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REGISTRATION NO.___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
(Check appropriate box or boxes)
AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
AMERICAN NATIONAL INSURANCE COMPANY
(Exact Name of Depositor)
ONE MOODY PLAZA
GALVESTON, TEXAS 77550
(Address of Depositor's Principal Executive Offices)
(409) 763-4661
(Depositor's Telephone Number, including Area Code)
REX HEMME JERRY L. ADAMS
VICE PRESIDENT, ACTUARY GREER, HERZ & ADAMS, L.L.P.
AMERICAN NATIONAL WITH COPY TO: ONE MOODY PLAZA
INSURANCE COMPANY GALVESTON, TEXAS 77550
ONE MOODY PLAZA
GALVESTON, TEXAS 77550
(Name and Address of Agent for Service)
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Title of Securities Amount Being Amount of
Being Registered Registered Registration Fee
- -------------------------------- --------------------------------- ----------------
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Variable Annuity An indefinite number of $500.00
Contracts II securities are being
registered pursuant to
Rule 24f-2 of the
Investment Company Act
of 1940
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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AMERICAN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT
CROSS REFERENCE SHEETS
Cross reference sheet pursuant to Rule 495(a) of the
Securities Act of 1933 showing location in the prospectuses and statement of
additional information of items required by the Form N-4.
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PART A ITEM CAPTION IN PROSPECTUS
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1. Cover Page
(a)(i) Cover Page
(a)(ii) Cover Page
(a)(iii) Cover Page
(a)(iv) Not Applicable
(a)(v)(A) Cover Page
(a)(v)(B) Cover Page
(a)(v)(C) Cover Page
(a)(vi) Cover Page
(a)(vii) Cover Page
(a)(viii) Cover Page
(a)(ix) Not Applicable
(b) Not Applicable
2. Definitions GLOSSARY OF TERMS
3. Synopsis
(a) SUMMARY OF EXPENSES -
Expenses during
the Accumulation Period
(b) SUMMARY OF THE CONTRACTS
(c) SUMMARY OF THE CONTRACTS
(d) Not Applicable
4. Condensed Financial Information
(a) Not Applicable
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(b) PERFORMANCE
(c) FINANCIAL STATEMENTS
5. General Description of Registrant, Depositor, and Portfolio Companies
(a)(i) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
American National
Insurance Company
(a)(ii) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
American National
Insurance Company
(a)(iii) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
American National
Insurance Company
(b)(i) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
The Separate Account
(b)(ii)(A) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
The Separate Account
(b)(ii)(B) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
The Separate Account
(b)(ii)(C) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
The Separate Account
(b)(iii) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
The Separate Account
(c)(i) Cover Page; AMERICAN
NATIONAL INSURANCE
COMPANY AND THE SEPARATE
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ii
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ACCOUNT - The American
National Fund; AMERICAN
NATIONAL INSURANCE
COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity
Funds
(c)(ii) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The
American National Fund;
AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The
Fidelity Funds
(c)(iii) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The
American National Fund;
AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The
Fidelity Funds
(d) Cover Page; AMERICAN
NATIONAL INSURANCE
COMPANY AND THE SEPARATE
ACCOUNT - The American
National Fund; AMERICAN
NATIONAL INSURANCE
COMPANY AND THE SEPARATE
ACCOUNT - The Fidelity
Funds
(e) VOTING RIGHTS
(f) DISTRIBUTOR OF THE
CONTRACTS
6. Deductions
(a) SUMMARY OF EXPENSES -
Expenses During the
Accumulation Period;
AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The
American National Fund;
AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT - The
Fidelity Funds; CHARGES
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AND DEDUCTIONS DURING THE
ACCUMULATION PERIOD
(b) SUMMARY OF EXPENSES -
Expenses During the
Accumulation Period;
CHARGES AND DEDUCTIONS
DURING THE ACCUMULATION
PERIOD
(c) CHARGES AND DEDUCTIONS
DURING THE ACCUMULATION
PERIOD - Exceptions to
Charges
(d) DISTRIBUTOR OF THE
CONTRACTS
(e) SUMMARY OF EXPENSES
(f) SUMMARY OF EXPENSES
7. General Description of Variable Annuity Contracts
(a) DISTRIBUTIONS UNDER THE
CONTRACT - ACCUMULATION
PERIOD - Full and Partial
Surrenders; DISTRIBUTIONS
UNDER THE CONTRACT -
Accumulation Period -
Death Benefit During
Accumulation Period;
ANNUITY PERIOD
(b)(i) CONTRACTS - Contract
Application and Purchase
Payments; CONTRACTS -
Allocation of Purchase
Payments
(b)(ii) CONTRACTS - Contract
Application and Purchase
Payments; CONTRACTS -
Allocation of Purchase
Payments; CONTRACTS -
Transfers Prior to
Annuity Date
(b)(iii) Not Applicable
(c)(i) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
Addition, Deletion or
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Substitution of
Investments; CONTRACTS -
Purpose of the Contracts
(c)(ii) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
Addition, Deletion or
Substitution of
Investments; CONTRACTS -
Purpose of the Contracts
(c)(iii) AMERICAN NATIONAL
INSURANCE COMPANY AND THE
SEPARATE ACCOUNT -
Addition, Deletion or
Substitution of
Investments; CONTRACTS -
Purpose of the Contracts
(d) CONTRACTS - Contractowner
Inquiries
8. Annuity Period
(a) ANNUITY PERIOD - Annuity
Provisions
(b) ANNUITY PERIOD - Election
of Annuity Date and Form
of Annuity
(c) ANNUITY PERIOD - Annuity
Options
(d) ANNUITY PERIOD - Value of
Variable Annuity
Payments: Assumed
Investment Rates
(e) CONTRACTS - Contract
Application and Purchase
Payments; ANNUITY PERIOD
(f) ANNUITY PERIOD - Election
of Annuity Date and Form
of Annuity
9. Death Benefit
(a) DISTRIBUTIONS UNDER THE
CONTRACT - Death Benefit
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During Accumulation
Period
(b) DISTRIBUTIONS UNDER THE
CONTRACT - Death Benefit
During Accumulation
Period
10. Purchases and Contract Value
(a)(i) CONTRACTS - Contract
Application and Purchase
Payments
(a)(ii) CONTRACTS - Contract
Application and Purchase
Payments; CONTRACTS -
Allocation of Purchase
Payments; CONTRACTS -
Crediting of Accumlation
Units
(a)(iii)(A) CONTRACTS - Crediting of
Accumulation Units
(a)(iii)(B) CONTRACTS - Determining
the Accumulation Unit
Values
(a)(iii)(C) CONTRACTS - Crediting of
Accumulation Units;
CONTRACTS - Determining
the Accumulation Unit
Values
(b) CONTRACTS - Determining
the Accumulation Unit
Values
(c) CONTRACTS - Crediting of
Accumulation Units;
CONTRACTS - Determining
the Accumulation Unit
Values
(d) DISTRIBUTOR OF THE
CONTRACTS
11. Redemptions
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(a) DISTRIBUTIONS UNDER THE
CONTRACT - Accumulation
Period - Full and Partial
Surrenders; ANNUITY
PERIOD
(b) Not Applicable
(c) Not Applicable
(d) DISTRIBUTIONS UNDER THE
CONTRACT - Accumulation
Period - Full and Partial
Surrenders; ANNUITY
PERIOD
(e) Cover Page; CONTRACTS -
Contract Application and
Purchase Payments
12. Taxes
(a) FEDERAL TAX MATTERS
(b) FEDERAL TAX MATTERS -
Qualified Contracts
(c) CHARGES AND DEDUCTIONS
DURING THE ACCUMULATION
PERIOD - Charges for
Taxes
13. Legal Proceedings LEGAL PROCEEDINGS
14. Table of Contents of the Statement of Additional Information
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL
INFORMATION
Location in the Statement of Additional Information of information required
by Items of Form N-4.
CAPTION IN STATEMENT OF
PART B ITEM ADDITIONAL INFORMATION
- ----------- ----------------------
15. Cover Page
(a)(i) Cover Page
(a)(ii) Cover Page
(a)(iii)(A) Cover Page
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vii
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(a)(iii)(B) Cover Page
(a)(iii)(C) Cover Page
(a)(iv) Cover Page
(a)(v) Cover Page
(b) Not Applicable
16. Table of Contents TABLE OF CONTENTS
17. General Information and History
(a) Not Applicable
(b) Not Applicable
(c) See Prospectus (AMERICAN
NATIONAL INSURANCE
COMPANY AND THE SEPARATE
ACCOUNT - American
National Insurance
Company)
18. Services
(a) Not Applicable
(b) See Prospectus
(DISTRIBUTOR OF THE
CONTRACTS)
(c) Cover Page
(d) Not Applicable
(e) Not Applicable
(f) Not Applicable
19. Purchase of Securities Being Offered
(a) See Prospectus (CONTRACTS
- Contract Application
and Purchase Payments;
CHARGES AND DEDUCTIONS
DURING THE ACCUMULATION
PERIOD - Exceptions to
Charges)
(b) See Prospectus (SUMMARY
OF EXPENSES - Expenses
during the Accumulation
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Period; CHARGES AND
DEDUCTIONS DURING THE
ACCUMULATION PERIOD -
Surrender Charge)
20. Underwriters
(a) See Prospectus
(DISTRIBUTOR OF THE
CONTRACTS)
(b) DISTRIBUTION OF THE
CONTRACTS
(c) Not Applicable
(d)(i) Not Applicable
(d)(ii) Not Applicable
(d)(iii) Not Applicable
(d)(iv) Not Applicable
21. Calculation of Performance Data
(a)(i) PERFORMANCE
(a)(ii) PERFORMANCE
(a)(iii) PERFORMANCE
(a)(iv) PERFORMANCE
(b)(i)(A) PERFORMANCE
(b)(i)(B) PERFORMANCE
(b)(i)(C) PERFORMANCE
(b)(ii)(A) PERFORMANCE
(b)(ii)(B) PERFORMANCE
(b)(ii)(C) PERFORMANCE
(b)(iii)(A) PERFORMANCE
(b)(iii)(B) PERFORMANCE
(b)(iii)(C) PERFORMANCE
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22. Annuity Payments THE CONTRACT -
Computation of Variable
Annuity Payments
23. Financial Statements
(a) Not Applicable
(b) FINANCIAL STATEMENTS;
FINANCIAL STATEMENT
SCHEDULES
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Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
x
<PAGE>
INVES$TRAC
GOLD
VARIABLE ANNUITY
PROSPECTUS
FOR
VARIABLE ANNUITY CONTRACTS II
ISSUED BY
AMERICAN NATIONAL INSURANCE COMPANY
<PAGE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE.
NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR
MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED
UPON.
<PAGE>
VARIABLE ANNUITY CONTRACTS II
ISSUED BY
AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA
GALVESTON, TEXAS 77550-7999
(409) 763-4661
This Prospectus describes the individual deferred Variable Annuity Contracts
II (the "Contracts") offered by American National Insurance Company ("American
National"). The Contracts are designed to provide an investment vehicle for the
accumulation of capital on a tax-deferred basis for retirement or other long-
term purposes. The Contracts provide for annuity payments commencing at some
later date specified by the Contractowner.
Unlike traditional guaranteed annuities, the Contracts provide for
Accumulation Values and annuity payment amounts which are based on and vary with
the investment performance of Subaccounts of the American National Variable
Annuity Separate Account (the "Separate Account") and/or the American National
Fixed Account. The assets of the Subaccounts are invested in the portfolios of
American National Investment Accounts, Inc. (the "American National Fund") and
in the portfolios of Variable Insurance Products Fund and Variable Insurance
Products Fund II (sometimes referred to, collectively, as the "Fidelity Funds").
The portfolios of the American National Fund and the portfolios of the Fidelity
Funds that are available for investment will sometimes be referred to,
individually, as an "Eligible Portfolio" and, collectively, as the "Eligible
Portfolios".
The Separate Account is registered with the Securities and Exchange Commission
(the "SEC") under the Investment Company Act of 1940 (the "1940 Act") as a unit
investment trust, which is a type of investment company. The Separate Account
currently has fourteen separate Subaccounts: the AN Money Market, the AN Growth,
the Balanced, the Managed, the Investment Grade Bond, the Asset Manager, the
Index 500, the FID Money Market, the Equity-Income, the High Income, the FID
Growth, the Overseas, the Contrafund and the Asset Manager: Growth Subaccounts.
The assets of such Subaccounts are invested in shares of a corresponding
Eligible Portfolio. The accompanying prospectuses for the American National Fund
and the Fidelity Funds describe the investment objectives, policies and the
risks of each of the Eligible Portfolios.
The Fixed Account is funded by the general assets of American National.
Although the contracts are designed primarily to offer benefits based on
investment performance, all or a portion of the annuity payments can be in the
form of a traditional guaranteed annuity.
The Contractowner has the right to examine a Contract and return it to
American National during what is generally known as the "free look" period.
American National will then refund the greater of all Purchase Payments made by
the Contractowner or the Accumulation Value plus the amount of any charges for
state premium taxes, mortality and expense risk and advisory fees. The "free
look" period is established by state law and generally runs ten days after the
Contractowner receives the Contract.
This Prospectus sets forth the information that a prospective investor should
know before investing. A Statement of Additional Information about the Contract
is free and may be obtained by writing American National at the address above.
The Statement of Additional Information which has the same date as this
Prospectus, has been filed with the Securities and Exchange Commission. The
Table of Contents of such Statement of Additional Information is set forth in
this Prospectus on page 24.
This Prospectus is valid only when accompanied by
Current Prospectuses For The American National Investment Accounts, Inc.,
Variable Insurance Products Fund and Variable Insurance Products Fund II.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, OR BY ANY STATE SECURITIES
REGULATORY AUTHORITY, NOR HAS THE COMMISSION, OR ANY STATE
SECURITIES REGULATORY AUTHORITY,
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THE DATE OF THIS PROSPECTUS IS __________________________,19______.
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2
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TABLE OF CONTENTS
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Glossary of Terms.................................... 5
Summary of the Contracts............................. 7
Purpose of the Contracts............................ 7
Investment Options.................................. 7
Purchasing a Variable Annuity Contract.............. 7
Allocations and Transfers........................... 7
How the Death Benefit Varies........................ 7
Surrenders from the Contract prior to Annuity Date.. 7
How Annuity Payments are Determined................. 7
Your Right to Cancel the Variable Annuity Contract... 7
Summary of Expenses.................................. 8
Expenses During the Accumulation Period............. 8
Expenses During the Annuity Period.................. 10
American National Insurance Company
and the Separate Account............................. 11
American National Insurance Company................. 11
The Separate Account................................ 11
The American National Fund.......................... 11
The Fidelity Funds.................................. 12
Addition, Deletion or Substitution of Investments... 13
Fixed Account........................................ 14
Contracts............................................ 14
Purpose of the Contracts............................ 14
Type of Contracts................................... 14
Contract Application and Purchase Payments.......... 14
Allocation of Purchase Payments..................... 15
Crediting of Accumulation Units..................... 15
Determining the Accumulation Unit Values............ 15
Transfers Prior to Annuity Date..................... 15
Contractowner Inquiries.............................. 15
Charges and Deductions During
the Accumulation Period.............................. 16
Surrender Charge.................................... 16
Other Charges....................................... 16
(a) Administrative Charges.......................... 16
(b) State Premium Taxes............................. 16
(c) Mortality and Expense Risk Fee.................. 16
(d) Distribution Expense Charge..................... 16
(e) Charges for Taxes............................... 16
(f) Exchange Fee.................................... 17
Deduction of Fees................................... 17
Exceptions to Charges............................... 17
Distributions Under the Contract
Accumulation Period.................................. 17
Full and Partial Surrenders......................... 17
Death Benefit During Accumulation Period............ 17
Annuity Period....................................... 18
Election of Annuity Date and Form of Annuity........ 18
Allocation of Benefits.............................. 18
Annuity Options..................................... 18
Value of Variable Annuity Payments:
Assumed Investment Rates............................ 19
Annuity Provisions.................................. 19
Federal Tax Matters.................................. 19
Introduction........................................ 19
Taxation of Annuities in General.................... 19
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Penalty Tax on Distributions........................ 20
Qualified Contracts................................. 20
Performance.......................................... 21
Distributor of the Contracts......................... 21
Safekeeping of the Separate Account's Assets......... 22
Voting Rights........................................ 22
State Regulation of American National................ 23
Legal Matters........................................ 23
Legal Proceedings.................................... 23
Experts.............................................. 23
Additional Information............................... 23
Financial Statements................................. 23
Table of Contents of
Statement of Additional Information.................. 24
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4
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GLOSSARY OF TERMS
The following definitions may be useful in reading this Prospectus.
Certain additional terms are defined in the text.
ACCUMULATION PERIOD - The period from the date Accumulation Units are first
purchased under a Contract to the earliest of the Annuity Date, the date the
Contract is surrendered for its then current value or the date of the individual
Contractowner's death.
ACCUMULATION UNIT - A standard of measurement used with respect to each
Subaccount to calculate the value of a Contract during the Accumulation Period.
The value of an Accumulation Unit fluctuates with the value of the shares of the
corresponding Eligible Portfolio owned by each Subaccount less any applicable
deductions (See "Charges and Deductions," page 16).
ACCUMULATION UNIT VALUE - The value of an Accumulation Unit.
ACCUMULATION VALUE - The Accumulation Value of a Contract is the sum of: (i)
the total Accumulation Units in Subaccounts times the respective Accumulation
Unit Values of such Subaccounts, and (ii) the Contractowner's value in the Fixed
Account.
ANNUITANT - The person upon whose life expectancy the Contract is written. The
Annuitant may also be the Contractowner.
ANNUITY DATE - The date on which the Accumulation Period changes to the
Annuity Period.
ANNUITY PERIOD - The period of time during which annuity payments are being
made.
ANNUITY UNIT - A standard of measurement used with respect to each Subaccount
to calculate the dollar amount of annuity payments during the Annuity Period.
The value of an Annuity Unit fluctuates with the value of shares of the
corresponding Eligible Portfolio owned by each Subaccount less any applicable
deductions. (See "Charges and Deductions," page 16).
CONTRACT - A Variable Annuity Contract issued pursuant to this prospectus
which sets forth the obligations and contractual promises which American
National makes to the Contractowner.
CONTRACTOWNER - The person or entity entitled to exercise rights of ownership
in a Contract prior to the Annuity Date or termination of the Contract. The
Contractowner and the Annuitant need not be the same.
CONTRACT YEAR - The period from the date the first Purchase Payment is
credited to the Contract until the immediately preceding day of the succeeding
year. (February 29 will be treated as February 28 for the purpose of this
definition).
DEFERRED ANNUITY CONTRACT - A Contract in which annuity payments commence at
some future date specified by the Contractowner.
ELIGIBLE PORTFOLIO - A Portfolio of The American National Fund or the Fidelity
Funds which corresponds to and in which a Subaccount can be invested.
FIXED ACCOUNT - An account that is a part of American National's General
Account to which all or a portion of Net Purchase Payments and transfers may be
allocated for accumulation at fixed rates of interest.
GENERAL ACCOUNT - The General Account of American National which includes all
of American National's assets except those assets segregated into its separate
accounts.
GUARANTEED ANNUITY - An annuity under which the amount of each annuity payment
is guaranteed by American National during the Annuity Period.
MINIMUM GUARANTEED DEATH BENEFIT - For all dates up to and including the first
Six-Year Anniversary Date, the Minimum Guaranteed Death Benefit will equal
Purchase Payments less Partial Surrender Reductions made on or before such date.
For all subsequent Six-Year Anniversary Dates, the Minimum Guaranteed Death
Benefit will equal the greater of: (i) the Accumulation Value on such Six-Year
Anniversary Date, or (ii) the Minimum Guaranteed Death Benefit for the
immediately preceding Six-Year Anniversary Date, plus Purchase Payments and less
Partial Surrender Reductions made since such immediately preceding Six-Year
Anniversary Date. For all other dates, the Minimum Guaranteed Death Benefit will
equal the Minimum Guaranteed Death Benefit for the immediately preceding Six-
Year Anniversary Date plus Purchase Payments and less Partial Surrender
Reductions made since such immediately preceding Six-Year Anniversary Date.
