contract or policy. No person has the
authority to enter into any proceeding in a court of law or before a
regulatory agency in the name of or on behalf of AGL.
(12) ARBITRATION
The parties agree that any controversy between or among them arising out of
their business or pursuant to this Agreement that cannot be settled by
agreement shall be taken to arbitration as set forth herein. Such arbitration
will be conducted in the forum, and according to the securities arbitration
rules then in effect, of the American Arbitration Association, NASD, or any
registered national securities exchange. Arbitration may be initiated by
serving or mailing a written notice. The notice must specify which forum and
rules will apply to the arbitration. This specification will be binding on all
parties.
Any award the arbitrator makes will be final, and judgment on it may be
entered in any court having jurisdiction. Any party to the arbitration may
request that the arbitrator's award include findings of fact and conclusions
of law. Each party shall bear its own costs of arbitration. This arbitration
agreement shall be enforced and interpreted exclusively in accordance with
applicable federal law, including the Federal Arbitration Act.
(13) GENERAL PROVISIONS
(A) Waiver
Failure of any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party under this
Agreement will not be deemed to constitute a waiver of the right to
enforce strict compliance.
(B) Independent Contractors
Distributor, Selling Group Member and Associated Agency are
independent contractors and not employees or subsidiaries of AGL;
Selling Group Member and Associated Agency are not employees or
subsidiaries of Distributor.
5
<PAGE>
(C) Independent Assignment
No assignment of this Agreement or of commissions or other payments
under this Agreement shall be valid without prior written consent of
AGL and Distributor.
(D) Notice
Any notice pursuant to this Agreement may be given electronically
(other than vocally by telephone) or by mail, postage paid,
transmitted to the last address communicated by the receiving party
to the other parties to this Agreement.
(E) Severability
To the extent this Agreement may be in conflict with any applicable
law or regulation, this Agreement shall be construed in a manner
consistent with such law or regulation. The invalidity or illegality
of any provisions of this Agreement shall not be deemed to affect
the validity or legality of any other provision of this Agreement.
(F) Amendment
This Agreement may be amended only in writing and signed by all
parties. No amendment will impair the right to receive commissions
as accrued with respect to Contracts issued and applications
procured prior to the amendment.
(G) Termination
This Agreement may be terminated by any party upon 30 days' prior
written notice. It may be terminated, for cause, by any party
immediately. Termination of this Agreement shall not impair the
right to receive commissions accrued with respect to applications
procured prior to the termination except as otherwise specifically
provided in Schedule B.
(H) TEXAS LAW
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
(I) This Agreement replaces and supersedes any other agreement or
understanding related to the Contracts, between or among the parties
to this Agreement.
By signing below, the undersigned agree to have read and be bound by the terms
and conditions of this Agreement.
Date: _________________________
6
<PAGE>
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
By: _________________________________
Name and Title
Selling Group Member: _________________________
Address: ______________________________________
______________________________________
By: ______________________________________
______________________________________
Associated Agency: ____________________________
Address: ______________________________________
______________________________________
By: ______________________________________
______________________________________
American General Life Insurance Company
2727-A Allen Parkway
Houston, Texas 77019
By: _________________________________
Name and Title
7
<PAGE>
Schedule A
AMERICAN GENERAL LIFE INSURANCE COMPANY
CONTRACTS COVERED BY THIS AGREEMENT
<TABLE>
<CAPTION>
Registration Forms Separate
Contract Name and Numbers Account
<S> <C> <C>
Generations Variable Annuity Form N-4 D
Nos. 811-2441
33-43390
</TABLE>
<PAGE>
Schedule B
SELLING GROUP AGREEMENT ("Agreement")
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC., AND
AMERICAN GENERAL LIFE INSURANCE COMPANY
This Schedule B is attached to and made a part of the Agreement to which it is
attached. It is subject to the terms and conditions of the Agreement. In no
event shall AGL be liable for the payment of any commission with respect to
any solicitation made, in whole or in part, by any person not appropriately
licensed and appointed prior to the commencement of such solicitation.
For Contracts listed on Schedule A, a commission will be paid to Associated
Agency in the amount of either: (1) 6% of the aggregate Purchase Payments
received and accepted by AGL with a properly completed application or as
subsequent Purchase Payments under the Contracts after the Contract is in
force; or (2) 4.75% of such aggregate Purchase Payments, plus a 0.25% trail
commission commencing at the end of the 15th month after receipt of the
Purchase Payments and continuing through the end of the seventh year following
receipt of the Purchase Payments, followed by a 0.50% trail commission
commencing at the end of the third month of the eighth year following receipt
of the Purchase Payments.
"Trail commission" refers to an amount equal to an annual percentage of that
portion of Contract Account Value attributable to Purchase Payments eligible
for a trail commission. Trail commissions shall be computed by multiplying
0.0625% (in the case of a 0.25% trail commission) or 0.125% (in the case of a
0.50% trail commission) and such portion of Contract Account Value at the end
of the relevant three month period following receipt of the Purchase Payments.
Trail commissions shall be paid at the end of the calendar quarter immediately
following the computation of the trail commission. Trail commissions shall
continue until annuitization, surrender, or death which requires distribution
of the Contract Account Value.
Commission Reductions:
(a) FREE LOOK. If a Contract is returned to AGL pursuant to the "Free Look"
provision of the Contract, the full commission paid by AGL will be
returned to AGL or, in the absence of such return, charged back to
Associated Agency.
(b) REDUCTIONS FOR PURCHASE PAYMENTS AT AGE 81 AND LATER. A 50% commission
reduction shall apply with respect to Purchase Payments made on or after
the Annuitant's eighty-first birthday (regardless of whether the Contract
has a Contingent Annuitant). Such commission reduction is not applicable
to trail commissions.
(c) CHARGEBACKS FOR WITHDRAWALS. The following commission chargebacks shall
apply on full or partial withdrawals: (excluding withdrawals made
pursuant to the Systematic Withdrawal Program that are within the 10%
Free Withdrawal Privilege, as defined in the Contract):
<PAGE>
o 100% for full or partial withdrawal of a Purchase Payment made
during the first six months following its receipt; and
o 50% for full or partial withdrawal of a Purchase Payment made during
the next six months following its receipt.
In no event shall any commission adjustment or chargeback be assessed for
termination of a Contract because of the death of the Annuitant or Owner
during the periods specified above.
(d) No Compensation Payable. No compensation shall be payable:
o if AGL, in its sole discretion, determines not to issue the Contract
applied for or rescinds the Contract;
o if AGL refunds all or any portion of the Purchase Payments as a
result of a complaint or grievance; or
o if AGL determines that a Purchase Payment made within 60 days
following a prior partial withdrawal, including systematic
withdrawals, is reasonably believed to be a reinvestment of part or
all of the prior partial withdrawal.
o if the Owner, at the time the Contract is purchased, is (i) an
employee or registered representative (or the spouse or minor child
of an employee or registered representative) of any broker-dealer
authorized to sell the Contracts, or (ii) is an officer, director,
or bona-fide employee of AGL or any of its company affiliates, or
Distributor; provided, however, that the Owner shall have completed,
at the time the Contract is purchased, appropriate documents
supplied by AGL which provide for a waiver of all surrender charges.
Associated Agency agrees to promptly deliver Contracts and holds AGL harmless
from and against any claim arising from market loss to the owner of the
Contract resulting from late delivery by Associated Agency.
Unless otherwise agreed, Associated Agency shall forward to AGL the first full
payment collected by Associated Agency, without deduction for compensation.
EXHIBIT 3(c)(i)(B)
FORM OF
AMENDED AND RESTATED FUND PARTICIPATION AGREEMENT
By and Among
American General Life Insurance Company,
American General Securities Incorporated,
Van Kampen American Capital Life Investment Trust,
Van Kampen American Capital Asset Management, Inc.,
and
Van Kampen American Capital Distributors, Inc.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
SECTION 1
FUND SHARES.............................................................. 2
1.1 Availability of Fund Shares.................................... 2
1.2 Purchases...................................................... 2
1.3 Redemptions.................................................... 3
1.4 Net Asset Value................................................ 3
1.5 Incorrect Net Asset Value...................................... 3
1.6 Separate Orders................................................ 3
1.7 Income Reinvestment............................................ 4
1.8 Book Entry..................................................... 4
SECTION 2
REPRESENTATIONS AND WARRANTIES........................................... 4
2.1 Of the Trust and the Adviser; Registration..................... 4
2.2 Of the Trust and the Adviser; Sales to General Public.......... 5
2.3 Of AGL......................................................... 5
2.4 Of the Distributor and AGSI.................................... 5
2.5 Of the Adviser................................................. 5
SECTION 3
PROSPECTUSES AND OTHER DOCUMENTS......................................... 5
3.1 Production and Distribution.................................... 5
3.2 Expenses....................................................... 6
SECTION 4
APPLICABLE LAWS.......................................................... 8
4.1 Qualification of Funds......................................... 8
4.2 Qualification of Contracts..................................... 8
4.3 Diversification Requirements................................... 8
4.4 Segregated Asset Account....................................... 8
4.5 Certification of Funds......................................... 9
4.6 State Insurance Laws or Regulations............................ 9
4.7 Securities Laws................................................ 9
SECTION 5
REGISTRATION STATEMENTS; SALES LITERATURE
AND PROMOTIONAL MATERIAL............................................ 10
5.1 Of the Contract................................................ 10
5.2 Of the Trust................................................... 10
5.3 Sales Literature and Promotional Material; Approval............ 10
5.4 Statements of One Party Describing Another Party............... 11
5.5 Court or Regulatory Orders..................................... 11
- i -
21130302.5
<PAGE>
SECTION 6
MATERIAL IRRECONCILABLE CONFLICT........................................ 12
6.1 AGL's Duty to Inform Trust.................................... 12
6.2 Definition.................................................... 12
6.3 AGL to Assist Trust........................................... 13
6.4 AGL to Remedy or Eliminate.................................... 13
6.5 Withdrawal From Investment.................................... 14
6.6 Adequacy of Remedies.......................................... 14
6.7 Trust's Duty to Inform AGL.................................... 14
6.8 Annual Reports to Trust....................................... 14
6.9 Mixed and Shared Funding...................................... 14
6.10 Other Participating Insurance Companies....................... 15
SECTION 7
TERMINATION............................................................. 15
7.1 Termination................................................... 15
SECTION 8
WARRANTIES AND INDEMNIFICATIONS SURVIVE TERMINATION..................... 16
8.1 Warranties and Indemnifications Survive Termination........... 16
SECTION 9
ASSIGNMENT.............................................................. 17
9.1 Assignment.................................................... 17
SECTION 10
AVAILABILITY OF SHARES FOLLOWING TERMINATION............................ 17
10.1 Availability of Shares Following Termination.................. 17
SECTION 11
PARTIES TO COOPERATE.................................................... 17
11.1 Parties to Cooperate.......................................... 17
SECTION 12
RECIPIENTS OF NOTICE.................................................... 17
12.1 Recipients of Notice.......................................... 17
SECTION 13
PROXY MATERIAL.......................................................... 18
13.1 Proxy Material................................................ 18
SECTION 14
INDEMNIFICATION OF AGL AND AGSI......................................... 18
- ii -
21130302.5
<PAGE>
14.1 Separate Account Registration Statement and Separate
Account Prospectus............................................ 18
14.2 Indemnified Parties' Willful Acts............................. 20
14.3 Notice Required............................................... 20
SECTION 15
INDEMNIFICATION OF THE ADVISER AND DISTRIBUTOR.......................... 20
15.1 Trust Registration Statement and Trust Prospectus............. 20
15.2 Indemnified Parties' Willful Acts............................. 22
15.3 Notice Required............................................... 22
SECTION 16
AGREEMENT AUTHORIZED; SURVIVAL OF TERMS................................. 23
16.1 Trust Approval................................................ 23
16.2 Cooperation of the Parties.................................... 23
16.3 Parties' Successors Bound..................................... 24
SECTION 17
APPLICABLE LAW.......................................................... 24
17.1 Applicable Law................................................ 24
SECTION 18
CONFIDENTIALITY......................................................... 24
18.1 Confidentiality............................................... 24
SECTION 19
MULTIPLE ORIGINAL AGREEMENTS............................................ 24
19.1 Multiple Original Agreements.................................. 24
SECTION 20
INVALIDITY OF ONE OR MORE PROVISIONS.................................... 25
20.1 Invalidity of One or More Provisions.......................... 25
SECTION 21
RIGHTS OF THE PARTIES................................................... 25
21.1 Rights of the Parties......................................... 25
SECTION 22
OTHER INSURANCE COMPANIES' PARTICIPATION................................ 25
22.1 Other Insurance Companies' Participation...................... 25
SECTION 23
FOREIGN TAX CREDITS..................................................... 25
- iii -
21130302.5
<PAGE>
23.1 Foreign Tax Credits........................................... 25
SCHEDULE A
Other Insurance Companies' Participation................................ 28
SCHEDULE B
Proxy Procedures and Responsibilities................................... 29
</TABLE>
- iv -
21130302.5
<PAGE>
FORM OF
AMENDED AND RESTATED FUND PARTICIPATION AGREEMENT
This amended and restated Agreement, is made and entered into as of the
___ day of __________, 1996, by and among American General Life Insurance
Company ("AGL") (on behalf of itself and each of its separate accounts listed
in Schedule A attached hereto and incorporated by reference herein, as the
Parties hereto may amend from time to time ("Variable Accounts"), American
General Securities Incorporated ("AGSI"), the principal underwriter with
respect to the Contracts referred to below, Van Kampen American Capital Life
Investment Trust ("Trust"), the Trust's investment adviser, Van Kampen
American Capital Asset Management, Inc. ("Adviser"), and the Trust's principal
underwriter, Van Kampen American Capital Distributors, Inc. (the
"Distributor") (hereinafter, AGLI, AGSI, Trust, Adviser, and Distributor may
be referred to individually as a "Party" or collectively as the "Parties").
W I T N E S S E T H
WHEREAS, the Trust is a Delaware business trust registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act");
WHEREAS, the Trust currently is comprised of several investment
portfolios ("Portfolios"), shares of which are currently sold to participating
life insurance companies and their separate accounts, including AGL's Separate
Account D, to fund benefits under certain variable annuity contracts and/or
variable life insurance policies issued by these companies;
WHEREAS, the Trust and Distributor intend to offer to AGL and its
Variable Accounts shares of the Portfolios set forth on Schedule A attached
hereto (each, a "Fund," and, collectively, the "Funds"), as the Parties hereto
may amend from time to time;
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission ("SEC") granting participating insurance companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a),
15(a) and 15(b) of 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 Funds to be sold
to and held by variable annuity and variable life insurance separate accounts
of both affiliated and unaffiliated participating insurance companies
("Exemptive Order");
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, AGL intends to purchase shares in one or more of the Funds on
behalf of its Variable Accounts to fund benefits under certain variable
annuity contracts and/or variable life insurance policies ("New Contracts") to
be issued by AGL, as set forth on Schedule A attached hereto, as the Parties
hereto may amend from time to time;
WHEREAS, the Parties executed a similar participation agreement, dated
March 27, 1992, pursuant to which Fund shares were made available to AGL's
separate account to fund benefits under certain variable annuity and variable
life contracts; and
WHEREAS, the Parties wish to modify the terms of their initial
participation agreement to expand upon and clarify their various rights and
obligations thereunder.
NOW, THEREFORE, in consideration of their mutual promises, AGL, on behalf
of itself and each Variable Account, AGSI, the Trust, the Adviser, and the
Distributor agree as follows:
SECTION 1
FUND SHARES
1.1 AVAILABILITY OF FUND SHARES. Trust and Distributor shall make shares of
each Fund available to AGL for purchase and redemption at net asset
value and with no sales charges, subject to the terms and conditions of
this Agreement. The Board of Trustees of the Trust may refuse to sell
shares of any Fund to any person, or suspend or terminate the offering
of shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the
Trustees acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, such action is deemed in
the best interests of the shareholders of such Fund.
1.2 PURCHASES. Trust and Distributor agree to sell to AGL those shares of
the selected Funds of Trust which AGL orders, executing such orders on a
daily basis at the net asset value next computed after receipt by Trust
or its designee of the order for the shares of Trust. For purposes of
this Section 1.2, AGL shall be the designee of Trust and Distributor for
receipt of such orders and receipt by such designee shall constitute
receipt by Trust. AGL shall use its best efforts to provide Distributor
with notice of such orders by 9:15 a.m. Houston time on the next
following Business Day; provided that such orders will not be executed
at the net asset value last calculated unless they are received by
Distributor by 10:00 a.m. Houston time on the Business Day next
following their
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receipt by AGL. As used herein, "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the
Trust calculates its net asset value as set forth in the Trust's
Prospectus and Statement of Additional Information (collectively, the
"Trust Prospectus").
1.3 REDEMPTIONS. Trust and Distributor agree to redeem for cash, on AGL's
request, any full or fractional shares of Trust held by AGL, executing
such requests on a daily basis at the net asset value next computed
after receipt by Distributor or its designee of the request for
redemption. For purposes of this Section 1.3, AGL shall be the designee
of Trust and Distributor for receipt of requests for redemption from AGL
and receipt by such designee shall constitute receipt by Distributor;
provided that Distributor receives notice of such request for redemption
in accord with the timing rules described in Section 1.2.
1.4 NET ASSET VALUE. The Distributor will provide closing net asset value,
dividend and capital gain information at the close of trading each
Business Day to AGL. The Distributor shall use its best efforts to
provide this information by 6:00 p.m. Houston time. AGL will use this
data to calculate unit values, which will in turn be used to process
that same Business Day's Variable Account unit value. In the event that
Distributor is unable to meet the 6:00 p.m. time stated immediately
above, then Distributor shall provide AGL with additional time to notify
Distributor of purchase or redemption orders pursuant to Sections 1.2
and 1.3, respectively, above. Such additional time shall be equal to the
additional time that Distributor takes to make the net asset values
available to AGL; provided, however, that notification must be made by
10:00 a.m. Houston time on the Business Day such order is to be
executed, regardless of when net asset value is made available.
1.5 INCORRECT NET ASSET VALUE. If Distributor provides materially incorrect
share net asset value information through no fault of AGL, AGL shall be
entitled to an adjustment with respect to the Fund shares purchased or
redeemed to reflect the correct net asset value per share. Any material
error in the calculation or reporting of net asset value per share,
dividend or capital gain information shall be reported promptly upon
discovery to AGL.
1.6 SEPARATE ORDERS. AGL will place separate orders to purchase or redeem
shares of each Fund. Each order shall describe the net amount of shares
and dollar amount of each Fund to be purchased or redeemed. In the event
of net purchases, AGL shall pay for Fund shares in federal funds
transmitted by wire to a custodial account designated by the Trust on
the next Business Day after an order to purchase Fund shares is made in
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accordance with the provisions of Section 1.2 hereof. In the event of
net redemptions, the Trust shall pay the redemption proceeds in federal
funds transmitted by wire on the next Business Day after an order to
redeem Fund shares is made in accordance with the provisions of Section
1.3 hereof. Notwithstanding the foregoing, if the payment of redemption
proceeds on the next Business Day would require Trust to dispose of
Portfolio securities or otherwise incur substantial additional costs,
and if Trust has determined to settle redemption transactions for all
shareholders of one or more Portfolios on a delayed basis, proceeds
shall be wired to AGL within seven (7) days and Trust shall notify in
writing the person designated by AGL as the recipient for such notice of
such delay by 3:00 p.m. Houston time on the same Business Day that AGL
transmits the redemption order to Trust. The Parties agree to consider
in the future whether and how AGL may elect to receive a credit for
shares of any Fund in lieu of receiving net redemption proceeds.
1.7 INCOME REINVESTMENT. AGL hereby elects to reinvest all income dividends
and capital gains distributions as are payable on a Fund's shares in
additional shares of that Fund at the net asset value calculated on the
day that any such distributions are made. AGL reserves the right to
revoke this election at any time and receive all such income dividends
and capital gain distributions in cash.
1.8 BOOK ENTRY. Issuance and transfer of the shares will be by book entry
only. Stock certificates will not be issued to AGL or the Variable
Account. The shares ordered from the Trust will be recorded in an
appropriate title for the Variable Account or the appropriate divisions
thereof.
SECTION 2
REPRESENTATIONS AND WARRANTIES
2.1 OF THE TRUST AND THE ADVISER; REGISTRATION. The Trust and the Adviser
represent and warrant that the Trust is duly organized and in good
standing as a Delaware business trust and that it is and shall remain
registered as an open-end management investment company under the 1940
Act to the extent required by the 1940 Act. The Trust and the Adviser
further represent and warrant that shares of each Fund sold pursuant to
this Agreement shall be: (a) registered under the 1933 Act to the extent
required by the 1933 Act, (b) duly authorized for issuance in accordance
with the laws of the State of Delaware, and (c) sold in compliance with
all applicable federal securities laws. The Trust shall register and
qualify its shares for sale in accordance with the laws of the various
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states only if and to the extent deemed advisable by the Trust, AGL, or
a participating insurance company.
2.2 OF THE TRUST AND THE ADVISER; SALES TO GENERAL PUBLIC. The Trust and the
Adviser represent and warrant that no shares of any Fund have been or
will be sold to the general public as described in Internal Revenue
Service Revenue Ruling 81-225 and such other related rulings or guidance
as now exist or may be issued in the future.
2.3 OF AGL. AGL represents and warrants that interests in each Variable
Account issued pursuant to the Contracts are or will be registered under
the 1933 Act to the extent required by the 1933 Act and that the
Contracts will be issued and sold in compliance with all applicable
federal and state laws. AGL further represents and warrants that it is
an insurance company duly organized and in good standing under
applicable law and that each Variable Account is or will be validly
established as a segregated asset account under the Texas Insurance Code
and is or will be registered as a unit investment trust in accordance
with and to the extent required by the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.4 OF THE DISTRIBUTOR AND AGSI. The Distributor and AGSI each represents
and warrants that it is registered as a broker-dealer with the
Securities and Exchange Commission under the Securities Exchange Act of
1934 and is a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD").
2.5 OF THE ADVISER. Adviser represents and warrants that it is duly
registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and any applicable state securities laws.
SECTION 3
PROSPECTUSES AND OTHER DOCUMENTS
3.1 PRODUCTION AND DISTRIBUTION. Trust, Distributor, or their designee shall
provide to AGL:
(a) such documentation (including a "camera ready" copy as set in type
or, at the request of AGL, as a diskette in the form sent to the
financial printer) and other assistance as is reasonably necessary
in order for AGL once each year (or more frequently if the Trust
Prospectus is supplemented or amended) to have the prospectuses
for the Contracts and Trust (respectively,
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the "Contract Prospectuses" and "Trust Prospectuses") printed
together in one document;
(b) such documentation (including a "camera ready" copies as set in
type or, at the request of AGL, as a diskette in the form sent to
the financial printer) and other assistance as is reasonably
necessary for AGL to print the annual and semi-annual reports
("Reports") of the Trust and Accounts together in one document;
(c) a reasonable quantity of any proxy material, statements of
additional information, and other materials (the "Trust
Documents") that AGL may require in sufficient quantity to be sent
to Contract owners, annuitants, or participants under Contracts
(collectively, the "Participants"); and
(d) definitive copies of the Trust Prospectus in sufficient quantity
to be distributed to each Participant of record as of November 29,
1996, or such other date as the parties agree.
3.2 EXPENSES. With respect to the documents described in Section 3.1:
(a) Trust shall bear the following expenses:
(i) registration of Trust shares with the SEC;
(ii) qualifying Trust shares in states where required;
(iii) preparation, setting in type, and printing of any Trust
Documents made available or provided to Participants;
(iv) one half of the cost of setting in type and printing
together in a single document copies of the Trust Prospectus
and Contract Prospectus that are made available to
Participants; provided, however, that in no event shall
Trust pay for any such costs that exceed by more than five
(5) percent what Trust would have paid to print such
documents;
(iv) one half of the cost of distributing the Trust Prospectus
and Trust Documents to Participants; and
(v) the cost of setting in type and printing any Trust
Prospectuses provided to individuals or entities that are
currently and were
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Participants as of November 29, 1996, or such other date as
the parties agree.
(b) Distributor shall bear the following expenses:
(i) preparation, setting in type, and printing of any Trust
Documents made available or provided to prospective
Participants as sales literature;
(ii) one half of the cost of setting in type and printing
together in a single document copies of the Trust Prospectus
and Contract Prospectus that are made available to
prospective Participants as sales literature; provided,
however, that in no event shall Distributor pay for any such
costs that exceed by more than five (5) percent what
Distributor or Trust would have paid to print such
documents; and
(iii) one half of the cost of distributing the Trust Prospectus
and Trust Documents to prospective Participants as sales
literature.
(c) AGL shall bear the following expenses:
(i) one half of the cost of setting in type and printing
together in a single document any copies of the Trust
Prospectus and Contract Prospectus plus any amount otherwise
payable by Trust or Distributor determined to exceed the
five (5) percent limit described in subsections (a)(iv) and
(b)(2) of this Section;
(ii) one half of the cost of distributing any copies of the Trust
Prospectus and Trust Documents; and
(iii) the cost of distributing the Trust Prospectus to
Participants of record as of November 29, 1996, or such
other date as the parties agree.
(d) In the event that AGL requests that Trust or its designee provide
the Trust Prospectus or reports in a "camera ready" or diskette
format, Trust shall be responsible for providing the Trust
Prospectus or Trust reports in the format in which it is
accustomed to formatting prospectuses or reports and shall bear
the expense of providing the Trust Prospectus or Trust reports in
such format (e.g., typesetting expenses), and, notwithstanding
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anything in subsection (a) and (b) of this Section, AGL shall bear
the expense of adjusting or changing the format to conform with
any of its prospectuses or reports.
SECTION 4
APPLICABLE LAWS
4.1 QUALIFICATION OF FUNDS. The Trust and the Adviser each represents that
it believes, in good faith, that each Fund is currently qualified as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended ("Code"), and that each will make every effort
to maintain such qualification of each Fund and that each will notify
AGL immediately upon having a reasonable basis for believing that a Fund
has ceased to so qualify or that it might not so qualify in the future.
4.2 QUALIFICATION OF CONTRACTS. AGL represents that it believes, in good
faith, that the Contracts will be treated as annuity contracts under
applicable provisions of the Code, and that it will make every effort to
maintain such treatment and that it will notify the Trust and the
Adviser 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.
4.3 DIVERSIFICATION REQUIREMENTS. The Trust and the Adviser each represents
that it believes, in good faith, that each Fund currently complies with
the diversification requirements set forth in Section 817(h) of the Code
and Section 1.817-5(b) of the regulations under the Code, and that each
will make every effort to maintain each Fund's compliance with such
diversification requirements, and that each will notify AGL immediately
upon having a reasonable basis for believing that a Fund has ceased to
so qualify or that a Fund might not so qualify in the future.
4.4 SEGREGATED ASSET ACCOUNT. AGL represents that it believes, in good
faith, that each Variable Account is a "segregated asset account" and
that interests in the Variable Account are or will be offered
exclusively through the purchase of or transfer into a "variable
contract," within the meaning of such terms under Section 1.817-5(f)(2)
of the regulations under the Code, and that it will make every effort to
continue to meet such definitional requirements, and that it will notify
the Trust and the Adviser immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they
might not be met in the future.
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4.5 CERTIFICATION OF FUNDS. The Adviser shall provide AGL within ten (10)
Business Days after the end of each calendar quarter a letter from the
appropriate Trust officer or Compliance Officer certifying to the
continued accuracy of the representations contained in Section 4.1 and
Section 4.3 above. The Adviser shall attach a detailed listing of the
individual securities and other assets, if any, held by each Fund as of
the end of such calendar quarter. Within ten (10) calendar days after
receipt of the Adviser's confirmation letter, AGL shall communicate to
the Adviser any disagreement with the Adviser's conclusion regarding the
continued accuracy of the representations contained in Section 4.1 and
Section 4.3 above.
4.6 STATE INSURANCE LAWS OR REGULATIONS. The Trust and the Adviser agree to
comply with any applicable state insurance laws or regulations,
including cooperating with AGL or AGSI in any filings of sales
literature for the Contracts, to the extent notified thereof in writing
by AGL, unless such compliance is deemed by the Trust or the Adviser to
be unduly burdensome, in which event any Party may exercise its option
under Section 7(a) hereof upon one month's, rather than six months',
advance written notice.
4.7 SECURITIES LAWS.
(a) AGL represents and warrants that each Variable Account will comply
in all material respects with the requirements of the 1940 Act and
the rules thereunder, that each Variable Account's 1933 Act
registration statement relating to the Contracts, together with
any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and the rules
thereunder, and that each Contract Prospectus, and if applicable,
statement of additional information (hereinafter all references to
"Contract Prospectus" shall include the related statement of
additional information), together with any supplements thereto,
will at all times comply in all material respects with the
requirements of the 1933 Act and rules thereunder.
(b) The Trust and the Adviser represent and warrant that the Trust
does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, that its
1933 Act registration statement, together with any amendments
thereto, will at all times comply in all material respects with
the requirements of the 1933 Act and rules thereunder, and that
each Trust Prospectus, together with any supplements thereto, will
at all times comply in all material respects with the requirements
of the 1933 Act and rules thereunder.
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SECTION 5
REGISTRATION STATEMENTS; SALES LITERATURE
AND PROMOTIONAL MATERIAL
5.1 OF THE CONTRACT. AGL will provide to the Trust one complete copy of all
registration statements, reports, any preliminary and final proxy
material, applications for exemptions, requests for no-action letters,
and all amendments to any of the above, that relate to the Variable
Account or the Contracts, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
5.2 OF THE TRUST. The Trust will provide to AGL one complete copy of all
registration statements, reports, any preliminary and final proxy
material, applications for exemptions, requests for no-action letters,
and all amendments to any of the above, that relate to the Trust or its
shares, contemporaneously with the filing of such document with the SEC
or other regulatory authorities.
5.3 Sales Literature and Promotional Material; Approval.
(a) AGL or AGSI will furnish or will cause to be furnished, by
telecopy or by overnight delivery, to Trust and Adviser each piece
of sales literature or other promotional material prepared by AGL,
AGSI, or any person contracting with AGL or AGSI for distribution
of the Contracts in which Trust or Adviser is named at least 15
Business Days prior to its intended first use, or such shorter
period as the Parties hereto may agree from time to time. No such
material will be used if Trust or Adviser objects to its use in
writing within such 15 Business Days or shorter period.
(b) Trust or Adviser will furnish, or will cause to be furnished, by
telecopy or by overnight delivery, to AGL or AGSI each piece of
sales literature or other promotional material prepared by the
Trust, Distributor, or any person contracting with the Trust or
Distributor in which AGL, any Variable Account, the Contracts or
AGSI is named at least 15 Business Days prior to its intended
first use, or such shorter period as the Parties hereto may agree
from time to time. No such material will be used if AGL or AGSI
objects to its use in writing within such 15 Business Days or
shorter period.
5.4 Statements of One Party Describing Another Party.
(a) Neither Trust, Adviser, Distributor nor any of their respective
affiliates or agents will give any information
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or make any representations or statements on behalf of or
concerning AGL, AGSI, any Variable Account, or the Contracts other
than (i) the information or representations contained in each
Variable Account's registration statement relating to the
Contracts, including the Contract Prospectus contained therein, as
such registration statement and Prospectus may be amended from
time to time; or (ii) in reports or voting instruction materials
for a Variable Account; or (iii) in sales literature or other
promotional material approved by AGL or its affiliates, except
with the express written permission of AGL.
(b) Neither AGL, AGSI, nor any of their respective affiliates or
agents will give any information or make any representations or
statements on behalf of or concerning the Trust, Adviser,
Distributor or any of their respective affiliates in connection
with the sale of the Contracts other than (i) the information or
representations contained in the registration statement, including
the Trust Prospectus contained therein, relating to Fund shares,
as such registration statement and Prospectus may be amended from
time to time; or (ii) in reports or proxy materials for the Trust;
or (iii) in sales literature or other promotional material
approved by the Trust or Adviser, except with the express written
permission of the Trust, Adviser or Distributor.
(c) As used herein, the term "sales literature and other promotional
material" or words of similar import shall include, without
limitation, all materials that come within the meaning of the
terms "advertisement" or "sales literature" as defined in Section
35(a) of Article III of the NASD's Rules of Fair Practice, as
amended from time to time, and any broker-only materials.
5.5 COURT OR REGULATORY ORDERS.
(a) Trust and Distributor will immediately notify AGL of (i) the
issuance by any court or regulatory body of any stop order, cease
and desist order, or other similar order with respect to Trust's
registration statement under the 1933 Act or the Trust Prospectus,
(ii) any request by the SEC for any amendment to such registration
statement or Trust Prospectus, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to
the registration or offering of Trust's shares, or (iv) any other
action or circumstances that may prevent the lawful offer or sale
of shares of any Fund in any state or jurisdiction, including,
without limitation, any circumstances in which (a) such shares are
not registered and, in all material respects, issued and sold in
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accordance with applicable state and federal law or (b) such law
precludes the use of such shares as an underlying investment
medium of the Contracts issued or to be issued by AGL.
(b) AGL and the Underwriter will immediately notify Trust of (i) the
issuance by any court or regulatory body of any stop order, cease
and desist order, or other similar order with respect to a
Variable Account's registration statement under the 1933 Act
relating to the Contracts or a Contract Prospectus, (ii) any
request by the SEC for any amendment to such registration
statement or Prospectus, (iii) the initiation of any proceedings
for that purpose or for any other purpose relating to the
registration or offering of a Variable Account's interests
pursuant to the Contracts, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of said
interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not
registered and, in all material respects, issued and sold in
accordance with applicable state and federal law.
SECTION 6
MATERIAL IRRECONCILABLE CONFLICT
6.1 AGL's Duty to Inform Trust. AGL agrees to inform the Board of Trustees
of the Trust of the existence of or any potential for any material
irreconcilable conflict of interest known to it between the interests of
its Participants and those of any other separate accounts investing in
the Trust.
6.2 Definition. A material irreconcilable conflict may arise for a variety
of reasons, including:
(a) an action by any state insurance or other 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 Fund are being managed;
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(e) a difference in voting instructions given by annuity contract
owners or participants and life insurance contract owners or by
contract owners of different life insurance companies utilizing
the Trust; or
(f) a decision by an insurer to disregard the voting instructions of
contract owners or participants.
6.3 AGL TO ASSIST TRUST. AGL will be responsible for assisting the Board of
Trustees of the Trust in carrying out its responsibilities by providing
the Board with all information reasonably necessary for the Board to
consider any issue raised, including information as to a decision by AGL
to disregard voting instructions of Participants.
6.4 AGL TO REMEDY OR ELIMINATE. It is agreed that if it is determined by a
majority of the members of the Board of Trustees of the Trust or a
majority of its disinterested Trustees that a material irreconcilable
conflict exists affecting AGL, AGL and the other relevant insurance
companies shall, at their own 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, which steps may include, but are not
limited to,
(a) withdrawing the assets allocable to some or all of the separate
accounts of participating insurance companies from the Trust or
any Fund and reinvesting such assets in a different investment
medium, including another Fund of the Trust, or submitting the
questions whether such segregation should be implemented to a vote
of all affected participants and, as appropriate, segregating the
assets of any particular group (e.g., annuity contract owners or
participants, life insurance contract owners or all contract
owners and participants of one or more participating insurance
companies) that votes in favor of such segregation, or offering to
the affected contract owners or participants the option of making
such a change; and
(b) establishing a new registered management investment company or
managed separate account.
6.5 WITHDRAWAL FROM INVESTMENT. If the material irreconcilable conflict
arises because of AGL's decision to disregard Participant voting
instructions and that decision represents a minority position or would
preclude a majority vote, AGL may be required, at the Trust's election
to withdraw a Variable Account's investment in the Trust. No charge or
penalty will be imposed as a result of such withdrawal. AGL agrees that
any remedial action taken by it in resolving any material
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conflicts of interest will be carried out at its expense and with a view
only to the interests of Participants.
6.6 ADEQUACY OF REMEDIES. For purposes of this Section 6, a majority of the
disinterested members of the Board of Trustees of the Trust shall
determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event will the Trust or the
Adviser be required to establish a new funding medium for any Contracts.
AGL shall not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote
of a majority of Participants materially adversely affected by the
material irreconcilable conflict.
6.7 TRUST'S DUTY TO INFORM AGL. The Trust will undertake to promptly make
known in writing to AGL the Board of Trustees' determination of the
existence of a material irreconcilable conflict and its implications.
6.8 ANNUAL REPORTS TO TRUST. AGL and the Adviser shall at least annually
submit to the Board of Trustees of the Trust such reports, materials or
data as the Trustees may reasonably request so that the Trustees may
fully carry out the obligations imposed upon them by the provisions
hereof, and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Board of Trustees. All reports
received by the Board of Trustees of potential or existing conflicts,
and all Board action with regard to determining the existence of a
conflict, notifying participating insurance companies of a conflict, and
determining whether any proposed action adequately remedies a conflict,
shall be properly recorded in the minutes of the Board or other
appropriate records, and such minutes or other records shall be made
available to the SEC upon request.
6.9 MIXED AND SHARED FUNDING. If and to the extent that Rule 6e-2 and Rule
6e-3T are amended, or Rule 6e-3 is adopted, to provided exemptive relief
from any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding on terms and conditions
materially different from those described in this Agreement, then (a)
the Trust and/or AGL, 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 6 and 14 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such
sections are contained in such Rules as so amended or adopted.
6.10 OTHER PARTICIPATING INSURANCE COMPANIES. Trust will require that each
participating insurance company enter into an agreement with the Trust
that contains in substance the same
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<PAGE>
provisions as are set forth in Sections 2.3, 4.1, 4.2, 4.3, 4.4, 4.7, 6
and 13.
SECTION 7
TERMINATION
7.1 Termination. This Agreement shall terminate as to the sale and issuance
of new Contracts, including new certificates under group Contracts:
(a) at the option of AGL, AGSI, the Adviser, the Distributor or the
Trust upon six months' advance written notice to the other;
(b) at the option of AGL or AGSI if Trust shares are not available for
any reason to meet the requirements of Contracts as determined by
AGL or AGSI. Reasonable advance notice of election to terminate
shall be furnished by AGL, said termination to be effective ten
(10) days after receipt of notice unless Trust makes available a
sufficient number of shares to reasonably meet the requirements of
the Variable Account within said ten (10) day period;
(c) at the option of AGL, AGSI, Adviser, Distributor, or the Trust,
upon institution of formal proceedings against a Variable Account,
AGL, the Adviser, the Distributor, or the Trust by the NASD, SEC
or another regulatory body if, in each case, there is a material
likelihood that the proceeding could have a material negative
impact upon the Party electing to terminate; provided that the
Party electing to terminate will give the other Parties hereto
thirty (30) days advance written notice of its determination to
terminate.
(d) upon a decision by AGL, in accordance with regulations of the SEC,
to substitute Trust shares with the shares of another investment
company for Contracts for which the Trust shares have been
selected to serve as the underlying investment medium. AGL will
give 60 days' written notice to the Trust and the Adviser of any
proposed vote to replace Trust shares;
(e) in the event Trust shares are not registered, issued or sold in
conformance with federal or applicable state law or such law
precludes the use of Trust shares as an underlying investment
medium of Contracts issued or to be issued by AGL. The terminating
Party shall give prompt notice to the other Parties of its
decision to terminate;
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<PAGE>
(f) at the option of Trust or AGL if the terminating Party determines
in its sole judgement reasonably exercised in good faith that the
other Party has suffered a material adverse change in its business
or financial condition or is the subject of material adverse
publicity and such material adverse change or material adverse
publicity is likely to have a material adverse impact upon
business and operation of the terminating Party or its affiliated
entities; provided that the terminating Party will give the other
Party 60 days' advance written notice of such determination and
its intent to terminate this Agreement, and provided further that
after consideration of the actions taken by the other Party and
any other changes in circumstances since the giving of such
notice, the determination of the terminating Party shall continue
to apply on the 60th day since giving of such notice, then such
60th day shall be the effective date of termination; or
(g) at the option of AGL or the Trust upon the other Party's breach of
any representation in Section 4 or any material provision of this
Agreement, which breach has not been cured to the satisfaction of
the terminating Party within ten (10) days after written notice of
such breach is delivered to the Trust or AGL, as the case may be.
SECTION 8
WARRANTIES AND INDEMNIFICATIONS SURVIVE TERMINATION
8.1 Warranties and Indemnifications Survive Termination. The warranties and
indemnifications set out in this Agreement shall survive its
termination.
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<PAGE>
SECTION 9
ASSIGNMENT
9.1 Assignment. This Agreement shall not be assigned, except with the
written consent of each other Party.
SECTION 10
AVAILABILITY OF SHARES FOLLOWING TERMINATION
10.1 AVAILABILITY OF SHARES FOLLOWING TERMINATION. Termination as the result
of any cause listed in Section 7 shall not affect the Trust's and the
Distributor's obligation to furnish Trust shares for Contracts or
certificates then in force for which the shares of the Trust serve or
may serve as an underlying medium, unless such further sale of Trust
shares is proscribed by law or the SEC or other regulatory body, or
unless the Trust determines that liquidation of the Trust following
termination of this Agreement is in the best interests of the Trust and
its beneficial owners.
SECTION 11
PARTIES TO COOPERATE
11.1 PARTIES TO COOPERATE. Each Party hereto shall cooperate with each other
Party and all appropriate governmental authorities having jurisdiction
(including, without limitation, the SEC, the NASD, and state insurance
regulators) and shall permit each other and 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.
SECTION 12
RECIPIENTS OF NOTICE
12.1 RECIPIENTS OF NOTICE. Each notice or other written communication
required by this Agreement shall be given by wire and confirmed in
writing to:
American General Life Insurance Company
2727 Allen Parkway
Houston, Texas 77019
Attn: Steven A. Glover
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21130302.5
<PAGE>
American General Securities Incorporated
2727 Allen Parkway
Houston, Texas 77019
Attn: F. Paul Kovach, Jr.
Van Kampen American Capital Life Investment Trust
2800 Post Oak Boulevard
Houston, Texas 77056
Attn: Nori L. Gabert
Van Kampen American Capital Asset Management, Inc.
2800 Post Oak Boulevard
Houston, Texas 77056
Attn: Nori L. Gabert
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attn: General Counsel
SECTION 13
PROXY MATERIAL
13.1 PROXY MATERIAL. AGL will distribute all proxy material furnished by
Trust to Participants to whom voting privileges are required to be
extended and will vote Trust shares in accordance with timely
instructions received from the contract owners or Participants, as
appropriate. AGL shall vote the Trust shares for which no instructions
have been received in the same proportion as Trust shares for which said
instructions have been received from contract owners or Participants.
AGL will assure that each Variable Account calculates voting privileges
in a manner consistent with the procedures described in Schedule B.
Trust will provide AGL with a formal report of the results of the vote,
including minutes of the shareholder meeting, within sixty days
following the meeting date.
SECTION 14
INDEMNIFICATION OF AGL AND AGSI
14.1 SEPARATE ACCOUNT REGISTRATION STATEMENT AND SEPARATE ACCOUNT PROSPECTUS.
Except as limited by and in accordance with the provisions of Sections
14.2 and 14.3 hereof, AGL and AGSI agree to indemnify and hold harmless
Trust, Adviser and Distributor and each trustee of the Board of Trustees
of Trust, and each of the directors and officers of Adviser and
Distributor and each person, if any, who controls Adviser or Distributor
within the meaning of Section 15 of the 1933 Act
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<PAGE>
(collectively, the "Indemnified Parties" for purposes of this Section
14) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of AGL or AGSI) 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 Trust's shares or the
Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or Contract Prospectus or contained in the
Contracts or any sales literature relating thereto (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 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 AGL or AGSI by or on
behalf of Trust for use in the registration statement, Contract
Prospectus, Contracts, or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, Trust Prospectus or sales literature of
Trust not supplied by AGL or AGSI, or persons under its contract)
or wrongful conduct of AGL or AGSI or persons under their control,
with respect to the sale or distribution of the Contracts or Trust
shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, Trust
Prospectus, or sales literature of Trust or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
Trust by or on behalf of AGL or AGSI; or
(d) arise as a result of any failure by AGL or AGSI to substantially
provide the services and furnish the materials under the terms of
this Agreement; or
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<PAGE>
(e) arise out of or result from any material breach of any
representation and/or warranty made by AGL or AGSI in this
Agreement or arise out of or result from any other material breach
of this Agreement by AGL or AGSI.
14.2 INDEMNIFIED PARTIES' WILLFUL ACTS. AGL and AGSI 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 Trust, whichever is applicable.
14.3 NOTICE REQUIRED. AGL and AGSI 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 AGL
and AGSI 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 AGL and AGSI of any such claim shall not
relieve AGL and AGSI 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, AGL and AGSI shall be entitled to
assume the defense thereof, with counsel satisfactory to the Party named
in the action. After notice from AGL and AGSI to such Party of AGL's and
AGSI's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by
it, and AGL and AGSI 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.
SECTION 15
INDEMNIFICATION OF THE ADVISER AND DISTRIBUTOR
15.1 TRUST REGISTRATION STATEMENT AND TRUST PROSPECTUS. Except as limited by
and in accordance with the provisions of Sections 15.2 and 15.3 hereof,
Adviser and Distributor agree to jointly and severally indemnify and
hold harmless AGL, AGSI, and each of their respective directors and
officers and each person, if any, who controls AGL or AGSI within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 17) against any and all losses,
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<PAGE>
claims, damages, liabilities (including amounts paid in settlement with
the written consent of Adviser or Distributor) 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 Trust's shares or the Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or Trust Prospectus or sales literature of
Trust (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 Adviser, Distributor,
or Trust by or on behalf of AGL for use in the registration
statement or Trust Prospectus or in sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Trust shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, Contract Prospectus or sales literature
for the Contracts not supplied by Trust, Adviser, Distributor or
persons under their control) or wrongful conduct of Distributor,
Trust, its advisers, including the Adviser, or persons under their
respective control, with respect to the sale or distribution of
the Contracts or Trust shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, Contract
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 statements therein not
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to AGL or AGSI by or on behalf of
Trust, Adviser or Distributor; or
(d) arise as a result of any failure by Trust, Adviser, or Distributor
to substantially provide the services and furnish the materials
under the terms of this Agreement;
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<PAGE>
(e) arise out of or result from any material breach of any
representation and/or warranty made by Trust, Adviser or
Distributor in this Agreement or arise out of or result from any
other material breach of this Agreement by Trust, Adviser, or
Distributor.
For purposes of subparagraph (e) immediately above, a "material
breach of any representation" shall include, without limitation, the
failure of any Fund to operate as a regulated investment company in
compliance with (i) Subchapter M of the Code and regulations thereunder
or (ii) Section 817(h) of the Code and regulations thereunder
(collectively, "failures"). AGL and AGSI shall be indemnified and held
harmless for any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arising out of or resulting
from these failures, including, without limitation, any income taxes and
related penalties, rescission charges, liability charges, liability
under state law to Participants asserting liability against AGL or AGSI
pursuant to the Contracts, the costs of any ruling and closing agreement
or other settlement with the Internal Revenue Service, and the cost of
any substitution by AGL of shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium
for each Variable Account that AGL reasonably deems necessary or
appropriate as a result of the noncompliance.
15.2 INDEMNIFIED PARTIES' WILLFUL ACTS. Neither Adviser nor Distributor shall
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 AGL or AGSI, whichever is applicable.
15.3 NOTICE REQUIRED. Neither Adviser nor Distributor shall be liable under
this indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified
Adviser or Distributor 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 Adviser or Distributor of any
such claim shall not relieve Adviser or Distributor from any liability
which each 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
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<PAGE>
Parties, Adviser or Distributor shall be entitled to participate at its
own expense in the defense thereof. Adviser or Distributor also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
Party named in the action. After notice from Adviser or Distributor to
such Party of Adviser or Distributor's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and Adviser or Distributor, as the
case may be, 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.
SECTION 16
AGREEMENT AUTHORIZED; SURVIVAL OF TERMS
16.1 TRUST APPROVAL. The execution of this Agreement has been authorized by
the Trust's Trustees. This Agreement is executed on behalf of the Trust
or the Trustees of the Trust as Trustees and not individually; the
obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of the Trust individually but are binding only
upon the assets and property of the Trust. The Trust is composed of
multiple Funds. All obligations of the Trust under this Agreement shall
apply only on a Fund by Fund basis and the assets of one Fund shall not
be liable for the obligations of any other Fund. A Certificate of Trust
in respect of the Trust is on file with the Secretary of the State of
Delaware.
16.2 COOPERATION OF THE PARTIES. In the event an Indemnifying Party elects to
assume the defense of any claim, the Indemnified Party shall cooperate
fully with the Indemnifying Party, at the Indemnifying Party's expense,
in the defense of such claim. No Party shall confess any claim nor make
any compromise in any action or proceeding which may result in a finding
of wrongdoing by any other Party without the other Party's written
consent. Any notice given by the Indemnifying Party to an Indemnified
Party or participation in or control of the litigation of any such claim
by the Indemnifying Party shall in no event be deemed to be an admission
by the Indemnifying Party of culpability, and the Indemnifying Party
shall be free to contest liability with respect to the claim among the
Parties.
16.3 PARTIES' SUCCESSORS BOUND. A successor by law of any Party shall be
entitled to the benefits of indemnification contained in this Agreement.
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<PAGE>
SECTION 17
APPLICABLE LAW
17.1 APPLICABLE LAW. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Texas, without regard for that state's principles of conflict of laws;
provided, however, that if such laws or any of the provisions of this
Agreement conflict with applicable provisions of the 1940 Act, the
latter shall control.
SECTION 18
CONFIDENTIALITY
18.1 CONFIDENTIALITY. Subject to the requirements of legal process and
regulatory authority, each Party hereto will treat as confidential the
names and addresses of the contract owners or Participants and all
information reasonably identified as confidential in writing by any
other Party hereto and, except as permitted by this Agreement, will not
disclose, disseminate or utilize such names and addresses and other
confidential information unless and until such time as it may otherwise
come into the public domain, without the express written consent of the
affected Party.
SECTION 19
MULTIPLE ORIGINAL AGREEMENTS
19.1 MULTIPLE ORIGINAL AGREEMENTS. 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>
SECTION 20
INVALIDITY OF ONE OR MORE PROVISIONS
20.1 INVALIDITY OF ONE OR MORE PROVISIONS. 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 will not be affected thereby.
SECTION 21
RIGHTS OF THE PARTIES
21.1 RIGHTS OF THE PARTIES. 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, that the Parties hereto
are entitled to under state and federal laws.
SECTION 22
OTHER INSURANCE COMPANIES' PARTICIPATION
22.1 OTHER INSURANCE COMPANIES' PARTICIPATION. Without AGL's express written
consent, neither the Trust, the Adviser nor the Distributor, nor any of
them, shall enter into any arrangement for participation in the Trust by
any other insurance company under which the terms granted to that
insurance company or its related persons and entities are more favorable
than those granted to AGL and its related persons and entities
hereunder.
SECTION 23
FOREIGN TAX CREDITS
23.1 FOREIGN TAX CREDITS. The Trust and Adviser agree to consult in advance
with AGL concerning any decision to elect or not to elect pursuant to
Section 853 of the Code to pass through the benefit of any foreign tax
credits to its shareholders.
-----------------------------------
IN WITNESS WHEREOF, the Parties have cause this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers signing below.
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<PAGE>
AMERICAN GENERAL LIFE INSURANCE
COMPANY on behalf of itself and
each of its Variable accounts
named in Schedule A hereto, as
amended from time to time
____________________________ By_______________________________
Date
Title____________________________
AMERICAN GENERAL SECURITIES INCORPORATED
____________________________ By_______________________________
Date
Title____________________________
VAN KAMPEN AMERICAN CAPITAL LIFE
INVESTMENT TRUST
____________________________ By_______________________________
Date
Title____________________________
VAN KAMPEN AMERICAN CAPITAL ASSET
MANAGEMENT, INC.
____________________________ By_______________________________
Date
Title____________________________
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<PAGE>
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS,
INC.
____________________________ By_______________________________
Date
Title____________________________
(Signature page to Fund Participation Agreement dated __________, 1996)
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<PAGE>
SCHEDULE A
Other Insurance Companies' Participation
NAME OF AGL VARIABLE ACCOUNTS
American General Life Insurance Company Separate Account D
NAME OF TRUST FUNDS
[Identify Funds here]
NAME OF CONTRACTS
Contract Form Nos.: 95020 Rev 896
95021 Rev 896
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<PAGE>
SCHEDULE B
Proxy Procedures and Responsibilities
The following is a list of procedures and corresponding responsibilities for
the handling of proxies relating to the Trust. The defined terms herein shall
have the meanings assigned in the Participation Agreement except that the term
"AGL" shall also include the department or third party assigned by AGL to
perform the steps delineated below.
1. The number of proxy proposals is given to AGL by the Distributor as
early as possible before the date set by the Trust for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Distributor will inform AGL of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, AGL will perform a "tape run", or other
activity, which will generate the names, addresses and number of
equivalent shares 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. AGL will use its best efforts to call in the
number of Customers to Distributor, as soon as possible, but no later
than two weeks after the Record Date.
3. The Trust's Annual Report must be sent to each Customer by AGL either
before or together with the Customers' receipt of a proxy statement.
Distributor will provide at least one copy of the last Annual Report to
AGL.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to AGL by the Trust. AGL, at its expense, shall produce and
personalize the Voting Instruction Cards. The Legal Department of the
Adviser or its affiliate ("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. Trust or account number
d. coding to state number of equivalent shares
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Trust)
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<PAGE>
(This and related steps may occur later in the chronological process due
to possible uncertainties relating to the proposals.)
5. During this time, Legal will develop, produce, and the Trust will pay
for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to AGL for insertion into
envelopes (envelopes and return envelopes are provided and paid for by
AGL). Contents of envelope sent to Customers by AGL will include:
a. voting instruction card(s)
b. one proxy notice and statement (one document)
c. return envelope (postage pre-paid by AGL) addressed to AGL 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 Trust.)
e. cover letter - optional, supplied by AGL and reviewed and approved
in advance by Legal.
6. The above contents should be received by AGL approximately 3-5 business
days before mail date. Individual in charge at AGL reviews and approves
the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Legal.
7. Package mailed by AGL.
The Trust must allow at least a 15-day solicitation time to AGL 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.
9. Signatures on Card checked by AGL against legal name on account
registration which was printed on the Card.
Note: For example, if the account registration is under "John C. Smith,
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 equivalent shares. (It is very
important that the Trust receives the tabulations stated in terms of a
percentage and the number of shares.) Legal must review and approve
tabulation format.
13. Final tabulation in shares is verbally given by AGL to Legal on the
morning of the meeting not later than 10:00 a.m. Houston time. 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 AGL as well as an original copy of the final vote. Legal
will provide a standard form for each Certification.