MORTALITY AND EXPENSE RISK FEE - The amount payable to American National for
accepting mortality and expense risks.
NET PURCHASE PAYMENT - The Purchase Payment less any government entity premium
tax charge.
NON-QUALIFIED CONTRACT - A Contract issued in connection with a retirement
plan that does not receive favorable tax treatment under the Internal Revenue
Code.
PARTIAL SURRENDER REDUCTION - An amount equal to (i) the amount of a
surrender, multiplied by (ii) the Minimum Guaranteed Death Benefit on the date
immediately prior to a surrender, divided by (iii) the Accumulation Value on the
date immediately prior to the surrender.
PORTFOLIO - A separate series of capital securities designed to meet specified
investment objectives. The American National Fund currently consists of four
portfolios, all of which are Eligible Portfolios. The Fidelity Funds currently
consist of ten portfolios, all of which are Eligible Portfolios.
PURCHASE PAYMENT - A payment made into a Contract during the Accumulation
Period.
QUALIFIED CONTRACT - A Contract issued in connection with a Plan that receives
favorable tax treatment under the Internal Revenue Code of 1986.
SIX-YEAR ANNIVERSARY DATE - The last day of each Contract Year prior to the
Annuitant's 75th birthday which is evenly divisible by six.
5
<PAGE>
SUBACCOUNT - A subdivision of the Separate Account. Each Subaccount invests
exclusively in the shares of a corresponding Eligible Portfolio.
VALUATION DATE - A valuation date is each day on which the New York Stock
Exchange ("NYSE") is open for trading.
VALUATION PERIOD - The period commencing at the close of regular trading on
the NYSE on one Valuation Date and ending at the close of regular trading on the
NYSE on the next succeeding Valuation Date.
VARIABLE ANNUITY - An annuity providing payments which vary in dollar amount
depending on the investment results of the American National Fund or the
Fidelity Funds.
6
<PAGE>
SUMMARY OF THE CONTRACTS
PURPOSE OF THE CONTRACTS
The purpose of the Contracts is to provide Accumulation Values and/or annuity
payments which are expected to reflect changes in the cost of living to a
greater degree than a traditional Guaranteed Annuity. The Contracts offer
Contractowners the opportunity to vary the Accumulation Value based on the
performance of the investments chosen by the Contractowner through the Deferred
Annuity.
There is no assurance that a Subaccount will obtain its investment objective.
Because a Variable Annuity's value is based on the investment performance of
Eligible Portfolios and is not guaranteed, a Variable Annuity Contract entails
more investment risk than a traditional Guaranteed Annuity.
There is also American National's Fixed Account option for Contractowners who
prefer more conservative investments. (See Fixed Account, page 14.)
INVESTMENT OPTIONS
Net Purchase Payments may be invested in the Subaccounts and/or in American
National's Fixed Account. The fourteen Subaccounts are: the AN Money Market, the
AN Growth, the Balanced, the Managed, the Investment Grade Bond, the Asset
Manager, the Index 500, the FID Money Market, the Equity-Income, the High
Income, FID Growth, the Overseas, the Contrafund and the Asset Manager: Growth
Subaccounts. Each of the Subaccounts invests exclusively in the shares of a
corresponding Eligible Portfolio. Each such Subaccount and corresponding
Eligible Portfolio has a different investment objective (See "The American
National Fund" at page 11, and "The Fidelity Funds" at page 12).
PURCHASING A VARIABLE ANNUITY CONTRACT
Individuals wishing to purchase a Variable Annuity Contract must complete an
application and pay the minimum initial Purchase Payment to American National's
Home Office. For information on the minimum and maximum amounts of Purchase
Payments, see "Contract Application and Purchase Payments," page 14.
ALLOCATION AND TRANSFERS
Net Purchase Payments will be initially allocated to each Subaccount and/or
American National's Fixed Account as instructed in the application. Thereafter,
the allocation may be changed by the Contractowner. All allocations must be at
least 10% of the Net Purchase Payment.
During the Accumulation Period, transfers can be made between Subaccounts and
American National's Fixed Account. American National allows twelve free
transfers per Contract Year. Any additional transfer will be subject to a $10.00
exchange fee. Transfers out of the Fixed Account are limited as described in the
section "Tranfers Prior to Annuity Date" on page 15.
Transfers and allocation changes can be made by either writing to American
National's home office or by telephone instructions. A Telephone Transfer
Authorization Form must be on file at American National's home office before
telephone instructions will be allowed.
HOW THE DEATH BENEFIT VARIES
In the event of the Annuitant's death prior to the Annuity Date, the death
benefit for the Contracts will equal the greater of: (i) Accumulation Value on
the date that notice of death is received by American National at its home
office in Galveston, Texas, or (ii) the Minimum Guaranteed Death Benefit on the
Contract. During the Annuity Period, death benefits, if any, depend upon the
annuity option selected. (See Annuity Options at page 18).
SURRENDERS FROM THE CONTRACT PRIOR TO ANNUITY DATE
Prior to the Annuity Date, all or part of a Variable Annuity's Accumulation
Value may be surrendered upon the Contractowner's written request. A surrender
may be subject to a Surrender Charge, an IRS penalty tax for early withdrawal
and potentially an income tax. Surrenders from Contracts qualified under Section
403(b) of the Code may be restricted. (See "Qualified Contracts" under "Federal
Tax Matters" at page 20). The sum of surrender charges and distribution expense
charges will never be more than 9.0% of total Purchase Payments paid.
HOW ANNUITY PAYMENTS ARE DETERMINED
There are a number of ways to receive annuity payments. They include monthly
payments for a specified number of years, payments for life guaranteed for 10 or
20 years, or payments made jointly (See Annuity Options, page 18). Payments may
also be received on a fixed basis and/or on a variable basis. Variable Annuity
payments will increase or decrease according to the investment experience of the
Eligible Portfolios and the declared rate paid by American National on the Fixed
Account.
YOUR RIGHT TO CANCEL THE VARIABLE ANNUITY CONTRACT - THE "FREE LOOK" PERIOD
State law requires that Contractowners be given a "free look" period,
generally running ten days after the Contractowner receives the Contract, within
which a Contractowner may return the Contract to American National's Home
Office. In such cases, American National will then refund the greater of all
Purchase Payments made by the Contractowner or the Accumulation Value plus the
amount of any charges for state premium taxes, mortality and expense risk and
advisory fees. (See "Contract Application and Purchase Payments," page 14.
7
<PAGE>
SUMMARY OF EXPENSES
EXPENSES DURING THE ACCUMULATION PERIOD
The purpose of the following table is to illustrate the costs and expenses
that are borne, directly and indirectly, by Contractowners during the
Accumulation Period. The information set forth should be considered together
with the narrative provided under the heading "Charges and Deductions" in this
Prospectus. In addition to the expenses listed below, premium taxes may also be
applicable. For information concerning the fees and expenses assessed during the
Annuity Period, see "Expenses During the Annuity Period", page 10.
CONTRACTOWNERS TRANSACTION EXPENSES
SALES LOAD AS A PERCENTAGE OF PURCHASE PAYMENTS.......0%
DEFERRED SALES LOAD ("SURRENDER CHARGE")
An amount of Accumulation Value equal to the greater of (i) 10% of
Accumulation Value in a Contract Year, or (ii) Accumulation Value less total
Purchase Payments made, may be withdrawn without Surrender Charge.
On surrenders of that portion of Accumulation Value in excess of the above
described free surrender amount, a Surrender Charge is imposed based upon the
number of Contract Years since the Contract Year in which the Purchase Payments
withdrawn were paid, on a first paid, first withdrawn basis. The Surrender
Charge is deducted from the remaining Accumulation Value, or, if the remaining
Accumulation Value is insufficient to cover the Surrender Charge, a portion of
the Surrender Charge will be deducted from the withdrawal amount. Such Surrender
Charge will be a percentage of each Purchase Payment or portion thereof
withdrawn as illustrated in the following table:
<TABLE>
<CAPTION>
APPLICABLE SURRENDER CHARGE
CONTRACT YEARS AS A PERCENTAGE
CHARGEABLE WITHDRAWAL OF EACH PURCHASE
AMOUNT OR PORTION PAYMENT OR PORTION
THEREOF MADE THEREOF WITHDRAWN
<S> <C> <C>
1 7.0
2 7.0
3 7.0
4 6.0
5 5.0
6 4.0
7 3.0
8 2.0
9 and thereafter 0.0
</TABLE>
DEFERRED
ANNUITY
EXCHANGE FEE $ 10
(THERE IS NO EXCHANGE FEE FOR
THE FIRST 12 TRANSFERS IN EACH CONTRACT YEAR)
SEPARATE ACCOUNT ANNUAL EXPENSES
Annual Contract Fee $ 35
AS A PERCENTAGE OF AVERAGE NET ASSETS:
Mortality Risk Fees 0.80%
Expense Risk Fees 0.35%
Administrative Asset Fees 0.10%
Distribution Expense Charge 0.15%
Total Separate Account
Annual Expenses* 1.40%
* Does not include Annual Contract Fee
AN MONEY MARKET PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees after
reimbursement * ** 0.52%
Other Expenses 0.39%
Total AN Money Market Portfolio
Annual Expenses 0.91%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.14%.
AN GROWTH PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees after
reimbursement * ** 0.52%
Other Expenses 0.38%
Total AN Growth Portfolio
Annual Expenses 0.90%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.13%.
BALANCED PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees after
reimbursement * ** 0.46%
Other Expenses 0.50%
Total Balanced Portfolio
Annual Expenses 0.96%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.25%.
8
<PAGE>
MANAGED PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees after
reimbursement * ** 0.50%
Other Expenses 0.48%
Total Managed Portfolio
Annual Expenses 0.98%
* Without reimbursement, management fees would have been 0.75% and the total
portfolio annual expense would have been 1.23%.
** Under its Administrative Service Agreement with the Fund, Securities
Management and Research, Inc. ("SM&R"), the Fund's Investment Adviser and
Manager, has agreed to pay (or to reimburse each Portfolio for) each Portfolio's
expenses (including the advisory fee and administrative service fee paid to
SM&R, but exclusive of interest, commissions and other expenses incidental to
portfolio transactions) in excess of 1.50% per year of such Portfolio's average
daily net assets. In addition, SM&R has entered into a separate undertaking with
the Fund effective May 1, 1994 until April 30, 1997, pursuant to which SM&R has
agreed to reimburse the Money Market Portfolio and the Growth Portfolio for
expenses in excess of .87%; the Balanced Portfolio for expenses in excess of
.90% and the Managed Portfolio for expenses in excess of .93%, of each of such
Portfolios' average daily net assets during such period. SM&R is under no
obligation to renew this undertaking for any Portfolio at the end of such
period.
INVESTMENT GRADE BOND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.45%
Other Expenses 0.14%
Total Investment Grade Bond Portfolio
Annual Expenses 0.59%
ASSET MANAGER PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.71%
Other Expenses 0.08%
Total Asset Manager Portfolio
Annual Expenses * 0.79%
* A portion of the brokerage commissions the portfolio paid was used to reduce
its expenses. Without the deduction, total portfolio expenses would have been
0.81%.
INDEX 500 PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Expenses 0.28%
Total Index 500 Portfolio
Annual Expenses * 0.28%
* The portfolio's expenses were voluntarily reduced by the portfolio's
investment advisor. Absent reimbursement, management fee,other expenses and
total expenses would have been 0.28%, 0.19% and.0.47%, respectively.
FID MONEY MARKET PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.24%
Other Expenses 0.09%
Total Asset Manager Portfolio
Annual Expenses 0.33%
EQUITY-INCOME PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.51%
Other Expenses 0.10%
Total Equity-Income Portfolio
Annual Expenses 0.61%
HIGH INCOME PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.60%
Other Expenses 0.11%
Total High Income Portfolio
Annual Expenses 0.71%
FID GROWTH PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.61%
Other Expenses 0.09%
Total FID Growth Portfolio
Annual Expenses 0.70%
OVERSEAS PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.76%
Other Expenses 0.15%
Total Overseas Portfolio
Annual Expenses 0.91%
CONTRAFUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.61%
Other Expenses 0.11%
Total Contrafund Portfolio
Annual Expenses * 0.72%
* A portion of the brokerage commissions the portfolio paid was used to reduce
its expenses. Without the deduction, total portfolio expenses would have been
0.73%.
ASSET MANAGER: GROWTH PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.71%
Other Expenses 0.29%
Total Asset Manager: Growth Portfolio
Annual Expenses * 1.00%
* A portion of the brokerage commissions the portfolio paid was used to reduce
its expenses. Without the deduction, total portfolio expenses would have been
1.13%. The portfolio's expenses were voluntarily reduced by the portfolio's
investment advisor. Absent reimbursement, management fee,other expenses and
total expenses would have been 0.71%, 0.42% and 1.13%, respectively.
9
<PAGE>
EXAMPLE: DEFERRED ANNUITY CONTRACT
If you surrender your Deferred Annuity Contract at the end of the applicable
time period:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
<TABLE>
<S> <C> <C>
1 3
FUND YEAR YEARS
AN Money Market Portfolio $89 $144
AN Growth Portfolio $89 $143
Balanced Portfolio $90 $145
Managed Portfolio $90 $146
Investment Grade Bond Portfolio $86 $135
Asset Manager Portfolio $88 $140
Index 500 Portfolio $83 $126
FID Money Market Portfolio $84 $127
Equity-Income Portfolio $86 $135
High Income Portfolio $87 $138
FID Growth Portfolio $87 $138
Overseas Portfolio $89 $144
Contrafund Portfolio $87 $138
Asset Manager: Growth Portfolio $90 $146
If you do not surrender your Deferred Annuity Contract:
You would pay the following expenses on a $1,000 investment, assuming 5% annual return on assets:
1 3
FUND YEAR YEARS
AN Money Market Portfolio $25 $ 76
AN Growth Portfolio $24 $ 75
Balanced Portfolio $25 $ 77
Managed Portfolio $25 $ 78
Investment Grade Bond Portfolio $21 $ 66
Asset Manager Portfolio $23 $ 72
Index 500 Portfolio $18 $ 57
FID Money Market Portfolio $19 $ 58
Equity-Income Portfolio $22 $ 67
High Income Portfolio $23 $ 70
FID Growth Portfolio $22 $ 69
Overseas Portfolio $25 $ 76
Contrafund Portfolio $23 $ 70
Asset Manager: Growth Portfolio $25 $ 78
</TABLE>
The examples should not be considered to be a representation of past or future
expenses, and the examples do not include the deduction of state premium taxes
which may be assessed by a number of states.
The purpose of the preceding table is to assist Contractowners in
understanding the various costs and expenses that a Contractowner will bear
directly or indirectly and, thus, the table reflects expenses of both the
Separate Account and the American National Fund and/or the Fidelity Funds.
Actual expenses may be greater or lesser than those shown. The example assumes a
5% annual rate of return pursuant to the requirements of the SEC. This
hypothetical rate of return is not intended to be representative of past or
future performance of an Eligible Portfolio. The annual contract fees are
deducted pro rata from each Subaccount. For a more complete description of the
various costs and expenses of the American National Fund and the Fidelity Funds,
see their Prospectuses.
EXPENSES DURING THE ANNUITY PERIOD
The Separate Account will be assessed a mortality and expense risk fee at an
annual rate of 1.15% during the Annuity Period. The Separate Account will also
be charged during the Annuity Period with the expenses of the Eligible
Portfolios in which the Contractowner has invested. No other fees or expenses
are charged against the Contracts during the Annuity Period. To the extent that
American National derives profits from the Mortality and Expense Risk Fee, those
profits may be used to pay for other expenses, including distribution expenses.
10
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
AND THE SEPARATE ACCOUNT
AMERICAN NATIONAL INSURANCE COMPANY
American National is a stock life insurance company chartered in 1905 in the
State of Texas. It is licensed to do life insurance business in 49 states, the
District of Columbia, Puerto Rico, Guam, and American Samoa. American National's
home office is located at the American National Insurance Building, One Moody
Plaza, Galveston, Texas 77550-7999. The Moody Foundation (the "Foundation"), a
charitable foundation established for charitable and educational purposes, owns
approximately 23.7% of American National's common stock and the Libbie S. Moody
Trust, a private trust, owns approximately 37.6% of such shares. Robert L. Moody
("RLM"), Chairman of the Board and a Director of American National, RLM's son,
Ross R. Moody, and Frances Moody Newman, RLM's mother, are trustees of the
Foundation.
The Moody National Bank of Galveston (the "Bank") is trustee of the Libbie S.
Moody Trust. RLM is Chairman of the Board and Chief Executive Officer of the
Bank and of Moody Bank Holding Company, Inc. ("MBHC"), the Bank's controlling
stockholder. RLM is also Chairman of the Board and President of Moody
Bancshares, Inc. ("Bancshares"), MBHC's sole shareholder. The Three R Trusts,
trusts established by RLM for the benefit of his children, own 100% of
Bancshares' Class B stock (which elects a majority of Bancshares' directors) and
47.5% of its Class A Stock. The trustee of the Three R Trusts is Irwin M. Herz,
Jr., a partner in Greer, Herz & Adams, L.L.P., 18th Floor, One Moody Plaza,
Galveston, Texas, General Counsel to American National, the Bank, Bancshares,
MBHC, the American National Fund and Securities Management and Research, Inc.
(SM&R).
American National's total assets on December 31, 1995 were $ 5,770,926,692 on
a statutory basis.
American National writes life, health and accident insurance and annuities.
THE SEPARATE ACCOUNT
The Separate Account was established by American National on July 30, 1991
pursuant to the insurance laws of the State of Texas. American National is the
depositor of the Separate Account. Under Texas law, the assets of the Separate
Account are held exclusively for the benefit of Contractowners and persons
entitled to payments under the Contracts. The Separate Account is used to
support variable annuity contracts, issued by American National. American
National is the legal holder of the assets in the Separate Account and will at
all times maintain assets in the Separate Account with a total market value at
least equal to the reserve and other contract liabilities for the Separate
Account. The assets of the Separate Account attributable to the Contracts are
not chargeable with liabilities arising out of any other business which American
National may conduct. Income, as well as both realized and unrealized gainsor
losses from the assets of the Separate Account, is credited to or charged
against the Separate Account without regard to income, gains or losses arising
out of other business that American National conducts. Nevertheless, these
assets shall be available to cover the liabilities of American National's
General Account, but only to the extent that the Separate Account's assets
exceed its liabilities arising under the Contracts supported by it. In addition
to these assets, the Separate Account assets may include accumulations of the
charges American National makes against Policies and Contracts participating in
the Separate Account. From time to time, any such assets due American National
may be transferred in cash to American National's General Account. Obligations
under the Contracts are obligations of American National.
The Separate Account is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust, which is a type of investment company. Such registration does
not involve any SEC supervision of the management or investment policies or
practices of the Separate Account. For state law purposes, the Separate Account
is treated as a division of American National. There are currently fourteen
Subaccounts within the Separate Account available to Contractowners and each
invests only in a corresponding Eligible Portfolio.
THE AMERICAN NATIONAL FUND
Four of the Subaccounts of the Separate Account invest in the shares of a
corresponding portfolio of the American National Fund. The American National
Fund is registered with the SEC under the 1940 Act as an open-end diversified,
series management investment company. The American National Fund shares are also
purchased by American National Variable Life Separate Account.
The Separate Account will purchase and redeem shares from the American
National Fund at net asset value.
The investment objectives and policies of each portfolio of the American
National Fund are summarized below. There is no assurance that any of the
portfolios will achieve their stated objectives. More detailed information,
including a description of investment objectives, policies, restrictions,
expenses and risks, is in the prospectus for the American National Fund, which
must accompany this Prospectus and which should be read carefully together with
this Prospectus and retained.
The American National Fund currently has a Money Market Portfolio, a Growth
Portfolio, a Balanced Portfolio and a Managed Portfolio.
AN MONEY MARKET PORTFOLIO ... seeks to obtain as high a level of current income
as is consistent with preserving capital and providing liquidity. The Money
Market portfolio will invest only in money market instruments of high quality
11
<PAGE>
as determined by the American National Fund's investment adviser. The Money
Market portfolio of the American National Funds shall be referred to herein as
"AN Money Market".