15. AGL 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, 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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21130302.5
EXHIBIT 4(g)(i)
AMERICAN GENERAL LIFE
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND THE SUM OF YOUR ACCOUNT VALUE AT THE END OF THE VALUATION PERIOD IN
WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM TAXES AND ANNUAL CONTRACT FEE
THAT HAVE BEEN DEDUCTED.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020 Rev 896
<PAGE>
<TABLE>
INDEX
<CAPTION>
Page
<S> <C>
Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . . . 7
Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Annuity Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Annuity Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Automatic Rebalancing . . . . . . . . . . . . . . . . . . . . . . . . 12
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Change of Investment Advisor or
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Contingent Annuitant . . . . . . . . . . . . . . . . . . . . . . . . 4
Contract Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Death Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Division Accumulation Units . . . . . . . . . . . . . . . . . . . . . 11
Divisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . . 9
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 6
Guaranteed Interest Rates . . . . . . . . . . . . . . . . . . . . . . 10
Guarantee Periods . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . 11
One-Time Reinstatement Privilege . . . . . . . . . . . . . . . . . . 15
Ownership Provisions . . . . . . . . . . . . . . . . . . . . . . . . 8
Payment of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 18
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Full Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Partial Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . 13
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Surrender Charge Exceptions . . . . . . . . . . . . . . . . . . . . . 14
Ten Percent Free Withdrawal Privilege . . . . . . . . . . . . . . . . 15
Tax Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Variable Annuity Payments . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
95020 Rev 896
Page 2
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY
<TABLE>
SCHEDULE PAGE
<S> <C>
INITIAL PURCHASE PAYMENT: $10,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
(Per Division or Guarantee Period): $ 100
ADDITIONAL BENEFITS: NONE
MAXIMUM ASSET CHARGE FACTORS (Separate Account Only)
ANNUAL RATE: 1.40%
MAXIMUM ANNUAL CONTRACT FEE: $ 30
TRANSFER CHARGE (After first 12 in a Contract Year): $ 25
ISSUE AGE: 35
ANNUITY COMMENCEMENT DATE: JANUARY 1, 2026
[INITIAL ALLOCATION:
</TABLE>
<TABLE>
<CAPTION>
Net Dollar
Amount of
Percentage Allocations
---------- -----------
<S> <C> <C>
Emerging Growth Fund 100% $10,000
Enterprise Fund xx% $ xxx
Global Equity Fund xx% $ xxx
Real Estate Securities Fund xx% $ xxx
Growth and Income Fund xx% $ xxx
Asset Allocation Fund xx% $ xxx
Domestic Income Fund xx% $ xxx
Government Fund xx% $ xxx
Money Market Fund xx% $ xxx
Fixed Account
1 Year Guarantee Period xx% $ xxx
3 Year Guarantee Period xx% $ xxx
5 Year Guarantee Period xx% $ xxx
7 Year Guarantee Period xx% $ xxx
10 Year Guarantee Period xx% $ xxx
---------- -----------
TOTAL ALLOCATIONS 100% $10,000]
</TABLE>
ANNUITANT: JOHN DOE CONTRACT NUMBER: 123456
CONTRACT OWNER: JOHN DOE DATE OF ISSUE: JANUARY 1, 1996
CONTRACT JURISDICTION: (STATE NAME)
95020 Rev 896
Page 3
<PAGE>
DEFINITIONS
"WE", "OUR", "US", OR "COMPANY". American General Life Insurance Company.
YOU, YOUR, OWNER. The Owner of this Contract. The "Owner" is the person,
persons or entity entitled to the ownership rights stated in this Contract.
The Owner may designate a trustee or custodian of a retirement plan which
meets the requirements of Section 401, Section 408(c), or Section 408(k) of
the Internal Revenue Code to serve as legal owner of assets of a retirement
plan, but the term "Owner" as used herein, shall refer to the organization
entering into this Contract.
ACCOUNT. Any of the Divisions or the Fixed Account.
ACCOUNT VALUE. The sum of the Fixed Account Value and the Separate Account
Value after deduction of any fees. The Fixed Account Value is the sum of Net
Purchase Payments and transfers into the Fixed Account, plus accumulated
interest, less any partial withdrawals and transfers out of the Fixed Account.
The Separate Account Value is the sum of the values of the Separate Account
Divisions. The value of a Separate Account Division is the value of a
Division's Accumulation Unit multiplied by the number of Accumulation Units in
that Division.
ACCUMULATION PERIOD. The period during which Net Purchase Payments are
applied.
ACCUMULATION UNIT. An accounting unit of measure used to calculate the value
of a Division of this Contract before annuity payments begin.
AGE. Age last birthday unless otherwise stated.
ANNUITANT. The person upon whose date of birth income payments are based. The
Annuitant's name is shown on Page 3.
ANNUITY UNIT. A unit of measurement to calculate variable annuity payments.
BENEFICIARY. The person entitled to receive benefits in the event the Owner or
Annuitant dies. If no named Beneficiary is living at the time any payment is
to be made, the Owner shall be the Beneficiary, or if the Owner is not living,
the Owner's estate shall be the Beneficiary.
CONTINGENT ANNUITANT. A person named by the Owner of a Non-Qualified contract
to become the Annuitant if: (1) the Annuitant dies before the Annuity
Commencement Date; and (2) the Contingent Annuitant is then living.
A Contingent Annuitant may not be named except at the time of application.
Once named, the choice may not be revoked or replaced. If a Contingent
Annuitant dies, a new Contingent Annuitant may not be named. After Annuity
Payments start, a Contingent Annuitant may not become the Annuitant.
CONTINGENT BENEFICIARY. A person named by the Owner to receive benefits in the
event a designated Beneficiary is not living at the time of the Owner's or
Annuitant's death.
CONTRACT YEAR. A period of 12 consecutive months beginning on the Date of
Issue or any anniversary thereof.
CONTRACT ANNIVERSARY. Each anniversary of the Date of Issue of this Contract.
DATE OF ISSUE. The date on which this Contract becomes effective as shown on
Page 3.
DIVISION. The subdivisions of the Separate Account which are used to determine
how the Owner's Account is allocated among the Variable Funds.
FIXED ANNUITY OPTION. An Annuity Option with payments which do not vary with
investment performance as to dollar amount.
GUARANTEE PERIOD. The period for which a Guaranteed Interest Rate is credited.
95020 Rev 896
Page 4
<PAGE>
GUARANTEED INTEREST RATE. The minimum rate we may use to credit interest on an
effective annual basis during any Guarantee Period.
HOME OFFICE. Our office at 2727-A Allen Parkway, Houston, Texas 77019;
1-713-831-3505; Mailing Address P.O. Box 1401, Houston, Texas 77251-1401.
ISSUE AGE. Age last birthday on the Date of Issue. (If the Date of Issue
occurs on the Annuitant's birthday, "last birthday" will mean the birthday
occurring on the Date of Issue).
NET ASSET VALUE PER SHARE. The net assets of a Variable Fund divided by the
number of shares in the Variable Fund.
NET PURCHASE PAYMENT. The gross amount of a Purchase Payment less any Premium
Taxes deducted at the time a Purchase Payment is made.
NON-QUALIFIED CONTRACT. A Contract that does not qualify for the special
federal income tax treatment applicable in connection with retirement plans.
OWNER'S ACCOUNT. An account established for each Owner to which each Purchase
Payment is credited.
PAYOUT PERIOD. The period, starting with the Annuity Commencement Date, during
which Annuity Payments are made by the Company.
PREMIUM TAX. The amount of tax, if any, charged by a state or municipality on
Purchase Payments or Contract values.
PURCHASE PAYMENT. An amount paid to the Company as consideration for the
benefits described herein.
QUALIFIED CONTRACT. A Contract that is qualified for the special federal
income tax treatment applicable in connection with certain retirement plans.
SEPARATE ACCOUNT. A segregated investment account entitled "Separate Account
D" established by the Company to separate the assets funding the variable
benefits for the class of contracts to which this Contract belongs from the
other assets of the Company. That portion of the assets of the Separate
Account equal to the reserves and other contract liabilities with respect to
the Separate Account shall not be chargeable with liabilities arising out of
any other business we may conduct. Income, gains and losses, whether or not
realized, from assets allocable to the Separate Account, are credited to or
charged against such account without regard to our other income, gains or
losses.
UNIT VALUE. The value of: (1) an Accumulation Unit as described in the
"Division Accumulation Units" provision; or (2) an Annuity Unit as described
in the "Annuity Units" provision.
VALUATION DATE. Any day on which we are open for business except, with respect
to any Division, a day on which the related Variable Fund does not value its
shares.
VALUATION PERIOD. The period that starts at the close of regular trading on
the New York Stock Exchange on a Valuation Date and ends at the close of
regular trading on the Exchange on the next Valuation Date.
VARIABLE ANNUITY OPTION. An Annuity Option under which we promise to pay the
Annuitant or other properly-designated Payee one or more payments which vary
in amount in accordance with the net investment experience of the applicable
Divisions selected to measure the value of this Contract.
VARIABLE FUND. An individual investment fund or series in which a Division
invests.
WRITTEN, IN WRITING. A written request or notice in acceptable form and
content, which is signed and dated, and received at our Home Office.
95020 Rev 896
Page 5
<PAGE>
GENERAL PROVISIONS
ENTIRE CONTRACT This Contract, endorsements if any, and a copy of the
Application, if attached, is the entire Contract. All
statements made by the Contract Owner or Annuitant will be
deemed representations and not warranties. No statement
will be used to reduce a claim under this Contract unless
it is in writing and made a part of this Contract.
NOT CONTESTABLE This Contract is not contestable.
GUARANTEES Subject to the Net Investment Factor provision of this
Contract, we guarantee that the dollar amount of Variable
Annuity Payments made during the lifetime of the Payee(s)
will not be adversely affected by our actual mortality
experience or by the actual expenses incurred by us in
excess of the expense deductions provided for in this
Contract.
SETTLEMENT All benefits under this Contract are payable from our Home
Office.
NONPARTICIPATING This Contract is nonparticipating and does not share in
our surplus or earnings.
CHANGE OF Unless otherwise required by law or regulation, investment
INVESTMENT advisor or any investment policy may not be changed
ADVISOR OR without our consent. If required, approval of or change of
INVESTMENT any investment objective will be filed with the Insurance
POLICY Department of the state where this Contract is delivered.
You will be notified of any material investment policy
change which has been approved. Notification of an
investment policy change will be given in advance to those
Owners who have the right to comment on or vote on such
change.
Any substitution of the underlying investments of any
Division will comply with all applicable requirements of
the Investment Company Act of 1940 and rules thereunder.
RIGHTS RESERVED Upon notice to you, this Contract may be modified by us,
BY US but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted
under the Investment Company Act of 1940 or in any
other form permitted by law;
(2) Transfer any assets in any Division to another
Division, or to one or more other separate accounts,
or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate
Account, or combine the Separate Account with another
separate account;
(4) Add, restrict or remove Guarantee Periods of the
Fixed Account;
(5) Make any new Division available to you on a basis to
be determined by us;
(6) Substitute for the shares held in any Division, the
shares of another Variable Fund or the shares of
another investment company or any other investment
permitted by law;
(7) Make any changes as required by the Internal Revenue
Code or by any other applicable law, regulation or
interpretation in order to continue treatment of this
Contract as an annuity; or
(8) Make any changes required to comply with rules of any
Variable Fund.
95020 Rev 896
Page 6
<PAGE>
When required by law, we will obtain your approval of
changes and we will gain approval from any appropriate
regulatory authority.
CHANGING THE TERMS Any change in your Contract must be approved by one of our
OF YOUR CONTRACT officers. No agent has the authority to make any changes
or waive any of the terms of your Contract.
TERMINATION This Contract will remain in force until surrendered for
its full value, or all annuity payments have been made, or
the death proceeds have been paid, except as follows:
If the Owner's Account Value is less than $500, We may
cancel this Contract upon 60 days' notice to the Owner.
Such cancellation would be considered a full surrender of
this Contract.
If the Owner's Account Value in any Division (except the
Money Market Division) falls below $500, we reserve the
right to transfer the remaining balance, without charge,
to the Money Market Division.
PURCHASE PAYMENTS
MINIMUM PAYMENTS The minimum amounts acceptable as Purchase Payments are
shown on Page 3. We reserve the right to modify these
minimums or to refuse a Purchase Payment for any reason.
ALLOCATION OF The initial allocation for Net Purchase Payments is shown
PURCHASE PAYMENTS on Page 3 of this Contract and will remain in effect until
changed by Written notice. The percentage allocation for
future Net Purchase Payments may be changed at any time by
Written notice.
Changes in the allocation will be effective on the date we
receive the Owner's notice. The allocation may be 100% to
any available Division or Guarantee Period, or may be
divided among these options in whole percentage points
totaling 100%.
The initial Purchase Payment will be credited to the
Owner's Account not more than two Valuation Periods after
we receive it, together with all other required
documentation, in good order at the office designated by
the Company for the processing of initial Purchase
Payments. Subsequent Purchase Payments will be credited as
of the end of the Valuation Period in which they are so
received. We reserve the right to limit the total number
of Fixed Account Guarantee Periods and Separate Account
Divisions that may be chosen during the life of the
Contract.
PREMIUM TAXES When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
(1) From Purchase Payment(s) when received; or
(2) From the Account Value at the time annuity payments
are to commence; or
(3) From the amount of any partial withdrawal; or
(4) From proceeds payable upon termination of the
Contract for anyother reason, including death of the
Annuitant or Owner, or surrender of the Contract.
95020 Rev 896
Page 7
<PAGE>
If premium tax is paid, the Company may reimburse itself
for such tax when deduction is being made under paragraphs
2, 3, or 4 above calculated by multiplying the sum of
Purchase Payments being withdrawn by the applicable
premium tax percentage.
OWNERSHIP PROVISIONS
EXERCISE OF This Contract belongs to the Owner, who is entitled to
CONTRACT RIGHTS exercise all rights and privileges in connection with this
Contract. Where a Contract is jointly owned, both Owners
must join in any request to exercise the rights or
privileges of an Owner.
In any case, such rights and privileges can be exercised
without the consent of the Beneficiary (other than an
irrevocably - designated Beneficiary) or any other person.
Such rights and privileges may be exercised only during
the lifetime of the Annuitant and prior to the Annuity
Commencement Date, except as otherwise provided in this
Contract.
Unless the Owner specifies otherwise, the Annuitant will
become the Payee on the Annuity Commencement Date. If the
Owner or the Annuitant dies prior to the Annuity
Commencement Date, the Beneficiary will become the Payee.
Such Payees may thereafter exercise such rights and
privileges of ownership which continue.
BENEFICIARY The Owner named the Beneficiary and any Contingent
Beneficiary when applying for this Contract. By Written
notice to us, a non-irrevocable Beneficiary or Contingent
Beneficiary may be changed by the Owner prior to the
Annuity Commencement Date or by the Annuitant or other
properly-designated Payee after the Annuity Commencement
Date.
CHANGE OF OWNERSHIP Ownership of a Qualified Contract may not be transferred
except to: (1) the Annuitant; (2) a trustee or successor
trustee of a pension or profit sharing trust which is
qualified under Section 401 of the Internal Revenue Code;
(3) the employer of the Annuitant, provided that the
Qualified Contract after transfer is maintained under the
terms of a retirement plan qualified under Section 403(a)
of the Internal Revenue Code for the benefit of the
Annuitant; (4) the trustee of an individual retirement
account plan qualified under Section 408 of the Internal
Revenue Code; or (5) as otherwise permitted from time to
time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract
may be issued. In no other case may a Qualified Contract
be sold, assigned, transferred, discounted or pledged as
collateral.
During the lifetime of the Annuitant and prior to the
Annuity Commencement Date, the Owner may change the
ownership of a Non-Qualified Contract.
A change of ownership will not be binding upon us until we
receive Written notification at our Home Office. When such
notification is so received, the change will be effective
as of the date of the signed request for change, but the
change will be without prejudice to us on account of any
payment made, or any action taken by us prior to receiving
the change, or on account of any tax consequence.
95020 Rev 896
Page 8
<PAGE>
DISTRIBUTION OF If an Owner (including the first to die in the case of
DEATH PROCEEDS joint Contract owners) under a Non-Qualified Contract dies
UNDER NON- prior to the Annuitant and before the Annuity Commencement
QUALIFIED Date, the death proceeds must be distributed to the
CONTRACTS Beneficiary either (1) within five years after the date of
death of the Owner, or (2) over the life of or a period
not greater than the life or expected life of the
Beneficiary, with annuity payments beginning within one
year after the date of death of the Owner. The Beneficiary
shall be considered the designated beneficiary for the
purposes of Section 72(s) of the Internal Revenue Code. In
all cases, any such designated beneficiary will not be
entitled to exercise any rights prohibited by applicable
federal income tax law.
These mandatory distribution requirements will not apply
when the designated Beneficiary is the spouse of the
deceased Owner, if the spouse elects to continue this
Contract in the spouse's own name, as Owner. When the
deceased Owner was also the Annuitant, the surviving
spouse (if the surviving spouse is the designated
Beneficiary) may elect to be named as both Owner and
Annuitant and continue this Contract.
If the Payee under a Non-Qualified Contract dies after the
Annuity Commencement Date and before all of the payments
under the Annuity Option have been distributed, the
remaining amount payable, if any, must be distributed at
least as rapidly as under the method of distribution then
in effect.
If the Owner prior to the Annuity Commencement Date, or
the Payee thereafter, is not a natural person, then the
foregoing distribution requirements shall apply upon the
death of the primary Annuitant within the meaning of the
Internal Revenue Code.
PERIODIC REPORTS We will send to each Owner, at least once during each
Contract Year, a statement showing the Owner's Account
Value as of a date not more than two months prior to the
date of mailing. We will also send such statements as may
be required by applicable state and federal laws, rules
and regulations.
OWNER'S ACCOUNT We will establish an Owner's Account for the Owner under
this Contract and will maintain such account during the
Accumulation Period. The Owner's Account Value for any
Valuation Period will be equal to the Owner's Separate
Account Value, if any, plus the Owner's Fixed Account
Value, if any, for that Valuation Period.
FIXED ACCOUNT
FIXED ACCOUNT VALUE That portion of a Net Purchase Payment which is allocated
to the Fixed Account will be credited to the Owner's
Account and allocated to the Guarantee Period(s) selected.
The Fixed Account Value of an Owner's Account for any
Valuation Period is equal to the sum of the values in each
of the Guarantee Periods credited to the Owner's account
for such Valuation Period.
The value in any one Guarantee Period on a Valuation Date
is the accumulated value of the Net Purchase Payments,
renewals or transfers allocated to the Guarantee Period at
the Guaranteed Interest Rate, minus the accumulated value
of surrenders and transfers out of that Guarantee Period
and Contract Fee allocated to that Guarantee Period, at
the Guaranteed Interest Rate.
95020 Rev 896
Page 9
<PAGE>
GUARANTEE PERIODS The Owner may select one or more Guarantee Period(s). The
Guarantee Period(s) selected will determine the Guaranteed
Interest Rates(s). The Net Purchase Payment or the portion
thereof (or amount transferred in accordance with the
transfer privilege provision described below) allocated to
a particular Guarantee Period will earn interest at the
Guaranteed Interest Rate during the Guarantee Period.
Guarantee Periods begin on the date as of which we credit
the Owner's Account Value to that Guarantee Period or, in
the case of a transfer, on the effective date of the
transfer. The Guarantee Period is the number of years we
credit the Guaranteed Interest Rate. The expiration date
of any Guarantee Period is the last day of the Guarantee
Period. Subsequent Guarantee Periods begin on the first
day following the expiration date. As a result of
Guarantee Period renewals, additional Purchase Payments
and transfers of portions of the Owner's Account Value,
Guarantee Periods of the same duration may have different
expiration dates and Guaranteed Interest Rates.
We will notify the Owner in writing at least 30 and no
more than 60 days prior to the expiration date of any
Guarantee Period. A new Guarantee Period of the same
duration as the previous Guarantee Period will begin
automatically unless we receive Written notice to the
contrary from the Owner at least 3 Valuation Dates prior
to the end of such Guarantee Period. The Owner may elect
to change to another Guarantee Period or Division which we
offer at such time.
If the amount of an Owner's Account Value in a Guarantee
Period is less than $500 at the end of such Guarantee
Period, we reserve the right to transfer such amount,
without charge, to the Money Market Division of the
Separate Account. However, we will transfer such amount to
another available Division at the Owner's request.
GUARANTEED INTEREST We will periodically establish an applicable Guaranteed
RATES Interest Rate for each Guarantee Period we offer. These
rates will be guaranteed for the duration of the
respective Guarantee Periods. The Guarantee Periods that
we make available at any time will be determined in our
discretion.
No Guaranteed Interest Rate shall be less than an
effective annual rate of 3.0% per year.
SEPARATE ACCOUNT
DIVISIONS The Separate Account has several Divisions, each investing
in a corresponding Variable Fund. Net Purchase Payments
will be allocated to the Divisions and the Fixed Account
as shown on Page 3, unless the Owner changes the
allocation.
We will use the Net Purchase Payments and any transferred
amounts to purchase Variable Fund shares applicable to the
Divisions at their net asset value. We will be the owner
of all Variable Fund shares purchased with the Net
Purchase Payments or transferred amounts.
95020 Rev 896
Page 10
<PAGE>
DIVISION Net Purchase Payments and transferred amounts allocated to
ACCUMULATION the Separate Account will be credited to the Owner's
UNITS Account in the form of Division Accumulation Units. The
number of Division Accumulation Units will be determined
by dividing the amount allocated to a Division by the
Division Accumulation Unit value as of the end of the
Valuation Period as of which the transaction is credited.
The value of each Division Accumulation Unit was
arbitrarily set as of the date the Division first
purchased Variable Fund shares. Subsequent values on any
Valuation Date are equal to the previous Division
Accumulation Unit value times the Net Investment Factor
for the Valuation Period ending on that Valuation Date.
NET INVESTMENT The Net Investment Factor is an index applied to measure
FACTOR the investment performance of a Division from one
Valuation Period to the next. The Net Investment Factor
may be greater or less than or equal to one; therefore,
the value of an Accumulation Unit may increase, decrease
or remain the same.
The Net Investment Factor for a Division is determined by
dividing (1) by (2), and then subtracting (3) from the
result, where:
(1) Is the sum of:
(a) The Net Asset Value Per Share of the Variable
Fund shares held in the Division, determined at
the end of the current Valuation Period; plus
(b) The per share amount of any dividend or capital
gain distributions made on the Variable Fund
shares held in the Division during the current
Valuation Period;
(2) Is the Net Asset Value Per Share of the Variable Fund
shares held in the Division, determined at the
beginning of the current Valuation Period; and
(3) Is a factor representing the mortality risk, expense
risk, and administrative expense charge. We will
determine the daily asset charge factor annually, but
in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
SEPARATE ACCOUNT The Separate Account Value for any Valuation Period is the
VALUE total of the values in each Division credited to the
Owner's Account for such Valuation Period. The value for
each Division will be equal to:
(1) The number of Division Accumulation Units; multiplied
by
(2) The Division Accumulation Unit value for the
Valuation Period.
The Separate Account value will vary from Valuation Date
to Valuation Date reflecting the total value in the
Divisions.
TRANSFERS
TRANSFERS Transfers may be made at any time during the Accumulation
Period after the first 30 days following the Date of
Issue. A transfer will be
95020 Rev 896
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<PAGE>
effective at the end of the Valuation Period in which we
receive the Owner's Written request for a transfer.
Transfers will be subject to the following restrictions:
(1) Prior to the Annuity Commencement Date, the Owner may
make up to 12 transfers each Contract Year without
charge.
(2) There will be a charge of $25.00 for each transfer in
excess of 12 in a Contract Year.
(3) Transfers under the Automatic Rebalancing program
will not count towards the 12 free transfers each
Contract Year. The $25.00 charge will not apply to
transfers made through Automatic Rebalancing.
Transfers under any other asset management
arrangement approved by the Company may be subject to
the $25.00 charge and may count towards the 12 free
transfers.
(4) Not more than 25% of the Owner's Account Value
allocated to a Guarantee Period at its inception may
be transferred to the Variable Account during any
Contract Year. Transfers from a Guarantee Period are
made on a first in, first out basis. The 25% limit
does not apply to:
(a) Funds transferred from the One-Year Guarantee
period; or
(b) Transfers within 15 days before or after the end
of the applicable Guarantee Period; or
(c) A renewal at the end of a Guarantee Period to
the same Guarantee Period.
(5) If a transfer would cause the Account Value in any
Division or Guarantee Period to fall below $500, we
reserve the right to also transfer the remaining
balance in that Division or Guarantee Period in the
same proportions as the transfer request.
(6) We reserve the right to defer any transfer from the
Fixed Account to the Variable Divisions for up to 6
months.
We reserve the right to restrict or terminate transfers.
After the Annuity Commencement Date, the Owner may make
one transfer during any 180 day period; such transfer is
without charge. The Owner may not make transfers from the
fixed annuity account.
AUTOMATIC "Automatic Rebalancing" occurs when funds are transferred
REBALANCING by the Company between the Separate Account Divisions so
that the values in each Division match the percentage
allocation then in effect. Automatic Rebalancing of the
Separate Account Divisions will occur periodically:
(1) If the Owner's Account Value is equal to or greater
than $25,000; and
(2) If selected by the Owner.
95020 Rev 896
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<PAGE>
The Owner may select Automatic Rebalancing when applying
for this Contract, or it may be selected at a later date.
The Company reserves the right to increase or lower the
Minimum Account Value required for Automatic Rebalancing.
SURRENDERS
GENERAL SURRENDER The amount surrendered will normally be paid to the Owner
PROVISIONS within 5 Valuation Dates following our receipt of:
(1) The Owner's Written request on a form acceptable to
us; and
(2) This Contract, if required.
We reserve the right to defer payment of surrenders from
the Fixed Account for up to 6 months from the date we
receive the request.
FULL SURRENDER At any time prior to the Annuity Commencement Date and
during the lifetime of the Annuitant, the Owner may
surrender this Contract by sending us a Written request.
The amount payable on surrender is:
(1) The Owner's Account Value at the end of the Valuation
Period in which we receive the Owner's request on a
form acceptable to us;
(2) Minus any applicable Surrender Charge;
(3) Minus any applicable Contract Fee; and
(4) Minus any applicable premium tax.
The amount payable upon surrender will not be less than
the amount required by state law.
Upon payment of the surrender amount, this Contract will
be terminated and the Company will have no further
obligation to the Owner.
All collateral assignees must consent to any surrender or
partial withdrawal. We may require that this Contract be
returned to our Home Office prior to making payment.
PARTIAL WITHDRAWALS A portion of the Owner's Account Value may be withdrawn at
any time prior to the Annuity Commencement Date. The Owner
must send us a Written request specifying the Divisions or
Guarantee Periods from which the Partial Withdrawal is to
be made. However, in cases where the Owner does not so
specify, or the withdrawal cannot be made in accordance
with the Owner's specification, we reserve the right to
implement the withdrawal pro rata from each Division and
Guarantee Period based on the Owner's Account Value in
each. Partial Withdrawals will be made effective at the
end of the Valuation Period in which we receive the
Written request. Partial Withdrawals will be subject to
the following guidelines:
(1) The Partial Withdrawal amount must be at least $100
or, if less, the Owner's entire Account Value;
95020 Rev 896
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<PAGE>
(2) We will surrender Division Accumulation Units from
the Separate Account or interests in a Guarantee
Period so that the total amount withdrawn will be the
sum of:
(a) The amount payable to the Owner;
(b) Plus any Surrender Charge and any applicable
premium tax;
(3) If a Partial Withdrawal would cause the Owner's
Account Value in any Division or Guarantee Period
(except the Money Market Division) to fall below
$500, we reserve the right to transfer the remaining
balance without charge to the Money Market Division.
(4) If the Owner's Account Value is less than $500, We
may cancel this Contract upon 60 days' notice to the
Owner. Such cancellation would be considered a full
surrender of this Contract.
SURRENDER CHARGE Except as noted under "Surrender Charge Exceptions", a
FOR PARTIAL Surrender Charge will be applied to the amount of any
WITHDRAWALS AND Purchase Payment withdrawn during the first 7 years after
FULL SURRENDERS it was first credited, as follows:
<TABLE>
<CAPTION>
Surrender Charge
Year of as a Percentage
Purchase Payment of Purchase
Withdrawal Payment Withdrawn
---------------- -----------------
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
For purposes of computing the Surrender Charge, the oldest
Purchase Payments are deemed to be withdrawn first, and
before any amounts in excess of Purchase Payments are
withdrawn from an Owner's Account. The following
transactions will be considered as withdrawals for
purposes of computing the Surrender Charge: total
surrender, partial withdrawal, commencement of an annuity
payment option and termination due to insufficient Owner
Account Value.
SURRENDER CHARGE The Surrender Charge will not apply:
EXCEPTIONS
(1) To any amounts in excess of Purchase Payments that
are withdrawn from an Owner's Account; or
(2) To any amounts in excess of the amount permitted by
the 10% Free Withdrawal Privilege if such amounts are
required to be withdrawn to obtain or retain
favorable federal tax treatment; (The granting of
this exception is subject to our approval);
(3) Upon the death of the Annuitant at any age during the
Payout Period;
95020 Rev 896
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<PAGE>
(4) Upon the death of the Annuitant at any age during the
Accumulation Period if no Contingent Annuitant
survives;
(5) Upon the death of the Owner of a Non-Qualified
Contract, unless the Contract is being continued
under the special rule for a surviving spouse as
defined under Internal Revenue Code Section (72)(s);
(6) Upon selection of an annuity payment option over a
period of at least 10 years;
(7) Upon selection of an annuity payment option based on
life contingencies if life expectancy is at least 10
years.