AN GROWTH PORTFOLIO ... seeks to achieve capital appreciation, normally
through the purchase of common stocks (although such Portfolio investments are
not restricted to any one type of security). Capital appreciation may also be
sought in other types of securities, including bonds and preferred stocks. This
Growth Portfolio of the American National Fund is referred to herein as "AN
Growth".
BALANCED PORTFOLIO ... seeks to provide conservation of principal, reasonable
current income and long-term capital appreciation by investing in a balanced
portfolio of fixed-income securities such as bonds, preferred stock and short-
term obligations combined with common stocks and securities convertible into
common stocks.
MANAGED PORTFOLIO ... seeks to achieve growth of capital and/or current income
by investing in a diversified portfolio consisting of, at the American National
Fund's investment adviser's discretion, money market instruments, debt
securities, stock or a combination thereof. It is anticipated that over longer
periods a larger portion of the Managed Portfolio will consist of equity
securities.
SM&R is the investment adviser and manager of the American National Fund. It
also provides investment advisory and portfolio management services to American
National and other clients. It maintains a staff of experienced investment
personnel and related support facilities. Detailed information about the
American National Fund Management Fees is contained in the American National
Fund Prospectus. Such fees exceed the industry average for advisory and
administrative fees.
THE FIDELITY FUNDS
Pursuant to a Participation Agreement between American National, Fidelity
Distributors Corporation and the Fidelity Funds, ten of the Subaccounts of the
Separate Account invest in the shares of ten corresponding portfolios of the
Fidelity Funds. The Fidelity Funds are registered with the SEC under the 1940
Act as open-end diversified, series management investment companies organized as
Massachusetts business trusts. The Fidelity Funds' shares are also purchased by
American National Variable Life Separate Account.
Fidelity Management & Research Company ("FMR"), the Fidelity Funds' investment
adviser, was founded in 1946. FMR provides a number of mutual funds and other
clients with investment research and portfolio management services. It maintains
a large staff of experienced investment personnel and a full compliment of
related support facilities. Fidelity Management & Research (U.K.) Inc. ("FMR
U.K.") and Fidelity Management and Research (Far East) Inc. ("FMR Far East")
are wholly owned subsidiaries of FMR that provide research with respect to
foreign securities. FMR U.K. and FMR Far East maintain their principal business
offices in London and Tokyo, respectively. As of December 31, 1995, FMR advised
funds having more than 22 million shareholder accounts with a total value of
more than $270 billion. Fidelity Distributors Corporation distributes shares for
the Fidelity funds. FMR Corp. is the holding company for the Fidelity companies.
Through ownership of voting common stock, Edward C. Johnson 3d, President and a
Trustee of the Fidelity Funds, and various trusts for the benefit of Johnson
family members form a controlling group with respect to FMR Corp.
The Management, Distribution and Service Fees for the Fidelity Funds are
explained in the Fidelity Funds' Prospectuses.
The Separate Account will purchase and redeem shares from the Fidelity Funds
at net asset value.
The investment objectives and policies of each portfolio of the Fidelity Funds
are summarized below. There is no assurance that any of the portfolios will
achieve their stated objectives. More detailed information, including a
description of investment objectives, policies, restrictions, expenses and
risks, is in the prospectus for each of the Fidelity Funds which must accompany
this Prospectus and which should be read carefully together with this Prospectus
and retained.
INVESTMENT GRADE BOND PORTFOLIO ... seeks as high a level of current income as
is consistent with the preservation of capital by investing in a broad range of
investment-grade fixed-income securities. The Investment Grade Bond Portfolio
will maintain a dollar-weighted average portfolio maturity of ten years or less.
EQUITY-INCOME PORTFOLIO ... seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the Equity-
Income Portfolio will also consider the potential for capital appreciation. The
Equity-Income Portfolio's goal is to achieve a yield which exceeds the composite
yield on the securities comprising the Standard & Poor's 500 Composite Stock
Price Index.
HIGH INCOME PORTFOLIO ... seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated, fixed-income securities,
while also considering growth of capital. High Yielding, lower-rated securities
present higher risks of untimely interest and principal payments, default and
price volatility than higher-quality securities, and may present problems of
liquidity and valuation. See the prospectus describing the High Income Portfolio
for more information on the risks of investing in high-yielding, lower-rated
securities.
FID GROWTH PORTFOLIO ... seeks to achieve capital appreciation. the FID Growth
Portfolio normally purchases common stocks, although its investments are not
restricted to
12
<PAGE>
any one type of security. Capital appreciation may also be found
in other types of securities, including bonds and preferred stocks. This Growth
Portfolio of the Fidelity Funds shall be referred to herein as "FID Growth."
OVERSEAS PORTFOLIO ... seeks long term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
FID MONEY MARKET PORTFOLIO ... seeks to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity. The
Money Market Portfolio will invest only in high quality U.S. dollar denominated
money market securities of domestic and foreign issuers. The Money Market
portfolio of the fidelity funds shall be referred to herein as "FID Money
Market."
ASSET MANAGER PORTFOLIO ... seeks high total return with reduced risk over the
long-term by allocating its assets among stocks, bonds and short-term fixed-
income instruments.
INDEX 500 PORTFOLIO ... seeks to provide investment results that correspond to
the total return (i.e., the combination of capital charges and income) of common
stocks publicly traded in the United States. In seeking this objective, the
Index 500 portfolio attempts to duplicate the composition and total return of
the Standard & Poor's 500 Composite Stock Price Index while keeping transaction
cost and other expense low. The Index 500 Portfolio is designed as a long-term
investment option.
CONTRAFUND PORTFOLIO ... seeks capital appreciation by investing in companies
FMR believes to be undervalued due to an overly pessimistic appraisal by the
public. In pursuit of the fund's goal, FMR looks for companies with the
following characteristics: (i) unpopular, but improvements seem possible due to
developments such as a change in management, a new product line, or an improved
balance sheet, (ii) recently popular, but temporarily out of favor due to short-
term or one-time factors, or (iii) undervalued compared to other companies in
the same industry.
ASSET MANAGER: GROWTH PORTFOLIO ... seeks to maximize total return over the
long term by allocating its assets among stocks, bonds, and short-term
instruments. Allocating among different types of investments allows the fund to
take advantage of opportunities wherever they may occur, but also subjects the
fund to the risks of a given investment type.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
American National reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held in
the Separate Account or that the Separate Account may purchase. If the shares of
an Eligible Portfolio are no longer available for investment or if in American
National's judgment further investment in any Eligible Portfolio should become
inappropriate in view of the purposes of the Separate Account, American National
may redeem the shares, if any, of that Eligible Portfolio, and substitute shares
of another registered open-end management company. American National will not
substitute any shares attributable to a Contractowner's interest in a Subaccount
of the Separate Account without notice and prior approval of the SEC and
possibly state insurance authorities, to the extent required by the 1940 Act or
other applicable law. The Separate Account may, to the extent permitted by law,
purchase other securities for other contracts or permit a conversion between
contracts upon request by the Contractowners.
American National also reserves the right to establish additional Subaccounts
of the Separate Account, each of which would invest in shares corresponding to a
new portfolio of the American National Fund or in shares of another investment
company having a corresponding investment objective. American National may
eliminate one or more Subaccounts with SEC approval if marketing needs, tax
considerations or investment conditions warrant. Any new Subaccounts may be made
available to existing Contractowners on a basis to be determined by American
National.
If any of these substitutions or changes are made, American National may by
appropriate endorsement change the Contract to reflect the substitution or
change. If American National deems it to be in the best interest of
Contractowners, and subject to any approvals that may be required under
applicable law, the Separate Account may be operated as a management company
under the 1940 Act, it may be registered under that Act if registration is no
longer required, or it may be combined with other American National Separate
Accounts. In addition, American National may, when permitted by law, restrict or
eliminate any voting rights as to the Separate Account.
The Contractowner will be notified of any material change in the investment
policy of any Eligible Portfolio in which the Contractowner has an interest.
Unless Contractowners have directed a different allocation, shares of the
American National Fund and the Fidelity Funds will be redeemed, pro rata, to the
extent necessary for American National to collect charges under the Contract, to
pay the surrender value upon full or partial surrenders of the Contracts, to
provide benefits under the Contract, or to transfer assets from one Subaccount
to another or to the Fixed Account. Any dividend or capital gain distribution
received from an Eligible Portfolio will be reinvested immediately at net asset
value in shares of that Eligible Portfolio and retained as assets of the
corresponding subaccount.
Each Contractowner should periodically consider the allocation among the
Subaccounts and the Fixed Account in light of current market conditions and the
investment risks attendant to investing in the American National Fund's and the
Fidelity Funds' various portfolios.
13
<PAGE>
FIXED ACCOUNT
During the Accumulation Period, Contractowners may elect to allocate all or a
portion of their Net Purchase Payment to the Fixed Account and, subject to
certain limitations, they may also transfer Accumulation Value from the
Subaccounts to the Fixed Account. Transfers from the Fixed Account to the
Subaccount are restricted. (See Transfers Prior to Annuity Date, page 15.)
Net Purchase Payments allocated to the Fixed Account and transfers from a
Subaccount to the Fixed Account are placed in the General Account of American
National. The General Account includes all of American National's assets except
those segregated in its separate accounts. American National has the sole
discretion to invest the assets of its General Account, subject to applicable
law. American National bears an investment risk for all amounts allocated or
transferred to the Fixed Account and interest credited thereto, less any
deduction for charges and expenses, whereas the Contract owner bears the
investment risk that the declared rate will fall to a lower rate after the
expiration of a declared rate period. Because of exemptive and exclusionary
provisions, interests in the General Account have not been registered under the
Securities Act (the "1933 Act"), nor is the General Account registered as an
investment company under the 1940 Act. Accordingly, neither the General Account
nor any interest therein is generally subject to the provisions of the 1933 or
1940 Act. American National understands that the staff of the SEC has not
reviewed the disclosures in this Prospectus relating to the Fixed Account
portion of the Contract; however, disclosures regarding the Fixed Account
portion of the Contract may be subject to generally applicable provisions of the
federal securities laws regarding the accuracy and completeness of statements
made in prospectuses.
American National guarantees that it will credit interest to the Fixed Account
at an effective annual rate of at least 3.0% compounded daily. American National
may, at its discretion, declare higher interest rate(s) for amounts allocated or
transferred to the Fixed Account.
CONTRACTS
PURPOSE OF THE CONTRACTS
The Contracts described in this Prospectus may be issued for use with
retirement plans and trusts qualified under the Internal Revenue Code of 1986,
as amended (the "Code"), for favorable tax treatment ("Qualified Contracts") and
for use with plans and trusts which are not so qualified ("Non-Qualified
Contracts"). See section entitled "Federal Tax Matters-Qualified Contracts,"
page 20 for further details.
The terms of the Contracts may only be changed by mutual agreement between
American National and each Contractowner, except as described in "Substitution
of Investments,"on page 13; for changes required to make the Contracts comply
with any law or regulation issued by a governmental agency to which American
National or the Contracts are subject; and for changes necessary to assure
continued qualification of the Contracts under the Internal Revenue Code.
TYPE OF CONTRACTS
This Prospectus offers a Deferred Annuity Contract:
DEFERRED ANNUITY CONTRACT
This type of Contract allows an individual to vary the Purchase Payments or
pay a single Purchase Payment. There are two types of Flexible or Single
Purchase Payment Deferred Annuities: Non-qualified and Qualified. Annuity
payments will commence at a later date.
CONTRACT APPLICATION AND PURCHASE PAYMENTS
Individuals wishing to purchase a Contract must complete an application and
provide the required initial Purchase Payment which will be sent to American
National's Home Office. (See page 15, Allocation of Purchase Payments.) If an
incomplete application cannot be completed within five days of its receipt, the
applicant will be notified of the reasons for the delay and any payment received
will be returned immediately unless the applicant specifically consents to have
American National retain the payment pending completion of the application.
As indicated earlier, Contractowners have a "free look" period, generally ten
days, within which a Contractowner can return the Contract to American
National's Home Office and American National will then refund the greater of all
Purchase Payments made by the Contractowner or the Accumulation Value plus any
premium taxes, mortality and expense risk fees and advisory fees deducted. The
"free look" period is established by state law and generally runs ten days after
the Contractowner receives the Contract. American National requires that all Net
Purchase Payments received by American National during the 15-day period after
the Date of Issue are allocated to the Subaccount of the Money Market Portfolio
of the Fidelity Funds. Thereafter, such amounts allocated to the Subaccount of
the Money Market Portfolio and Net Purchase Payments paid are allocated as
directed by the Contractowner.
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No surrender charges are assessed on premiums returned during this "free look"
period.
Deferred Annuity Contracts require a minimum initial payment of $5,000. The
maximum Purchase Payment under any Deferred Annuity Contract is $1,000,000
without the prior approval of American National.The Minimum subsequent payments
are $1000. These amounts may be changed at the sole discretion of American
National. In addition, American National reserves the right to terminate any
Deferred Annuity Contract for certain specified reasons, including failure of
the Accumulation Value to meet certain specified minimums.
ALLOCATION OF PURCHASE PAYMENTS
After the "free look" period, Net Purchase Payments will be allocated to each
Subaccount in accordance with the written instructions contained in the
application. The Contractowner may by written instruction to the Home Office
indicate one or more Subaccounts and/or the Fixed Account to which a specified
portion or portions of the Net Purchase Payment should be applied, except that
no allocation will be permitted which would result in less than 10% of the Net
Purchase Payment being allocated to any one Subaccount and/or the Fixed Account.
Changes in allocation of future Net Purchase Payments (with the same 10%
minimum) may be made at any time by written instruction to the Home Office or by
telephone instruction, provided that a properly completed Telephone Transfer
Authorization Form is on file with American National.
CREDITING OF ACCUMULATION UNITS
During the Accumulation Period, all Net Purchase Payments received will
purchase Accumulation Units in the Subaccount selected and/or allocated to the
Fixed Account. The number of Accumulation Units purchased is determined by
dividing the dollar amount of the Net Purchase Payment allocated to the
Subaccount by the Accumulation Unit Value for that Subaccount next computed
following allocation of the Net Purchase Payment to such Subaccount.
DETERMINING THE ACCUMULATION UNIT VALUES
The Accumulation Unit Value of each Subaccount reflects the investment
performance of that Subaccount. The Accumulation Unit Value of each Subaccount
shall be calculated by: (i) multiplying the per share net asset value of the
corresponding Eligible Portfolio on the Valuation Date times the number of
shares held by the Subaccount, after the purchase or redemption of any shares on
that date; (ii) subtracting therefrom a charge for the administrative fee,
distribution expense charge and the mortality and expense risk fee for that
Subaccount and (iii) dividing the result by the total number of units held in
the Subaccount on the Valuation Date, before the purchase or redemption of any
units on that date. The Accumulation Unit Value for each Subaccount shall be
calculated at the end of each Valuation Period. Investment performance of the
portfolio companies, portfolio company expenses, and the deduction of certain
charges affect the Accumulation Unit Value for each Subaccount.
TRANSFERS PRIOR TO ANNUITY DATE
Accumulation Value may be transferred among the Subaccounts and/or the Fixed
Account subject to the following limits. The transfers may be requested in
person, by mail, or by telephone. ATelephone Transfer Authorization Form must be
on file at American National's home office before any telephone instructions
will be allowed. The total amount transferred from each Subaccount must be at
least $250, or the balance of the Subaccount, if less. The minimum amount that
may remain in a Subaccount after a transfer is $100. American National will
effectuate transfers and determine all values in connection with transfers on
the later of the date designated in the request or at the end of the Valuation
Period during which the transfer request is received. Transfers from the Fixed
Account to the Subaccounts are allowed subject to the following limits. Once
each Contract Year, during the thirty- day period beginning on the Contract
anniversary, the maximum amount which may be transferred from the Fixed Account
to the Subaccounts is the greater of (a) twenty-five percent of the amount in
the Fixed Account, or (b) $1,000.
The first twelve transfers per Contract Year will be permitted free of charge.
Any additional transfers will be charged a $10.00 fee at the time of the
transfer and will be deducted from the amount transferred. (See Exchange Fee,
page 17). American National may at any time revoke or modify the transfer
privilege, including the number and minimum amount transferable. For a
discussion of transfers after the Annuity Date, see "Allocation of Benefits" at
page 18).
CONTRACTOWNER INQUIRIES
Contractowner inquiries should be addressed to American National Insurance
Company, One Moody Plaza, Galveston, Texas 77550-7999, or made by calling (409)
763-4661.
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CHARGES AND DEDUCTIONS DURING THE ACCUMULATION PERIOD
SURRENDER CHARGE
Since no deduction for a sales charge is made from Purchase Payments, a
contingent deferred sales charge (a "Surrender Charge") is imposed on certain
partial and full withdrawals to cover certain expenses relating to the
distribution of the Contracts. An amount of the Accumulation Value equal to the
greater of (i) Accumulation Value less total Purchase Payments made, or (ii) 10%
of the Accumulation Value in a Contract Year, may be withdrawn without a
Surrender Charge. On withdrawals of that portion of the Accumulation Value
representing Purchase Payments, a Surrender Charge is imposed based upon the
number of Contract Years since the Contract Year in which the Purchase Payments
withdrawn were paid, on a first paid, first withdrawn basis. The Surrender
Charge is a maximum of 7% of the Purchase Payment withdrawn and grades down to
zero in the ninth Contract Year after the Purchase Payment being withdrawn was
made.
In no event will the sum of all surrender charges and the distribution expense
charges assessed exceed 9.0% of total Purchase Payments paid. (See the chart
under "Contractowners Transaction Expenses" at Page 8)
OTHER CHARGES
(a) Administrative Charges
American National's administrative charges consist of an annual contract fee
and a daily administrative asset fee. These administrative charges are to
cover all fixed and varying costs of administering the Contract. These charges
are designed only to reimburse American National for the cost of
administration and are not intended to produce a profit.
In order to cover American National's fixed cost of administration of the
contract, the annual contract fee of $35.00 is charged at the end of each
Contract Year against any funds held in the Separate Account. If all of the
funds are in the Fixed Account, no annual contract fee is charged. If the
Accumulation Value is greater than $50,000 on the last day of a Contract Year,
no annual contract fee is charged.
An administrative asset fee is charged daily at an annual rate of 0.10% to
each Subaccount to cover the varying costs of a Deferred Annuity Contract.
(b) State Premium Taxes
An amount for state premium taxes (which presently range from 0% to 3.5%) will
be deducted if assessed by a given state. American National's current practice
is to deduct any state premium tax imposed by a State upon annuitization of
the Contracts. In some states, however, premium taxes must be deducted from
Purchase Payments made under the Contracts when the payments are received by
American National.
(c) Mortality and Expense Risk Fee
American National assumes a number of risks under the Contracts. While annuity
payments will vary in accordance with the investment performance of the
selected Subaccounts, the amount of such payments will not be decreased
because of adverse mortality experiences of Annuitants as a class or because
of an increase in actual expenses of American National over the expense
charges provided for in the Contracts. American National assumes the risk that
Annuitants as a class may live longer than expected (necessitating a greater
number of annuity payments) and that fees deducted may not prove sufficient to
cover its actual costs. In assuming these risks, American National agrees to
continue annuity payments under life-contingent annuity options determined in
accordance with the annuity tables and other provisions of the Contracts to
the Annuitant or other payee for as long as he or she may live. In addition,
American National is at risk for the death benefits payable under the
Contracts to the extent that the death benefit in such cases exceeds the
Accumulation Value.
For American National's contractual promises to accept these risks, a 0.80%
per annum Mortality Risk Fee and a 0.35% per annum Expense Risk Fee will be
assessed daily against the Separate Account based on the value of its net
assets. This fee is assessed during the Accumulation Period and during the
Annuity Period. American National could realize a gain or a loss from such fee
depending on the mortality and expenses actually incurred.
(d) Distribution Expense Charge
A distribution expense is assessed daily to each Subaccount to compensate
American National for the risk that surrender charges assessed under the
Contracts may be insufficient to cover the costs of distributing the
Contracts. The distribution expense charge is 0.15% annually for Deferred
Annuity Contracts. If the distribution expense charge is insufficient to cover
the actual risk assumed, American National will bear the loss; however if the
charge is more than sufficient, any excess will be a profit to American
National. The sum of all surrender charges and the distribution expense
charges assessed will at no time exceed 9.0% of all Purchase Payments paid.