10% FREE The Surrender Charge does not apply to that portion of
WITHDRAWAL each withdrawal or a total surrender in any Contract Year
PRIVILEGE that does not exceed:
(1) Ten Percent (10%) of the amount of Purchase Payments
not previously withdrawn that have been credited to
this Contract for at least one year, but not more
than 7 years; less
(2) The amount of any previous withdrawals made during
such Contract Year.
For withdrawals under a systematic withdrawal plan,
Purchase Payments credited for 30 days or more are
eligible for the 10% Free Withdrawal Privilege.
If multiple withdrawals are made during a Contract Year,
the amount eligible for the free withdrawal will be
recalculated at the time of each Partial Withdrawal. After
the first Contract Year, non-automatic and automatic
withdrawals may be made in the same Contract Year subject
to the 10% limitation.
A free withdrawal pursuant to any of the foregoing
Surrender Charge Exceptions is not deemed a withdrawal of
Purchase Payments except for purposes of computing the 10%
free withdrawal privilege.
CONTRACT FEE
MANNER OF An annual Contract Fee not to exceed $30.00 will be
DEDUCTING deducted at the end of each Contract Year prior to the
Annuity Commencement Date. Unless paid directly, the fee
will be allocated among the Guarantee Periods and
Divisions in proportion to the Owner's Account Value in
each. The entire fee for the year will be deducted from
the proceeds of any full surrender of this Contract.
TAX CHARGE
RIGHT TO We reserve the right to impose additional charges or
IMPOSE establish reserves for any federal or local taxes incurred
or that may be incurred by us, and that may be deemed
attributable to the Contracts.
ONE-TIME REINSTATEMENT PRIVILEGE
REINSTATEMENT OF If the Owner has made a full surrender of the Owner's
ACCOUNT VALUE Account Value, the Owner may reinstate the Contract, if we
receive the Written reinstatement request, together with a
return of the net surrender
95020 Rev 896
Page 15
<PAGE>
proceeds, not more than 30 days after the date as of which
the surrender was made. In such a case, the Owner's
Account Value will be restored to what it was at the time
of the surrender (less any annual Contract maintenance
charge that has since become payable), and any subsequent
Surrender Charge will be computed as if the Contract had
been issued at the date of reinstatement in consideration
of a Purchase Payment in the amount of such net surrender
proceeds. This one-time reinstatement privilege is
available only if the Owner's Account Value following the
reinstatement would be at least $500. Unless the Owner
requests otherwise in Writing, the Account Value following
the reinstatement will be allocated among the Divisions
and Guarantee Periods in the same proportions as those
prior to surrender.
DEATH PROCEEDS
DEATH PROCEEDS If the Annuitant dies before the Annuity Commencement
BEFORE THE ANNUITY Date, and is survived by a Contingent Annuitant, the
COMMENCEMENT DATE Contract will be continued with the Contingent Annuitant
being named the Annuitant. If this is a Non-Qualified
Contract, this Contract may qualify for continuation under
the "Distribution of Death Proceeds under Non-Qualified
Contracts" provision. Otherwise, we will pay the death
proceeds to the Beneficiary if one of the following dies
prior to the Annuity Commencement Date:
(1) The Annuitant (provided that no Contingent Annuitant
survives); or
(2) The Owner of a Non-Qualified Contract (including the
first to die in the case of Joint Owners).
If the Annuitant or such Owner dies, the amount of the
death proceeds will be the greatest of the following
amounts, less any applicable Premium Tax:
(1) The sum of all Net Purchase Payments less any prior
Partial Withdrawals;
(2) The Owner's Account Value as of the end of the
Valuation Period in which we receive proof of the
Annuitant's or such Owner's death and a Written
request from the Beneficiary as to the form of
payment; or
(3) The Highest Anniversary Value prior to the date of
death, determined as follows:
(a) We will calculate the Account Values at the end
of each of the past Contract Anniversaries that
occurred prior to the deceased's 81st birthday;
(b) Each of the Account Values will be increased by
the amount of Net Purchase Payments made since
the end of such Contract Years;
95020 Rev 896
Page 16
<PAGE>
(c) The result will be reduced by the amount of any
withdrawals made since the end of such Contract
Years;
The Highest Anniversary Value will be an amount equal to
the highest of such values.
The death proceeds will not be less than the amount
payable on a full surrender at the date used to value the
death benefit. The death proceeds will become payable when
we receive:
(1) Proof of the Owner's or Annuitant's Death; and
(2) A Written request from the Beneficiary for either a
single sum or payment under an Annuity Option.
If the Annuitant dies, and a Contingent Annuitant was
named but predeceased the Annuitant, we will require proof
of the Contingent Annuitant's death in addition to proof
of the death of the Annuitant.
We will pay a single sum to the Beneficiary unless an
Annuity Option is chosen.
DEATH PROCEEDS ON If the Annuitant dies on or after the Annuity Commencement
OR AFTER THE Date, the Beneficiary will receive the death proceeds, if
ANNUITY any, as provided by the annuity form in effect.
COMMENCEMENT DATE
PROOF OF DEATH We accept any of the following as proof of the Annuitant's
or Owner's death:
(1) A copy of a certified death certificate;
(2) A copy of a certified decree of a court of competent
jurisdiction as to the finding of death;
(3) A written statement by a medical doctor who attended
the deceased at the time of death; or
(4) Any other proof satisfactory to us.
PAYMENT OF BENEFITS
APPLICATION OF Unless directed otherwise, we will apply the Fixed Account
ACCOUNT VALUE Value to provide a Fixed Annuity, and the Separate Account
Value to provide a Variable Annuity. The Owner must tell
us in writing at least 30 days prior to the Annuity
Commencement Date if Fixed and Separate Account values are
to be applied in different proportions. Transfers and
partial withdrawals will be permitted within the 30-day
period.
95020 Rev 896
Page 17
<PAGE>
ANNUITY The Annuity Commencement Date (Annuity Date) is shown on
COMMENCEMENT DATE page 3. The Owner of a qualified Contract may be required
to receive distributions after the Annuitant's 70th
birthday to comply with certain federal tax requirements.
The Annuity Date may be changed by Written notice from the
Owner, subject to our approval.
OPTIONS AVAILABLE The Owner may elect to have annuity payments made
TO A CONTRACT beginning on the Annuity Commencement Date under any one
OWNER of the Annuity Options described in this Contract. We will
notify the Owner 60 to 90 days prior to the scheduled
Annuity Date that the Contract is scheduled to mature, and
request that an Annuity Option be selected. If the Owner
has not selected an Annuity Option ten days prior to the
Annuity Commencement Date, we will proceed as follows:
If the scheduled Annuity Commencement Date is any date
prior to the Annuitant's 100th birthday, we will extend
the Annuity Commencement Date to the Annuitant's 100th
birthday.
If the scheduled Annuity Commencement Date is the
Annuitant's 100th birthday, the Account Value less any
applicable charges and premium taxes will be paid in one
sum to the Owner.
OPTIONS AVAILABLE The Owner may elect, in lieu of payment in one sum, that
TO BENEFICIARY any amount or part thereof due under this Contract be
applied under any of the options described below. Within
60 days after the death of the Annuitant or Owner, the
Beneficiary may make such election if the Owner has not
done so. In such case, the Beneficiary thereafter shall
have all the rights and options of the Owner.
The first annuity payment under any option shall be made
on the first day of the second month after approval of the
claim for settlement. Subsequent payments shall be made
periodically in accordance with the manner of payment
elected.
PAYMENT CONTRACT At such time as one of these options becomes effective,
this Contract shall be surrendered to the Company in
exchange for a payment contract providing for the option
elected.
FIXED ANNUITY Fixed Annuity Payments start on the Annuity Commencement
PAYMENTS Date. The amount of the first monthly payment for the
annuity selected will be at least as favorable as that
produced by the applicable annuity tables of this Contract
for each $1,000 applied as of the end of the Valuation
Period that contains the tenth day prior to the Annuity
Commencement Date.
The dollar amount of any payments after the first payment
is specified during the entire period of annuity payments,
according to the provisions of the Annuity Option
selected.
95020 Rev 896
Page 18
<PAGE>
VARIABLE ANNUITY PAYMENTS
ANNUITY UNITS We convert the Division Accumulation Units into Division
Annuity Units at the values determined at the end of the
Valuation Period which contains the tenth day prior to the
Annuity Commencement Date. The number of Division Annuity
Units is obtained by dividing the first monthly payment by
the Division Annuity Unit Value determined at the end of
the above Valuation Period (see following paragraph). The
first monthly payment is determined by applying the dollar
value of the Division Accumulation Units to the applicable
Annuity Table. The number of Division Annuity Units
remains constant as long as an annuity remains in force
and allocation among the Divisions has not changed.
Each Division Annuity Unit Value was arbitrarily set when
the Division first converted Division Accumulation Units
into Division Annuity Units. Subsequent values on any
Valuation Date are equal to the previous Division Annuity
Unit Value times the Net Investment Factor for that
Division for the Valuation Period ending on that Valuation
Date, with an offset for the 3 1/2% assumed interest rate
used in the annuity tables of this Contract.
Variable Annuity Payments start on the Annuity
Commencement Date. Payments will vary in amount and are
determined at the end of the Valuation Period that
contains the tenth day prior to each payment. If the
monthly payment under the annuity form selected is based
on a single Division, the monthly payment is found by
multiplying the Division Annuity Unit Value on said date
by the number of Division Annuity Units.
If the monthly payment under the annuity form selected is
based upon more than one Division, the above procedure is
repeated for each applicable Division. The sum of these
payments is the Variable Annuity Payment.
We guarantee that the amount of each payment will not be
affected by variations in expense or mortality experience.
ANNUITY OPTIONS
FIRST OPTION - LIFE ANNUITY - An annuity payable monthly
during the lifetime of the Annuitant.
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY
PAYMENTS GUARANTEED - An annuity payable monthly during
the lifetime of the Annuitant, including the guarantee
that if, at the death of the Annuitant, payments have been
made for less than 120 months, 180 months or 240 months
(as selected), payments shall be continued during the
remainder of the selected period.
95020 Rev 896
Page 19
<PAGE>
THIRD OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An
annuity payable monthly during the joint lifetime of the
Annuitant, and a secondary Annuitant, and thereafter
during the remaining lifetime of the survivor, ceasing
with the last payment prior to the death of the survivor.
FOURTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD - An
amount payable monthly for the number of years selected
which may be from 5 to 40 years. If this option is
selected on a variable basis, the number of years may not
exceed the life expectancy of the Annuitant or other
properly-designated Payee.
FIFTH OPTION - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The
amount due may be paid in equal monthly installments of a
designated dollar amount (not less than $125 nor more than
$200 per annum per $1,000 of the original amount due)
until the remaining balance is less than the amount of one
installment. Payments under this option are available on a
fixed basis only. To determine the remaining balance at
the end of any month, such balance at the end of the
previous month is decreased by the amount of any
installment paid during the month and the result will be
accumulated at an interest rate not less than 3.5%
compounded annually. If the remaining balance at any time
is less than the amount of one installment, such balance
will be paid and will be the final payment under the
option.
In lieu of monthly payments, payments may be elected on a
quarterly, semi-annual or annual basis, in which cases the
amount of each annuity payment will be determined on a
basis consistent with that described in this Contract for
monthly payments.
No election of any Annuity Option may be made in the case
where a Fixed or Variable Annuity is elected, unless a
minimum initial annuity payment of $100 will be provided.
No election of any Annuity Option may be made in the case
where a combination of a Fixed and a Variable Annuity is
elected, unless a minimum initial annuity payment of $50
on each basis will be provided. If the initial annuity
payment does not meet the minimum amount required for the
Annuity Option elected, the Company will provide a less
frequent payment schedule. If the minimum is still not
met, the Company will make a lump-sum payment of the
Account Value (less any Surrender Charge, uncollected
annual Maintenance Charge and applicable premium tax) as
of the date of this determination to the Annuitant or
other properly-designated Payee.
If the age of the Annuitant has been misstated to us, any
amount payable will be that which would have been payable
had the misstatement not occurred. We will deduct any
overpayment from the next payment or payments due and add
any underpayments to the next payment due. Interest at an
effective annual rate of 3.5% will be added to any such
adjustment.
ANNUITY TABLES The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options.
The tables are based on the 1983a Male or Female Tables,
adjusted by projection scale G for 9 years, with unisex
rates based on 60% female and 40%
95020 Rev 896
Page 20
<PAGE>
male, and interest at the rate of 3 1/2% per year. Under
the First or Second Options, the amount of each payment
will depend upon the Annuitant's adjusted age at the time
the first payment is due. Under the Third Option, the
amount of each payment will depend upon both Annuitant's
adjusted ages at the time the first payment is due.
In using the table of annuity payment rates, the ages of
the Annuitants must be reduced by one year for Annuity
Commencement Dates occurring during the decade 2000-2009,
reduced two years for Annuity Commencement Dates occurring
during the decade 2010-2019, and reduced an additional
year for each decade that follows. The age 70 rate is also
used for ages above 70.
ALTERNATE AMOUNT If a fixed life income option is elected, the Owner (or,
OF INSTALLMENTS if the Owner has not elected a payment option, the
UNDER FIXED LIFE Beneficiary) may elect life income payments equal to those
INCOME OPTIONS provided by those fixed single premium immediate annuity
option rates in use by the Company when annuity payments
begin.
95020 Rev 896
Page 21
<PAGE>
ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH $1,000 OF ANNUITY VALUE
<TABLE>
Options 1 and 2 - Life Annuities
Adjusted Unisex ----------------Monthly Payments Guaranteed----------------
<CAPTION>
Age Option 1 Option 2 Option 2 Option 2
None 120 180 240
<S> <C> <C> <C> <C>
50 4.18 4.15 4.12 4.07
51 4.24 4.21 4.18 4.12
52 4.31 4.28 4.24 4.17
53 4.38 4.34 4.30 4.23
54 4.45 4.41 4.36 4.28
55 4.53 4.48 4.43 4.34
56 4.61 4.56 4.50 4.40
57 4.70 4.64 4.57 4.46
58 4.79 4.73 4.65 4.52
59 4.89 4.82 4.72 4.59
60 5.00 4.91 4.81 4.65
61 5.11 5.02 4.89 4.71
62 5.23 5.12 4.98 4.78
63 5.36 5.23 5.07 4.85
64 5.49 5.35 5.17 4.91
65 5.64 5.48 5.26 4.98
66 5.80 5.61 5.36 5.04
67 5.96 5.74 5.46 5.10
68 6.14 5.88 5.57 5.16
69 6.34 6.03 5.67 5.21
70 and above 6.54 6.19 5.77 5.27
</TABLE>
<TABLE>
Option 3 - Joint and Last Survivor Life Annuity
<CAPTION>
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant
Unisex 50 55 60 65 70
<S> <C> <C> <C> <C> <C>
55 3.85 4.00 4.13 4.24 4.33
60 3.94 4.13 4.32 4.49 4.65
65 4.01 4.24 4.49 4.75 5.00
70 4.07 4.33 4.65 5.00 5.36
</TABLE>
<TABLE>
Option 4 - Payments for a Designated Period
<CAPTION>
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
<S> <C> <C> <C>
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
</TABLE>
95020 Rev 896
Page 22
EXHIBIT 4(g)(ii)
AMERICAN GENERAL LIFE
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND THE SUM OF YOUR ACCOUNT VALUE AT THE END OF THE VALUATION PERIOD IN
WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM TAXES AND ANNUAL CONTRACT FEE
THAT HAVE BEEN DEDUCTED.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021 Rev 896
<PAGE>
<TABLE>
INDEX
<CAPTION>
Page
----
<S> <C>
Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . . . . . . 7
Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Annuity Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Annuity Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Automatic Rebalancing. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Change of Investment Advisor or
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Contingent Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Contract Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Death Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Division Accumulation Units. . . . . . . . . . . . . . . . . . . . . . . . 11
Divisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Guaranteed Interest Rates. . . . . . . . . . . . . . . . . . . . . . . . . 10
Guarantee Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Net Investment Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
One-Time Reinstatement Privilege . . . . . . . . . . . . . . . . . . . . . 15
Ownership Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Payment of Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Full Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Partial Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Surrender Charge Exceptions. . . . . . . . . . . . . . . . . . . . . . . . 14
Ten Percent Free Withdrawal Privilege. . . . . . . . . . . . . . . . . . . 15
Tax Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Variable Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
95021 Rev 896
Page 2
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY
<TABLE>
SCHEDULE PAGE
<S> <C>
INITIAL PURCHASE PAYMENT: $10,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
(Per Division or Guarantee Period): $ 100
ADDITIONAL BENEFITS: NONE
MAXIMUM ASSET CHARGE FACTORS (Separate Account Only)
ANNUAL RATE: 1.40%
MAXIMUM ANNUAL CONTRACT FEE: $ 30
TRANSFER CHARGE (After first 12 in a Contract Year): $ 25
ISSUE AGE: 35
ANNUITY COMMENCEMENT DATE: JANUARY 1, 2026
[INITIAL ALLOCATION:
</TABLE>
<TABLE>
<CAPTION>
Net Dollar
Amount of
Percentage Allocations
---------- -----------
<S> <C> <C>
Emerging Growth Fund 100% $10,000
Enterprise Fund xx% $ xxx
Global Equity Fund xx% $ xxx
Real Estate Securities Fund xx% $ xxx
Growth and Income Fund xx% $ xxx
Asset Allocation Fund xx% $ xxx
Domestic Income Fund xx% $ xxx
Government Fund xx% $ xxx
Money Market Fund xx% $ xxx
Fixed Account
1 Year Guarantee Period xx% $ xxx
3 Year Guarantee Period xx% $ xxx
5 Year Guarantee Period xx% $ xxx
7 Year Guarantee Period xx% $ xxx
10 Year Guarantee Period xx% $ xxx
---------- -----------
TOTAL ALLOCATIONS 100% $10,000]
</TABLE>
ANNUITANT: JOHN DOE CONTRACT NUMBER: 123456
CONTRACT OWNER: JOHN DOE DATE OF ISSUE: JANUARY 1, 1996
CONTRACT JURISDICTION: (STATE NAME)
95021 Rev 896
Page 3
<PAGE>
DEFINITIONS
"WE", "OUR", "US", OR "COMPANY". American General Life Insurance Company.
YOU, YOUR, OWNER. The Owner of this Contract. The "Owner" is the person,
persons or entity entitled to the ownership rights stated in this Contract.
The Owner may designate a trustee or custodian of a retirement plan which
meets the requirements of Section 401, Section 408(c), or Section 408(k) of
the Internal Revenue Code to serve as legal owner of assets of a retirement
plan, but the term "Owner" as used herein, shall refer to the organization
entering into this Contract.
ACCOUNT. Any of the Divisions or the Fixed Account.
ACCOUNT VALUE. The sum of the Fixed Account Value and the Separate Account
Value after deduction of any fees. The Fixed Account Value is the sum of Net
Purchase Payments and transfers into the Fixed Account, plus accumulated
interest, less any partial withdrawals and transfers out of the Fixed Account.
The Separate Account Value is the sum of the values of the Separate Account
Divisions. The value of a Separate Account Division is the value of a
Division's Accumulation Unit multiplied by the number of Accumulation Units in
that Division.
ACCUMULATION PERIOD. The period during which Net Purchase Payments are
applied.
ACCUMULATION UNIT. An accounting unit of measure used to calculate the value
of a Division of this Contract before annuity payments begin.
AGE. Age last birthday unless otherwise stated.
ANNUITANT. The person upon whose date of birth and sex income payments are
based. The Annuitant's name is shown on Page 3.
ANNUITY UNIT. A unit of measurement to calculate variable annuity payments.
BENEFICIARY. The person entitled to receive benefits in the event the Owner or
Annuitant dies. If no named Beneficiary is living at the time any payment is
to be made, the Owner shall be the Beneficiary, or if the Owner is not living,
the Owner's estate shall be the Beneficiary.
CONTINGENT ANNUITANT. A person named by the Owner of a Non-Qualified contract
to become the Annuitant if: (1) the Annuitant dies before the Annuity
Commencement Date; and (2) the Contingent Annuitant is then living.
A Contingent Annuitant may not be named except at the time of application.
Once named, the choice may not be revoked or replaced. If a Contingent
Annuitant dies, a new Contingent Annuitant may not be named. After Annuity
Payments start, a Contingent Annuitant may not become the Annuitant.
CONTINGENT BENEFICIARY. A person named by the Owner to receive benefits in the
event a designated Beneficiary is not living at the time of the Owner's or
Annuitant's death.
CONTRACT YEAR. A period of 12 consecutive months beginning on the Date of
Issue or any anniversary thereof.
CONTRACT ANNIVERSARY. Each anniversary of the Date of Issue of this Contract.
DATE OF ISSUE. The date on which this Contract becomes effective as shown on
Page 3.
DIVISION. The subdivisions of the Separate Account which are used to determine
how the Owner's Account is allocated among the Variable Funds.
FIXED ANNUITY OPTION. An Annuity Option with payments which do not vary with
investment performance as to dollar amount.
GUARANTEE PERIOD. The period for which a Guaranteed Interest Rate is credited.
95021 Rev 896
Page 4
<PAGE>
GUARANTEED INTEREST RATE. The minimum rate we may use to credit interest on an
effective annual basis during any Guarantee Period.
HOME OFFICE. Our office at 2727-A Allen Parkway, Houston, Texas 77019;
1-713-831-3505; Mailing Address P.O. Box 1401, Houston, Texas 77251-1401.
ISSUE AGE. Age last birthday on the Date of Issue. (If the Date of Issue
occurs on the Annuitant's birthday, "last birthday" will mean the birthday
occurring on the Date of Issue).
NET ASSET VALUE PER SHARE. The net assets of a Variable Fund divided by the
number of shares in the Variable Fund.
NET PURCHASE PAYMENT. The gross amount of a Purchase Payment less any Premium
Taxes deducted at the time a Purchase Payment is made.
NON-QUALIFIED CONTRACT. A Contract that does not qualify for the special
federal income tax treatment applicable in connection with retirement plans.
OWNER'S ACCOUNT. An account established for each Owner to which each Purchase
Payment is credited.
PAYOUT PERIOD. The period, starting with the Annuity Commencement Date, during
which Annuity Payments are made by the Company.
PREMIUM TAX. The amount of tax, if any, charged by a state or municipality on
Purchase Payments or Contract values.
PURCHASE PAYMENT. An amount paid to the Company as consideration for the
benefits described herein.
QUALIFIED CONTRACT. A Contract that is qualified for the special federal
income tax treatment applicable in connection with certain retirement plans.
SEPARATE ACCOUNT. A segregated investment account entitled "Separate Account
D" established by the Company to separate the assets funding the variable
benefits for the class of contracts to which this Contract belongs from the
other assets of the Company. That portion of the assets of the Separate
Account equal to the reserves and other contract liabilities with respect to
the Separate Account shall not be chargeable with liabilities arising out of
any other business we may conduct. Income, gains and losses, whether or not
realized, from assets allocable to the Separate Account, are credited to or
charged against such account without regard to our other income, gains or
losses.
UNIT VALUE. The value of: (1) an Accumulation Unit as described in the
"Division Accumulation Units" provision; or (2) an Annuity Unit as described
in the "Annuity Units" provision.
VALUATION DATE. Any day on which we are open for business except, with respect
to any Division, a day on which the related Variable Fund does not value its
shares.
VALUATION PERIOD. The period that starts at the close of regular trading on
the New York Stock Exchange on a Valuation Date and ends at the close of
regular trading on the Exchange on the next Valuation Date.
VARIABLE ANNUITY OPTION. An Annuity Option under which we promise to pay the
Annuitant or other properly-designated Payee one or more payments which vary
in amount in accordance with the net investment experience of the applicable
Divisions selected to measure the value of this Contract.
VARIABLE FUND. An individual investment fund or series in which a Division
invests.
WRITTEN, IN WRITING. A written request or notice in acceptable form and
content, which is signed and dated, and received at our Home Office.
95021 Rev 896
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<PAGE>
GENERAL PROVISIONS
ENTIRE CONTRACT This Contract, endorsements if any, and a copy of the
Application, if attached, is the entire Contract. All
statements made by the Contract Owner or Annuitant will be
deemed representations and not warranties. No statement
will be used to reduce a claim under this Contract unless
it is in writing and made a part of this Contract.
NOT CONTESTABLE This Contract is not contestable.
GUARANTEES Subject to the Net Investment Factor provision of this
Contract, we guarantee that the dollar amount of Variable
Annuity Payments made during the lifetime of the Payee(s)
will not be adversely affected by our actual mortality
experience or by the actual expenses incurred by us in
excess of the expense deductions provided for in this
Contract.
SETTLEMENT All benefits under this Contract are payable from our Home
Office.
NONPARTICIPATING This Contract is nonparticipating and does not share in
our surplus or earnings.
CHANGE OF Unless otherwise required by law or regulation, the
INVESTMENT investment advisor or any investment policy may not be
ADVISOR OR changed without our consent. If required, approval of or
INVESTMENT change of any investment objective will be filed with the
POLICY Insurance Department of the state where this Contract is
delivered. You will be notified of any material investment
policy change which has been approved. Notification of an
investment policy change will be given in advance to those
Owners who have the right to comment on or vote on such
change.
Any substitution of the underlying investments of any
Division will comply with all applicable requirements of
the Investment Company Act of 1940 and rules thereunder.
RIGHTS RESERVED Upon notice to you, this Contract may be modified by us,
BY US but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted
under the Investment Company Act of 1940 or in any
other form permitted by law;
(2) Transfer any assets in any Division to another
Division, or to one or more other separate accounts,
or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate
Account, or combine the Separate Account with another
separate account;
(4) Add, restrict or remove Guarantee Periods of the
Fixed Account;
(5) Make any new Division available to you on a basis to
be determined by us;
(6) Substitute for the shares held in any Division, the
shares of another Variable Fund or the shares of
another investment company or any other investment
permitted by law;
(7) Make any changes as required by the Internal Revenue
Code or by any other applicable law, regulation or
interpretation in order to continue treatment of this
Contract as an annuity; or
(8) Make any changes required to comply with rules of any
Variable Fund.
95021 Rev 896
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<PAGE>
When required by law, we will obtain your approval of
changes and we will gain approval from any appropriate
regulatory authority.
CHANGING THE TERMS Any change in your Contract must be approved by one of our
OF YOUR CONTRACT officers. No agent has the authority to make any changes
or waive any of the terms of your Contract.
TERMINATION This Contract will remain in force until surrendered for
its full value, or all annuity payments have been made, or
the death proceeds have been paid, except as follows:
If the Owner's Account Value is less than $500, We may
cancel this Contract upon 60 days' notice to the Owner.
Such cancellation would be considered a full surrender of
this Contract.
If the Owner's Account Value in any Division (except the
Money Market Division) falls below $500, we reserve the
right to transfer the remaining balance, without charge,
to the Money Market Division.
PURCHASE PAYMENTS
MINIMUM PAYMENTS The minimum amounts acceptable as Purchase Payments are
shown on Page 3. We reserve the right to modify these
minimums or to refuse a Purchase Payment for any reason.
ALLOCATION OF The initial allocation for Net Purchase Payments is shown
PURCHASE PAYMENTS on Page 3 of this Contract and will remain in effect until
changed by Written notice. The percentage allocation for
future Net Purchase Payments may be changed at any time by
Written notice.
Changes in the allocation will be effective on the date we
receive the Owner's notice. The allocation may be 100% to
any available Division or Guarantee Period, or may be
divided among these options in whole percentage points
totaling 100%.
The initial Purchase Payment will be credited to the
Owner's Account not more than two Valuation Periods after
we receive it, together with all other required
documentation, in good order at the office designated by
the Company for the processing of initial Purchase
Payments. Subsequent Purchase Payments will be credited as
of the end of the Valuation Period in which they are so
received. We reserve the right to limit the total number
of Fixed Account Guarantee Periods and Separate Account
Divisions that may be chosen during the life of the
Contract.
PREMIUM TAXES When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
(1) From Purchase Payment(s) when received; or
(2) From the Account Value at the time annuity payments
are to commence; or
(3) From the amount of any partial withdrawal; or
(4) From proceeds payable upon termination of the
Contract for any other reason, including death of the
Annuitant or Owner, or surrender of the Contract.