(e) Charges for Taxes
Currently, no charge will be made against the Separate Account for federal,
state or local income taxes. American National may, however, make such a
charge in the future if income or gains within the Separate Account will incur
any federal, or any significant state or local tax treatment or if tax
treatment of American National changes. Charges for such
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taxes, if any, would be deducted from the Separate Account and/or the Fixed
Account. American National would not realize a profit on such taxes with
respect to the Contracts.
(f) Exchange Fee
An exchange fee of $10.00 will be imposed for each additional transfer among
the Subaccounts and Fixed Account after twelve transfers per Contract Year to
compensate American National for the costs of effecting the transfer. Since
the fee reimburses American National for the cost of effecting the transfer
only, American National does not expect to make any profit from the exchange
fee. This fee will be deducted from the amount transferred. The amount of the
transfer charge will not be increased.
DEDUCTION OF FEES
When annual contract fees are deducted from the Accumulation Value of a
Contract, the deductions shall be allocated among the Subaccounts in the same
proportion as the Accumulation Value in each Subaccount bears to the total
Accumulation Value on that date.
EXCEPTIONS TO CHARGES
The surrender charges, distribution expense charges or other administrative
charges or deductions may be reduced for sales of Contracts to a trustee,
employer, or similar entity representing a group where American National
determines that such sales result in savings of sales or administrative
expenses. In addition, directors, officers and bona fide full-time employees
(and their spouses and minor children) of SM&R and American National are
permitted to purchase Contracts with substantial reduction of the surrender
charges or other administrative charges or deductions.
DISTRIBUTIONS UNDER THE CONTRACT
ACCUMULATION PERIOD
FULL AND PARTIAL SURRENDERS
Any Contract may be surrendered in full or partially during the Accumulation
Period, subject to the limitations discussed herein. If a partial surrender
would leave less than $1,000 total Accumulation Value in the Contract, then the
Contract will be fully surrendered. A request for a partial surrender should
specify the allocation of that surrender, as applicable, from the Fixed Account
and each Subaccount. In the absence of specification, American National will
take amounts in the same proportion as needed to satisfy the surrender in the
manner set forth in "Deduction of Fees," on page 17. Upon a partial surrender,
any charges will be deducted from the amount of the surrender.
Upon receipt of an application for a partial or full surrender of a Contract
signed by the Contractowner, the applicable Accumulation Unit Value will be that
next determined after such application is received in American National's Home
Office. The Accumulation Value of a Contract which is available for full
surrender may be determined by multiplying the number of Accumulation Units for
each Subaccount times the Accumulation Unit Value at that time, adding any
Accumulation Value in the Fixed Account and deducting any surrender charge.
Partial or full surrenders will be paid within seven days of receipt of the
written request in proper form, except as described below.
If at the time the Contractowner makes a surrender request, he or she has not
provided American National with a written election not to have federal and state
income taxes withheld, American National is required by law to withhold such
taxes from the taxable portion of any surrender, and to remit that amount to the
federal and/or state government.
DEATH BENEFIT DURING ACCUMULATION PERIOD
In the event of Annuitant's death prior to the Annuity Date, a death benefit
will be payable equal to the greater of: (i) Accumulation Value on the date that
notice of death is received by American National at its home office in
Galveston, Texas, or (ii) the Minimum Guaranteed Death Benefit on the Contract.
The death benefit will be paid in a lump sum to the beneficiary named in the
contract within seven business days of receipt of proof of death in proper form.
In lieu of payment in one lump sum, the Contractowner may elect that the death
benefit be applied under any one of the annuity options described on page 18. If
the Contractowner did not make such an election, the beneficiary may do so. The
person selecting the annuity option settlement may also designate contingent
beneficiaries to receive any further amounts due, should the first beneficiary
die before completion of the specified payments. The manner in which annuity
payments to the beneficiary are determined and in which they may vary from month
to month are described under "Annuity Period," on page 18.
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ANNUITY PERIOD
All or a part of any amount payable at the Annuity Date for Deferred Annuity
Contracts may be applied to any of the Annuity Options. American National will
discharge in a single sum any liability under an assignment of the Contract and
any applicable federal or state taxes, fees or assessments based on or
predicated on the purchase payments of this contract which have not otherwise
been deducted or offset. The remaining amount is the net sum payable. The
minimum amount that American National will apply to an Annuity Option is $5,000.
American National's consent is required for any payment to a corporation,
association, partnership, or trustee.
ELECTION OF ANNUITY DATE AND FORM OF ANNUITY
(a) Non-Qualified Contracts
The date on which annuity payments are to begin and the form of annuity are
elected in the application. A Contract may not be purchased after age 85 and
annuity payments must begin no later than age 95.
(b) Qualified Contracts
The date on which annuity payments are to begin and the form of annuity are
elected in the application. A Contract may not be purchased after age 70 and
annuity payments must begin no later than April 1st of the calendar year
following the calendar year in which the Annuitant reaches 70/1//2.
If no election of an Annuity Date is made under a Contract, American National
reserves the right to automatically begin payments at age 65 (or if age at
purchase was over 55, then 10 years after issue) under Option 2, Life Annuity
with 120 monthly payments certain. Once an Annuity Payment is made, the
Annuity Option can not be changed to another Annuity Option. (See "Federal Tax
Matters" on page 19.)
ALLOCATION OF BENEFITS
If no election is made to the contrary, the Accumulation Units of each
Subaccount will be changed into Annuity Units and applied to provide a Variable
Annuity based on that Subaccount.
In lieu of this automatic allocation of annuity benefits the Contractowner may
elect to transfer his or her Accumulation Units to any other Eligible Portfolio.
After the Annuity Date, transfers among Subaccounts may be made twelve times
each Contract year. Each Contractowner may transfer Annuity Units of one
Subaccount into Annuity Units of another Subaccount and/or the Fixed Account as
discussed above at any time other than during the five-day interval prior to and
including any annuity payment date. There are no transfers allowed during the
Annuity Period from the Fixed Account to the Separate Account.
No election may be made for any individual unless such election would produce
an initial annuity payment of at least $100.
ANNUITY OPTIONS
The following annuity options are available.
Option 1 - Life Annuity - Annuity payment payable monthly during the lifetime
of an individual, ceasing with the last annuity payment due prior to the death
of the individual. This option offers the maximum level of monthly annuity
payments since there is no provision for a minimum number of annuity payments or
a death benefit for beneficiaries. It would be possible under this option for an
individual to receive only one annuity payment if death occurred prior to the
due date of the second annuity payment, two if death occurred before the third
annuity payment date, etc.
Option 2 - Life Annuity with 10 or 20 Years Certain - An annuity payable
monthly during the lifetime of an individual with payments made for a period
certain of not less than 10 or 20 years, as elected. The annuity payments will
be continued to a designated beneficiary until the end of the period certain.
Option 3 - Unit Refund Life Annuity - An annuity payable monthly during the
lifetime of an individual with annuity payments made for a period certain not
less than the number of months determined by dividing the amount applied under
this option by the amount of the first monthly annuity payment. This option
guarantees that the annuity units but not the dollar value applied under a
Variable Annuity payout will be repaid to the Annuitant or his beneficiary.
Option 4 - Joint and Survivor Annuity - An annuity payable monthly during the
joint lifetime of an individual and another named individual and thereafter
during the lifetime of the survivor, ceasing with the last annuity payment due
prior to the death of the survivor. It would be possible under this option, for
only one annuity payment to be made if both individuals under the option died
prior to the second annuity payment date, or only two annuity payments if both
died prior to the third annuity payment date, etc.
Option 5 - Installment Payments, Fixed Period - An amount payable monthly for
any specified number of years not exceeding 20. The amount of each Variable
Annuity payment will be determined by multiplying (a) and (b) where (a) is the
Annuity Unit Value on the day the annuity payment is made and (b) is the number
of Annuity Units applied under this Option divided by the number of remaining
monthly annuity payments.
Option 6 - Equal Installment Payments, Fixed Amount- An amount payable in
equal monthly installments (not less than $6.25 per $1,000 applied) until the
amount applied, adjusted daily by the investment results, is exhausted. The
final annuity payment will be the remaining sum left with American National.
Option 7 - Deposit Option - The amount due may be left on deposit with
American National for placement in its Fixed Account with interest at the rate
of not less than 3.0% per year. Interest will be paid annually, semiannually,
quarterly or monthly as elected. This option may not be available under certain
Qualified Contracts.
Option 8 - IRC Age Recalculation - An annuity payment based upon the
Annuitant's life expectancy, or the joint life expectancies of the Annuitant and
a beneficiary, at the Annuitant's attained age (and the beneficiary's attained
or adjusted age, if applicable) each year as computed in reference to actuarial
tables prescribed by
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the Treasury Secretary, until the amount applied, adjusted daily by the
investment results, is exhausted.
At any time, any amount remaining under Option 5, 6 or 7 may be withdrawn as a
lump sum or, if that amount is at least $5,000, may be applied under any one of
the first four Options. The lump sum payment requested will be paid within seven
days of receipt of the request at the Home Office based on the value next
computed after receipt of the request.
Other Annuity Forms - Provision may be made for annuity payments in any
reasonable arrangement mutually agreed upon.
If the beneficiary dies while receiving annuity payments certain under Option
2, 3, 5, 6 or 8 above, the present value will be paid in a lump sum to the
estate of the beneficiary.
VALUE OF VARIABLE ANNUITY PAYMENTS:
ASSUMED INVESTMENT RATES
The annuity tables in the Contract which are used to calculate the annuity
payments are based on an "assumed investment rate" of 3.0%. If the actual
investment performance of the particular Subaccount selected is such that the
net investment return to the Contract is 3.0% per annum, the annuity payments
will remain constant. If the net investment return exceeds 3.0%, the annuity
payments will increase and if the return is less than 3.0%, the annuity payments
will decline.
The annuity payment will be greater for shorter guaranteed periods than for
longer guaranteed periods, and greater for life annuities than for joint and
survivor annuities, because the life annuities are expected to be made for a
shorter period.
ANNUITY PROVISIONS
Non-qualified life contingent annuity payments are determined on the basis of
the mortality table [1983 Table "a" (female) with Projection Scale G, and 3.0%
interest] which generally reflects the age and sex of the Annuitant and the type
of annuity option selected, and varies with the investment performance of the
Eligible Portfolios in which the Contractowner has invested. The attained age
at settlement will be adjusted downward by one year for each full five-year
period that has lapsed since January 1, 1993.
Qualified life contingent annuity payments are determined on the basis of the
mortality table [1983 Table "a" (female) with Projection Scale G, and 3.0%
interest] which generally reflects the age of the Annuitant and type of annuity
option selected and varies with the investment performance of the Eligible
Portfolios in which the Contractowner has invested. The attained age at
settlement will be adjusted downward by one year for each full five-year period
that has lapsed since January 1, 1993.
Payment of any amount upon surrender, benefits payable in connection with
death, annuity payments, and transfers may be postponed whenever: (i) the New
York Stock Exchange is closed other than customary week-end and holiday
closings, or trading on the New York Stock Exchange is restricted as determined
by the Securities and Exchange Commission ("Commission"); (ii) the Commission by
order permits postponement for the protection of the Contractowners; or (iii) an
emergency exists, as determined by the Commission, as a result of which disposal
of securities is not reasonably practicable or it is not reasonably practicable
to determine the value of the Separate Account's net assets.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion is general in nature and is not intended as tax
advice for each Contractowner. It does not address the tax consequences
resulting from all situations in which each Contractowner may be entitled to or
may receive a distribution under a Contract. Tax advice should be sought from a
competent source prior to purchase. The discussion below is based on American
National's understanding of the present federal tax law as currently interpreted
by the Internal Revenue Service. No representation is made as to the
continuation of present federal tax law or its current interpretation. State tax
law may also be applicable.
TAXATION OF ANNUITIES IN GENERAL
A Contractowner, other than a corporate owner or an owner that is not a
natural person, is not generally subject to income tax on increases in the
Accumulation Value of the Contract until payments are received under the
Contract. Income taxation of the benefits received under the Contract, whether
before or after the Annuity Date, is determined under Section 72 of the Code.
Any distribution whether a full or partial surrender, prior to the Annuity Date
may subject the Contractowner to income tax.
If the distribution prior to Annuity Date is by full surrender, the
Contractowner is taxed on the amount distributed less Purchase Payments less any
prior partial surrenders which were not subject to income tax.
If the distribution prior to the Annuity Date is by partial surrender, it is
deemed to come first from any previously untaxed Accumulation Value and then
from Purchase Payments. The Contractowner is subject to income tax on any
previously untaxed Accumulation Value which is distributed.
Purchase Payments may be paid by means of a tax free exchange of annuity
Contracts under Section 1035 of the Code. Contracts exchanged under Code Section
1035 will be subject to the annuity income tax rules of Section 72 of the Code
in effect after that date, with exceptions set out in the description of the
Penalty Tax regarding the First-in First-out treatment of pre-August 14, 1982
contracts.
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Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (in accordance with Code Section 403(b)(11)) are limited to
circumstances only: when the Contractowner attains age 59/1//2, separates from
service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code), or in the case of hardship. Withdrawals for hardship are restricted to
the portion of the Accumulation Value which represents contributions made by the
Contractowner and does not include any investment results. These limitations on
withdrawals apply to: (1) salary reduction contributions made after December 31,
1988; (2) income attributable to such contributions; and (3) income attributable
to amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers or exchanges between certain qualified plans. Tax penalties may
also apply. While the foregoing limitations only apply to certain Contracts
issued in connection with Section 403(b) qualified plans, all Contractowners
should seek competent tax advice regarding any withdrawals or distributions.
If distributions are received after the Annuity Date under an annuity option,
that portion of each annuity payment which represents the Contractowner's
investment in the Contract is excluded from gross income for income tax
purposes. The "investment in the contract" is equal to the total Purchase
Payments for the Contract less any payments under the Contract that were
excluded from gross income. Once the Contractowner's investment in the Contract
is returned in full, the entire amount of each annuity payment is taxable as
ordinary income.
The Technical and Miscellaneous Revenue Act of 1988 made several changes in
the Code. Among those changes is a provision that provides that all annuity
Contracts issued by the same life insurance company to the same Contractowner
during a twelve month period shall be treated as one annuity Contract for
purposes of determining the amount includable in the Contractowner's income for
amounts not received as an annuity. This rule will apply to a distribution
received under the Contract, including a distribution by full or partial
surrender, or other distribution that is not in the form of a payment received
under an annuity option of the Contract.
If the Contractowner dies before the Annuity Date, the Accumulation Value must
be distributed within a specified period. This distribution requirement does not
apply where the spouse of the Contractowner is the successor owner.
Annuity payments and other amounts received under Contracts are subject to
income tax withholding unless the recipient elects not to have taxes withheld.
Notwithstanding the recipient's election, withholding may be required with
respect to certain payments to be delivered outside the United States.
The United States Treasury Department has adopted regulations under Section
817(h) of the Code which set standards of diversification for the investment
underlying the Contracts, in order for the Contracts to be treated as annuities
for income tax purposes. American National intends that these diversification
standards will be satisfied. American National reserves the right to amend the
Contracts in any way necessary to maintain compliance with these standards.
PENALTY TAX ON DISTRIBUTIONS
If there is a taxable distribution from the annuity, there is a penalty tax
equal to 10% of the taxable amount distributed to the extent the taxable
distribution is considered to be an early distribution under the annuity
Contract. The penalty tax does not apply to taxable distributions made as a
result of the death or disability of the Contractowner or distributions made
after the Contractowner reaches age 59/1//2; to distributions made under
Immediate Annuities; to distributions made under Settlement Options 1 or 4,
provided the distribution under such plans are substantially equal; and to
distributions attributable to Purchase Payments prior to August 14, 1982. The
penalty tax will not apply to distributions attributable to Purchase Payments
within ten years or more prior to the distribution. For this purpose,
distributions will be attributed to Purchase Payments on a "first-in first-out"
basis (to the earliest Purchase Payment which has not been fully allocated to
prior distributions).
QUALIFIED CONTRACTS
Qualified Contracts are designed for use with several types of qualified plans
including those subject to Code sections 401, 403(b), 408, and 457. The tax
rules applicable to Annuitants in such qualified plans vary according to the
type of plan and the terms and conditions of the plan itself. Annuitants in
qualified plans may include: individuals purchasing Individual Retirement
Annuities (IRAs); business owners (both self-employed and stockholders) who
establish pensions, profit sharing plans, and SEPs; employees of 501(c)(3)
organizations or public schools contributing to 403(b) annuities; and government
employees covered by a 457 deferred compensation plan.
As a general rule, Purchase Payments made by or for Annuitants in qualified
plans are not subject to current taxation. To the extent any such amounts are
taxed prior to or at the time of Purchase Payment, such amounts establish a cost
basis
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exempt from tax at the time of distribution.
Distributions from Qualified Contracts must satisfy certain minimum
distribution requirements. These requirements relate to both the time and amount
of distribution which include premature payments. Failure to comply may result
in penalty taxes which would be in addition to normal taxes. Distributions from
401 plans and 403(b) annuities paid to the plan participant/annuitant will be
subject to mandatory Federal withholding of twenty percent (20%). No withholding
will apply if there is a direct rollover among plans.
The Retirement Equity Act of 1984 imposes certain requirements with respect to
payments from qualified plans for married Annuitants and provides certain
restrictions involving qualified domestic relations orders.
PERFORMANCE
Performance information for the Subaccounts may appear in reports and
advertising to current and prospective Contractowners. The performance
information is based on historical investment experience of the Subaccounts and
the Funds and does not indicate or represent future performance.
Total returns are based on the overall dollar or percentage change in value of
a hypothetical investment. Total return quotations reflect changes in Fund share
price, the automatic reinvestment by the separate account of all distributions
and the deduction of applicable annuity charges (including any contingent
deferred sales charges that would apply if a Contractowner surrendered the
Contract at the end of the period indicated). Quotations of total return may
also be shown that do not take into account certain contractual charges such as
a contingent deferred sales load. The total return percentage will be higher
under this method than under the standard method described above.
A cumulative total return reflects performance over a stated period of time.
An average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the
performance had been constant over the entire period. Because average annual
total returns tend to smooth out variations in a Subaccount's returns, you
should recognize that they are not the same as actual year-by-year results.
Some Subaccounts may also advertise yield. These measures reflect the income
generated by an investment in the Subaccount over a specified period of time.
This income is annualized and shown as a percentage. Yields do not take into
account capital gains or losses or the contingent deferred sales load.
The FID Money Market Subaccount and the AN Money Market Subaccount may
advertise their current and effective yield. Current yield reflects the income
generated by an investment in the Subaccount over a 7-day period. Effective
yield is calculated in a similar manner except that income earned is assumed to
be reinvested. The Investment Grade Bond and the High Income Subaccounts may
advertise a 30-day yield which reflects the income generated by an investment in
the Subaccount over a 30-day period.
DISTRIBUTOR OF THE CONTRACTS
SM&R, One Moody Plaza, Galveston, Texas 77550-7999, a wholly-owned subsidiary
of American National will act as the principal underwriter of the Contracts
pursuant to a Distribution and Administrative Services Agreement between itself
and American National. SM&R was organized under the laws of the State of Florida
in 1964, and is a registered broker/dealer pursuant to the Securities Exchange
Act of 1934 and a member of the National Association of Securities Dealers. (See
the American National Funds', Prospectus.)
Registered representatives of SM&R who sell Variable Annuities will receive
commissions from SM&R based upon a commission schedule. After issuance of the
Contract, broker-dealers will receive sales commissions aggregating no more than
6.75% of the Purchase Payments. In addition to such sales commissions, after the
first Contract year, broker-dealers who have entered into distribution
agreements with American National may receive an annual override commission of
no more than 0.25% of the Contract's accumulation value. SM&R and American
National may authorize other registered broker/dealers and their Registered
Representatives to sell the Contracts subject to applicable law.
21
<PAGE>
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
American National holds the assets of the Separate Account. The assets are
kept physically segregated and held separate and apart from the General Account
assets, except for the Fixed Account. American National maintains records of all
purchases and redemptions of shares of Eligible Portfolios by each of the
Subaccounts.
VOTING RIGHTS
All of the assets held in the Subaccounts of the Separate Account will be
invested in shares of the corresponding Eligible Portfolios. American National
is the legal holder of those shares and as such has the right to vote to elect
the Board of Directors of the American National Fund and the Fidelity Funds, to
vote upon certain matters that are required by the 1940 Act to be approved or
ratified by the shareholders of a mutual fund, and to vote upon any other matter
that may be voted upon at a shareholders' meeting. To the extent required by
law, American National will vote all shares of Eligible Portfolios held in the
Separate Account at regular and special shareholder meetings in accordance with
instructions received from Contractowners. The number of votes for which each
Contractowner has the right to provide instructions will be determined as of the
record date selected by the Board of Directors of the American National Fund or
the Fidelity Funds, as the case may be. American National will furnish
Contractowners with the proper forms, materials and reports to enable them to
give it these instructions.
The number of shares of an Eligible Portfolio in a Subaccount for which
instructions may be given by a Contractowner is determined by dividing the
Accumulation Value held in that Subaccount by the net asset value of one share
in the corresponding Eligible Portfolio. Fractional shares will be counted.
Shares of an Eligible Portfolio held in each Subaccount for which no timely
instructions from Contractowners are received and shares of an Eligible
Portfolio held in each Subaccount which do not support Contractowner interests
will be voted by American National in the same proportion as those shares in
that Subaccount for which timely instructions are received. Voting instructions
to abstain on any item to be voted will be applied on a pro rata basis to reduce
the votes eligible to be cast. Should applicable federal securities laws or
regulations permit, American National may elect to vote shares of the Eligible
Portfolios in its own right.
Matters on which Contractowners may give voting instructions include the
following: (1) election of the Board of Directors of the American National Fund
or the Fidelity Funds (2) ratification of the independent accountant of the
American National Fund or the Fidelity Funds; (3) approval of the Investment
Advisory Agreement for the Eligible Portfolio(s) corresponding to the
Contractowner's selected Subaccount; (4) any change in the fundamental
investment Policies of the Eligible Portfolio(s) corresponding to the
Contractowner's selected Subaccount(s); and (5) any other matter requiring a
vote of the shareholders of the American National Fund or the Fidelity Funds
under the 1940 Act.
22
<PAGE>
STATE REGULATION OF AMERICAN NATIONAL
American National, a stock life insurance company organized under the laws of
Texas, is subject to regulation by the Texas Department of Insurance. On or
before March 1 of each year a National Association of Insurance Commissioners
convention blank covering the operations and reporting on the financial
condition of American National and the Separate Account as of December 31 of the
preceding year must be filed with the Texas Department of Insurance.
Periodically, the Texas Department of Insurance examines the liabilities and
reserves of American National and the Separate Account and certifies their
adequacy. A full examination of American National's operations is also conducted
periodically by the National Association of Insurance Commissioners.
In addition, American National is subject to the insurance laws and
regulations of other states within which it is licensed or may become licensed
to operate. The Contracts offered by the Prospectus are available in the various
states as approved. Generally, the Insurance Department of any other state
applies the laws of the state of domicile in determining permissible
investments. However, differences in state laws may require American National to
offer a Contract in one or more states which are more favorable to a
Contractowner than provisions in a Contract offered in other states.
LEGAL MATTERS
All matters of Texas law pertaining to the Contract, including the validity of
the Contract and American National's right to issue the Contract under Texas
Insurance Law, have been passed upon by Greer, Herz and Adams, L.L.P., General
Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. American National is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Account.
EXPERTS
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1995 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1995 and for the year then ended, included in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The consolidated financial statements of American National Insurance Company and
subsidiaries as of December 31, 1994 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1994 and for the period April 20, 1994, through December 31,
1994, included in this prospectus and elsewhere in the registration statement
have been audited by KPMG Peat Marwick LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Contract offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning the Separate Account, American National and the Contract
offered hereby. Statements contained in this Prospectus as to the contents of
the Contract and other legal instruments are summaries. For a complete statement
of the terms thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of American National should be considered only as
bearing on the ability of American National to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Separate Account. The financial statements
can be found in the Statement of Additional Information.
23
<PAGE>
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Contract............................................ 3
Valuation of Accumulation Units......................... 3
Computation of Variable Annuity Payments................ 3
Annuity Unit Value...................................... 3
Summary................................................. 4
Exceptions to Charges................................... 4
Termination of Contract................................. 4
Group Unallocated Contract.............................. 4
Additional Federal Tax Matters.......................... 4
Limits on Subsequent Purchase Payments
(Under the Internal Revenue Code)..................... 4
Taxation of American National........................... 5
Tax Status of the Contracts............................. 5
Assignment.............................................. 5
Distribution of the Contracts........................... 5
Safekeeping of Separate Account Assets.................. 5
State Regulation of American National................... 5
Records and Reports..................................... 6
Performance............................................. 6
Total Return............................................ 6
Yields.................................................. 6
Legal Matters........................................... 7
Legal Proceedings....................................... 7
Experts................................................. 7
Additional Information.................................. 7
Financial Statements.................................... 7
Financials.............................................. 8
</TABLE>
24
<PAGE>
PURCHASER SUITABILITY FORM
NEW ACCOUNT INFORMATION & ARBITRATION AGREEMENT
This form must accompany all applications to establish
new accounts in American National's Variable products,
American National Investment Accounts, Inc., Variable
Insurance Products Fund and Variable Insurance Products
Fund II.
Article III, Sections 2 & 21 of the Rules of Fair
Practice require a Representative to obtain the
information contained in this form in order to accept a
new account in the American National Variable products.
Date Registered Representative
________________ __________________________________________________________
A. SECURITIES REGISTRATION OF CUSTOMER
Name(s) and Age(s)
_______________________________________________________________________________
Address
_______________________________________________________________________________
Social Security No. (Individual, Joint Accounts, Taxpayer ID No. (Trust,
Custodial Accounts for Minors) Estate, Pension Trust,
Corporation, Partnership, etc.)
B. IS THE PURCHASER OR PROPOSED INSURED EMPLOYED BY OR ASSOCIATED WITH A MEMBER
OF THE NASD OR NYSE?
[ ] Yes [ ] No If he/she is, provide the name, address and phone number of
the firm:
_______________________________________________________________________________
If yes, provide the name, address and phone number of the
firm:
_______________________________________________________________________________
C. DOES CUSTOMER HAVE OTHER SECURITIES HOLDINGS? Yes No
[ ] Stocks [ ] Bonds [ ] Mutual Funds [ ] Variable Products [ ] Other
Are they redeeming other mutual fund shares and/or variable products to
make this purchase? [ ] Yes [ ] No
_______________________________________________________________________________
D. PERTINENT ADDITIONAL INFORMATION (CHECK APPROPRIATE BOXES)
[ ] Application Attached [ ] Check Attached Payable To:
_________________________
[ ] Signed Arbitration Agreement
[ ] Signed Statement of Refusal to Provide
Financial Information if Applicable [ ] Other_____________________
______________________________________________________________________
_________________________________________ ___________________________________
Registered Representative's Name (print) Representative's Personal Code
________________________________________ ___________________________________
Registered Representative's Signature Date
________________________________________ ___________________________________
B/O# PSO# Home Office Approval Date Received
SIGNATURE REQUIRED ON THE REVERSE SIDE
INVESTMENT SUITABILITY TO BE COMPLETED BY REGISTERED REPRESENTATIVE AND
PURCHASER
NASD rules require the Registered Representative to have reasonable grounds for
believing that any sale is suitable for the customer. Therefore, Registered
Representatives are required to make inquiries concerning the financial
condition of a proposed purchaser (the "Purchaser") of American National's
Variable products. Purchasers are urged to supply such information so that the
representative can make an informed judgment as to the suitability for a
particular Purchaser of variable products. However, Purchasers are not required
to divulge such information. If the Purchaser chooses not to do so, the
Purchaser must execute the signature line on the reverse side signifying his/her
refusal and acknowledge that the representative requested the suitability
information.
INVESTMENT SUITABILITY CONTINUED To be completed by Registered Representative
and Purchaser
1. OCCUPATION:_______________________ PHONE NO. EMPLOYER_____________________
Name and Address Employer:____________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. TAX STATUS: [ ] Single [ ] Head of Household [ ] Married filing separate
returns
[ ] Married filing joint return or Qualifying [ ] Corporation
widow(er) with dependent child [ ] Other_________________
CONTINUED ON THE REVERSE SIDE
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
3. MARITAL STATUS
A. [ ] Married B. [ ] Single C. [ ] Widowed
4. DEPENDENTS
A. [ ] Spouse B. [ ] Children: Ages________________________ C. [ ] _______________________
5. SOURCES OF FUNDS FOR INVESTMENT
A. [ ] Current Earnings C. [ ] Gift or Inheritance E. [ ] Death Benefit G. [ ] Other Policy Proceeds
B. [ ] Savings D. [ ] Sale of Assets F. [ ] Maturity Proceeds H. [ ] _______________________
6. PRIMARY PURPOSE OF INVESTMENT:
INDIVIDUAL BUSINESS
A. [ ] Education D. [ ] Tax Shelter A. [ ] Retirement Plan D. [ ] Buy-Sell
B. [ ] Savings E. [ ] B. [ ] Key Man E. [ ] Depreciation Reserve
C. [ ] Estate Plan C. [ ] Deferred Compensation F. [ ] ______________________
7. INVESTMENT PROFILE:
1. What is your current investment preference?
[ ] High Growth Potential [ ] Income Growth Potential [ ] Maximum Safety/Modest Return
2. What is your Risk comfort level?
[ ] High [ ] Moderate [ ] Limited
3. What is your financial goal time horizon?
[ ] 1-5 Years [ ] 5-10 Years [ ] 10 Years and Beyond
4. What is your age range?
[ ] 21-40 [ ] 41-59 [ ] 60+
5. What is tax bracket?
[ ] 15% [ ] 28% [ ] 28%+
6. Are you concerned with having adequate income during retirement: [ ] Yes [ ] No
</TABLE>
7. Are you responsible for the financial welfare of anyone other than your
immediate family (i.e. alimony, child, parental support, etc.)
[ ] Yes [ ] No
<TABLE>
<CAPTION>
Estimated Annual Income *Estimated Net Worth Life Insurance Is the applicant a policyholder of American
Face Amount National?
$ $ $ [ ] Yes [ ] No
<S> <C> <C> <C> <C>
*Net Worth is exclusive of home furnishings and automobile.
</TABLE>
STATEMENT OF REFUSAL TO PROVIDE FINANCIAL INFORMATION
I fully understand that the Registered Representative, acting on behalf of
American National Insurance Company and Securities Management and Research,
Inc., has requested the above suitability information to determine whether my
purchase of American National's Variable products is an appropriate investment
considering my financial condition. I refuse to provide the requested
information and by my/our signature(s) below agree not to seek rescission of the
applicable variable product issued or damages based on its unsuitability.
________________________________________ __________________________________
Signature Purchaser Signature Joint Owner (Must Sign)
REPRESENTATIVE EXPLANATION OF CUSTOMERS REFUSAL TO PROVIDE INFORMATION ON THIS
FORM
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
PURCHASER AGREEMENT TO ARBITRATION
THIS SECTION IS NOT APPLICABLE TO MISSOURI RESIDENTS!
The following conditions are agreed to by all parties to this agreement.
1. Arbitration is final and binding on the parties.
2. The parties are waiving their right to seek remedies in court, including the
right to jury trial.
3. Pre-arbitration discovery is generally more limited and different from court
proceedings.
4. The arbitrators' award is not required to include factual findings or legal
reasoning and any party's right to appeal or to seek modification of rulings
by arbitrators is strictly limited.
5. The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry.
By signature below, I (we) understand that I (we) have the right to any
dispute between us arising under the federal securities laws to be resolved
through litigation in the courts. In lieu of using the courts, I (we) may agree,
after any such dispute has arisen, to settle it by arbitration before an
appropriate group of arbitrators. However, I (we) understand that any other
dispute between us arising out of any transaction or this agreement shall be
settled by arbitration before the National Association of Securities Dealers,
Inc., which must be commenced by a written notice of intent to arbitrate.
Judgement upon any award rendered may be entered in any appropriate court.
I (we) further understand that we may not bring a punitive or certified class
action to arbitration, nor seek to enforce any pre-dispute arbitration agreement
against anyone who has initiated in court a punitive class action; or who is a
member of a punitive class action until (1) the class action certification is
denied; or (2) the class is decertified; or (3) I (we) are excluded from the
class action by the court. Such forbearance to enforce an agreement to arbitrate
shall not constitute a waiver of any rights under this agreement except to the
extent stated herein.
___________________________________ _________________________________
Signature Purchaser Signature Joint Owner (Must Sign)
<PAGE>
DISTRIBUTOR
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
CUSTODIAN
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
INVESTMENT MANAGER
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
INSURER
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
[LOGO]
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA
GALVESTON, TEXAS 77550-7999
AMERICAN NATIONAL
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF ADDITIONAL INFORMATION
_______________________________
Relating to the Prospectuses dated ___________________________
(409) 763-4661
INVESTMENT MANAGER
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
UNDERWRITER
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550-7999
CUSTODIAN
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550-7999
INDEPENDENT AUDITORS
Arthur Andersen LLP
711 Louisiana, Suite 1300
Houston, Texas 77002-2786
1
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
One Moody Plaza
Galveston, Texas 77550-7999
AMERICAN NATIONAL
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF
ADDITIONAL INFORMATION
__________________
This Statement of Additional Information expands upon subjects discussed in
the current Prospectuses for the Variable Annuity Contracts II("the Contracts")
offered by American National Insurance Company ("American National"). You may
obtain a copy of the Prospectuses dated ___________ , by calling (409) 763-4661,
or writing to American National Insurance Company, One Moody Plaza, Galveston,
Texas 77550-7999. Terms used in the current Prospectuses for the Contract are
incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Contract................................................................ 3
Valuation of Accumulation Units............................................. 3
Computation of Variable Annuity Payments.................................... 3
Annuity Unit Value.......................................................... 3
Summary..................................................................... 4
Exceptions to Charges....................................................... 4
Termination of Contract..................................................... 4
Group Unallocated Contract.................................................. 4
Additional Federal Tax Matters.............................................. 4
Limits on Subsequent Purchase Payments
(Under the Internal Revenue Code)........................................... 4
Taxation of American National............................................... 5
Tax Status of the Contracts................................................. 5
Assignment.................................................................. 5
Distribution of the Contracts............................................... 5
Safekeeping of Separate Account Assets...................................... 5
State Regulation of American National....................................... 5
Records and Reports......................................................... 6
Performance................................................................. 6
Total Return................................................................ 6
Yields...................................................................... 6
Legal Matters............................................................... 7
Legal Proceedings........................................................... 7
Experts..................................................................... 7
Additional Information...................................................... 7
Financial Statements........................................................ 7
Financials.................................................................. 8
</TABLE>
2
<PAGE>
THE CONTRACT
The following provides additional information about the contracts which
supplements the description in the Prospectus and which may be of interest to
some Contractowners.
Valuation of Accumulation Units
The Accumulation Unit Value for a Subaccount on any day is equal to (a)
divided by (b), where (a) is the net asset value of the corresponding Eligible
Portfolio of the underlying fund owned by each Subaccount less any applicable
deductions and (b) is the number of Accumulation Units of that Subaccount at the
beginning of that day.
Computation of Variable Annuity Payments
The amount of the first variable annuity payment to the annuitant will depend
on the amount of his/her accumulation value applied to affect the variable
annuity as of the tenth day immediately preceding the date annuity payments
commence, the amount of any premium tax owed (if applicable), the annuity option
selected, and the age of the annuitant. The contracts contain tables indicating
the dollar amount of the first annuity payment under annuity options 1, 2, 3,
and 4 for each $1,000 of accumulation value at various ages. These tables are
based upon the 1983 Table "a" (promulgated by the Society of Actuaries) and an
Assumed Investment Rate (the AIR) of 3.0% per annum.
In any subsequent month, the dollar amount of the variable annuity payment is
determined by multiplying the number of annuity units in the applicable
division(s) by the value of such annuity unit on the tenth day preceding the due
date of such payment. The annuity unit value will increase or decrease in
proportion to the net investment return of the division(s) underlying the
variable annuity since the date of the previous annuity payment, less an
adjustment to neutralize the 3.0% or other AIR referred to above.
Therefore, the dollar amount of variable annuity payments after the first will
vary with the amount by which the net investment return is greater or less than
the 3.0% (or other AIR) per annum. For example, assuming a 3.5% AIR, if an
Eligible Portfolio has a cumulative net investment return of 5% over a one year
period, the first annuity payment in the next year will be approximately 1.5
percentage points greater than the payment on the same date in the preceding
year, and subsequent payments will continue to vary with the investment
experience of the Eligible Portfolio.
If such net investment return is 1% over a one year period, the first annuity
payment in the next year will be approximately 2.5 percentage points less than
the payment on the same date in the preceding year, and subsequent payments will
continue to vary with the investment experience of the applicable division.
ANNUITY UNIT VALUE
The value of an annuity unit is calculated at the same time that the value of
an accumulation unit is calculated and is based on the same values for shares of
Eligible Portfolios and other assets and liabilities. The following
illustrations show, by use of hypothetical examples, the method of determining
the annuity unit value and the amount of variable annuity payments.
Illustration: Calculation of Annuity Unit Value
Annuity at age 65: Life with 120 payments certain
1. Annuity unit value, beginning of period $ .980000
2. Net investment factor for Period 1.001046
3. Daily adjustment for
3.0% Assumed Investment Rate .999919
4. (2) x (3) 1.000965
5. Annuity unit value, end of period (1) x (4) $ .980946
Illustration: Annuity Payments
Annuity at age 65: Life with 120 payments certain
1. Number of accumulation units at annuity date 10,000.00
2. Accumulation Unit value
(10 days prior to date of first monthly payment) $1.800000
3. Accumulation Value of Contract (1) x (2) $ 18,000.00
4. First monthly annuity payment per
$1,000 of Accumulation Value $5.63
5. First monthly annuity payment (3) x (4) / 1,000 $ 101.34
6. Annuity Unit value
(10 days prior to date of first monthly payment) $.980000
7. Number of annuity units (5) / (6) 103.408
8. Assume annuity unit value for
second month equal to $.997000
9. Second monthly annuity payment (7) x (8) $ 103.10
10. Assume annuity unit value for
third month equal to $.953000
11. Third monthly annuity payment (7) x (10) $ 98.55
3
<PAGE>
SUMMARY
In conclusion, for a variable annuity the key element to pricing the annuity
is unknown; there is no interest rate guarantee made and interest credited will
depend upon actual future results. The technique used to overcome this obstacle
is the calculation of the premium for the annuity using an AIR. The initial
variable annuity payment is based upon this premium; subsequent payments will
increase or decrease depending upon the relationship between the AIR and the
actual investment performance of Eligible Portfolios to be passed to the
annuitant. Suppose an Eligible Portfolio showed a monthly return of 1% after the
first month, the participant's second monthly payment would be (assuming 30 days
between payments):
$100 x 1.01 = $100.75
------
(1.03)/30/365/
Hence, we have shown that the AIR methodology means that at each payment date
the value in a participant's annuity is updated to reflect actual investment
results to date, but continued assumption of the AIR for the remainder of the
annuity period.
Exceptions To Charges
The surrender charges or other administration charges or deductions may be
reduced for sales of contracts to a trustee, employer or similar entity
representing a group where such sales result in savings of sales or
administrative expenses. The entitlement to such a reduction in surrender
charges or other charges or deductions will be determined by American National
based on the following factors: (1) the size of the group; (2) the total amount
of purchase payments to be received from a group; (3) the purpose for which the
contracts are being purchased; (4) the nature of the group for which the
contracts are being purchased; and (5) any other circumstances of which American
National is not presently aware but that could result in reduced sales or
administrative expenses.
Directors, officers and bona fide full-time employees (and their spouses and
minor children) of Securities Management and Research, Inc. and American
National are permitted to purchase contracts with substantial reduction of
surrender charges or other administrative charges or deductions. No sales
commission will be paid on such contracts.