95021 Rev 896
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<PAGE>
If premium tax is paid, the Company may reimburse itself
for such tax when deduction is being made under paragraphs
2, 3, or 4 above calculated by multiplying the sum of
Purchase Payments being withdrawn by the applicable
premium tax percentage.
OWNERSHIP PROVISIONS
EXERCISE OF This Contract belongs to the Owner, who is entitled to
CONTRACT RIGHTS exercise all rights and privileges in connection with this
Contract. Where a Contract is jointly owned, both Owners
must join in any request to exercise the rights or
privileges of an Owner.
In any case, such rights and privileges can be exercised
without the consent of the Beneficiary (other than an
irrevocably - designated Beneficiary) or any other person.
Such rights and privileges may be exercised only during
the lifetime of the Annuitant and prior to the Annuity
Commencement Date, except as otherwise provided in this
Contract.
Unless the Owner specifies otherwise, the Annuitant will
become the Payee on the Annuity Commencement Date. If the
Owner or the Annuitant dies prior to the Annuity
Commencement Date, the Beneficiary will become the Payee.
Such Payees may thereafter exercise such rights and
privileges of ownership which continue.
BENEFICIARY The Owner named the Beneficiary and any Contingent
Beneficiary when applying for this Contract. By Written
notice to us, a non-irrevocable Beneficiary or Contingent
Beneficiary may be changed by the Owner prior to the
Annuity Commencement Date or by the Annuitant or other
properly-designated Payee after the Annuity Commencement
Date.
CHANGE OF Ownership of a Qualified Contract may not be transferred
OWNERSHIP except to: (1) the Annuitant; (2) a trustee or successor
trustee of a pension or profit sharing trust which is
qualified under Section 401 of the Internal Revenue Code;
(3) the employer of the Annuitant, provided that the
Qualified Contract after transfer is maintained under the
terms of a retirement plan qualified under Section 403(a)
of the Internal Revenue Code for the benefit of the
Annuitant; (4) the trustee of an individual retirement
account plan qualified under Section 408 of the Internal
Revenue Code; or (5) as otherwise permitted from time to
time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract
may be issued. In no other case may a Qualified Contract
be sold, assigned, transferred, discounted or pledged as
collateral.
During the lifetime of the Annuitant and prior to the
Annuity Commencement Date, the Owner may change the
ownership of a Non-Qualified Contract.
A change of ownership will not be binding upon us until we
receive Written notification at our Home Office. When such
notification is so received, the change will be effective
as of the date of the signed request for change, but the
change will be without prejudice to us on account of any
payment made, or any action taken by us prior to receiving
the change, or on account of any tax consequence.
95021 Rev 896
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<PAGE>
DISTRIBUTION OF If an Owner (including the first to die in the case of
DEATH PROCEEDS joint Contract owners) under a Non-Qualified Contract dies
UNDER NON-QUALIFIED prior to the Annuitant and before the Annuity Commencement
CONTRACTS Date, the death proceeds must be distributed to the
Beneficiary either (1) within five years after the date of
death of the Owner, or (2) over the life of or a period
not greater than the life or expected life of the
Beneficiary, with annuity payments beginning within one
year after the date of death of the Owner. The Beneficiary
shall be considered the designated beneficiary for the
purposes of Section 72(s) of the Internal Revenue Code. In
all cases, any such designated beneficiary will not be
entitled to exercise any rights prohibited by applicable
federal income tax law.
These mandatory distribution requirements will not apply
when the designated Beneficiary is the spouse of the
deceased Owner, if the spouse elects to continue this
Contract in the spouse's own name, as Owner. When the
deceased Owner was also the Annuitant, the surviving
spouse (if the surviving spouse is the designated
Beneficiary) may elect to be named as both Owner and
Annuitant and continue this Contract.
If the Payee under a Non-Qualified Contract dies after the
Annuity Commencement Date and before all of the payments
under the Annuity Option have been distributed, the
remaining amount payable, if any, must be distributed at
least as rapidly as under the method of distribution then
in effect.
If the Owner prior to the Annuity Commencement Date, or
the Payee thereafter, is not a natural person, then the
foregoing distribution requirements shall apply upon the
death of the primary Annuitant within the meaning of the
Internal Revenue Code.
PERIODIC REPORTS We will send to each Owner, at least once during each
Contract Year, a statement showing the Owner's Account
Value as of a date not more than two months prior to the
date of mailing. We will also send such statements as may
be required by applicable state and federal laws, rules
and regulations.
OWNER'S ACCOUNT We will establish an Owner's Account for the Owner under
this Contract and will maintain such account during the
Accumulation Period. The Owner's Account Value for any
Valuation Period will be equal to the Owner's Separate
Account Value, if any, plus the Owner's Fixed Account
Value, if any, for that Valuation Period.
FIXED ACCOUNT
FIXED ACCOUNT VALUE That portion of a Net Purchase Payment which is allocated
to the Fixed Account will be credited to the Owner's
Account and allocated to the Guarantee Period(s) selected.
The Fixed Account Value of an Owner's Account for any
Valuation Period is equal to the sum of the values in each
of the Guarantee Periods credited to the Owner's account
for such Valuation Period.
The value in any one Guarantee Period on a Valuation Date
is the accumulated value of the Net Purchase Payments,
renewals or transfers allocated to the Guarantee Period at
the Guaranteed Interest Rate, minus the accumulated value
of surrenders and transfers out of that Guarantee Period
and Contract Fee allocated to that Guarantee Period, at
the Guaranteed Interest Rate.
95021 Rev 896
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<PAGE>
GUARANTEE PERIODS The Owner may select one or more Guarantee Period(s). The
Guarantee Period(s) selected will determine the Guaranteed
Interest Rates(s). The Net Purchase Payment or the portion
thereof (or amount transferred in accordance with the
transfer privilege provision described below) allocated to
a particular Guarantee Period will earn interest at the
Guaranteed Interest Rate during the Guarantee Period.
Guarantee Periods begin on the date as of which we credit
the Owner's Account Value to that Guarantee Period or, in
the case of a transfer, on the effective date of the
transfer. The Guarantee Period is the number of years we
credit the Guaranteed Interest Rate. The expiration date
of any Guarantee Period is the last day of the Guarantee
Period. Subsequent Guarantee Periods begin on the first
day following the expiration date. As a result of
Guarantee Period renewals, additional Purchase Payments
and transfers of portions of the Owner's Account Value,
Guarantee Periods of the same duration may have different
expiration dates and Guaranteed Interest Rates.
We will notify the Owner in writing at least 30 and no
more than 60 days prior to the expiration date of any
Guarantee Period. A new Guarantee Period of the same
duration as the previous Guarantee Period will begin
automatically unless we receive Written notice to the
contrary from the Owner at least 3 Valuation Dates prior
to the end of such Guarantee Period. The Owner may elect
to change to another Guarantee Period or Division which we
offer at such time.
If the amount of an Owner's Account Value in a Guarantee
Period is less than $500 at the end of such Guarantee
Period, we reserve the right to transfer such amount,
without charge, to the Money Market Division of the
Separate Account. However, we will transfer such amount to
another available Division at the Owner's request.
GUARANTEED INTEREST We will periodically establish an applicable Guaranteed
RATES Interest Rate for each Guarantee Period we offer. These
rates will be guaranteed for the duration of the
respective Guarantee Periods. The Guarantee Periods that
we make available at any time will be determined in our
discretion.
No Guaranteed Interest Rate shall be less than an
effective annual rate of 3.0% per year.
SEPARATE ACCOUNT
DIVISIONS The Separate Account has several Divisions, each investing
in a corresponding Variable Fund. Net Purchase Payments
will be allocated to the Divisions and the Fixed Account
as shown on Page 3, unless the Owner changes the
allocation.
We will use the Net Purchase Payments and any transferred
amounts to purchase Variable Fund shares applicable to the
Divisions at their net asset value. We will be the owner
of all Variable Fund shares purchased with the Net
Purchase Payments or transferred amounts.
95021 Rev 896
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<PAGE>
DIVISION Net Purchase Payments and transferred amounts allocated to
ACCUMULATION the Separate Account will be credited to the Owner's
UNIT Account in the form of Division Accumulation Units. The
number of Division Accumulation Units will be determined
by dividing the amount allocated to a Division by the
Division Accumulation Unit value as of the end of the
Valuation Period as of which the transaction is credited.
The value of each Division Accumulation Unit was
arbitrarily set as of the date the Division first
purchased Variable Fund shares. Subsequent values on any
Valuation Date are equal to the previous Division
Accumulation Unit value times the Net Investment Factor
for the Valuation Period ending on that Valuation Date.
NET INVESTMENT The Net Investment Factor is an index applied to measure
FACTOR the investment performance of a Division from one
Valuation Period to the next.
The Net Investment Factor may be greater or less than or
equal to one; therefore, the value of an Accumulation Unit
may increase, decrease or remain the same.The Net
Investment Factor for a Division is determined by dividing
(1) by (2), and then subtracting (3) from the result,
where:
(1) Is the sum of:
(a) The Net Asset Value Per Share of the Variable
Fund shares held in the Division, determined at
the end of the current Valuation Period; plus
(b) The per share amount of any dividend or capital
gain distributions made on the Variable Fund
shares held in the Division during the current
Valuation Period;
(2) Is the Net Asset Value Per Share of the Variable Fund
shares held in the Division, determined at the
beginning of the current Valuation Period; and
(3) Is a factor representing the mortality risk, expense
risk, and administrative expense charge. We will
determine the daily asset charge factor annually, but
in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
SEPARATE ACCOUNT The Separate Account Value for any Valuation Period is the
VALUE total of the values in each Division credited to the
Owner's Account for such Valuation Period. The value for
each Division will be equal to:
(1) The number of Division Accumulation Units; multiplied
by
(2) The Division Accumulation Unit value for the
Valuation Period.
The Separate Account value will vary from Valuation Date
to Valuation Date reflecting the total value in the
Divisions.
TRANSFERS
TRANSFERS Transfers may be made at any time during the Accumulation
Period after the first 30 days following the Date of
Issue. A transfer will be
95021 Rev 896
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<PAGE>
effective at the end of the Valuation Period in which we
receive the Owner's Written request for a transfer.
Transfers will be subject to the following restrictions:
(1) Prior to the Annuity Commencement Date, the Owner may
make up to 12 transfers each Contract Year without
charge.
(2) There will be a charge of $25.00 for each transfer in
excess of 12in a Contract Year.
(3) Transfers under the Automatic Rebalancing program
will not counttowards the 12 free transfers each
Contract Year. The $25.00charge will not apply to
transfers made through AutomaticRebalancing.
Transfers under any other asset managementarrangement
approved by the Company may be subject to the$25.00
charge and may count towards the 12 free transfers.
(4) Not more than 25% of the Owner's Account Value
allocated to a Guarantee Period at its inception may
be transferred to the Variable Account during any
Contract Year. Transfers from a Guarantee Period are
made on a first in, first out basis. The 25%limit
does not apply to:
(a) Funds transferred from the One-Year Guarantee
period; or
(b) Transfers within 15 days before or after the end
of the applicable Guarantee Period; or
(c) A renewal at the end of a Guarantee Period to
the same Guarantee Period.
(5) If a transfer would cause the Account Value in any
Division orGuarantee Period to fall below $500, we
reserve the right to alsotransfer the remaining
balance in that Division or Guarantee Periodin the
same proportions as the transfer request.
(6) We reserve the right to defer any transfer from the
Fixed Accountto the Variable Divisions for up to 6
months.
We reserve the right to restrict or terminate transfers.
After the Annuity Commencement Date, the Owner may make
one transfer during any 180 day period; such transfer is
without charge. The Owner may not make transfers from the
fixed annuity account.
AUTOMATIC "Automatic Rebalancing" occurs when funds are transferred
REBALANCING by the Company between the Separate Account Divisions so
that the values in each Division match the percentage
allocation then in effect. Automatic Rebalancing of the
Separate Account Divisions will occur periodically:
(1) If the Owner's Account Value is equal to or greater
than $25,000;and
(2) If selected by the Owner.
95021 Rev 896
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<PAGE>
The Owner may select Automatic Rebalancing when applying
for this Contract, or it may be selected at a later date.
The Company reserves the right to increase or lower the
Minimum Account Value required for Automatic Rebalancing.
SURRENDERS
GENERAL SURRENDER The amount surrendered will normally be paid to the Owner
PROVISIONS within 5 Valuation Dates following our receipt of:
(1) The Owner's Written request on a form acceptable to
us; and
(2) This Contract, if required.
We reserve the right to defer payment of surrenders from
the Fixed Account for up to 6 months from the date we
receive the request.
FULL SURRENDER At any time prior to the Annuity Commencement Date and
during the lifetime of the Annuitant, the Owner may
surrender this Contract by sending us a Written request.
The amount payable on surrender is:
(1) The Owner's Account Value at the end of the Valuation
Period in which we receive the Owner's request on a
form acceptable to us;
(2) Minus any applicable Surrender Charge;
(3) Minus any applicable Contract Fee; and
(4) Minus any applicable premium tax.
The amount payable upon surrender will not be less than
the amount required by state law.
Upon payment of the surrender amount, this Contract will
be terminated and the Company will have no further
obligation to the Owner.
All collateral assignees must consent to any surrender or
partial withdrawal. We may require that this Contract be
returned to our Home Office prior to making payment.
PARTIAL WITHDRAWALS A portion of the Owner's Account Value may be withdrawn at
any time prior to the Annuity Commencement Date. The Owner
must send us a Written request specifying the Divisions or
Guarantee Periods from which the Partial Withdrawal is to
be made. However, in cases where the Owner does not so
specify, or the withdrawal cannot be made in accordance
with the Owner's specification, we reserve the right to
implement the withdrawal pro rata from each Division and
Guarantee Period based on the Owner's Account Value in
each. Partial Withdrawals will be made effective at the
end of the Valuation Period in which we receive the
Written request. Partial Withdrawals will be subject to
the following guidelines:
(1) The Partial Withdrawal amount must be at least $100
or, if less, the Owner's entire Account Value;
95021 Rev 896
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<PAGE>
(2) We will surrender Division Accumulation Units from
the Separate Account or interests in a Guarantee
Period so that the total amount withdrawn will be the
sum of:
(a) The amount payable to the Owner;
(b) Plus any Surrender Charge and any applicable
premium tax;
(3) If a Partial Withdrawal would cause the Owner's
Account Value in any Division or Guarantee Period
(except the Money Market Division) to fall below
$500, we reserve the right to transfer the remaining
balance without charge to the Money Market Division.
(4) If the Owner's Account Value is less than $500, We
may cancel this Contract upon 60 days' notice to the
Owner. Such cancellation would be considered a full
surrender of this Contract.
SURRENDER CHARGE Except as noted under "Surrender Charge Exceptions", a
FOR PARTIAL Surrender Charge will be applied to the amount of any
WITHDRAWALS AND Purchase Payment withdrawn during the first 7 years after
FULL SURRENDERS it was first credited, as follows:
<TABLE>
<CAPTION>
SURRENDER CHARGE
YEAR OF AS A PERCENTAGE
PURCHASE PAYMENT OF PURCHASE
WITHDRAWAL PAYMENT WITHDRAWN
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
For purposes of computing the Surrender Charge, the oldest
Purchase Payments are deemed to be withdrawn first, and
before any amounts in excess of Purchase Payments are
withdrawn from an Owner's Account. The following
transactions will be considered as withdrawals for
purposes of computing the Surrender Charge: total
surrender, partial withdrawal, commencement of an annuity
payment option and termination due to insufficient Owner
Account Value.
SURRENDER CHARGE The Surrender Charge will not apply:
EXCEPTIONS
(1) To any amounts in excess of Purchase Payments that
are withdrawn from an Owner's Account; or
(2) To any amounts in excess of the amount permitted by
the 10% Free Withdrawal Privilege if such amounts are
required to be withdrawn to obtain or retain
favorable federal tax treatment; (The granting of
this exception is subject to our approval);
(3) Upon the death of the Annuitant at any age during the
Payout Period;
95021 Rev 896
Page 14
<PAGE>
(4) Upon the death of the Annuitant at any age during the
Accumulation Period if no Contingent Annuitant
survives;
(5) Upon the death of the Owner of a Non-Qualified
Contract, unless the Contract is being continued
under the special rule for a surviving spouse as
defined under Internal Revenue Code Section (72)(s);
(6) Upon selection of an annuity payment option over a
period of at least 10 years;
(7) Upon selection of an annuity payment option based on
life contingencies if life expectancy is at least 10
years.
10% FREE WITHDRAWAL The Surrender Charge does not apply to that portion of
PRIVILEGE each withdrawal or a total surrender in any Contract Year
that does not exceed:
(1) Ten Percent (10%) of the amount of Purchase Payments
not previously withdrawn that have been credited to
this Contract for at least one year, but not more
than 7 years; less
(2) The amount of any previous withdrawals made during
such Contract Year.
For withdrawals under a systematic withdrawal plan,
Purchase Payments credited for 30 days or more are
eligible for the 10% Free Withdrawal Privilege.
If multiple withdrawals are made during a Contract Year,
the amount eligible for the free withdrawal will be
recalculated at the time of each Partial Withdrawal. After
the first Contract Year, non-automatic and automatic
withdrawals may be made in the same Contract Year subject
to the 10% limitation.
A free withdrawal pursuant to any of the foregoing
Surrender Charge Exceptions is not deemed a withdrawal of
Purchase Payments except for purposes of computing the 10%
free withdrawal privilege.
CONTRACT FEE
MANNER OF An annual Contract Fee not to exceed $30.00 will be
DEDUCTING deducted at the end of each Contract Year prior to the
Annuity Commencement Date. Unless paid directly, the fee
will be allocated among the Guarantee Periods and
Divisions in proportion to the Owner's Account Value in
each. The entire fee for the year will be deducted from
the proceeds of any full surrender of this Contract.
TAX CHARGE
RIGHT TO We reserve the right to impose additional charges or
IMPOSE establish reserves for any federal or local taxes incurred
or that may be incurred by us, and that may be deemed
attributable to the Contracts.
ONE-TIME REINSTATEMENT PRIVILEGE
REINSTATEMENT OF If the Owner has made a full surrender of the Owner's
ACCOUNT VALUE Account Value, the Owner may reinstate the Contract, if we
receive the Written reinstatement request, together with a
return of the net surrender
95021 Rev 896
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<PAGE>
proceeds, not more than 30 days after the date as of which
the surrender was made. In such a case, the Owner's
Account Value will be restored to what it was at the time
of the surrender (less any annual Contract maintenance
charge that has since become payable), and any subsequent
Surrender Charge will be computed as if the Contract had
been issued at the date of reinstatement in consideration
of a Purchase Payment in the amount of such net surrender
proceeds. This one-time reinstatement privilege is
available only if the Owner's Account Value following the
reinstatement would be at least $500. Unless the Owner
requests otherwise in Writing, the Account Value following
the reinstatement will be allocated among the Divisions
and Guarantee Periods in the same proportions as those
prior to surrender.
DEATH PROCEEDS
DEATH PROCEEDS If the Annuitant dies before the Annuity Commencement
BEFORE THE ANNUITY Date,and is survived by a Contingent Annuitant, the
COMMENCEMENT DATE Contract will be continued with the Contingent Annuitant
being named the Annuitant. If this is a Non-Qualified
Contract, this Contract may qualify for continuation under
the "Distribution of Death Proceeds under Non-Qualified
Contracts" provision. Otherwise, we will pay the death
proceeds to the Beneficiary if one of the following dies
prior to the Annuity Commencement Date:
(1) The Annuitant (provided that no Contingent Annuitant
survives); or
(2) The Owner of a Non-Qualified Contract (including the
first to die in the case of Joint Owners).
If the Annuitant or such Owner dies, the amount of the
death proceeds will be the greatest of the following
amounts, less any applicable Premium Tax:
(1) The sum of all Net Purchase Payments less any prior
Partial Withdrawals;
(2) The Owner's Account Value as of the end of the
Valuation Period in which we receive proof of the
Annuitant's or such Owner's death and a Written
request from the Beneficiary as to the form of
payment; or
(3) The Highest Anniversary Value prior to the date of
death, determined as follows:
(a) We will calculate the Account Values at the end
of each of the past Contract Anniversaries that
occurred prior to the deceased's 81st birthday;
(b) Each of the Account Values will be increased by
the amount of Net Purchase Payments made since
the end of such Contract Years;
95021 Rev 896
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<PAGE>
(c) The result will be reduced by the amount of any
withdrawals made since the end of such Contract
Years;
The Highest Anniversary Value will be an amount equal to
the highest of such values.
The death proceeds will not be less than the amount
payable on a full surrender at the date used to value the
death benefit. The death proceeds will become payable when
we receive:
(1) Proof of the Owner's or Annuitant's Death; and
(2) A Written request from the Beneficiary for either a
single sum or payment under an Annuity Option.
If the Annuitant dies, and a Contingent Annuitant was
named but predeceased the Annuitant, we will require proof
of the Contingent Annuitant's death in addition to proof
of the death of the Annuitant.
We will pay a single sum to the Beneficiary unless an
Annuity Option is chosen.
DEATH PROCEEDS ON If the Annuitant dies on or after the Annuity Commencement
OR AFTER THE Date, the Beneficiary will receive the death proceeds, if
ANNUITY any, as provided by the annuity form in effect.
COMMENCEMENT DATE
PROOF OF DEATH We accept any of the following as proof of the Annuitant's
or Owner's death:
(1) A copy of a certified death certificate;
(2) A copy of a certified decree of a court of competent
jurisdiction as to the finding of death;
(3) A written statement by a medical doctor who attended
the deceased at the time of death; or
(4) Any other proof satisfactory to us.
PAYMENT OF BENEFITS
APPLICATION OF Unless directed otherwise, we will apply the Fixed Account
ACCOUNT VALUE Value to provide a Fixed Annuity, and the Separate Account
Value to provide a Variable Annuity. The Owner must tell
us in writing at least 30 days prior to the Annuity
Commencement Date if Fixed and Separate Account values are
to be applied in different proportions. Transfers and
partial withdrawals will be permitted within the 30-day
period.
95021 Rev 896
Page 17
<PAGE>
ANNUITY The Annuity Commencement Date (Annuity Date) is shown on
COMMENCEMENT DATE page 3. The Owner of a qualified Contract may be required
to receive distributions after the Annuitant's 70th
birthday to comply with certain federal tax requirements.
The Annuity Date may be changed by Written notice from the
Owner, subject to our approval.
OPTIONS AVAILABLE The Owner may elect to have annuity payments made
TO A CONTRACT beginning on the Annuity Commencement Date under any one
OWNER of the Annuity Options described in this Contract. We will
notify the Owner 60 to 90 days prior to the scheduled
Annuity Date that the Contract is scheduled to mature, and
request that an Annuity Option be selected. If the Owner
has not selected an Annuity Option ten days prior to the
Annuity Commencement Date, we will proceed as follows:
If the scheduled Annuity Commencement Date is any date
prior to the Annuitant's 100th birthday, we will extend
the Annuity Commencement Date to the Annuitant's 100th
birthday.
If the scheduled Annuity Commencement Date is the
Annuitant's 100th birthday, the Account Value less any
applicable charges and premium taxes will be paid in one
sum to the Owner.
OPTIONS AVAILABLE The Owner may elect, in lieu of payment in one sum, that
TO BENEFICIARY any amount or part thereof due under this Contract be
applied under any of the options described below. Within
60 days after the death of the Annuitant or Owner, the
Beneficiary may make such election if the Owner has not
done so. In such case, the Beneficiary thereafter shall
have all the rights and options of the Owner.
The first annuity payment under any option shall be made
on the first day of the second month after approval of the
claim for settlement. Subsequent payments shall be made
periodically in accordance with the manner of payment
elected.
PAYMENT CONTRACT At such time as one of these options becomes effective,
this Contract shall be surrendered to the Company in
exchange for a payment contract providing for the option
elected.
FIXED ANNUITY Fixed Annuity Payments start on the Annuity Commencement
PAYMENTS Date. The amount of the first monthly payment for the
annuity selected will be at least as favorable as that
produced by the applicable annuity tables of this Contract
for each $1,000 applied as of the end of the Valuation
Period that contains the tenth day prior to the Annuity
Commencement Date.
The dollar amount of any payments after the first payment
is specified during the entire period of annuity payments,
according to the provisions of the Annuity Option
selected.
95021 Rev 896
Page 18
<PAGE>
VARIABLE ANNUITY PAYMENTS
ANNUITY UNITS We convert the Division Accumulation Units into Division
Annuity Units at the values determined at the end of the
Valuation Period which contains the tenth day prior to the
Annuity Commencement Date. The number of Division Annuity
Units is obtained by dividing the first monthly payment by
the Division Annuity Unit Value determined at the end of
the above Valuation Period (see following paragraph). The
first monthly payment is determined by applying the dollar
value of the Division Accumulation Units to the applicable
Annuity Table. The number of Division Annuity Units
remains constant as long as an annuity remains in force
and allocation among the Divisions has not changed.
Each Division Annuity Unit Value was arbitrarily set when
the Division first converted Division Accumulation Units
into Division Annuity Units. Subsequent values on any
Valuation Date are equal to the previous Division Annuity
Unit Value times the Net Investment Factor for that
Division for the Valuation Period ending on that Valuation
Date, with an offset for the 3 1/2% assumed interest rate
used in the annuity tables of this Contract.
Variable Annuity Payments start on the Annuity
Commencement Date. Payments will vary in amount and are
determined at the end of the Valuation Period that
contains the tenth day prior to each payment. If the
monthly payment under the annuity form selected is based
on a single Division, the monthly payment is found by
multiplying the Division Annuity Unit Value on said date
by the number of Division Annuity Units.
If the monthly payment under the annuity form selected is
based upon more than one Division, the above procedure is
repeated for each applicable Division. The sum of these
payments is the Variable Annuity Payment.
We guarantee that the amount of each payment will not be
affected by variations in expense or mortality experience.
ANNUITY OPTIONS
FIRST OPTION - LIFE ANNUITY - An annuity payable monthly
during the lifetime of the Annuitant.
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY
PAYMENTS GUARANTEED - An annuity payable monthly during
the lifetime of the Annuitant, including the guarantee
that if, at the death of the Annuitant, payments have been
made for less than 120 months, 180 months or 240 months
(as selected), payments shall be continued during the
remainder of the selected period.
95021 Rev 896
Page 19
<PAGE>
THIRD OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An
annuity payable monthly during the joint lifetime of the
Annuitant, and a secondary Annuitant, and thereafter
during the remaining lifetime of the survivor, ceasing
with the last payment prior to the death of the survivor.
FOURTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD - An
amount payable monthly for the number of years selected
which may be from 5 to 40 years. If this option is
selected on a variable basis, the number of years may not
exceed the life expectancy of the Annuitant or other
properly-designated Payee.
FIFTH OPTION - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The
amount due may be paid in equal monthly installments of a
designated dollar amount (not less than $125 nor more than
$200 per annum per $1,000 of the original amount due)
until the remaining balance is less than the amount of one
installment. Payments under this option are available on a
fixed basis only. To determine the remaining balance at
the end of any month, such balance at the end of the
previous month is decreased by the amount of any
installment paid during the month and the result will be
accumulated at an interest rate not less than 3.5%
compounded annually. If the remaining balance at any time
is less than the amount of one installment, such balance
will be paid and will be the final payment under the
option.
In lieu of monthly payments, payments may be elected on a
quarterly, semi-annual or annual basis, in which cases the
amount of each annuity payment will be determined on a
basis consistent with that described in this Contract for
monthly payments.
No election of any Annuity Option may be made in the case
where a Fixed or Variable Annuity is elected, unless a
minimum initial annuity payment of $100 will be provided.
No election of any Annuity Option may be made in the case
where a combination of a Fixed and a Variable Annuity is
elected, unless a minimum initial annuity payment of $50
on each basis will be provided. If the initial annuity
payment does not meet the minimum amount required for the
Annuity Option elected, the Company will provide a less
frequent payment schedule. If the minimum is still not
met, the Company will make a lump-sum payment of the
Account Value (less any Surrender Charge, uncollected
annual Maintenance Charge and applicable premium tax) as
of the date of this determination to the Annuitant or
other properly-designated Payee.