Termination of Contract
American National reserves the right to terminate any Group Unallocated
Contract under the following circumstances: (1) the contract value is less than
$2,000 after the end of the first contract year, or $5,000 after the end of the
third contract year; (2) the Plan pursuant to which the contract is issued is
terminated for any reason or becomes disqualified under Section 401 or 403 of
the Internal Revenue Code or (3) for any reason after the eighth policy year.
American National may also terminate individual contracts during the
accumulation period if certain conditions exist. These conditions are that (1)
no purchase payments have been received by American National for the contract
for three full years; (2) the Accumulation Value of the contract is less than
$200; and (3) the value of the contract allocated to the Fixed Account,
projected to the maturity date, would produce installments of less than $20 per
month using contractual guarantees. Termination of a Contract may have adverse
tax consequences. (See the prospectus at "Federal Tax Matters," page 18.)
Group Unallocated Contracts
Group Unallocated Contract is a contract between the Contractowner and
American National. Individual accounts are not established for Plan Participants
unless the one of the annuity payment options is selected.
ADDITIONAL FEDERAL TAX MATTERS
LIMITS ON SUBSEQUENT PURCHASE PAYMENTS
(Under The Internal Revenue Code)
The amount of subsequent Purchase Payments may be increased or decreased on
any date, and submission of a Purchase Payment different from the previous
Purchase Payment will automatically effect such an increase or decrease.
However, U.S. Treasury Regulations currently permit only one change to a salary
deduction agreement in any taxable year for contracts issued to qualify under
Section 403(b) of the Internal Revenue Code (the Code). Contracts issued under
Section 408(b) of the Code provide that the maximum Purchase Payments for each
Participant for a taxable year shall be $2,000 or other such amount as may
become permissible under amended laws. Contracts issued to qualify under Section
408(k) of the Code provide that the maximum annual Purchase Payment by an
employer for each employee shall be the lesser of 25% of the employee's
compensation or $30,000 or such other amount as may become permissible under
amended law.
Contracts issued to qualify under Section 457 of the Code provide that the
maximum Purchase Payment in any taxable year shall be $7,500 for each
Participant or such other amount as may become permissible under amended law.
Such contracts further provide for an increase in Purchase Payments for one or
more of the Participant's last three taxable years ending before normal
retirement age in accordance with the provisions of the applicable Plan
agreement.
Purchase Payments pursuant to the salary deduction agreements to contracts
issued under Section 403(b), 408(k), 401(k) or 457 of the Code that are in
excess of $7,000 in a taxable year ($9,500 in the case of Section 403(b)
contracts and the lesser of $7,000 or /1//3 of employee's compensation for 457)
may be subject to adverse tax treatment.
4
<PAGE>
TAXATION OF AMERICAN NATIONAL
American National is taxed as a life insurance company under Part 1 of
Subchapter L of the Code. Since the Separate Account is not an entity separate
from American National and its operations form a part of American National, it
will not be taxed separately as a "regulated investment company" under
Subchapter M of the code. Investment income and realized net capital gains on
Separate Account assets are reinvested and are taken into account in determining
the contract values. As a result, such investment income and realized net
capital gains are automatically retained as part of the reserves under the
Contract. Under existing federal income tax law, American National believes that
the Separate Account's investment income and realized net capital gains should
not be taxed to the extent that such income and gains are retained as part of
the reserves under the Contract.
TAX STATUS OF THE CONTRACTS
To comply with regulations under 817(h) of the Code, the investment of the
Separate Account must be "adequately diversified" in order for the Contracts to
qualify as annuity contracts under section 72 of the code. The Separate Account,
through the underlying funds, intends to comply with the diversification
requirements prescribed by the Treasury which affect how the Separate Account's
assets may be invested. American National will monitor compliance with this
requirement. Thus, American National believes that the Contracts will be treated
as annuity contracts for federal tax purposes.
ASSIGNMENT
The Contracts may be assigned by the Contractowner except when issued to plans
or trusts qualified under Section 403(b) or 408 of the Internal Revenue Code.
401(k) Contracts are not assignable.
DISTRIBUTION OF THE CONTRACTS
Subject to arrangements with American National, the Contracts are sold as part
of a continuous offering by independent broker-dealers who are members of the
National Association of Security Dealers, Inc., and who become licensed to sell
life insurance and variable annuities for American National. Pursuant to a
Distribution and Administrative Services Agreement, Securities Management and
Research, Inc. ("SM&R") acts as the principal underwriter on behalf of American
National for distribution of the Contracts. Under the Agreement, SM&R is to use
commercially reasonable efforts to sell the Contracts through registered
representatives. In connection with these sales activities SM&R is responsible
for (i) compliance with the requirements of any applicable state broker-dealer
regulations and the Securities Exchange Act of 1934, (ii) keeping correct
records and books of account in accordance with Rules 17a-3 and 17a-4 of the
Securities Exchange Act, (iii) training agents of American National for the sale
of Contracts, and (iv) forwarding all purchase payments under the Contracts
directly to American National. SM&R is not entitled to any renumeration for its
services as underwriter under the Distribution and Administrative Services
Agreement, however SM&R is entitled to reimbursement for all reasonable expenses
incurred in connection with its duties as underwriter.
Safekeeping of the Separate Account Assets
All assets of the Separate Account are held in the custody and safekeeping of
American National. The assets are kept physically segregated and held separate
and apart from the General Account assets. American National maintains records
of all purchases and redemptions of shares of the Eligible Portfolios by each of
the Subaccounts.
State Regulation of American National
American National, a stock life insurance company organized under the laws of
Texas, is subject to regulation by the Texas Department of Insurance. On or
before March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of American National and the Separate
Account as of December 31 of the preceding year must be filed with the Texas
Department of Insurance. Periodically, the Texas Department of Insurance
examines the liabilities and reserves of American National and the Separate
Account and certifies their adequacy. A full examination of American National's
operations is also conducted periodically by the National Association of
Insurance Commissioners.
In addition, American National is subject to the insurance laws and
regulations of other states within which it is licensed or may become licensed
to operate. The Policies offered by the Prospectus are available in the various
states as approved. Generally, the Insurance Department of any other state
applies the laws of the state of domicile in determining permissible investment.
However, differences in state laws may require American National to offer a
Contract in one or more states which has suicide, incontestability and refund
provisions which are more favorable to a Contractowner than provisions in a
Contract offered in other states.
5
<PAGE>
RECORDS AND REPORTS
Reports concerning each Contract will be sent annually to each Contractowner.
Contractowners will additionally receive annual and semiannual reports
concerning the underlying funds and annual reports concerning the Separate
Account. Contractowners will also receive confirmations of receipt of purchase
payments, changes in allocation of purchase payments and transfer of
Accumulation Units and Annuity Units.
Performance
Performance information for any Subaccount may be compared, in reports and
advertising to: (1) the Standard & Poor's 500 Composite Stock Price Index ("S &
P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue's Money Market
Institutional Averages; (2) other variable annuity separate accounts or other
investment products tracked by Lipper Analytical Services, Lehman-Brothers,
Morningstar, or the Variable Annuity Research and Data Service, widely used
independent research firms which rank mutual funds and other investment
companies by overall performance, investment objectives, and assets; and (3) the
Consumer Price Index (measure for inflation) to assess the real rate of return
from an investment in a contact. Unmanaged indices may assume the reinvestment
of dividends but generally do not reflect deductions for annuity charges and
investment management costs.
Total returns, yields and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Reports and
advertising may also contain other information including (i) the ranking of any
subaccount derived from rankings of variable annuity separate accounts or other
investment products tracked by Lipper Analytical Series or by rating services,
companies, publications or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (ii) the
effect of tax deferred compounding on a subaccount's investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.
Total Return
Total Return quoted in advertising reflects all aspects of a Subaccount's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the Subaccount's value over the period. Average
annual returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in the Subaccount over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18%, which is the steady rate
that would equal 100% growth on a compounded basis in ten years. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the subaccount's performance is not constant over
time, but changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of a
subaccount.
Average annual total returns are computed by finding the average annual
compounded rates of return over the periods shown that would equate the initial
amount invested to the withdrawal value, in accordance with the following
formula: P(1+T)/n/ = ERV where P is a hypothetical investment payment of
$1,000, T is the average annual total return, n is the number of years, and ERV
is the withdrawal value at the end of the periods shown. Since the Contract is
intended as a long-term product, the average annual total returns assume that no
money was withdrawn from the Contract prior to the end of the period.
In addition to average annual returns, the Subaccounts may advertise
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period.
Yields
Some Subaccounts may also advertise yields. Yields quoted in advertising
reflect the change in value of a hypothetical investment in the Subaccount over
a stated period of time, not taking into account capital gains or losses. Yields
are annualized and stated as a percentage. Yields do not reflect the impact of
any contingent deferred sales load. Yields quoted in advertising may be based on
historical seven day periods. Current yield for the FID Money Market Subaccount
and the AN Money Market Subaccount will reflect the income generated by a
Subaccount over a 7-day period. Current yield is calculated by determining the
net change, exclusive of capital changes, in the value of a hypothetical account
having one Accumulation Unit at the beginning of the period and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and multiplying the base period return by
(365/7). The resulting yield figure will be carried to the nearest hundredth of
a percent. Effective yield for the FID Money Market Subaccount and the AN Money
Market Subaccount is calculated in a similar manner to current yield except that
investment income is assumed to be reinvested throughout the year at the 7-day
rate. Effective yield is obtained by taking the base period returns as computed
above, and then compounding the base period return by adding 1, raising the sum
to a power equal to (365/7) and subtracting one from the result, according to
the formula Effective Yield = [(Base Period Return +1)/365/7/] - 1. Since the
reinvestment of income is assumed in the calculation of effective yield, it will
generally be higher than current yield.
A 30-day yield for bond subaccounts will reflect the income generated by a
Subaccount over a 30-day period. Yield will be computed by dividing the net
investment income per Accumulation Unit earned during the period by the maximum
offering price per Accumulation Unit on the last day of the period, according to
the following formula: Yield = 2[((a - b)/cd + 1)/6/-1] where a = net investment
income earned by the applicable portfolio, b = expenses for the period including
expenses charged to the contract owner accounts, c = the average daily number of
Accumulation Units outstanding during the period, and d = the maximum offering
price per Accumulation Unit on the last day of the period.
6
<PAGE>
LEGAL MATTERS
All matters of Texas law pertaining to the Contract, including the validity of
the Contract and American National's right to issue the Contract under Texas
Insurance Law, have been passed upon by Greer, Herz and Adams, L.L.P., General
Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. American National is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Account.
EXPERTS
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1995 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1995 and for the year then ended, included in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The consolidated financial statements of American National Insurance Company
and subsidiaries as of December 31, 1994 and for the year then ended, and the
financial statements of American National Variable Annuity Separate Account as
of December 31, 1994 and for the period April 20, 1994, through December 31,
1994, included in this prospectus and elsewhere in the registration statement
have been audited by KPMG Peat Marwick LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Contract offered hereby. This Statement of Additional Information does not
contain all the information set forth in the registration statement and the
amendments and exhibits to the registration statement, to all of which reference
is made for further information concerning the Separate Account, American
National and the Contracts offered hereby. For a complete statement of the terms
thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of American National should be considered only as
bearing on the ability of American National to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Separate Account.
[FIN. STMTS. TO BE FILED BY AMENDMENT]
7
<PAGE>
PART C ITEM AND CAPTION
Items 24. Financial Statements and Exhibits.
(a) Financial Statements FINANCIAL STATEMENTS and FINANCIAL STATEMENT
SCHEDULES sections of Statement of
Additional Information (TO BE FILED BY
POST-EFFECTIVE AMENDMENT)
(b) Exhibits
Exhibit "1" - copy of the resolutions of the board of directors
of the depositor authorizing the establishment of
the Registrant
Exhibit "2" - Not Applicable
Exhibit "3" - Distribution and Administrative Services Agreement
Exhibit "4" - the form of each variable annuity contract (to be
filed by post-effective amendment)
Exhibit "5" - the form of application used with any variable
annuity contract (to be filed by post-effective
amendment)
Exhibit "6a" - copy of the articles of incorporation of the
depositor
Exhibit "6b" - copy of the by-laws of the depositor
Exhibit "7" - Not Applicable
Exhibit "8a" American National Investment Account, Inc.
Participation Agreement
Exhibit "8b" Fidelity Investments' Variable Insurance Products
Fund Participation Agreement
Exhibit "8c" Variable Insurance Products Fund II Participation
Agreement
i
<PAGE>
Exhibit "9" - an opinion of counsel and consent to its use as to
the legality of the securities being registered,
indicating whether they will be legally issued and
will represent binding obligations of the
depositor (to be filed by post-effective
amendment)
Exhibit "10" - Consent of independent accountants (to be filed by
post-effective amendment)
Exhibit "11" - Not Applicable
Exhibit "12" - Not Applicable
Exhibit "13" - Not Applicable
Exhibit "14" - Control chart of depositor
Exhibit "27" - Financial Data Schedule (to be filed by post-
effective amendment)
Item 25. Directors and Officers of the Depositor.
Directors
- ---------
Name Business Address
- ---- ----------------
Irwin M. Herz, Jr. Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550
R. Eugene Lucas Gal-Tex Hotel Corporation
2302 Postoffice, Suite 504
Galveston, Texas 77550
Harold C. MacDonald The Moody Foundation
2302 Postoffice, Suite 704
Galveston, Texas 77550
E. Douglas McLeod The Moody Foundation
2302 Postoffice, Suite 704
Galveston, Texas 77550
Frances Anne Moody 7031 Inwood
Dallas, Texas 75209
Robert L. Moody 2302 Postoffice, Suite 702
Galveston, Texas 77550
ii
<PAGE>
Russell S. Moody 6016 Mount Bonnell Hollow
Austin, Texas 78731
W.L. Moody, IV 2302 Postoffice, Suite 502
Galveston, Texas 77550
Joe Max Taylor Galveston County Sheriff's Department
715 19th Street
Galveston, Texas 77550
Officers
- --------
The principal business address of the officers, unless otherwise indicated
in the "Directors" section, is American National Insurance Company, One Moody
Plaza, Galveston, Texas 77550.
Name Office
- ------ ------
R.L. Moody Chairman of the Board, President Chief Executive
Officer
G.R. Ferdinandtsen Senior Executive Vice President, Chief
Administrative Officer
R.A. Fruend Executive Vice President, Director of Ordinary
Agencies
B.J. Garrison Executive Vice President, Director of Home Service
Division
M.W. McCroskey Executive Vice President, Investments
J.E. Pozzi Executive Vice President, Independent Marketing
R.J. Welch Executive Vice President & Chief Actuary
C.H. Addison Senior Vice President, Systems Planning and Computing
A.L. Amato, Jr. Senior Vice President, Life Policy Administration
W.J. Davis Senior Vice President, Life Claims
G.C. Langley Senior Vice President, Human Resources
G.L. Noelle Senior Vice President, Health Insurance Operations
S.E. Pavlicek Senior Vice President & Controller
iii
<PAGE>
J.R. Thomason Senior Vice President, Credit Insurance Services
G.W. Tolman Senior Vice President, Corporate Affairs
V.E. Soler, Jr. Vice President, Secretary & Treasurer
J.J. Antkowiak Vice President, Director of Computing Services
D. D. Brichler Vice President, Mortgage Loan Production
F.V. Broll, Jr. Vice President & Actuary
A.C. Deetjen Vice President, Director of Marketing & Product
Services
G.D. Dixon Vice President, Stocks
J.F. Grant, Jr. Vice President, Group Actuary
R.D. Graves Vice President, Director of Manpower Development,
Ordinary Agencies
R.D. Hemme Vice President & Actuary
M.E. Hogan Vice President, Credit Insurance Operations
C.J. Jones Vice President, Health Underwriting & New Business
D.D. Judy Vice President, Financial Marketing
Dr. H.B. Kelso, Jr. Vice President & Medical Director
G.G. Kirk Vice President, Pension& Payroll Deduction Marketing
D.D. Lagrone Vice President, Home Office Services
George A. Macke Vice President, General Auditor
G.W. Marchand Vice President, Life Underwriting
R.G. McCrary Vice President, Application Development Division
D.N. McDaniel Vice President, Home Service Administration
iv
<PAGE>
W.T. Porter Vice President, Chief Marketing Officer, Health
Operations
W.H. Watson III Vice President, Health Actuary
G.W. Williamson Vice President, Asst. Director, Home Service
Division
D.M. Azur Asst. Vice President, Life Claims
P. Barber Asst. Vice President, Human Resources
W.F. Carlton Asst. Vice President, Financial Reports
J. R. Cramer Asst. Vice President, Health Claims
R. T. Crawford Asst. Vice President, General Accounting
J.D. Ferguson Asst. Vice President, Director of Marketing Services
D.S. Fuentes Asst. Vice President, Director of Group Claims
M. E. Hogan Asst. Vice President, Credit Insurance Operations
C.J. Jones Asst. Vice President, Health Underwriting & New
Business
P.E. Kennedy Asst. Vice President, Personnel
C.H. Lee Asst. Vice President and Actuary
D.L. Leining Asst. Vice President, Life Underwriting
D.N. McDaniel Asst. Vice President, Home Service Administration
R.J. Ostermayer Asst. Vice President, Director of Group Quality
Assurance
E.B. Pavelka Asst. Vice President, Life Premium Accounting & Policy
Service
J.J. Rooney Asst. Vice President, Group Legal/Audit
G.A. Schillaci Asst. Vice President & Actuary
M.J. Soler Asst. Vice President, Group Administration
v
<PAGE>
G.A. Sparks, Sr. Asst. Vice President, Director of Field Services
M.A. Trevino Asst. Vice President, Life Systems, Training & New
Business
V.M. Young Asst. Vice President, Securities Investments
J.N. Bell Assistant Secretary
Item 26. Persons Controlled by or Under Common Control with Depositor of
Registrant.
Exhibit "14" - control chart of depositor
Item 27. Number of Contractowners.
None.
Item 28. Indemnification.
The following provision is in the Distribution and Administrative Services
Agreement:
"American National agrees to indemnify SM&R for any liability that
SM&R may incur to a Contractowner or party-in-interest under a
Contract (i) arising out of any act or omission in the course of, or
in connection with, rendering services under this Agreement, or (ii)
arising out of the purchase, retention or surrender of a Contract;
provided, however, that American National will not indemnify SM&R for
any such liability that results from the willful misfeasance, bad
faith or gross negligence of SM&R, or from the reckless disregard, by
SM&R, of its duties and obligations arising under this Agreement."
The officers and directors of American National are indemnified by American
National in the American National By-Laws for liability incurred by reason of
the officer and directors serving in such capacity. This indemnification would
cover liability arising out of the variable annuity sales of American National
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,
therefor, unenforceable. In the event that a claim for
vi
<PAGE>
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of 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) American National Funds Group consisting of American National Growth
Fund, Inc., American National Income Fund, Inc. and American National Triflex
Fund, Inc.; SM&R Capital Funds, Inc. consisting of American National Government
Income Fund Series, American National Primary Fund Series and American National
Tax Free Fund Series; American National Investment Accounts, Inc.
(b) The Registrant's principal underwriter is Securities Management and
Research, Inc. The following are the officers and directors of Securities
Management and Research, Inc.
Principal Business
Name Position Address
- ---- -------- -------------------
[S] [C] [C]
Robert A. Fruend, C.L.U. Director American National
Insurance Company
One Moody Plaza
Galveston, Texas 77550
R. Eugene Lucas Director Gal-Tenn Hotel
Corporation
504 Moody National Bank
Tower
Galveston, Texas 77550
Michael W. McCroskey Director, Securities Management
President and Research, Inc.
and Chief One Moody Plaza
Executive Galveston, Texas 77550
Officer
Gordon D. Dixon Director, Securities Management
Senior Vice and Research, Inc.
President and One Moody Plaza
Chief Galveston, Texas 77550
Investment
Officer
vii
<PAGE>
Ronald J. Welch Director American National Insurance
Company
One Moody Plaza
Galveston, Texas 77550
Vera M. Young Vice American National Insurance
President Company
One Moody Plaza
Galveston, Texas 77550
Emerson V. Unger, C.L.U. Vice Securities Management and
President Research, Inc.