If the age or sex of the Annuitant has been misstated to
us, any amount payable will be that which would have been
payable had the misstatement not occurred. We will deduct
any overpayment from the next payment or payments due and
add any underpayments to the next payment due. Interest at
an effective annual rate of 3.5% will be added to any such
adjustment.
ANNUITY TABLES The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options.
The tables are based on the 1983a Male or Female Tables
adjusted by projection scale G for 9 years, with interest
at the rate of 3 1/2% per year.
95021 Rev 896
Page 20
<PAGE>
Under the First or Second Options, the amount of each
payment will depend upon the sex of the Annuitant and the
Annuitant's adjusted age at the time the first payment is
due. Under the Third Option, the amount of each payment
will depend upon the sex of both Annuitants and their
adjusted ages at the time the first payment is due.
In using the table of annuity payment rates, the ages of
the Annuitants must be reduced by one year for Annuity
Commencement Dates occurring during the decade 2000-2009,
reduced two years for Annuity Commencement Dates occurring
during the decade 2010-2019, and reduced an additional
year for each decade that follows. The age 70 rate is also
used for ages above 70.
ALTERNATE AMOUNT If a fixed life income option is elected, the Owner (or,
OF INSTALLMENTS if the Owner has not elected a payment option, the
UNDER FIXED LIFE Beneficiary) may elect life income payments equal to those
INCOME OPTIONS provided by those fixed single premium immediate annuity
option rates in use by the Company when annuity payments
begin.
95021 Rev 896
Page 21
<PAGE>
AMOUNT OF MONTHLY PAYMENT
FOR EACH $1,000 OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
<TABLE>
<CAPTION>
Adjusted Age --------------Monthly Payments Guaranteed--------------
of Male Option 1 Option 2 Option 2 Option 2
None 120 180 240
<S> <C> <C> <C> <C>
50 4.37 4.33 4.28 4.21
51 4.44 4.40 4.34 4.26
52 4.52 4.47 4.40 4.32
53 4.59 4.54 4.47 4.37
54 4.68 4.62 4.54 4.43
55 4.77 4.70 4.61 4.49
56 4.86 4.78 4.69 4.55
57 4.96 4.87 4.76 4.61
58 5.06 4.97 4.84 4.67
59 5.18 5.07 4.93 4.73
60 5.30 5.17 5.01 4.79
61 5.42 5.28 5.10 4.86
62 5.56 5.40 5.20 4.92
63 5.71 5.52 5.29 4.98
64 5.87 5.65 5.38 5.04
65 6.04 5.79 5.48 5.10
66 6.22 5.92 5.58 5.15
67 6.41 6.07 5.68 5.21
68 6.62 6.22 5.77 5.26
69 6.84 6.37 5.87 5.30
70 and above 7.07 6.53 5.96 5.35
</TABLE>
<TABLE>
<CAPTION>
Adjusted Age --------------Monthly Payments Guaranteed--------------
of Female Option 1 Option 2 Option 2 Option 2
None 120 180 240
<S> <C> <C> <C> <C>
50 4.05 4.03 4.01 3.97
51 4.10 4.09 4.06 4.02
52 4.17 4.14 4.12 4.07
53 4.23 4.21 4.17 4.12
54 4.30 4.27 4.23 4.18
55 4.37 4.34 4.30 4.23
56 4.44 4.41 4.36 4.29
57 4.52 4.48 4.43 4.35
58 4.61 4.56 4.50 4.41
59 4.70 4.65 4.58 4.48
60 4.79 4.74 4.66 4.54
61 4.89 4.83 4.74 4.61
62 5.00 4.93 4.83 4.67
63 5.12 5.03 4.92 4.74
64 5.24 5.14 5.01 4.81
65 5.38 5.26 5.11 4.88
66 5.52 5.38 5.20 4.95
67 5.67 5.51 5.31 5.01
68 5.83 5.65 5.41 5.08
69 6.01 5.79 5.52 5.14
70 and above 6.20 5.94 5.62 5.20
</TABLE>
95021 Rev 896
Page 22
<PAGE>
Option 3 - Joint and Last Survivor Life Annuity
<TABLE>
<CAPTION>
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant
<S> <C> <C> <C> <C> <C>
Male F50 F55 F60 F65 F70
50 3.76 3.89 4.01 4.11 4.19
55 3.84 4.01 4.18 4.33 4.46
60 3.90 4.11 4.33 4.56 4.77
65 3.95 4.19 4.47 4.78 5.09
70 3.99 4.25 4.58 4.96 5.39
</TABLE>
<TABLE>
<CAPTION>
Adjusted Age Adjusted Age of Secondary Annuitant
of Annuitant
<S> <C> <C> <C> <C> <C>
Female M50 M55 M60 M65 M70
50 3.76 3.84 3.90 3.95 3.99
55 3.89 4.01 4.11 4.19 4.25
60 4.01 4.18 4.33 4.47 4.58
65 4.11 4.33 4.56 4.78 4.96
70 4.19 4.46 4.77 5.09 5.39
</TABLE>
<TABLE>
Option 4 - Payments for a Designated Period
<CAPTION>
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
<S> <C> <C> <C>
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
</TABLE>
95021 Rev 896
Page 23
EXHIBIT 4(g)(iii)
AMERICAN GENERAL LIFE CALIFORNIA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
IMPORTANT
YOU HAVE PURCHASED A VARIABLE ANNUITY CONTRACT. CAREFULLY REVIEW IT FOR
LIMITATIONS.
THIS CONTRACT MAY BE RETURNED WITHIN 10 DAYS* FROM THE DATE YOU RECEIVED IT
FOR A FULL REFUND EITHER BY RETURNING IT TO THE AGENT OR THE INSURANCE
COMPANY. THE AMOUNT OF REFUND WILL BE THE SUM OF YOUR ACCOUNT VALUE AT THE END
OF THE VALUATION PERIOD IN WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM
TAXES AND ANNUAL MAINTENANCE CHARGES THAT HAVE BEEN DEDUCTED. AFTER 10 DAYS*,
CANCELLATION MAY RESULT IN A SUBSTANTIAL PENALTY, KNOWN AS A SURRENDER CHARGE.
*30 DAYS IF YOU WERE AGE 60 OR ABOVE ON THE DATE OF ISSUE.
A surrender charge as shown on page 14 may be applied to the amount of any
Purchase Payment withdrawn during the first seven years after it was first
credited.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--5 Rev 896
<PAGE>
AMERICAN GENERAL LIFE CALIFORNIA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--5 Rev 896
<PAGE>
FLORIDA
(2) We will surrender Division Accumulation Units from
the Separate Account or interests in a Guarantee
Period so that the total amount withdrawn will be the
sum of:
(a) The amount payable to the Owner;
(b) Plus any Surrender Charge and any applicable
premium tax;
(3) If a Partial Withdrawal would cause the Owner's
Account Value in any Division or Guarantee Period
(except the Money Market Division) to fall below
$500, we reserve the right to transfer the remaining
balance without charge to the Money Market Division.
(4) If the Owner's Account Value is less than $500, We
may cancel this Contract upon 60 days' notice to the
Owner. Such cancellation would be considered a full
surrender of this Contract.
SURRENDER CHARGE Except as noted under "Surrender Charge Exceptions", a
FOR PARTIAL Surrender Charge will be applied to the amount of any
WITHDRAWALS AND Purchase Payment withdrawn during the first 7 years after
FULL SURRENDERS it was first credited, as follows:
<TABLE>
<CAPTION>
Surrender Charge
Year of as a Percentage
Purchase Payment of Purchase
Withdrawal Payment Withdrawn
---------------- -----------------
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
For purposes of computing the Surrender Charge, the oldest
Purchase Payments are deemed to be withdrawn first, and
before any amounts in excess of Purchase Payments are
withdrawn from an Owner's Account. This order of
withdrawal may be different than the order considered by
the IRS for determining tax liability. The following
transactions will be considered as withdrawals for
purposes of computing the Surrender Charge: total
surrender, partial withdrawal, commencement of an annuity
payment option and termination due to insufficient Owner
Account Value.
SURRENDER CHARGE The Surrender Charge will not apply:
EXCEPTIONS
(1) To any amounts in excess of Purchase Payments that
are withdrawn from an Owner's Account; or
(2) To any amounts in excess of the amount permitted by
the 10% Free Withdrawal Privilege if such amounts are
required to be withdrawn to obtain or retain
favorable federal tax treatment; (The granting of
this exception is subject to our approval);
(3) Upon the death of the Annuitant at any age during the
Payout Period;
95020--10 Rev 896
Page 14
<PAGE>
FLORIDA
(4) Upon the death of the Annuitant at any age during the
Accumulation Period if no Contingent Annuitant
survives;
(5) Upon the death of the Owner of a Non-Qualified
Contract, unless the Contract is being continued
under the special rule for a surviving spouse as
defined under Internal Revenue Code Section (72)(s);
(6) Upon selection of an annuity payment option over a
period of at least 10 years;
(7) Upon selection of an annuity payment option based on
life contingencies if life expectancy is at least 10
years.
10% FREE The Surrender Charge does not apply to that portion of
WITHDRAWAL each withdrawal or a total surrender in any Contract Year
PRIVILEGE that does not exceed:
(1) Ten Percent (10%) of the amount of Purchase Payments
not previously withdrawn that have been credited to
this Contract for at least one year, but not more
than 7 years; less
(2) The amount of any previous withdrawals made during
such Contract Year.
For withdrawals under a systematic withdrawal plan,
Purchase Payments credited for 30 days or more are
eligible for the 10% Free Withdrawal Privilege.
If multiple withdrawals are made during a Contract Year,
the amount eligible for the free withdrawal will be
recalculated at the time of each Partial Withdrawal. After
the first Contract Year, non-automatic and automatic
withdrawals may be made in the same Contract Year subject
to the 10% limitation.
A free withdrawal pursuant to any of the foregoing
Surrender Charge Exceptions is not deemed a withdrawal of
Purchase Payments except for purposes of computing the 10%
free withdrawal privilege.
CONTRACT FEE
MANNER OF An annual Contract Fee not to exceed $30.00 will be
DEDUCTING deducted at the end of each Contract Year prior to the
Annuity Commencement Date. Unless paid directly, the fee
will be allocated among the Guarantee Periods and
Divisions in proportion to the Owner's Account Value in
each. The entire fee for the year will be deducted from
the proceeds of any full surrender of this Contract.
TAX CHARGE
RIGHT TO We reserve the right to impose additional charges or
IMPOSE establish reserves for any federal or local taxes incurred
or that may be incurred by us, and that may be deemed
attributable to the Contracts.
ONE-TIME REINSTATEMENT PRIVILEGE
REINSTATEMENT OF If the Owner has made a full surrender of the Owner's
ACCOUNT VALUE Account Value, the Owner may reinstate the Contract, if we
receive the Written reinstatement request, together with a
return of the net surrender
95020--10 Rev 896
Page 15
<PAGE>
AMERICAN GENERAL LIFE IDAHO
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 20 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 20 DAY PERIOD, WE WILL
REFUND THE SUM OF YOUR ACCOUNT VALUE AT THE END OF THE VALUATION PERIOD IN
WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM TAXES AND ANNUAL CONTRACT FEE
THAT HAVE BEEN DEDUCTED.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE IDAHO
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE KANSAS
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- --------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE KANSAS
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--A Rev 896
<PAGE>
MARYLAND
GENERAL PROVISIONS
ENTIRE CONTRACT This Contract, endorsements if any, and a copy of the
Application, if attached, is the entire Contract. All
statements made by the Contract Owner or Annuitant will be
deemed representations and not warranties. No statement
will be used to reduce a claim under this Contract unless
it is in writing and made a part of this Contract.
NOT CONTESTABLE This Contract is not contestable.
GUARANTEES Subject to the Net Investment Factor provision of this
Contract, we guarantee that the dollar amount of Variable
Annuity Payments made during the lifetime of the Payee(s)
will not be adversely affected by our actual mortality
experience or by the actual expenses incurred by us in
excess of the expense deductions provided for in this
Contract.
SETTLEMENT All benefits under this Contract are payable from our Home
Office.
NONPARTICIPATING This Contract is nonparticipating and does not share in
our surplus or earnings.
CHANGE OF Unless otherwise required by law or regulation, the
INVESTMENT investment advisor or any investment policy may not be
ADVISOR OR changed without our consent. If required, approval of or
INVESTMENT POLICY change of any investment objective will be filed with the
Insurance Department of the state where this Contract is
delivered. You will be notified of any material investment
policy change which has been approved. Notification of an
investment policy change will be given in advance to those
Owners who have the right to comment on or vote on such
change.
Any substitution of the underlying investments of any
Division will comply with all applicable requirements of
the Investment Company Act of 1940 and rules thereunder.
RIGHTS RESERVED Upon notice to you, this Contract may be modified by us,
BY US but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted
under the Investment Company Act of 1940 or in any
other form permitted by law;
(2) Transfer any assets in any Division to another
Division, or to one or more other separate accounts,
or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate
Account, or combine the Separate Account with another
separate account;
(4) Add, restrict or remove Guarantee Periods of the
Fixed Account;
(5) Make any new Division available to you on a basis to
be determined by us;
(6) Substitute for the shares held in any Division, the
shares of another Variable Fund or the shares of
another investment company or any other investment
permitted by law;
(7) Make any changes as required by the Internal Revenue
Code or by any other applicable law, regulation or
interpretation in order to continue treatment of this
Contract as an annuity; or
(8) Make any changes required to comply with rules of any
Variable Fund.
95020--21 Rev 896
Page 6
<PAGE>
MARYLAND
When required by law, we will obtain your approval of
changes and we will gain approval from any appropriate
regulatory authority.
CHANGING THE TERMS Any change in your Contract must be approved by one of our
OF YOUR CONTRACT officers. No agent has the authority to make any changes
or waive any of the terms of your Contract.
TERMINATION This Contract will remain in force until surrendered for
its full value, or all annuity payments have been made, or
the death proceeds have been paid, except as follows:
If the Owner's Account Value is less than $500, We may
cancel this Contract upon 60 days' notice to the Owner.
Such cancellation would be considered a full surrender of
this Contract.
If the Owner's Account Value in any Division (except the
Money Market Division) falls below $500, we reserve the
right to transfer the remaining balance, without charge,
to the Money Market Division.
PURCHASE PAYMENTS
MINIMUM PAYMENTS The minimum amounts acceptable as Purchase Payments are
shown on Page 3.
ALLOCATION OF The initial allocation for Net Purchase Payments is shown
PURCHASE PAYMENTS on Page 3 of this Contract and will remain in effect until
changed by Written notice. The percentage allocation for
future Net Purchase Payments may be changed at any time by
Written notice.
Changes in the allocation will be effective on the date we
receive the Owner's notice. The allocation may be 100% to
any available Division or Guarantee Period, or may be
divided among these options in whole percentage points
totaling 100%.
The initial Purchase Payment will be credited to the
Owner's Account not more than two Valuation Periods after
we receive it, together with all other required
documentation, in good order at the office designated by
the Company for the processing of initial Purchase
Payments. Subsequent Purchase Payments will be credited as
of the end of the Valuation Period in which they are so
received. We reserve the right to limit the total number
of Fixed Account Guarantee Periods and Separate Account
Divisions that may be chosen during the life of the
Contract.
PREMIUM TAXES When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
(1) From Purchase Payment(s) when received; or
(2) From the Account Value at the time annuity payments
are to commence; or
(3) From the amount of any partial withdrawal; or
(4) From proceeds payable upon termination of the
Contract for any other reason, including death of the
Annuitant or Owner, or surrender of the Contract.
95020--21 Rev 896
Page 7
<PAGE>
MASSACHUSETTS
<TABLE>
TABLE OF MINIMUM GUARANTEED ANNUITY AND SURRENDER VALUES
FOR THE FIXED ACCOUNT
ASSUMING AN INITIAL PURCHASE PAYMENT OF $2,000.00
ALLOCATED TO THE FIXED ACCOUNT
<CAPTION>
END OF ANNUITY SURRENDER SURRENDER
YEAR VALUE CHARGE VALUE
<S> <C> <C> <C>
1 $2,030.00 $ 108.00 $1,922.00
2 2,060.90 108.00 1,952.90
3 2,092.73 90.00 2,002.73
4 2,125.51 90.00 2,035.51
5 2,159.28 72.00 2,087.28
6 2,194.06 54.00 2,140.06
7 2,229.88 36.00 2,193.88
8 2,266.78 0.00 2,266.78
9 2,304.78 0.00 2,304.78
10 2,343.92 0.00 2,343.92
11 2,384.24 0.00 2,384.24
12 2,425.77 0.00 2,425.77
13 2,468.54 0.00 2,468.54
14 2,512.60 0.00 2,512.60
15 2,557.98 0.00 2,557.98
16 2,604.72 0.00 2,604.72
17 2,652.86 0.00 2,652.86
18 2,702.45 0.00 2,702.45
19 2,753.52 0.00 2,753.52
20 2,806.13 0.00 2,806.13
21 2,860.31 0.00 2,860.31
22 2,916.12 0.00 2,916.12
23 2,973.60 0.00 2,973.60
24 3,032.81 0.00 3,032.81
25 3,093.79 0.00 3,093.79
26 3,156.60 0.00 3,156.60
27 3,221.30 0.00 3,221.30
28 3,287.94 0.00 3,287.94
29 3,356.58 0.00 3,356.58
30 3,427.28 0.00 3,427.28
31 3,500.10 0.00 3,500.10
32 3,575.10 0.00 3,575.10
33 3,652.35 0.00 3,652.35
34 3,731.92 0.00 3,731.92
35 3,813.88 0.00 3,813.88
36 3,898.30 0.00 3,898.30
37 3,985.25 0.00 3,985.25
38 4,074.81 0.00 4,074.81
39 4,167.05 0.00 4,167.05
40 4,262.06 0.00 4,262.06
41 4,359.92 0.00 4,359.92
42 4,460.72 0.00 4,460.72
43 4,564.54 0.00 4,564.54
44 4,671.48 0.00 4,671.48
45 4,781.62 0.00 4,781.62
</TABLE>
The values shown above were calculated assuming the guaranteed interest rate
of 3.0% will be applied to the amount allocated to the fixed account.
95020 Rev 896
Page 23
<PAGE>
MASSACHUSETTS
<TABLE>
TABLE OF MINIMUM GUARANTEED ANNUITY AND SURRENDER VALUES
FOR THE FIXED ACCOUNT
ASSUMING AN INITIAL PURCHASE PAYMENT OF $2,000.00
ALLOCATED TO THE FIXED ACCOUNT
<CAPTION>
END OF ANNUITY SURRENDER SURRENDER
YEAR VALUE CHARGE VALUE
<S> <C> <C> <C>
46 4,895.07 0.00 4,895.07
47 5,011.92 0.00 5,011.92
48 5,132.28 0.00 5,132.28
49 5,256.25 0.00 5,256.25
50 5,383.94 0.00 5,383.94
51 5,515.46 0.00 5,515.46
52 5,650.92 0.00 5,650.92
53 5,790.45 0.00 5,790.45
54 5,934.16 0.00 5,934.16
55 6,082.18 0.00 6,082.18
56 6,234.65 0.00 6,234.65
57 6,391.69 0.00 6,391.69
58 6,553.44 0.00 6,553.44
59 6,720.04 0.00 6,720.04
60 6,891.64 0.00 6,891.64
</TABLE>
The values shown above were calculated assuming the guaranteed interest rate
of 3.0% will be applied to the amount allocated to the fixed account.
95020 Rev 896
Page 24
<PAGE>
AMERICAN GENERAL LIFE MINNESOTA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
RIGHT TO CANCEL -- YOU MAY CANCEL THIS CONTRACT BY DELIVERING OR MAILING A
WRITTEN NOTICE OR SENDING A TELEGRAM TO THE COMPANY AT 2727--A ALLEN PARKWAY,
HOUSTON, TEXAS 77019, AND BY RETURNING THE CONTRACT BEFORE MIDNIGHT OF THE
TENTH DAY AFTER THE DATE YOU RECEIVE THE CONTRACT. NOTICE GIVEN BY MAIL AND
RETURN OF THE CONTRACT BY MAIL ARE EFFECTIVE ON BEING POSTMARKED, PROPERLY
ADDRESSED AND POSTAGE PREPAID. THE INSURER MUST RETURN ALL PAYMENTS MADE FOR
THIS CONTRACT WITHIN TEN DAYS AFTER IT RECEIVES NOTICE OF CANCELLATION AND THE
RETURNED CONTRACT.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--24 Rev 896
<PAGE>
AMERICAN GENERAL LIFE MINNESOTA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--24 Rev 896
<PAGE>
SCHEDULE PAGE MINNESOTA
(CONTINUED)
A Surrender Charge will apply to the amount of any
Purchase Payment withdrawn during the first 7 years after
it was first credited. (See provisions entitled "Surrender
Charge for Partial Wthdrawals and Full Surrenders" and
"Surrender Charge Exceptions" on page 14.)
<TABLE>
<CAPTION>
Number of Years from
Date Purchase Payment
was Credited to Date Surrender Charge as a
of Withdrawal Percentage of Purchase
Withdrawn Payment
---------------- -----------------
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
95020--24 Rev 896
Page 3A
<PAGE>
AMERICAN GENERAL LIFE NORTH CAROLINA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- --------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE NORTH CAROLINA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE NORTH DAKOTA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 20 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 20 DAY PERIOD, WE WILL
REFUND THE SUM OF YOUR ACCOUNT VALUE AT THE END OF THE VALUATION PERIOD IN
WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM TAXES AND ANNUAL CONTRACT FEE
THAT HAVE BEEN DEDUCTED.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE NORTH DAKOTA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE OKLAHOMA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY. IF REFUND IS NOT MADE
WITHIN 30 DAYS AFTER THE POLICY IS RETURNED TO US, THE AMOUNT REFUNDED WILL
INCLUDE INTEREST.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--37 Rev 896
<PAGE>
AMERICAN GENERAL LIFE OKLAHOMA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--37 Rev 896
<PAGE>
PENNSYLVANIA
<TABLE>
INDEX
<CAPTION>
Page
<S> <C>
Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . . . 7
Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Annuity Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Annuity Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Automatic Rebalancing . . . . . . . . . . . . . . . . . . . . . . . . 12
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Change of Investment Advisor or
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Contingent Annuitant . . . . . . . . . . . . . . . . . . . . . . . . 4
Contract Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Death Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Division Accumulation Units . . . . . . . . . . . . . . . . . . . . . 11
Divisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . . 9
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 6
Guaranteed Interest Rates . . . . . . . . . . . . . . . . . . . . . . 10
Guarantee Periods . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . 11
One-Time Reinstatement Privilege . . . . . . . . . . . . . . . . . . 15
Ownership Provisions . . . . . . . . . . . . . . . . . . . . . . . . 8
Payment of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 18
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Full Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Partial Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . 13
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Surrender Charge Exceptions . . . . . . . . . . . . . . . . . . . . . 14
Ten Percent Free Withdrawal Privilege . . . . . . . . . . . . . . . . 15
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Variable Annuity Payments . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
95020--39 Rev 896
Page 2
<PAGE>
AMERICAN GENERAL LIFE SOUTH CAROLINA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- --------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE SOUTH CAROLINA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--A Rev 896
<PAGE>
TEXAS
GENERAL PROVISIONS
ENTIRE CONTRACT This Contract, endorsements if any, and a copy of the
Application, if attached, is the entire Contract. All
statements made by the Contract Owner or Annuitant will be
deemed representations and not warranties. No statement
will be used to reduce a claim under this Contract unless
it is in writing and made a part of this Contract.
NOT CONTESTABLE This Contract is not contestable.
GUARANTEES Subject to the Net Investment Factor provision of this
Contract, we guarantee that the dollar amount of Variable
Annuity Payments made during the lifetime of the Payee(s)
will not be adversely affected by our actual mortality
experience or by the actual expenses incurred by us in
excess of the expense deductions provided for in this
Contract.
SETTLEMENT All benefits under this Contract are payable from our Home
Office.
NONPARTICIPATING This Contract is nonparticipating and does not share in
our surplus or earnings.
CHANGE OF Unless otherwise required by law or regulation, the
INVESTMENT investment advisor or any investment policy may not be
ADVISOR OR changed without our consent. If required, approval of or
INVESTMENT POLICY change of any investment objective will be filed with the
Insurance Department of the state where this Contract is
delivered. You will be notified of any material investment
policy change which has been approved. Notification of an
investment policy change will be given in advance to those
Owners who have the right to comment on or vote on such
change.
Any substitution of the underlying investments of any
Division will comply with all applicable requirements of
the Investment Company Act of 1940 and rules thereunder.
RIGHTS RESERVED Upon notice to you, this Contract may be modified by us,
BY US but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted
under the Investment Company Act of 1940 or in any
other form permitted by law;
(2) Transfer any assets in any Division to another
Division, or to one or more other separate accounts,
or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate
Account, or combine the Separate Account with another
separate account;
(4) Add, restrict or remove Guarantee Periods of the
Fixed Account;
(5) Make any new Division available to you on a basis to
be determined by us;
(6) Substitute for the shares held in any Division, the
shares of another Variable Fund or the shares of
another investment company or any other investment
permitted by law;
(7) Make any changes as required by the Internal Revenue
Codeor by any other applicable law, regulation or
interpretation inorder to continue treatment of this
Contract as an annuity; or
(8) Make any changes required to comply with rules of any
Variable Fund.
95020--44 Rev 896
Page 6
<PAGE>
TEXAS
When required by law, we will obtain your approval of
changes and we will gain approval from any appropriate
regulatory authority.
CHANGING THE TERMS Any change in your Contract must be approved by one of our
OF YOUR CONTRACT officers. No agent has the authority to make any changes
or waive any of the terms of your Contract.
TERMINATION This Contract will remain in force until surrendered for
its full value, or all annuity payments have been made, or
the death proceeds have been paid, except as follows:
Upon 60 days notice to the Owner, we may cancel this
contract prior to the time the annuity becomes payable if:
(1) No considerations have been received under the
contract for a period of two full years; and
(2) The Owner's Account Value is less than $500.
PURCHASE PAYMENTS
MINIMUM PAYMENTS The minimum amounts acceptable as Purchase Payments are
shown on Page 3. We reserve the right to modify these
minimums or to refuse a Purchase Payment for any reason.
ALLOCATION OF The initial allocation for Net Purchase Payments is shown
PURCHASE PAYMENTS on Page 3 of this Contract and will remain in effect until
changed by Written notice. The percentage allocation for
future Net Purchase Payments may be changed at any time by
Written notice.
Changes in the allocation will be effective on the date we
receive the Owner's notice. The allocation may be 100% to
any available Division or Guarantee Period, or may be
divided among these options in whole percentage points
totaling 100%.
The initial Purchase Payment will be credited to the
Owner's Account not more than two Valuation Periods after
we receive it, together with all other required
documentation, in good order at the office designated by
the Company for the processing of initial Purchase
Payments. Subsequent Purchase Payments will be credited as
of the end of the Valuation Period in which they are so
received. We reserve the right to limit the total number
of Fixed Account Guarantee Periods and Separate Account
Divisions that may be chosen during the life of the
Contract.
PREMIUM TAXES When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
(1) From Purchase Payment(s) when received; or
(2) From the Account Value at the time annuity payments
are to commence; or
(3) From the amount of any partial withdrawal; or
(4) From proceeds payable upon termination of the
Contract for any other reason, including death of the
Annuitant or Owner, or surrender of the Contract.
95020--44 Rev 896
Page 7
<PAGE>
TEXAS
GUARANTEE PERIODS The Owner may select one or more Guarantee Period(s). The
Guarantee Period(s) selected will determine the Guaranteed
Interest Rates(s). The Net Purchase Payment or the portion
thereof (or amount transferred in accordance with the
transfer privilege provision described below) allocated to
a particular Guarantee Period will earn interest at the
Guaranteed Interest Rate during the Guarantee Period.
Guarantee Periods begin on the date as of which we credit
the Owner's Account Value to that Guarantee Period or, in
the case of a transfer, on the effective date of the
transfer. The Guarantee Period is the number of years we
credit the Guaranteed Interest Rate. The expiration date
of any Guarantee Period is the last day of the Guarantee
Period. Subsequent Guarantee Periods begin on the first
day following the expiration date. As a result of
Guarantee Period renewals, additional Purchase Payments
and transfers of portions of the Owner's Account Value,
Guarantee Periods of the same duration may have different
expiration dates and Guaranteed Interest Rates.
We will notify the Owner in writing at least 30 and no
more than 60 days prior to the expiration date of any
Guarantee Period. A new Guarantee Period of the same
duration as the previous Guarantee Period will begin
automatically unless we receive Written notice to the
contrary from the Owner at least 3 Valuation Dates prior
to the end of such Guarantee Period. The Owner may elect
to change to another Guarantee Period or Division which we
offer at such time.
If the amount of an Owner's Account Value in a Guarantee
Period is less than $500 at the end of such Guarantee
Period, we reserve the right to transfer such amount,
without charge, to the Money Market Division of the
Separate Account. However, we will transfer such amount to
another available Division at the Owner's request.
GUARANTEED INTEREST We will periodically establish an applicable Guaranteed
RATES Interest Rate for each Guarantee Period we offer. These
rates will be guaranteed for the duration of the
respective Guarantee Periods. The Guarantee Periods that
we make available at any time will be determined in our
discretion.
No Guaranteed Interest Rate shall be less than an
effective annual rate of 3.0% per year.
STATUTORY The paid up annuity benefits, surrender benefits and death
REQUIREMENTS benefits guaranteed in this contract are not less than the
minimum benefits required by any statute of the state in
which this contract is delivered.
SEPARATE ACCOUNT
DIVISIONS The Separate Account has several Divisions, each investing
in a corresponding Variable Fund. Net Purchase Payments
will be allocated to the Divisions and the Fixed Account
as shown on Page 3, unless the Owner changes the
allocation.
We will use the Net Purchase Payments and any transferred
amounts to purchase Variable Fund shares applicable to the
Divisions at their net asset value. We will be the owner
of all Variable Fund shares purchased with the Net
Purchase Payments or transferred amounts.
95020--44 Rev 896
Page 10
<PAGE>
TEXAS
DIVISION Net Purchase Payments and transferred amounts allocated to
ACCUMULATION the Separate Account will be credited to the Owner's
UNITS Account in the form of Division Accumulation Units. The
number of Division Accumulation Units will be determined
by dividing the amount allocated to a Division by the
Division Accumulation Unit value as of the end of the
Valuation Period as of which the transaction is credited.
The value of each Division Accumulation Unit was
arbitrarily set as of the date the Division first
purchased Variable Fund shares. Subsequent values on any
Valuation Date are equal to the previous Division
Accumulation Unit value times the Net Investment Factor
for the Valuation Period ending on that Valuation Date.
NET INVESTMENT The Net Investment Factor is an index applied to measure
FACTOR the investment performance of a Division from one
Valuation Period to the next. The Net Investment Factor
may be greater or less than or equal to one; therefore,
the value of an Accumulation Unit may increase, decrease
or remain the same.
The Net Investment Factor for a Division is determined by
dividing (1) by (2), and then subtracting (3) from the
result, where:
(1) Is the sum of:
(a) The Net Asset Value Per Share of the Variable
Fund shares held in the Division, determined at
the end of the current Valuation Period; plus
(b) The per share amount of any dividend or capital
gain distributions made on the Variable Fund
shares held in the Division during the current
Valuation Period;
(2) Is the Net Asset Value Per Share of the Variable Fund
shares held in the Division, determined at the
beginning of the current Valuation Period; and
(3) Is a factor representing the mortality risk, expense
risk, and administrative expense charge. We will
determine the daily asset charge factor annually, but
in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
SEPARATE ACCOUNT The Separate Account Value for any Valuation Period is the
VALUE total of the values in each Division credited to the
Owner's Account for such Valuation Period. The value for
each Division will be equal to:
(1) The number of Division Accumulation Units; multiplied
by
(2) The Division Accumulation Unit value for the
Valuation Period.
The Separate Account value will vary from Valuation Date
to Valuation Date reflecting the total value in the
Divisions.
TRANSFERS
TRANSFERS Transfers may be made at any time during the Accumulation
Period after the first 30 days following the Date of
Issue. A transfer will be
95020--44 Rev 896
Page 11
<PAGE>
TEXAS
THIRD OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An
annuity payable monthly during the joint lifetime of the
Annuitant, and a secondary Annuitant, and thereafter
during the remaining lifetime of the survivor, ceasing
with the last payment prior to the death of the survivor.
FOURTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD - An
amount payable monthly for the number of years selected
which may be from 5 to 40 years. If this option is
selected on a variable basis, the number of years may not
exceed the life expectancy of the Annuitant or other
properly-designated Payee.
FIFTH OPTION - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The
amount due may be paid in equal monthly installments of a
designated dollar amount (not less than $125 nor more than
$200 per annum per $1,000 of the original amount due)
until the remaining balance is less than the amount of one
installment. Payments under this option are available on a
fixed basis only. To determine the remaining balance at
the end of any month, such balance at the end of the
previous month is decreased by the amount of any
installment paid during the month and the result will be
accumulated at an interest rate not less than 3.5%
compounded annually. If the remaining balance at any time
is less than the amount of one installment, such balance
will be paid and will be the final payment under the
option.
In lieu of monthly payments, payments may be elected on a
quarterly, semi-annual or annual basis, in which cases the
amount of each annuity payment will be determined on a
basis consistent with that described in this Contract for
monthly payments.
No election of any Annuity Option may be made in the case
where a Fixed or Variable Annuity is elected, unless a
minimum initial annuity payment of $100 will be provided.
No election of any Annuity Option may be made in the case
where a combination of a Fixed and a Variable Annuity is
elected, unless a minimum initial annuity payment of $50
on each basis will be provided. If the initial annuity
payment does not meet the minimum amount required for the
Annuity Option elected, the Company will provide a less
frequent payment schedule. If the Annuity Value is less
than $2,000 or payments on a monthly basis would be less
than $20.00, the Company will make a lump-sum payment of
the Account Value (less any Surrender Charge, uncollected
annual Maintenance Charge and applicable premium tax) as
of the date of this determination to the Annuitant or
other properly-designated Payee.
If the age of the Annuitant has been misstated to us, any
amount payable will be that which would have been payable
had the misstatement not occurred. We will deduct any
overpayment from the next payment or payments due and add
any underpayments to the next payment due. Interest at an
effective annual rate of 3.5% will be added to any such
adjustment.
Annuity Tables The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options.
The tables are based on the 1983a Male or Female Tables,
adjusted by projection scale G for 9 years, with unisex
rates based on 60% female and 40%
95020--44 Rev 896
Page 20
<PAGE>
TEXAS
male, and interest at the rate of 3 1/2% per year. Under
the First or Second Options, the amount of each payment
will depend upon the Annuitant's adjusted age at the time
the first payment is due. Under the Third Option, the
amount of each payment will depend upon both Annuitant's
adjusted ages at the time the first payment is due.
In using the table of annuity payment rates, the ages of
the Annuitants must be reduced by one year for Annuity
Commencement Dates occurring during the decade 2000-2009,
reduced two years for Annuity Commencement Dates occurring
during the decade 2010-2019, and reduced an additional
year for each decade that follows. The age 70 rate is also
used for ages above 70.
ALTERNATE AMOUNT If a fixed life income option is elected, the Owner (or,
OF INSTALLMENTS if the Owner has not elected a payment option, the
UNDER FIXED LIFE Beneficiary) may elect life income payments equal to those
INCOME OPTIONS provided by those fixed single premium immediate annuity
option rates in use by the Company when annuity payments
begin.
95020--44 Rev 896
Page 21
<PAGE>
AMERICAN GENERAL LIFE UTAH
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- --------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE UTAH
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE WEST VIRGINIA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
--------------------- --------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE WEST VIRGINIA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95020--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE CALIFORNIA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
All payments and values provided by this Contract, when based on the
investment experience of a Separate Account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. ^NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
IMPORTANT
YOU HAVE PURCHASED A VARIABLE ANNUITY CONTRACT. CAREFULLY REVIEW IT FOR
LIMITATIONS.
THIS CONTRACT MAY BE RETURNED WITHIN 10 DAYS* FROM THE DATE YOU RECEIVED IT
FOR A FULL REFUND EITHER BY RETURNING IT TO THE AGENT OR THE INSURANCE
COMPANY. THE AMOUNT OF REFUND WILL BE THE SUM OF YOUR ACCOUNT VALUE AT THE END
OF THE VALUATION PERIOD IN WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM
TAXES AND ANNUAL MAINTENANCE CHARGES THAT HAVE BEEN DEDUCTED. ^AFTER 10 DAYS*,
CANCELLATION MAY RESULT IN A SUBSTANTIAL PENALTY, KNOWN AS A SURRENDER CHARGE.
*30 DAYS IF YOU WERE AGE 60 OR ABOVE ON THE DATE OF ISSUE.
A surrender charge as shown on page 14 may be applied to the amount of any
Purchase Payment withdrawn during the first seven years after it was first
credited.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
/s/THOMAS B. PHILLIPS /s/ROBERT S. CAUTHEN, Jr.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--5 Rev 896
<PAGE>
AMERICAN GENERAL LIFE CALIFORNIA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--5 Rev 896
<PAGE>
FLORIDA
(2) We will surrender Division Accumulation Units from
the Separate Account or interests in a Guarantee
Period so that the total amount withdrawn will be the
sum of:
(a) The amount payable to the Owner;
(b) Plus any Surrender Charge and any applicable
premium tax;
(3) If a Partial Withdrawal would cause the Owner's
Account Value in any Division or Guarantee Period
(except the Money Market Division) to fall below
$500, we reserve the right to transfer the remaining
balance without charge to the Money Market Division.
(4) If the Owner's Account Value is less than $500, We
may cancel this Contract upon 60 days' notice to the
Owner. Such cancellation would be considered a full
surrender of this Contract.
SURRENDER CHARGE Except as noted under "Surrender Charge Exceptions", a
FOR PARTIAL Surrender Charge will be applied to the amount of any
WITHDRAWALS AND Purchase Payment withdrawn during the first 7 years after
FULL SURRENDERS it was first credited, as follows:
<TABLE>
<CAPTION>
Surrender Charge
Year of as a Percentage
Purchase Payment of Purchase
Withdrawal Payment Withdrawn
---------------- -----------------
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
For purposes of computing the Surrender Charge, the oldest
Purchase Payments are deemed to be withdrawn first, and
before any amounts in excess of Purchase Payments are
withdrawn from an Owner's Account. This order of
withdrawal may be different than the order considered by
the IRS for determining tax liability. The following
transactions will be considered as withdrawals for
purposes of computing the Surrender Charge: total
surrender, partial withdrawal, commencement of an annuity
payment option and termination due to insufficient Owner
Account Value.
SURRENDER CHARGE The Surrender Charge will not apply:
EXCEPTIONS
(1) To any amounts in excess of Purchase Payments that
are withdrawn from an Owner's Account; or
(2) To any amounts in excess of the amount permitted by
the 10% Free Withdrawal Privilege if such amounts are
required to be withdrawn to obtain or retain
favorable federal tax treatment; (The granting of
this exception is subject to our approval);
(3) Upon the death of the Annuitant at any age during the
Payout Period;
95021--10 Rev 896
Page 14
<PAGE>
FLORIDA
(4) Upon the death of the Annuitant at any age during the
Accumulation Period if no Contingent Annuitant
survives;
(5) Upon the death of the Owner of a Non-Qualified
Contract, unless the Contract is being continued
under the special rule for a surviving spouse as
defined under Internal Revenue Code Section (72)(s);
(6) Upon selection of an annuity payment option over a
period of at least 10 years;
(7) Upon selection of an annuity payment option based on
life contingencies if life expectancy is at least 10
years.
10% FREE The Surrender Charge does not apply to that portion of
WITHDRAWAL each withdrawal or a total surrender in any Contract Year
PRIVILEGE that does not exceed:
(1) Ten Percent (10%) of the amount of Purchase Payments
not previously withdrawn that have been credited to
this Contract for at least one year, but not more
than 7 years; less
(2) The amount of any previous withdrawals made during
such Contract Year.
For withdrawals under a systematic withdrawal plan,
Purchase Payments credited for 30 days or more are
eligible for the 10% Free Withdrawal Privilege.
If multiple withdrawals are made during a Contract Year,
the amount eligible for the free withdrawal will be
recalculated at the time of each Partial Withdrawal. After
the first Contract Year, non-automatic and automatic
withdrawals may be made in the same Contract Year subject
to the 10% limitation.
A free withdrawal pursuant to any of the foregoing
Surrender Charge Exceptions is not deemed a withdrawal of
Purchase Payments except for purposes of computing the 10%
free withdrawal privilege.
CONTRACT FEE
MANNER OF An annual Contract Fee not to exceed $30.00 will be
DEDUCTING deducted at the end of each Contract Year prior to the
Annuity Commencement Date. Unless paid directly, the fee
will be allocated among the Guarantee Periods and
Divisions in proportion to the Owner's Account Value in
each. The entire fee for the year will be deducted from
the proceeds of any full surrender of this Contract.
TAX CHARGE
RIGHT TO We reserve the right to impose additional charges or
IMPOSE establish reserves for any federal or local taxes incurred
or that may be incurred by us, and that may be deemed
attributable to the Contracts.
ONE-TIME REINSTATEMENT PRIVILEGE
REINSTATEMENT OF If the Owner has made a full surrender of the Owner's
ACCOUNT VALUE Account Value, the Owner may reinstate the Contract, if we
receive the Written reinstatement request, together with a
return of the net surrender.
95021--10 Rev 896
Page 15
<PAGE>
AMERICAN GENERAL LIFE IDAHO
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 20 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 20 DAY PERIOD, WE WILL
REFUND THE SUM OF YOUR ACCOUNT VALUE AT THE END OF THE VALUATION PERIOD IN
WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM TAXES AND ANNUAL CONTRACT FEE
THAT HAVE BEEN DEDUCTED.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE IDAHO
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE KANSAS
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE KANSAS
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--A Rev 896
<PAGE>
MARYLAND
GENERAL PROVISIONS
ENTIRE CONTRACT This Contract, endorsements if any, and a copy of the
Application, if attached, is the entire Contract. All
statements made by the Contract Owner or Annuitant will be
deemed representations and not warranties. No statement
will be used to reduce a claim under this Contract unless
it is in writing and made a part of this Contract.
NOT CONTESTABLE This Contract is not contestable.
GUARANTEES Subject to the Net Investment Factor provision of this
Contract, we guarantee that the dollar amount of Variable
Annuity Payments made during the lifetime of the Payee(s)
will not be adversely affected by our actual mortality
experience or by the actual expenses incurred by us in
excess of the expense deductions provided for in this
Contract.
SETTLEMENT All benefits under this Contract are payable from our Home
Office.
NONPARTICIPATING This Contract is nonparticipating and does not share in
our surplus or earnings.
CHANGE OF Unless otherwise required by law or regulation, the
INVESTMENT ADVISOR investment advisor or any investment policy may not be
OR INVESTMENT changed without our consent. If required, approval of or
POLICY change of any investment objective will be filed with the
Insurance Department of the state where this Contract is
delivered. You will be notified of any material investment
policy change which has been approved. Notification of an
investment policy change will be given in advance to those
Owners who have the right to comment on or vote on such
change.
Any substitution of the underlying investments of any
Division will comply with all applicable requirements of
the Investment Company Act of 1940 and rules thereunder.
RIGHTS RESERVED Upon notice to you, this Contract may be modified by us,
BY US but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted
under the Investment Company Act of 1940 or in any
other form permitted by law;
(2) Transfer any assets in any Division to another
Division, or to one or more other separate accounts,
or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate
Account, or combine the Separate Account with another
separate account;
(4) Add, restrict or remove Guarantee Periods of the
Fixed Account;
(5) Make any new Division available to you on a basis to
be determined by us;
(6) Substitute for the shares held in any Division, the
shares of another Variable Fund or the shares of
another investment company or any other investment
permitted by law;
(7) Make any changes as required by the Internal Revenue
Codeor by any other applicable law, regulation or
interpretation inorder to continue treatment of this
Contract as an annuity; or
(8) Make any changes required to comply with rules of any
Variable Fund.
95021--21 Rev 896
Page 6
<PAGE>
MARYLAND
When required by law, we will obtain your approval of
changes and we will gain approval from any appropriate
regulatory authority.
CHANGING THE TERMS Any change in your Contract must be approved by one of our
OF YOUR CONTRACT officers. No agent has the authority to make any changes
or waive any of the terms of your Contract.
TERMINATION This Contract will remain in force until surrendered for
its full value, or all annuity payments have been made, or
the death proceeds have been paid, except as follows:
If the Owner's Account Value is less than $500, We may
cancel this Contract upon 60 days' notice to the Owner.
Such cancellation would be considered a full surrender of
this Contract.
If the Owner's Account Value in any Division (except the
Money Market Division) falls below $500, we reserve the
right to transfer the remaining balance, without charge,
to the Money Market Division.
PURCHASE PAYMENTS
MINIMUM PAYMENTS The minimum amounts acceptable as Purchase Payments are
shown on Page 3.
ALLOCATION OF The initial allocation for Net Purchase Payments is shown
PURCHASE PAYMENTS on Page 3 of this Contract and will remain in effect until
changed by Written notice. The percentage allocation for
future Net Purchase Payments may be changed at any time by
Written notice.
Changes in the allocation will be effective on the date we
receive the Owner's notice. The allocation may be 100% to
any available Division or Guarantee Period, or may be
divided among these options in whole percentage points
totaling 100%.
The initial Purchase Payment will be credited to the
Owner's Account not more than two Valuation Periods after
we receive it, together with all other required
documentation, in good order at the office designated by
the Company for the processing of initial Purchase
Payments. Subsequent Purchase Payments will be credited as
of the end of the Valuation Period in which they are so
received. We reserve the right to limit the total number
of Fixed Account Guarantee Periods and Separate Account
Divisions that may be chosen during the life of the
Contract.
PREMIUM TAXES When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
(1) From Purchase Payment(s) when received; or
(2) From the Account Value at the time annuity payments
are to commence; or
(3) From the amount of any partial withdrawal; or
(4) From proceeds payable upon termination of the
Contract for any other reason, including death of the
Annuitant or Owner, or surrender of the Contract.
95021--21 Rev 896
Page 7
<PAGE>
MASSACHUSETTS
TABLE OF MINIMUM GUARANTEED ANNUITY AND SURRENDER VALUES
FOR THE FIXED ACCOUNT
ASSUMING AN INITIAL PURCHASE PAYMENT OF $2,000.00
ALLOCATED TO THE FIXED ACCOUNT
<TABLE>
<CAPTION>
END OF ANNUITY SURRENDER SURRENDER
YEAR VALUE CHARGE VALUE
<S> <C> <C> <C>
1 $2,030.00 $ 108.00 $1,922.00
2 2,060.90 108.00 1,952.90
3 2,092.73 90.00 2,002.73
4 2,125.51 90.00 2,035.51
5 2,159.28 72.00 2,087.28
6 2,194.06 54.00 2,140.06
7 2,229.88 36.00 2,193.88
8 2,266.78 0.00 2,266.78
9 2,304.78 0.00 2,304.78
10 2,343.92 0.00 2,343.92
11 2,384.24 0.00 2,384.24
12 2,425.77 0.00 2,425.77
13 2,468.54 0.00 2,468.54
14 2,512.60 0.00 2,512.60
15 2,557.98 0.00 2,557.98
16 2,604.72 0.00 2,604.72
17 2,652.86 0.00 2,652.86
18 2,702.45 0.00 2,702.45
19 2,753.52 0.00 2,753.52
20 2,806.13 0.00 2,806.13
21 2,860.31 0.00 2,860.31
22 2,916.12 0.00 2,916.12
23 2,973.60 0.00 2,973.60
24 3,032.81 0.00 3,032.81
25 3,093.79 0.00 3,093.79
26 3,156.60 0.00 3,156.60
27 3,221.30 0.00 3,221.30
28 3,287.94 0.00 3,287.94
29 3,356.58 0.00 3,356.58
30 3,427.28 0.00 3,427.28
31 3,500.10 0.00 3,500.10
32 3,575.10 0.00 3,575.10
33 3,652.35 0.00 3,652.35
34 3,731.92 0.00 3,731.92
35 3,813.88 0.00 3,813.88
36 3,898.30 0.00 3,898.30
37 3,985.25 0.00 3,985.25
38 4,074.81 0.00 4,074.81
39 4,167.05 0.00 4,167.05
40 4,262.06 0.00 4,262.06
41 4,359.92 0.00 4,359.92
42 4,460.72 0.00 4,460.72
43 4,564.54 0.00 4,564.54
44 4,671.48 0.00 4,671.48
45 4,781.62 0.00 4,781.62
</TABLE>
The values shown above were calculated assuming the guaranteed interest rate
of 3.0% will be applied to the amount allocated to the fixed account.
95021 Rev 896
Page 24
<PAGE>
MASSACHUSETTS
TABLE OF MINIMUM GUARANTEED ANNUITY AND SURRENDER VALUES
FOR THE FIXED ACCOUNT
ASSUMING AN INITIAL PURCHASE PAYMENT OF $2,000.00
ALLOCATED TO THE FIXED ACCOUNT
<TABLE>
<CAPTION>
END OF ANNUITY SURRENDER SURRENDER
YEAR VALUE CHARGE VALUE
<S> <C> <C> <C>
46 4,895.07 0.00 4,895.07
47 5,011.92 0.00 5,011.92
48 5,132.28 0.00 5,132.28
49 5,256.25 0.00 5,256.25
50 5,383.94 0.00 5,383.94
51 5,515.46 0.00 5,515.46
52 5,650.92 0.00 5,650.92
53 5,790.45 0.00 5,790.45
54 5,934.16 0.00 5,934.16
55 6,082.18 0.00 6,082.18
56 6,234.65 0.00 6,234.65
57 6,391.69 0.00 6,391.69
58 6,553.44 0.00 6,553.44
59 6,720.04 0.00 6,720.04
60 6,891.64 0.00 6,891.64
</TABLE>
The values shown above were calculated assuming the guaranteed interest rate
of 3.0% will be applied to the amount allocated to the fixed account.
95021 Rev 896
Page 25
<PAGE>
AMERICAN GENERAL LIFE MINNESOTA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if lie inns on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
RIGHT TO CANCEL -- YOU MAY CANCEL THIS CONTRACT BY DELIVERING OR MAILING A
WRITTEN NOTICE OR SENDING A TELEGRAM TO THE COMPANY AT 2727--A ALLEN PARKWAY,
HOUSTON, TEXAS 77019, AND BY RETURNING THE CONTRACT BEFORE MIDNIGHT OF THE
TENTH DAY AFTER THE DATE YOU RECEIVE THE CONTRACT. NOTICE GIVEN BY MAIL AND
RETURN OF THE CONTRACT BY MAIL ARE EFFECTIVE ON BEING POSTMARKED, PROPERLY
ADDRESSED AND POSTAGE PREPAID. THE INSURER MUST RETURN ALL PAYMENTS MADE FOR
THIS CONTRACT WITHIN TEN DAYS AFTER IT RECEIVES NOTICE OF CANCELLATION AND THE
RETURNED CONTRACT.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--24 Rev 896
<PAGE>
AMERICAN GENERAL LIFE MINNESOTA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
American General Life
Insurance Company
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--24 Rev 896
<PAGE>
MINNESOTA
SCHEDULE PAGE
(CONTINUED)
A Surrender Charge will apply to the amount of any
Purchase Payment withdrawn during the first 7 years after
it was first credited. (See provisions entitled "Surrender
Charge for Partial Withdrawals and Full Surrenders" and
"Surrender Charge Exceptions" on page 14.)
<TABLE>
<CAPTION>
Number of Years from
Date Purchase Payment Surrender Charge as a
was Credited to Date Percentage of Purchase
of Withdrawal Payment
Withdrawn
-------------------- ----------------------
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
95021--24 Rev 896
Page 3A
<PAGE>
AMERICAN GENERAL LIFE NORTH CAROLINA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE NORTH CAROLINA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE NORTH DAKOTA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 20 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 20 DAY PERIOD, WE WILL
REFUND THE SUM OF YOUR ACCOUNT VALUE AT THE END OF THE VALUATION PERIOD IN
WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM TAXES AND ANNUAL CONTRACT FEE
THAT HAVE BEEN DEDUCTED.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE NORTH DAKOTA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--35 Rev 896
<PAGE>
AMERICAN GENERAL LIFE OKLAHOMA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
Contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this Contract.
All payments and values provided by this Contract, when based on the
investment experience of a Separate Account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
IMPORTANT
YOU HAVE PURCHASED A VARIABLE ANNUITY CONTRACT. CAREFULLY REVIEW IT FOR
LIMITATIONS.
THIS CONTRACT MAY BE RETURNED WITHIN 10 DAYS* FROM THE DATE YOU RECEIVED IT
FOR A FULL REFUND EITHER BY RETURNING IT TO THE AGENT OR THE INSURANCE
COMPANY. THE AMOUNT OF REFUND WILL BE THE SUM OF YOUR ACCOUNT VALUE AT THE END
OF THE VALUATION PERIOD IN WHICH YOUR REQUEST IS RECEIVED, PLUS ANY PREMIUM
TAXES AND ANNUAL MAINTENANCE CHARGES THAT HAVE BEEN DEDUCTED. AFTER 10 DAYS*,
CANCELLATION MAY RESULT IN A SUBSTANTIAL PENALTY, KNOWN AS A SURRENDER CHARGE.
*30 DAYS IF YOU WERE AGE 60 OR ABOVE ON THE DATE OF ISSUE.
A surrender charge as shown on page 14 may be applied to the amount of any
Purchase Payment withdrawn during the first seven years after it was first
credited.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--37 Rev 896
<PAGE>
AMERICAN GENERAL LIFE OKLAHOMA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--37 Rev 896
<PAGE>
PENNSYLVANIA
<TABLE>
INDEX
<CAPTION>
Page
<S> <C>
Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . . . . . . 7
Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Annuity Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Annuity Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Automatic Rebalancing. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Change of Investment Advisor or
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Contingent Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Contract Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Death Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Division Accumulation Units. . . . . . . . . . . . . . . . . . . . . . . . 11
Divisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Guaranteed Interest Rates. . . . . . . . . . . . . . . . . . . . . . . . . 10
Guarantee Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Net Investment Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
One-Time Reinstatement Privilege . . . . . . . . . . . . . . . . . . . . . 15
Ownership Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Payment of Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Full Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Partial Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Surrender Charge Exceptions. . . . . . . . . . . . . . . . . . . . . . . . 14
Ten Percent Free Withdrawal Privilege. . . . . . . . . . . . . . . . . . . 15
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Variable Annuity Payments. . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
95021--39 Rev 896
Page 2
<PAGE>
AMERICAN GENERAL LIFE SOUTH CAROLINA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE SOUTH CAROLINA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--A Rev 896
<PAGE>
TEXAS
GENERAL PROVISIONS
ENTIRE CONTRACT This Contract, endorsements if any, and a copy of the
Application, if attached, is the entire Contract. All
statements made by the Contract Owner or Annuitant will be
deemed representations and not warranties. No statement
will be used to reduce a claim under this Contract unless
it is in writing and made a part of this Contract.
NOT CONTESTABLE This Contract is not contestable.
GUARANTEES Subject to the Net Investment Factor provision of this
Contract, we guarantee that the dollar amount of Variable
Annuity Payments made during the lifetime of the Payee(s)
will not be adversely affected by our actual mortality
experience or by the actual expenses incurred by us in
excess of the expense deductions provided for in this
Contract.
SETTLEMENT All benefits under this Contract are payable from our Home
Office.
NONPARTICIPATING This Contract is nonparticipating and does not share in
our surplus or earnings.
CHANGE OF Unless otherwise required by law or regulation, the
INVESTMENT ADVISOR investment advisor or any investment policy may not be
OR INVESTMENT changed without our consent. If required, approval of or
POLICY change of any investment objective will be filed with the
Insurance Department of the state where this Contract is
delivered. You will be notified of any material investment
policy change which has been approved. Notification of an
investment policy change will be given in advance to those
Owners who have the right to comment on or vote on such
change.
Any substitution of the underlying investments of any
Division will comply with all applicable requirements of
the Investment Company Act of 1940 and rules thereunder.