One Moody Plaza
Galveston, Texas 77550
Brenda T. Koelemay Vice Securities Management and
President Research, Inc.
and Treasurer One Moody Plaza
Galveston, Texas 77550
Teresa E. Axelson Vice Securities Management and
President Research, Inc.
and Secretary One Moody Plaza
Galveston, Texas 77550
(c) Not Applicable
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder will be maintained at the offices of American National Insurance
Company, One Moody Plaza, Galveston, Texas 77550.
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes to include as part of any application to purchase
a contract offered by the prospectus, a
viii
<PAGE>
space that an applicant can check to request a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
(d) The Registrant hereby represents that it is relying upon a No Action
Letter issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
(i) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403 (b) (11) in each
registration statement, including the prospectus, used in
connection with the offer of the contract;
(ii) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403 (b) (11) in any sales
literature used in connection with the offer of the
contract;
(iii) Instruct sales representatives who solicit participants to
purchase the contract specifically to bring the redemption
restrictions imposed by Section 403(b) (11) to the attention
of the potential participants;
(iv) Obtain from each plan participant who purchases a Section
403 (b) annuity contract, prior to or at the time of such
purchase, a signed statement acknowledging the participant's
understanding of (1) the restrictions on redemption imposed
by Section 403 (b) (11), and (2) other investment
alternatives available under the employer's Section 403 (b)
arrangement to which the participant may elect to transfer
his contract value.
ix
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Galveston, and the State of Texas on the 15 day of
August, 1996.
AMERICAN NATIONAL VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
By: AMERICAN NATIONAL INSURANCE COMPANY
By: Robert L. Moody
------------------------------
Robert L. Moody, Chairman of the
Board, President and Chief Executive Officer
AMERICAN NATIONAL INSURANCE COMPANY
(Sponsor)
By: Robert L. Moody
------------------------------
Robert L. Moody, Chairman of the
Board, President and Chief Executive Officer
ATTEST:
Vincent E. Soler, Jr.
- ------------------------------
Vincent E. Soler, Jr., Vice
President, Secretary and Treasurer
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in their capacities and on the dates
indicated:
Signature Title Date
- --------- ----- ----
Michael W. McCroskey Executive Vice President - August 15, 1996
- ------------------------- Investments (Principal Financial
Michael W. McCroskey Officer)
Stephen E. Pavlicek Vice President and Controller August 15, 1996
- ------------------------- (Principal Accounting
Stephen E. Pavlicek Officer)
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<PAGE>
Signature Title Date
- --------- ----- ----
Robert L. Moody Chairman of the Board, August 15, 1996
- ------------------------- Director, President and Chief
Robert L. Moody Executive Officer
Irwin M. Herz, Jr.
- ------------------------- Director August 15, 1996
Irwin M. Herz, Jr.
R. Eugene Lucas
- ------------------------- Director August 15, 1996
R. Eugene Lucas
Harold C. MacDonald
- ------------------------- Director August 15, 1996
Harold C. MacDonald
E. Douglas McLeod
- ------------------------- Director August 15, 1996
E. Douglas McLeod
- ------------------------- Director ______
Frances Anne Moody
- ------------------------- Director ______
Russell S. Moody
- ------------------------- Director ______
W. L. Moody IV
- ------------------------- Director ______
Joe Max Taylor
xi
<PAGE>
Exhibit 99.B1
STATE OF TEXAS (S)
(S)
COUNTY OF GALVESTON (S)
I, the undersigned, Assistant Secretary of the AMERICAN NATIONAL INSURANCE
COMPANY, Galveston, Texas, do hereby certify that the following is a true and
correct copy from the corporate records of said Corporation, of a resolution
duly adopted by the Board of Directors thereof, at a regular meeting of said
Board, a quorum thereof present and acting, on the 20th day of December, 1991,
to wit:
Resolution Establishing Separate Account
Variable Annuity Contracts
RESOLVED, That the officers of the Company be, and they hereby are,
authorized to establish one or more separate accounts of this Company, in
accordance with the insurance laws of the State of Texas, to provide an
investment medium for variable annuity contracts issued by this company as
may be designated as participating therein. Any such separate account
shall receive, hold, invest and reinvest only the monies arising from: (1)
premiums, contributions or payments made pursuant to variable annuity
contracts participating therein; (2) such assets of the company as may be
necessary for the establishment of such separate account or accounts; and
(3) the dividends, interest and gains produced by the foregoing; and
FURTHER RESOLVED, that the separate account may be divided into various
sub-accounts as determined necessary by the officers of the Company to fund
such variable annuity contracts. Purchase payments (net of any applicable
deductions) remitted to the Company under the variable annuity contracts
and allocated to the separate account shall be allocated to the appropriate
sub-account in accordance with the terms of the variable annuity contracts.
Each sub-account, in turn, shall invest in the shares of one or more
registered management investment companies, or designated investment series
thereof, as specified for investment by its, at net asset value per share
next to be determined following receipt of an order for purchase by such
sub-account. To the extent that such registered management investment
company, or companies, establishes additional investment series, the
officers of the Company are empowered and authorized to establish such
additional sub-accounts as there are additional investment series, with
each such sub-
1
<PAGE>
account to invest solely in the shares of a specified additional
investment series; and
FURTHER RESOLVED, that the separate account shall be administered and
accounted for as part of the general business of the Company, but the
income, gains and losses of the separate account shall be credited to or
charged solely against the assets held in the separate account, without
regard to any other income arising out of other business that this Company
may conduct. The assets of the separate account shall not be chargeable
with the liabilities arising out of any other business that this Company
may conduct; and
FURTHER RESOLVED, each sub-account shall be administered and accounted for
as part of the general business of the Company, but the income (including
capital gains, or losses, if any) of each sub-account shall be credited to
or charged against the assets held in that sub-account in accordance with
the terms of the policies funded therein, without regard to other income of
the remaining sub-accounts or arising out of any other business that this
Company may conduct. The assets of each sub-account shall not be
chargeable with liabilities arising out of the business conducted by
another sub-account, nor shall a sub-account be chargeable with liabilities
arising out of any other business that this Company may conduct; and
FURTHER RESOLVED, that the officers of the Company be, and they hereby are,
authorized:
(i) to register the variable annuity contracts issued or to be issued
by the Company under the provisions of the Securities Act of 1933 to
the extent that they shall determine that such registration is
necessary;
(ii) to register any such separate account or accounts with the
Securities and Exchange Commission under the provisions of the
Investment Company Act of 1940 to the extent that they shall determine
that such registration is necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including such pre-
effective and post-effective amendments), supplements and exhibits
thereto as they may deem necessary or desirable;
<PAGE>
(iv) to apply for exemption from those provisions of the
aforementioned Acts and the rules promulgated thereunder as they may
deem necessary or desirable and to take any and all other actions
which they may deem necessary, desirable or appropriate in connection
with such Acts;
(v) to file the variable annuity contracts participating in any such
separate accounts with the appropriate state insurance departments and
to prepare and execute all necessary documents to obtain approval of
the insurance departments; and
(vi) to prepare or have prepared and execute all necessary documents
to obtain approval of, or clearance with, or other appropriate actions
required, or any other regulatory authority that may be necessary in
connection with the foregoing matters; and
(vii) to enter into agreements with appropriate entities for the
provisions of administrative and other required services on behalf of
the Separate Account(s) and for the safekeeping of assets of such
Separate Account(s); and
FURTHER RESOLVED, that the form of any resolutions required by any state
authority to be filed in connection with any variable annuity contracts or
any of the other documents or instruments referred to in any of the
preceding resolutions be, and the same hereby are, adopted as fully set
forth herein if (i) in the opinion of the officers of the Company the
adoption of the resolutions is advisable; and (ii) the Corporate Secretary
or Assistant Secretary of the Company evidences such adoption by inserting
into these minutes copies of such resolutions; and
FURTHER RESOLVED, that the officers of the Company, and each of them, are
hereby authorized to prepare and to execute the necessary documents and to
take such further actions as may be deemed necessary or appropriate, in
their discretion, to cause the issuance and sale of variable annuity
contracts and/or to fully implement the purpose of the foregoing
resolutions.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of
the said Corporation, this 24th day of March, 1993.
<PAGE>
Jean N. Bell
-----------------------------
Assistant Secretary
SUBSCRIBED AND SWORN TO BEFORE ME, this 24th day of March, 1993.
Vicky Martinez
-----------------------------
Notary Public
State of Texas
<PAGE>
Exhibit 99.B3
DISTRIBUTION AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT, made and entered into on this 20th day of July, 1995, by
and between AMERICAN NATIONAL INSURANCE COMPANY ("American National"), a life
insurance company organized under the laws of the State of Texas, American
National Variable Life Separate Account ("Separate Account"), a separate account
established by American National pursuant to the Texas Insurance Code and
SECURITIES MANAGEMENT AND RESEARCH, INC. ("SM&R"), a corporation organized under
the laws of the State of Florida.
W I T N E S S E T H:
WHEREAS, American National proposes to issue to the public certain variable
contracts ("Contracts") and has authorized the creation of one or more separate
investment accounts in connection therewith; and
WHEREAS, American National has established the Separate Account for the
purpose of issuing the Contracts and is registering the Separate Account with
the Securities and Exchange Commission ("Commission") as a unit investment trust
under the Investment Company Act of 1940; and
WHEREAS, the Contracts to be issued by the Separate Account are to be
registered with the Commission under the Securities Act of 1933 for offer and
sale to the public, and otherwise in compliance with all applicable laws; and
WHEREAS, SM&R, a broker-dealer registered under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers, Inc.,
proposes to act as the distributor in the offering and sale of said Contracts;
WHEREAS, SM&R also proposes to perform certain administrative, processing
and clerical services for American National in connection with the offering and
sale of said Contracts; and
WHEREAS, American National desires to obtain such distribution and other
services from SM&R;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, American National, the Separate Account and SM&R hereby agree as
follows:
1. SM&R will serve as distributor for the Contracts which will be issued
by American National through the Separate Account and will be
registered with the Commission for offer and sale to the public. As
Distributor, SM&R will use its best efforts to effect offers and sales
of the Contracts to the public on a continuing basis. SM&R shall be
responsible for compliance with the requirements of any applicable
state broker-dealer regulations and the Securities Exchange Act of
1934 as each applies to SM&R in connection with its duties as
Distributor of said Contracts. Moreover, SM&R shall conduct its
affairs in accordance with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (NASD).
<PAGE>
2. SM&R will assist American National in identifying, training and
qualifying (under appropriate NASD and/or state requirements)
insurance agents desiring to sell the Contracts. SM&R will register
such agents as its registered representatives before they engage in
the sale of the Contracts and will supervise and control such agents
in the sale of the Contracts in the manner and to the extent required
by the applicable rules of the NASD and the Commission. If any such
agent of American National should fail or refuse to submit to the
supervision of SM&R in accordance with the terms of this Agreement or
otherwise fail to meet the rules and standards imposed by SM&R on its
registered representatives, SM&R shall take whatever steps may be
necessary to terminate the sales activities of such agent relating to
the Contracts.
3. As distributor, SM&R will be responsible for the preparation of
marketing materials (and where appropriate obtaining regulatory
approval), for actively recruiting additional sales agents and sales
organizations and for providing sales training (including continuing
education required for license maintenance).
4. SM&R may contract with other broker-dealers registered under the
Securities Exchange Act of 1934 and authorized by applicable law to
sell variable contracts issued by the Separate Account. Any such
contractual arrangement is expressly made subject to this Agreement,
and SM&R will at all times be responsible to American National for the
distribution of all Contracts issued by the Separate Account.
5. The amount of any commissions payable in connection with the sale of
Contracts will be made by American National to the sales personnel of
SM&R and this function is being performed as a purely ministerial
service and the Records in respect thereof are properly reflected on
the Books and Records maintained by or for SM&R. The gross amounts
paid or advances made by American National on behalf of SM&R will be
transmitted to SM&R for proper reporting .
6. Warranties.
(a) American National represents and warrants to SM&R that:
(i) Any and all Registration Statements required for the
Contracts or the Separate Account have been filed with the
Commission in the form previously delivered to SM&R and
that copies of any and all amendments thereto will be
forwarded to SM&R at the time that they were filed with the
Commission;
(ii) The Registration Statements and any further amendments or
supplements thereto will, when they become effective,
conform in all material respects to the requirements of the
Securities Act of 1933, the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder,
and will not contain untrue statements of material facts or
omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
PROVIDED,
2
<PAGE>
HOWEVER, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to
American National by SM&R expressly for use herein;
(iii) American National is validly existing as a stock life
insurance company in good standing under the laws of the
State of Texas with corporate power to own its properties
and conduct its business as described in the Prospectus,
and has been duly qualified for the transaction of business
and is in good standing under the laws of each other
jurisdiction in which its owns or leases properties, or
conducts any business, so as to require such qualification;
(iv) The Contracts to be issued by the Separate Account through
SM&R hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and will
conform to the description of such Contracts contained in
the Prospectuses relating thereto;
(v) Those persons who offer and sell the Contracts are
appropriately licensed in a manner as to comply with the
state insurance laws;
(vi) The performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of,
or constitute a default under, any statutes, any indenture,
mortgage, deed of trust, note agreement or other agreement
or instrument to which American National is a party or by
which American National is bound, American National's
Charter as a stock life insurance company or By-Laws, or
any order, rule or regulation of any court or governmental
agency or body having jurisdiction over American National
or any of its properties; and no consent, approval,
authorization or order of any court or governmental agency
or body is required for the consummation by American
National of the transactions contemplated by this
Agreement, except such as may be required under the
Securities Exchange Act of 1934 or state insurance or
securities laws in connection with the purchase and
distribution of the Contracts by SM&R; and
(vii) There are no material legal or governmental proceedings
pending to which American National or the Separate Account
is a party or of which any property of American National or
the Separate Account is the subject, other than as set
forth in the Prospectus relating to the Contracts, and
other than litigation incident to the kind of business
conducted by American National which, if determined
adversely to American National, would individually or in
the aggregate have a material adverse effect on the
financial position, surplus or operations of American
National.
3
<PAGE>
(b) SM&R represents and warrants to American National that:
(i) It is a broker-dealer duly registered with the Commission
pursuant to the Securities Exchange Act of 1934 and a
member in good standing of the National Association of
Securities Dealers and is in compliance with the securities
laws in those states in which it conducts business as a
broker-dealer;
(ii) It shall permit the offer and sale of Contracts only by and
through persons who are appropriately licensed under both
the securities laws and state insurance laws;
(iii) The performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of or
constitute a default under, any statute, any indenture,
mortgage, deed of trust, note agreement or other agreement
or instrument to which SM&R is a party or by which SM&R is
bound, the Certificate of Incorporation and By-Laws of
SM&R, or any other rule or regulation of any court or
governmental agency or body having jurisdiction over SM&R
or its property;
(iv) No offering, sale or other disposition of any Contracts
will be made until SM&R is notified by American National
that the subject Registration Statement has been declared
effective and that the Contracts have been released for
sale by American National; and such offering, sale or other
disposition shall be limited to those jurisdictions that
have approved or otherwise permit the offer and sale of the
Contracts by American National.
(v) To the extent that any statements or omissions made in the
Registration Statements with respect to the Contracts, or
any amendment or supplement thereto are made in reliance
upon and in conformity with written information furnished
to American National by SM&R expressly for use therein,
such Registration Statements and any amendments or
supplements thereto will, when they become effective or are
filed with the Commission, as the case may be, conform in
all material respects to the requirements of the Securities
Act of 1933 and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading.
7. SM&R shall keep, in manner and form prescribed or approved by American
National and in accordance with Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934 correct records and books of account
as required to be maintained by a registered broker-dealer acting as
distributor of all transactions entered into on behalf of American
National and with respect to variable contract business it conducts of
American National. SM&R shall make such records and books of account
available for inspection by the
4
<PAGE>
Commission, and American National shall have the right to inspect,
make copies of or take possession of such records and books of
accounts at any time on demand.
SM&R, however, may request that some or all of the books and records
relating to the sales of the Contracts which are required to be
maintained by it as a registered broker-dealer pursuant to Rule 17a-3
and 17a-4 under the 1934 Act be prepared and maintained in accordance
with such rules by American National on behalf of and as agent for
SM&R. American National agrees that for the purposes of this
Agreement, such books and records shall be deemed to be the property
of SM&R and shall be subject at all times to examination by the
Securities and Exchange Commission in accordance with Section 17(a) of
the 1934 Act and SM&R shall have the right to inspect and make copies
of such books and records of accounts at any time on demand.
8. Upon the request of SM&R, American National agrees to prepare and send
all confirmations required to be sent by SM&R in connection with
crediting purchase payments under the Contracts. Any such
confirmation shall be sent upon or before the completion of each
"transaction", as that term is used in Rule 15c1-4 of the 1934 Act,
and shall reflect the facts of the transaction and indicate that the
confirmation is forwarded on behalf of SM&R in its capacity of
Distributor of Contracts.
9. Subsequent to having been authorized to commence with the offering
contemplated herein, SM&R will utilize the currently effective
Prospectus relating to the subject Contracts in connection with its
selling efforts. As to the other types of sales material, SM&R agrees
that it will use only sales materials which conform to the
requirements of federal and state laws and regulations, and which have
been filed where necessary with the appropriate regulatory
authorities, including the National Association of Securities Dealers.
10. SM&R will not use any Prospectus, sales literature, or any other
printed matter or material in the offer or sale of any Contract if, to
the knowledge of SM&R, any of the foregoing misstates the duties,
obligations or liabilities of American National, the Separate Account
or SM&R.
11. SM&R shall not be entitled to any remuneration for its services as
distributor. However, in payment for the administrative, processing
and clerical services provided by SM&R, American National shall pay
SM&R a processing fee of $50 for each Contract application submitted
by SM&R and accepted by American National. In addition, upon
presentation of proper evidence of expenditures, American National
will reimburse SM&R for all of SM&R's reasonable charges and expenses
directly incurred in connection with the performance of its duties and
obligations contained in this Agreement.
12. SM&R makes no representation or warranties regarding the number of
Contracts to be sold or the amount to be paid thereunder. SM&R does,
however, represent that it will actively market such Contracts on a
continuous basis while there is an effective registration thereof with
the Commission.
5
<PAGE>
13. SM&R may render similar services or act as a distributor or dealer for
issuers other than the Separate Account or sponsors other than
American National in the offering of their Contracts.
14. The Contracts shall be offered for sale on the terms described in the
currently effective Prospectus describing such Contracts.
15. American National will use its best efforts to register for sale, from
time to time if necessary, additional dollar amounts of the Contracts
under the Securities Act of 1933 and should it ever be required, under
state Blue Sky Laws and to file for approval under state insurance
laws when necessary. American National may require SM&R to assist it
in obtaining any necessary clearance or approval of prospectuses,
sales literature and proxy materials in accordance with the
requirements of the Commission, the NASD or other regulatory bodies.
16. American National reserves the right at any time to suspend or limit
the public offering of the subject Contracts upon one day's written
notice to SM&R.
17. American National agrees to advise SM&R immediately:
(a) of any request by the Commission (i) for amendment of the
Securities Act Registration Statement relating to the Contracts,
or (ii) for additional information;
(b) of issuance by the Commission of any stop order suspending the
effectiveness of its Registration Statement or the initiation of
any proceedings for that purpose; and
(c) of the happening of any material event, if known, which makes
untrue any statement made in its Registration Statement or which
requires the making of a change therein in order to make any
statement made therein not misleading.
18. American National will furnish to SM&R such information with respect
to the Separate Account and the Contracts in such form and signed by
such of its officers as SM&R may reasonably request; and will warrant
that the statements therein contained when so signed will be true and
correct.
19. Each of the undersigned parties agrees to notify the other in writing
upon being apprised of the institution of any proceeding investigation
or hearing involving the offer or sale of the subject Contracts.
20. Absent the prior written consent of American National, this Agreement
will terminate automatically upon its assignment.
21. This Agreement shall terminate without payment of any penalty by
either party:
(a) at the option of American National or of SM&R upon sixty (60)
days' advance written notice to the other; or
6
<PAGE>
(b) at the option of American National upon institution of formal
proceedings against SM&R by the National Association of
Securities Dealers or by the Commission; or
(c) at the option of American National, if SM&R or any representative
thereof at any time (i) employs any device, scheme, or artifice
to defraud; makes any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading; or engages in any act, practice, or
course of business which operates or would operate as a fraud or
deceit upon any person; (ii) fails to promptly account and pay
over the American National money due it according to its records;
or (iii) violates the conditions of this Agreement.