RIGHTS RESERVED Upon notice to you, this Contract may be modified by us,
BY US but only if such modification is necessary to:
(1) Operate the Separate Account in any form permitted
under the Investment Company Act of 1940 or in any
other form permitted by law;
(2) Transfer any assets in any Division to another
Division, or to one or more other separate accounts,
or to the Fixed Account;
(3) Add, combine or remove Divisions in the Separate
Account, or combine the Separate Account with another
separate account;
(4) Add, restrict or remove Guarantee Periods of the
Fixed Account;
(5) Make any new Division available to you on a basis to
be determined by us;
(6) Substitute for the shares held in any Division, the
shares of another Variable Fund or the shares of
another investment company or any other investment
permitted by law;
(7) Make any changes as required by the Internal Revenue
Code or by any other applicable law, regulation or
interpretation in order to continue treatment of this
Contract as an annuity; or
(8) Make any changes required to comply with rules of any
Variable Fund.
95021--44 Rev 896
Page 6
<PAGE>
TEXAS
When required by law, we will obtain your approval of
changes and we will gain approval from any appropriate
regulatory authority.
CHANGING THE TERMS Any change in your Contract must be approved by one of our
OF YOUR CONTRACT officers. No agent has the authority to make any changes
or waive any of the terms of your Contract.
TERMINATION This Contract will remain in force until surrendered for
its full value, or all annuity payments have been made, or
the death proceeds have been paid, except as follows:
Upon 60 days notice to the Owner, we may cancel this
contract prior to the time the annuity becomes payable if:
(1) No considerations have been received under the
contract for a period of two full years; and
(2) The Owner's Account Value is less than $500.
PURCHASE PAYMENTS
MINIMUM PAYMENTS The minimum amounts acceptable as Purchase Payments are
shown on Page 3. We reserve the right to modify these
minimums or to refuse a Purchase Payment for any reason.
ALLOCATION OF The initial allocation for Net Purchase Payments is shown
PURCHASE PAYMENTS on Page 3 of this Contract and will remain in effect until
changed by Written notice. The percentage allocation for
future Net Purchase Payments may be changed at any time by
Written notice.
Changes in the allocation will be effective on the date we
receive the Owner's notice. The allocation may be 100% to
any available Division or Guarantee Period, or may be
divided among these options in whole percentage points
totaling 100%.
The initial Purchase Payment will be credited to the
Owner's Account not more than two Valuation Periods after
we receive it, together with all other required
documentation, in good order at the office designated by
the Company for the processing of initial Purchase
Payments. Subsequent Purchase Payments will be credited as
of the end of the Valuation Period in which they are so
received. We reserve the right to limit the total number
of Fixed Account Guarantee Periods and Separate Account
Divisions that may be chosen during the life of the
Contract.
PREMIUM TAXES When applicable, we will deduct an amount to cover premium
taxes. Such deduction will be made:
(1) From Purchase Payment(s) when received; or
(2) From the Account Value at the time annuity payments
are to commence; or
(3) From the amount of any partial withdrawal; or
(4) From proceeds payable upon termination of the
Contract for any other reason, including death of the
Annuitant or Owner, or surrender of the Contract.
95021--44 Rev 896
Page 7
<PAGE>
TEXAS
GUARANTEE PERIODS The Owner may select one or more Guarantee Period(s). The
Guarantee Period(s) selected will determine the Guaranteed
Interest Rates(s). The Net Purchase Payment or the portion
thereof (or amount transferred in accordance with the
transfer privilege provision described below) allocated to
a particular Guarantee Period will earn interest at the
Guaranteed Interest Rate during the Guarantee Period.
Guarantee Periods begin on the date as of which we credit
the Owner's Account Value to that Guarantee Period or, in
the case of a transfer, on the effective date of the
transfer. The Guarantee Period is the number of years we
credit the Guaranteed Interest Rate. The expiration date
of any Guarantee Period is the last day of the Guarantee
Period. Subsequent Guarantee Periods begin on the first
day following the expiration date. As a result of
Guarantee Period renewals, additional Purchase Payments
and transfers of portions of the Owner's Account Value,
Guarantee Periods of the same duration may have different
expiration dates and Guaranteed Interest Rates.
We will notify the Owner in writing at least 30 and no
more than 60 days prior to the expiration date of any
Guarantee Period. A new Guarantee Period of the same
duration as the previous Guarantee Period will begin
automatically unless we receive Written notice to the
contrary from the Owner at least 3 Valuation Dates prior
to the end of such Guarantee Period. The Owner may elect
to change to another Guarantee Period or Division which we
offer at such time.
If the amount of an Owner's Account Value in a Guarantee
Period is less than $500 at the end of such Guarantee
Period, we reserve the right to transfer such amount,
without charge, to the Money Market Division of the
Separate Account. However, we will transfer such amount to
another available Division at the Owner's request.
GUARANTEED INTEREST We will periodically establish an applicable Guaranteed
RATES Interest Rate for each Guarantee Period we offer. These
rates will be guaranteed for the duration of the
respective Guarantee Periods. The Guarantee Periods that
we make available at any time will be determined in our
discretion.
No Guaranteed Interest Rate shall be less than an
effective annual rate of 3.0% per year.
STATUTORY The paid up annuity benefits, surrender benefits and death
REQUIREMENTS benefits guaranteed in this contract are not less than the
minimum benefits required by any statute of the state in
which this contract is delivered.
SEPARATE ACCOUNT
DIVISIONS The Separate Account has several Divisions, each investing
in a corresponding Variable Fund. Net Purchase Payments
will be allocated to the Divisions and the Fixed Account
as shown on Page 3, unless the Owner changes the
allocation.
We will use the Net Purchase Payments and any transferred
amounts to purchase Variable Fund shares applicable to the
Divisions at their net asset value. We will be the owner
of all Variable Fund shares purchased with the Net
Purchase Payments or transferred amounts.
95021--44 Rev 896
Page 10
<PAGE>
TEXAS
DIVISION Net Purchase Payments and transferred amounts allocated to
ACCUMULATION the Separate Account will be credited to the Owner's
UNITS Account in the form of Division Accumulation Units. The
number of Division Accumulation Units will be determined
by dividing the amount allocated to a Division by the
Division Accumulation Unit value as of the end of the
Valuation Period as of which the transaction is credited.
The value of each Division Accumulation Unit was
arbitrarily set as of the date the Division first
purchased Variable Fund shares. Subsequent values on any
Valuation Date are equal to the previous Division
Accumulation Unit value times the Net Investment Factor
for the Valuation Period ending on that Valuation Date.
NET INVESTMENT The Net Investment Factor is an index applied to measure
FACTOR the investment performance of a Division from one
Valuation Period to the next. The Net Investment Factor
may be greater or less than or equal to one; therefore,
the value of an Accumulation Unit may increase, decrease
or remain the same.
The Net Investment Factor for a Division is determined by
dividing (1) by (2), and then subtracting (3) from the
result, where:
(1) Is the sum of:
(a) The Net Asset Value Per Share of the Variable
Fund shares held in the Division, determined at
the end of the current Valuation Period; plus
(b) The per share amount of any dividend or capital
gain distributions made on the Variable Fund
shares held in the Division during the current
Valuation Period;
(2) Is the Net Asset Value Per Share of the Variable Fund
shares held in the Division, determined at the
beginning of the current Valuation Period; and
(3) Is a factor representing the mortality risk, expense
risk, and administrative expense charge. We will
determine the daily asset charge factor annually, but
in no event may it exceed the Maximum Asset Charge
Factor as specified on Page 3.
SEPARATE ACCOUNT The Separate Account Value for any Valuation Period is the
total of the values Period. The value for each Division
will be equal to:
(1) The number of Division Accumulation Units; multiplied
by
(2) The Division Accumulation Unit value for the
Valuation Period.
The Separate Account value will vary from Valuation Date
to Valuation Date reflecting the total value in the
Divisions.
TRANSFERS
TRANSFERS Transfers may be made at any time during the Accumulation
Period after the first 30 days following the Date of
Issue. A transfer will be
95021--44 Rev 896
Page 11
<PAGE>
TEXAS
THIRD OPTION - JOINT AND LAST SURVIVOR LIFE ANNUITY - An
annuity payable monthly during the joint lifetime of the
Annuitant, and a secondary Annuitant, and thereafter
during the remaining lifetime of the survivor, ceasing
with the last payment prior to the death of the survivor.
FOURTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD - An
amount payable monthly for the number of years selected
which may be from 5 to 40 years. If this option is
selected on a variable basis, the number of years may not
exceed the life expectancy of the Annuitant or other
properly-designated Payee.
FIFTH OPTION - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The
amount due may be paid in equal monthly installments of a
designated dollar amount (not less than $125 nor more than
$200 per annum per $1,000 of the original amount due)
until the remaining balance is less than the amount of one
installment. Payments under this option are available on a
fixed basis only. To determine the remaining balance at
the end of any month, such balance at the end of the
previous month is decreased by the amount of any
installment paid during the month and the result will be
accumulated at an interest rate not less than 3.5%
compounded annually. If the remaining balance at any time
is less than the amount of one installment, such balance
will be paid and will be the final payment under the
option.
In lieu of monthly payments, payments may be elected on a
quarterly, semi-annual or annual basis, in which cases the
amount of each annuity payment will be determined on a
basis consistent with that described in this Contract for
monthly payments.
No election of any Annuity Option may be made in the case
where a Fixed or Variable Annuity is elected, unless a
minimum initial annuity payment of $100 will be provided.
No election of any Annuity Option may be made in the case
where a combination of a Fixed and a Variable Annuity is
elected, unless a minimum initial annuity payment of $50
on each basis will be provided. If the initial annuity
payment does not meet the minimum amount required for the
Annuity Option elected, the Company will provide a less
frequent payment schedule. If the Annuity Value is less
than $2,000 or payments on a monthly basis would be less
than $20.00, the Company will make a lump-sum payment of
the Account Value (less any Surrender Charge, uncollected
annual Maintenance Charge and applicable premium tax) as
of the date of this determination to the Annuitant or
other properly-designated Payee.
If the age or sex of the Annuitant has been misstated to
us, any amount payable will be that which would have been
payable had the misstatement not occurred. We will deduct
any overpayment from the next payment or payments due and
add any underpayments to the next payment due. Interest at
an effective annual rate of 3.5% will be added to any such
adjustment.
ANNUITY TABLES The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options.
The tables are based on the 1983a Male or Female Tables
adjusted by projection scale G for 9 years, with interest
at the rate of 3 1/2% per year.
95021--44 Rev 896
Page 20
<PAGE>
TEXAS
Under the First or Second Options, the amount of each
payment will depend upon the sex of the Annuitant and the
Annuitant's adjusted age at the time the first payment is
due. Under the Third Option, the amount of each payment
will depend upon the sex of both Annuitants and their
adjusted ages at the time the first payment is due.
In using the table of annuity payment rates, the ages of
the Annuitants must be reduced by one year for Annuity
Commencement Dates occurring during the decade 2000-2009,
reduced two years for Annuity Commencement Dates occurring
during the decade 2010-2019, and reduced an additional
year for each decade that follows. The age 70 rate is also
used for ages above 70.
ALTERNATE AMOUNT If a fixed life income option is elected, the Owner (or,
OF INSTALLMENTS if the Owner has not elected a payment option, the
UNDER FIXED LIFE Beneficiary) may elect life income payments equal to those
INCOME OPTIONS provided by those fixed single premium immediate annuity
option rates in use by the Company when annuity payments
begin.
95021--44 Rev 896
Page 21
<PAGE>
AMERICAN GENERAL LIFE UTAH
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE UTAH
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE WEST VIRGINIA
INSURANCE COMPANY
Unless otherwise directed by the Owner, we will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of
such payments will be determined on the basis of the provisions of this
contract. The first payment will be payable on the Annuity Commencement Date.
Subsequent payments will be payable on the corresponding day of each month
thereafter in accordance with the provisions of this contract.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. SEE THE "SEPARATE ACCOUNT" AND
"VARIABLE ANNUITY PAYMENTS" PROVISIONS IN THIS CONTRACT.
CANCELLATION RIGHT. YOU MAY RETURN THIS CONTRACT FOR CANCELLATION TO US OR TO
THE SALES REPRESENTATIVE THROUGH WHOM IT WAS PURCHASED, WITHIN 10 DAYS AFTER
DELIVERY. UPON SURRENDER OF THIS CONTRACT WITHIN THE 10 DAY PERIOD, WE WILL
REFUND ALL PURCHASE PAYMENTS RECEIVED BY THE COMPANY.
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
- --------------------- -------------------------
Secretary President
READ YOUR CONTRACT CAREFULLY
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
95021--A Rev 896
<PAGE>
AMERICAN GENERAL LIFE WEST VIRGINIA
INSURANCE COMPANY
This is a FLEXIBLE PAYMENT VARIABLE and FIXED INDIVIDUAL DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING -- NOT ELIGIBLE FOR DIVIDENDS.
All payments and values provided by this Contract, when based on the
investment experience of a separate account are variable, may increase or
decrease and are not guaranteed as to amount. See the "Separate Account" and
"Variable Annuity Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact your Registered Representative,
or the Annuity Administration Department
AMERICAN GENERAL LIFE
INSURANCE COMPANY
2727-A Allen Parkway
P.O. Box 1401
Houston, Texas 77251-1401
(713) 831-3505
[AMERICAN GENERAL LOGO]
A STOCK COMPANY
A Subsidiary of American General Corporation
95021--A Rev 896
<PAGE>
EXHIBIT 4(g)(iv)
AMERICAN GENERAL LIFE INSURANCE COMPANY
RIDER PROVIDING
WAIVER OF SURRENDER CHARGES DUE TO DISABILITY WITH 12 MONTHS
OR LESS TO LIVE, OR DUE TO CONFINEMENT IN A HOSPITAL,
CONVALESCENT NURSING HOME OR EXTENDED CARE FACILITY
This rider has been added to and made a part of the Contract to which it is
attached.
The following provisions are hereby added to the Contract.
SURRENDER CHARGE EXCEPTION DUE TO DISABILITY (DEFINED AS BEING TERMINALLY ILL
WITH 12 MONTHS OR LESS TO LIVE).
A Surrender Charge will not apply to partial or total surrenders if we receive
satisfactory evidence that due to disability, the Annuitant is considered to
be terminally ill with 12 months or less to live.
SURRENDER CHARGE EXCEPTION DUE TO CONFINEMENT IN A HOSPITAL, CONVALESCENT
NURSING HOME OR EXTENDED CARE FACILITY.
A surrender charge will not apply to Partial or Total Surrenders if we are
given written proof that the Annuitant is (or was) confined in a Hospital,
Convalescent Nursing Home or Extended Care Facility, provided that:
1. Such confinement was for a period of 30 consecutive days or more; and
2. The surrender request is made:
a. While the Annuitant is confined in such facility; or
b. Within 30 days after discharge from such facility.
DEFINITIONS
PHYSICIAN. The term "Physician" means an individual who:
1. Is licensed to practice medicine and treat illness or injury in the state
in which treatment is received;
2. Is acting within the scope of his or her license; and
3. Is not the Annuitant, the Owner, a person who lives with the Annuitant or
Owner, or a member of the immediate family of the Annuitant or Owner.
IMMEDIATE FAMILY. The term "Immediate Family" means a spouse, child, brother,
sister, parent or grandparent of:
1. The Owner or the Annuitant; or
2. A spouse of the Owner or the Annuitant.
HOSPITAL. The term "Hospital" means a facility that:
1. Is operated pursuant to law;
2. Provides services:
a. On its premises; or
b. In facilities available to the hospital on a contractual basis;
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<PAGE>
3. Provides or operates medical, diagnostic and major surgical facilities
for the care and treatment of sick or injured persons:
a. On an inpatient basis; and
b. For which a charge is made;
4. Is under the supervision of a staff of one or more duly licensed
physicians;
5. Provides 24-hour nursing service by or under the supervision of a
registered nurse (R.N.);
6. Has x-ray and laboratory facilities, and
7. Maintains permanent medical history records.
CONVALESCENT NURSING HOME OR EXTENDED CARE FACILITY. The term "Convalescent
Nursing Home" (Nursing Home) or "Extended Care Facility" means a Nursing Home
or Extended Care Facility that:
1. Is operated pursuant to law;
2. Is primarily engaged in providing:
a. Room and board accommodations; and
b. Skilled nursing care under the supervision of a duly licensed
physician; and
3. Provides continuous 24-hour a day nursing service by or under the
supervision of a registered nurse (R.N.); and
4. Maintains a daily medical record on each patient.
This definition does not include any home or facility used primarily for rest
or the aged.
WRITTEN PROOF. Surrender Charges will be waived subject to the
following requirements:
1. The Owner must submit a request for full or partial surrender, on a form
acceptable to us, while the Contract and this rider are in force. The
form must state the basis for Surrender Charges to be waived.
2. If Surrender Charges are to be waived due to the Annuitant's terminal
illness with 12 months or less to live, we must receive a written
statement signed by a Physician providing:
a. The diagnosis; and
b. A statement that the Annuitant is terminally ill, and the
Annuitant's medical condition is expected to result in death in 12
months or less.
A second medical opinion may be requested at our expense. If the second
opinion differs from the first, we will submit all medical information to an
independent third party, and will rely on the third party's decision.
3. If Surrender Charges are to be waived due to the Annuitant's confinement
in a Hospital, Nursing Home or Extended Care Facility, we must receive:
a. A signed statement from the Hospital, Nursing home or Extended Care
Facility providing the name of the Annuitant and the dates of
confinement; or
b. A copy of an invoice from the Hospital, Nursing home or Extended
Care Facility providing the name of the Annuitant, and the dates of
confinement.
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<PAGE>
CONTRACT PROVISIONS APPLICABLE.
This rider is subject to all the conditions and provisions of the Contract to
which it is attached except as otherwise provided in this rider.
CONSIDERATION.
The consideration for this rider is payment of the initial Purchase Payment
for the base Contract. There is no charge for this rider.
The effective date of this rider is the Date of Issue of the Contract to which
this rider is attached. This rider will terminate upon termination of the
Contract.
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EXHIBIT 15(h)
LIMITED POWER OF ATTORNEY
WHEREAS, American General Life Insurance Company, a Texas company (and
its successors, if applicable) ("Company"), intends from time to time to file
with the Securities and Exchange Commission ("Commission"), one or more Form
N-4 Registration Statement(s) under the Securities Act of 1933 and the
Investment Company Act of 1940, on behalf of the Company and the Separate
Account(s) maintained or to be maintained by the Company, with such amendments
thereto as may be necessary or appropriate, together with any and all exhibits
and other documents related thereto;
NOW, THEREFORE, each of the undersigned individuals, in his capacity as a
director or officer of the Company, hereby appoints Thomas B. Phillips and
Steven A. Glover, and each of them, either of whom may act without the joinder
of the other, his true and lawful attorney-in-fact and with full power of
substitution and resubstitution, to execute in his name, place, and stead, in
his capacity as a director or officer or both, as the case may be, of the
Company, any and all Form N-4 Registration Statements and any and all
amendments thereto as each said attorney-in-fact shall deem necessary or
appropriate, together with all instruments necessary or incidental in
connection therewith, and to file the same or cause the same to be filed with
the Commission. The above-named attorneys-in-fact shall each have full power
and authority to do and perform in the name and on behalf of the undersigned,
in any and all capacities, every act whatsoever necessary or desirable in
connection with any and all Form N-4 Registration Statements, and any and all
amendments thereto, as fully and for all intents and purposes as the
undersigned might or could do in person, the undersigned hereby ratifying and
approving the acts of each said attorney-in-fact.
EXECUTED this 14th day of August, 1996.
/s/RODNEY O. MARTIN, JR. /s/ROBERT F. HERBERT, JR.
----------------------- -----------------------
Rodney O. Martin, Jr. Robert F. Herbert, Jr.
EXHIBIT 16
August 16, 1995
AMENDED STATEMENT OF EXEMPTIVE RELIEF RELIED UPON
American General Life Insurance Company ("AG Life"), American General
Life Insurance Company Separate Account D (the "Account"), and American
General Securities Incorporated ("AGSI") have received an order of the
Securities and Exchange Commission, pursuant to Section 6(c) of the Investment
Company Act of 1940 (the "1940 Act") exempting them from the provisions of
Sections 26(a)(2)(C) and 27(c)(2) of the 1940 Act "to the extent necessary to
permit the deduction of mortality and expense risk charges from the assets of
Separate Account D." SEC Rel. No. IC-18453 (Dec. 20, 1991) ("Order"), Rel. No.
IC-18417 (Nov. 22, 1991) (Notice) (File No. 812-7811).
AG Life, the Account and AGSI intend to rely on the exemptive relief
granted in the Order in connection with variable annuity contracts that will
be funded through the Account and that have been enhanced as described below
("Enhanced Contracts"). AG Life, the Account and AGSI base their reliance on
the Order on the fact that the Enhanced Contracts do not differ from the
variable annuity contracts that were the subject of a registration statement
under the Securities Act of 1933 at the time of the Order ("Original
Contracts") in any way that is material to the relief granted by the Order.
The Enhanced Contracts differ from the Original Contracts principally in
terms of: sale through an additional distribution channel, certain different
underlying investment options, and certain lower charge levels and generally
enhanced benefits. (The Enhanced Contracts also differ from two generations of
Contracts subsequent to the Original Contracts and including the
currently-offered generation of Contracts. This Statement of Exemptive Relief
Relied Upon addresses only the Original Contracts, because only the Original
Contracts were the subject of the Order.)
A. Basis for Reliance on Order
AGSI has served as principal underwriter for the Original Contracts and
will serve as principal underwriter for the Enhanced Contracts through
wholesale and retail broker-dealers. AGSI intends to continue to distribute
the Original Contracts during at least a portion of the period that AG Life
seeks approval of the Enhanced Contracts from state insurance departments.
<PAGE>
AG Life, the Account and AGSI base their reliance on the Order on the
following:
1. The Commission staff has recently confirmed that multiple
prospectuses may be combined in a single Form N-4 registration statement
when the prospectuses describe contracts that are essentially identical.
The Commission staff stated that multiple prospectuses may be used in a
single registration statement where: (a) the prospectuses describe the
same contract that is sold through different distribution channels; (b)
the prospectuses describe contracts that differ only with respect to
underlying funds or portfolio investment options offered; and (c) the
prospectuses describe both the original and "enhanced" versions of the
same contract during the period that the insurance company seeks approval
of the "enhanced" version from state insurance departments. SEC Staff
Industry Comment Letter (Nov. 3, 1995).
2. The foregoing Commission staff position is based on the
Commission's recognition that the provisions of some variable annuity
contracts may vary slightly depending upon how the contracts are used and
that contract variations may not warrant separate registration under the
Securities Act of 1933. SEC Rel. No. 33-6588 at n. 20 (June 14, 1985)
(adopting Form N-4 Registration Statement).
3. Since AG Life, the Account and AGSI received their Order in 1991,
the Commission has begun following an administrative practice of granting
exemptive orders under Sections 26(a)(2)(C) and 27(c)(2) of the 1940 Act,
which orders expressly apply to contracts that "are substantially similar
in all material respects" to the contracts described in the applications
underlying the Orders. See, e.g., Aid Association for Lutherans, Rel. No.
IC-20773 (Dec. 24, 1994) (Order), Rel. No. IC-20720 (Nov. 18, 1994)
(Notice) (File No. 812-9130).
4. Furthermore, since AG Life, the Account and AGSI received their
Order in 1991, the Commission and its staff have followed a flexible
administrative approach that has permitted companies in situations
similar to that of AG Life, the Account and AGSI, to rely on previously
granted exemptive orders under Sections 26(a)(2)(C) and 27(c)(2) relief
with respect to significant contract variations where the variations
benefit contractowners. See, e.g., WF Life Insurance Company, SEC Staff
No-Action Letter (Jan. 19, 1994).
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<PAGE>
B. Variations in Contracts
The Enhanced Contracts reflect variations from the Original Contracts
that lower certain charge levels and generally enhance benefits. Neither the
Original Contracts, the Order, nor the exemptive application underlying the
Order prohibit any such variation in subsequent versions of the Original
Contracts.
Both the Enhanced Contracts and the Original Contract provide for a
mortality and expense risk assumption charge ("M&E charge") of 1.25% as
reflected in the Order. At the same time, AG Life will assume mortality and
expense risks under the Enhanced Contracts that will at least equal -- and, in
important respects, exceed -- those under the Original Contracts. Regarding
mortality risks, the Enhanced Contracts, for example, differ from the Original
Contracts in providing for: an enhanced minimum guaranteed death benefit, from
the issue date (rather than after the fifth anniversary date), equal to the
highest value on any contract anniversary prior to the deceased's attained age
81, plus purchase payments less withdrawals since such anniversary (rather
than the value on the most recent five-year contract anniversary); the minimum
guaranteed death benefit to be applicable to age 81 (rather than age 75); and
an enhanced minimum guaranteed death benefit applicable after age 81 equal to
the minimum guaranteed death benefit immediately prior to the deceased's 81st
birthday. Regarding expense risks, the Enhanced Contracts, for example, differ
from the Original Contracts in providing for: an annual administrative charge
of $30 per contract (rather than $36); an asset-based administrative charge at
the daily rate of 0.15% (rather than 0.30%); and a waiver of the annual
administrative charge per contract for $100,000 or more of cumulative premium.
Other principal differences between the Enhanced Contracts and the
Original Contracts are as follows:
1. The Enhanced Contracts provide for a sales load that is: lowered
to a maximum rate of 6% (from 7.5%); assessed over seven years (rather
than nine); and lowered in years 3, 5, 6, and 7 by one percentage point
and in year 8 by two percentage points.
2. The Account subaccounts funding the Enhanced Contracts invest in
one of the two mutual funds that underlie the Account subaccounts funding
the Original Contracts. However, the Enhanced Contracts will offer a
number of different investment options than the Original Contracts,
including series under both Van Kampen American Capital Life Investment
Trust and the Morgan Stanley Universal Funds, Inc.
3. The Enhanced Contracts provide for the calculation of the
annuitant's age at the last birthday (rather than the nearest birthday).
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4. The Enhanced Contracts will require a higher minimum initial
purchase payment of $10,000 (rather than $5,000) than the Original
Contract.
C. Actuarial Memorandums
Each representation made in the exemptive application underlying the
Order ("Application") will remain valid as to the Enhanced Contracts.
The Application requested exemptive relief based on the representation
that the level of the M&E charge under the Original Contracts was "within the
range of industry practice for comparable annuity contracts." As noted above,
under the Enhanced Contracts, the rate of the M&E charge will be unchanged and
the CDSL and the asset-based administrative charges will be substantially
reduced. The representation quoted above from the Application will remain
valid with respect to the Enhanced Contracts.
AG Life, the Account and AGSI, in concluding that the level of the M&E
charge under the Enhanced Contracts is within the range of industry practice
for comparable annuity contracts, have reviewed publicly available information
regarding variable annuity contracts of other companies, taking into
consideration such factors as guaranteed minimum death benefits, guaranteed
annuity purchase rates, minimum initial and subsequent purchase payments,
other contract charges, the manner in which charges are imposed, market
sector, investment options under contracts, the rating of the issuer, the size
of the issuer, and availability to individual qualified and non-tax-qualified
plans. AG Life will maintain at its principal office, and make available on
request to the Commission or its staff, a memorandum setting forth in detail,
with respect to the Enhanced Contracts, the variable annuity products analyzed
and the methodology and results of AG Life's comparative review.
Moreover, AG Life has concluded that there is a reasonable likelihood
that the proposed distribution financing arrangements with respect to the
Enhanced Contracts will benefit the Account and owners of the Contracts. AG
Life will maintain at its principal office, and make available on request to
the Commission or its staff, a memorandum setting out the basis for such
conclusion.
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D. Conclusion
Based on the foregoing analysis, AG Life, the Account and AGSI believe
(1) that the Enhanced Contracts will be offered on a basis that is similar to
that on which the Original Contracts were intended to be offered, in all
respects material to the exemptive relief granted by the Order and (2) that
the Enhanced Contracts are similar to the Original Contracts in all respects
material to the exemptive relief previously granted by the Order. Accordingly,
AG Life, the Account and AGSI believe that they may rely on the Order with
respect to the Enhanced Contracts.
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