22. Each notice required by this Agreement may be given by wire or
facsimile transmission and confirmed in writing to :
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
Attn: President
[Name of Separate Account]
One Moody Plaza
Galveston, Texas 77550
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
Attn: President
23. American National agrees to indemnify SM&R for any liability that SM&R
may incur to a Contract Owner or party-in-interest under a Contract
(i) arising out of any act or omission in the course of, or in
connection with, rendering services under this Agreement, or (ii)
arising out of the purchase, retention or surrender of a Contract;
PROVIDED, HOWEVER, that American National will not indemnify SM&R for
any such liability that results from the willful misfeasance, bad
faith or gross negligence of SM&R, or from the reckless disregard, by
SM&R, of its duties and obligations arising under this Agreement.
24. This Agreement shall be subject to the laws of the State of Texas and
construed so as to interpret the Contracts as insurance products
written within the business operation of American National.
25. This Agreement covers and includes all agreements, verbal and written,
between SM&R and American National with regard to the offer and sale
of the Contracts, and supersedes and annuls any and all agreements
between the parties with regards to the distribution of the Contracts;
except that this Agreement shall not effect the operation of
7
<PAGE>
previous agreements entered into between SM&R and American National
unrelated to the sale of the Contracts. This Agreement may be amended
from time to time by the mutual fund agreement and consent of the
undersigned parties; PROVIDED, that such amendment shall not affect
the rights of existing Contract Owners, and that such amendment be in
writing and duly executed.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
By: Carl R. Robertson
---------------------------------
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT
By: AMERICAN NATIONAL INSURANCE COMPANY
By: Carl R. Robertson
---------------------------------
Carl R. Robertson, Senior Executive Vice President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: Michael W. McCroskey
---------------------------------
Michael W. McCroskey, President
8
<PAGE>
Exhibit 99.B6a
AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INSURANCE COMPANY
Pursuant to the applicable provision of the Texas Business Corporation Act
and the Texas Insurance Code, American National Insurance Company adopts the
following Articles of Amendment to its Restated Articles of Incorporation:
ARTICLE ONE
The name of the corporation is AMERICAN NATIONAL INSURANCE COMPANY.
ARTICLE TWO
A new Article, to be numbered ARTICLE X of the Restated Articles of
Incorporation, was adopted by the shareholders of the corporation on April 29,
1988. The full text of the new ARTICLE X being added to the Restated Articles
of Incorporation reads as follows:
"ARTICLE X
"A director of the Company shall not abe personally liable to the Company
or its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except for liability:
"(i) for any breach of director's duty of loyalty to the Company or
its shareholders,
"(ii) for acts or omissions not in good faith or that involves
intentional misconduct or a knowing violation of the laws,
"(iii) for any transaction from which a director received an
improper benefit, whether or not the benefit resulted from
an action taken within the scope of the director's office,
"(iv) for any act or omission for which the liability of a
director is expressly provided for by statute, or
"(v) for an act related to an unlawful stock repurchase or
payment of a dividend."
1
<PAGE>
ARTICLE THREE
The number of shares of the corporation outstanding at the time of such
adoption was 28,267,340; and the number of shares entitled to vote thereon was
28,267,340.
ARTICLE FOUR
The number of shares voted for such amendment was 21,471,433; and the
number of shares voted against such amendment was 89,944.
DATED: May 27, 1988.
AMERICAN NATIONAL INSURANCE COMPANY
By: Orson C Clay
--------------------------------
Orson C. Clay
President
By: Jean N. Bell
--------------------------------
Jean N. Bell
Assistant Secretary
THE STATE OF TEXAS (S)
(S)
COUNTY OF GALVESTON (S)
I, Cheri Brown, a Notary Public, do hereby certify that on the 27th day of
May, 1988, personally appeared before me ORSON C CLAY, known to me to be the
person whose name is subscribed to the foregoing document and, being by me first
duly sworn, declared to me that he is President of the corporation and that he
executed the foregoing document in the capacity therein stated, and he declared
that the statements therein contained are true and correct.
IN WITNESS WHEREOF I have hereunto set my hand and seal of office this 27th
day of May, 1988.
Cheri Brown
-------------------------------
Notary Public in and for
The State of Texas
Cheri Brown
<PAGE>
Printed or Typed Name of Notary
My commission expires: 2-21-89
<PAGE>
RESTATED ARTICLES OF INCORPORATION
(with Amendments)
OF
AMERICAN NATIONAL INSURANCE COMPANY
1. American National Insurance Company (the "Corporation") hereby
restates and amends its previously filed Restated Articles of Incorporation,
restating the entire text of its Restated Articles of Incorporation, and
amending such Restated Articles of Incorporation as set forth herein (such
Restated and amended Restated Articles of Incorporation, all prior amendments,
and the amendments effected hereby being called the "Restated Articles").
2. These Restated Articles accurately copy the Articles of Incorporation
and all amendments thereto that are in effect to date and as further amended by
these Restated Articles, and contain no other changes of a substantive nature in
any provision thereof, except for the following:
(a) Article VI of the previously filed Restated Articles of Incorporation
is hereby amended by these Restated Articles to decrease and
reclassify the authorized capital stock of the Corporation from
62,000,000 common shares (such 62,000,000 common shares being
previously classified into 50,000,000 shares of Class A Common Stock
with a par value of $1 per share and 12,000,000 shares of nonvoting
Class B Common Stock with a par value of $1 per share) to 50,000,000
shares of voting common stock having a par value of $1 per share (of
which at least 50% has been fully subscribed and fully paid for), and
deleting all of the previously authorized 12,000,000 shares of
nonvoting Class B Common Stock (none of which has been issued), as
more fully described in such Article VI.
(b) The amendment made by these Restated Articles has been effected in
conformity with the applicable provisions of the Texas Business
Corporation Act and the Texas Insurance Code.
3. These Restated Articles were duly adopted by the shareholders of the
Corporation at a special stockholder's meeting held on January 3, 1979.
4. The number of shares of the Corporation outstanding and entitled to
vote on these Restated Articles was 32,793,416; the number of such shares voted
FOR and the number of such shares voted AGAINST such Restated Articles was as
follows:
Percentage Percent of Total
FOR AGAINST for Adoption Outstanding Shares
- --- ------- ------------ ------------------
<PAGE>
32,793,416 -0- 100% 100%
5. The previously filed Restated Articles of Incorporation, are hereby
superseded in their entirety by the following Restated Articles:
RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INSURANCE COMPANY
ARTICLE I
The name of the Corporation is AMERICAN NATIONAL INSURANCE COMPANY.
ARTICLE II
The names of the initial incorporators, all of Galveston, Texas, are shown
below:
W.L. Moody, Jr.
I.H. Kempner
M.O. Kopperl
ARTICLE III
The location of the Home Office of the Corporation shall be Galveston,
Galveston County, Texas.
ARTICLE IV
The purpose for which the Corporation is formed is to transact the
following types of insurance business:
A. Life insurance business, involving the payment of money or other thing
of value, conditioned on the continuance or cessation of human life,
or involving an insurance, guaranty, contract or pledge for the
payment of endowments or annuities.
B. Accident insurance business, involving the payment of money or other
thing of value, conditioned upon the injury, disablement or death of
persons resulting from general accident or from traveling by land,
air, or water.
C. Health insurance business, involving the payment of any amount of
money, or other thing of value, conditioned upon loss by reason of
disability caused by sickness or ill health.
<PAGE>
D. Legal services insurance, involving the issuance of legal services
contracts on individual, group, or franchise bases.
ARTICLE V
The period of duration of the Corporation is five hundred (500) years.
ARTICLE VI
The total number of shares of stock which the Corporation shall have
authority to issue is 50,000,000 shares of voting common stock with a par value
of $1 each.
ARTICLE VII
32,793,416 shares of common stock of the Corporation having full voting
rights have been fully subscribed, are fully paid for and are presently
outstanding. All of such outstanding shares are hereby designated and shall
continue to constitute shares of the voting common stock of the Corporation.
ARTICLE VIII
No holder of any of the voting common stock of the corporation, whether now
or hereafter authorized and issued, shall be entitled as a matter of right to
purchase or subscribe for (1) any unissued shares of stock of any class, or (2)
any additional shares of any class, common or preferred, authorized to be
issued, or (3) any bonds, certificates of indebtedness, debentures, or other
securities convertible into stock of the Corporation, or carrying any right to
purchase stock of any class, but any such unissued stock or such additional
authorized issue of any stock or of other securities convertible into stock, or
carrying any right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors of the Corporation to such persons, firms,
corporations or associations and upon such terms as may be deemed advisable by
such Board of Directors in the exercise of its discretion.
ARTICLE IX
At each election for Directors every holder of voting common stock entitled
to vote at such election shall have the right to vote, in person or by proxy,
the number of shares owned by him for as many persons as there are Directors to
be elected and for whose election the stockholder has a right to vote. It is
expressly prohibited for any stockholder to cumulate his votes in any election
of Directors.
<PAGE>
DATED 1/3/79
AMERICAN NATIONAL INSURANCE COMPANY
By: Orson C Clay
--------------------------------
Orson C Clay, President
C.D. Thompson
--------------------------------
C. D. Thompson, Secretary
THE STATE OF TEXAS X
X
COUNTY OF GALVESTON X
I, Mildred Jones, a Notary Public, do hereby certify that on this 3rd
day of January, 1979, personally appeared before me ORSON C. CLAY, who declared
he is the President of the Corporation executing the foregoing document, and
being first duly sworn, acknowledged that he had signed the foregoing document
in the capacity therein set forth, and declared that the statements therein
contained are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this day and
year before written.
Mildred Jones
--------------------------------
Notary Public in and for
Galveston County, Texas
My Commission Expires:
November 30, 1980
<PAGE>
Exhibit 99.B6b
AMERICAN NATIONAL INSURANCE COMPANY
GALVESTON, TEXAS
BYLAWS
ARTICLE I
Name and Object
Section 1. The name of this corporation shall be American National Insurance
Company (the "Company"), and its object shall be to transact a life insurance
business, making contracts upon any and all conditions appertaining to or
connected with life risks. The Company shall also transact the business of
issuing accident and health insurance and credit insurance, conditioned upon the
injury, disablement, or death of the insured resulting from accident or illness,
and the business of issuing legal services contracts on an individual, group, or
franchise basis. The Company may also reinsure any risk insured by the Company
with any other solvent life, accident and health company, and it may also
reinsure the risks insured of other life, health and accident companies or
purchase and take over all or part of the risks of such companies.
ARTICLE II
Home Office
Section 1. The general Home Office of the Company shall be in the City of
Galveston, Galveston County, Texas.
ARTICLE III
Stockholders
Section 1. The Annual Meeting of the Stockholders shall be held in the City of
Galveston, Texas, or at such other place within or without the State of Texas as
may be, from time to time determined by the Board of Directors, on April 30 of
each year (provided that if April 30 is a legal holiday, then such meeting shall
be held on Friday immediately preceding such legal holiday) or on such other day
prior to April 30 as shall be determined from time to time by the Board of
Directors.
Each Stockholder shall be entitled to one vote for each share of the subscribed
Capital Stock standing in his name on the books of the Company, which vote may
be cast in person or by proxy.
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A majority of the subscribed Capital Stock represented at any meeting of the
Stockholders shall constitute a quorum.
At said Annual Meeting the Stockholders shall elect fourteen (14) Directors,
or such other number of Directors not less than seven (7), nor more than fifteen
(15), as the Board of Director shall, from time to time, determined, who shall
hold their office for one year, and until their successors are elected. It
shall require a majority vote of the Capital Stock represented at such meeting
to elect a Director, and such Director need not be a citizen of Texas or a
Stockholder of the Company.
The Chairman of the Board or President shall call special meetings of the
Stockholders whenever, in his judgment, it is necessary and shall call a special
meeting when requested to do so by a majority of the Directors, or by
Stockholders holding or representing not less than thirty-five percent (35%) of
the outstanding stock.
Notice of special meetings shall be given by the Secretary to all Stockholders,
in person, or by mailing such notice to the last known address of the
Stockholders, at least ten (10) days in advance of the date for such meeting.
ARTICLE IV
Officers
Section 1. The officers of this corporation shall consist of a Chairman of the
Board, a President, one or more Senior Executive Vice Presidents, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice
Presidents, one or more Assistant Vice Presidents, a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a
Controller, one or more Assistant Controllers, one or more Actuaries, one or
more Assistant Actuaries, a Medical Director, and General Counsel, all of whom
shall be elected by the Board of Directors. One person may hold more than one
office, except that the offices of President and Secretary may not be held by
the same person.
Section 2. The Board of Directors may from time to time create additional
offices and elect persons to fill such posts, and the Board may appoint such
committees as it may deem appropriate or necessary. The Board may delegate to
any officer or committee such duties as it may deem appropriate.
Section 3. The employment and salary of all officers shall be from month to
month.
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ARTICLE V
Directors
Section 1. The Directors shall hold an Annual Meeting for the election of
officers and such other business that may come before them immediately upon the
adjournment of the Annual Stockholders' Meeting, and they shall also have four
(4) regular meetings, and the first three (3) of which shall be held on the last
Thursday of the months of February, July and October and the fourth of which
shall be held on the second or third Friday of December as the Directors shall
determine; provided that if any of such last Thursdays shall fall on a holiday
observed by the Company, then such meeting shall be held on the weekday
immediately preceding such holiday; and provided further that the Board may, at
any special or regular meeting, cancel one or more subsequent regular meetings
or it may reschedule the date of one or more subsequent regular meetings, and
the Chairman of the Board and the President, acting jointly between meetings,
may cancel or reschedule not more than two (2) successive regular meetings; but
in any event, the Secretary shall give notice to all Directors that one or more
specified regular meetings have been canceled or rescheduled for stated dates;
and such notice shall be given by the Secretary to each Director, in person, by
telephone or by mailing such notice to the last address of the Director, such
notice to be given as soon as practicable after cancellation or rescheduling of
one or more such regular meetings.
A special meeting of the Directors may be held at any time, upon call of the
Chairman of the Board, the President, or upon call of a majority of the members
of the Board of Directors. Notice of such special meeting shall be given by the
Secretary to each Director, in person, by telephone, or by mailing such notice
to the last address of the Director at least four (4) days in advance of the
date of such meeting.
Quorum
Section 2. A majority of the duly elected Directors shall constitute a quorum
for the transaction of business.
Place of Meeting
Section 3. All meetings of the Directors shall be held at the office of the
Company in the City of Galveston, or at such other place designated by the Board
of Directors.
Filling of Vacancies
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Section 4. Should any vacancy occur in the Directorship, the same may be filled
for the unexpired term by a majority of the remaining Directors.
Finance Committee
Section 5. The Board of Directors may appoint a Finance Committee consisting of
not less than five (5) officers or directors of the Company. The members of
such Finance Committee shall serve at the pleasure of the Board of Directors.
Such Finance Committee shall have the authority to approve and authorize for and
on the Company's behalf (1) investments and loans permitted by the Texas
Insurance Code and regulations thereunder, and (2) all purchases, sales and
other transactions of any kind including or relating to real estate or interest
in real estate. Such Finance Committee shall also be charged with the duty of
supervising all of the Company's investments and loans.
It shall require three (3) or more members of the Finance Committee to
constitute a quorum at any meeting of the Finance Committee, and its every
decision must receive a majority vote of those present, and in no case less than
three (3) affirmative votes. Such Finance Committee shall keep minutes of all
of its meetings, fully reflecting all actions taken by it, which shall be
recorded in a permanent minute book.
In the exercise of its authority and the discharge of its duty, such Finance
Committee shall have the right to appoint one or more subcommittees and to
delegate to such subcommittees authority to make minor investments and small
loans, not to exceed a predetermined dollar amount, and to act on matters not
involving material investment decisions without prior approval of the Finance
Committee.
The Finance Committee shall determine the number and appoint the membership of
each such subcommittee, and the detailed authority of each shall be fully set
forth in the resolutions creating each and amendments thereto. There shall be
included in such resolutions requirements that:
(a) at least one member of each subcommittee shall also be a member
of the Finance Committee; (b) that the presence of at least four
(4) members of each subcommittee shall be necessary to constitute
a quorum at any meeting thereof; and (c) that no affirmative
action shall be authorized without at least three (3) affirmative
votes.
The Finance Committee shall carefully supervise all operations of its
subcommittees and shall periodically review all actions taken by them.
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Executive Committee
Section 6. The Board of Directors may, by resolution adopted by a majority of
the whole Board, create an Executive Committee and designate the members
thereof. All members of such Committee shall serve at the pleasure of the
Board.
The Executive Committee shall have such powers and shall perform such duties as
the Board may delegate to it by resolution from time to time; provided, however
that such Committee shall have no authority with respect to matters where action
of the Board of Directors is required to be taken by the provisions of the Texas
Business Corporation Act or other applicable law.
The Executive Committee shall be organized and shall perform its functions as
directed by the Board of Directors, and minutes of all meetings of the Executive
Committee shall be kept in a book provided for such purpose. Any action taken
by the Executive Committee within the course and scope of its authority shall be
binding on the Company.
The membership of the Executive Committee may, from time to time, be increased
or decreased and the powers and duties of the Committee may, from time to time,
be changed by the Board of Directors as it may deem appropriate. The Executive
Committee may be abolished at any time by the vote of a majority of the whole
Board of Directors.
Dividends
Section 7. The Board of Directors may, from time to time, declare and order
paid out of the Company's current earnings or surplus or both, dividends, either
in cash or stock, as it may determine to be in the best interest of the Company.
ARTICLE VI
Duties of Officers
Chairman of the Board
Section 1. The Chairman of the Board shall be the Chief Executive Officer of
the Company and shall preside at all meetings of the Stockholders and Board of
Directors. He shall have general and active management responsibilities for the
business and affairs of the Company, and shall see that all orders and
resolutions of the Board are carried into effect. He shall also do such other
things, perform such other duties and have such other powers as the bylaws, the
Board of Directors or Executive Committee may from time to time prescribe.
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President
Section 2. The President shall be the Chief Administrative Officer of the
Company, his activities as such subject to the direction and approval of the
Chief Executive Officer, and shall be responsible for the implementation of the
details of managing the administrative affairs of the Company. He shall also do
such other things, perform such other duties and have such other powers as the
bylaws, the Board of Directors or Executive Committee may from time to time
prescribe. The President, in the absence and/or disability of the Chairman of
the Board, shall perform the duties and exercise the powers of the Chairman of
the Board.
Senior Executive Vice Presidents
Section 3. The Senior Executive Vice Presidents shall perform such duties and
have such powers as the Board of Directors may prescribe. One of such Senior
Executive Vice Presidents shall be the Chief Marketing Officer.
Executive Vice Presidents
Section 4. The Executive Vice President shall perform such duties and have such
powers as the Board of Directors may prescribe.
Senior Vice Presidents
Section 5. Senior Vice Presidents shall perform such duties and have such
powers as the Board of Directors may prescribe.
Vice Presidents
Section 6. Vice Presidents shall perform such duties and have such powers as
the Board of Directors may prescribe.
Assistant Vice Presidents
Section 7. Assistant Vice Presidents shall perform such duties and have such
powers as the Board of Directors may prescribe.
Secretary
Section 8. The Secretary shall be custodian of all the Company's records, books
and papers and shall see that the books, reports, statements, certificates and
all other documents and reports required by law are properly executed and filed.
He shall keep such other records and reports as the Board of Directors may
prescribe, and render reports as may be called for by the Chairman of the Board
or the President. He shall have custody of the corporate seal with authority to
affix the same, attested by his signature, to all instruments requiring
execution under seal, and
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shall act with the Chairman of the Board and the President in the general care
and supervision of the Company's business. He shall attend the meetings of the
Stockholders, Board of Directors, and Finance Committee, keeping a full account
of their proceedings, and furnishing such information, accounts, and papers as
may be required and calling to their attention any matter coming under his
province on which their action is needed. He shall perform such other duties and
have such other powers as the Board of Directors may prescribe.
Assistant Secretaries
Section 9. The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors, shall in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. He, or they, as the case may be, shall perform such
other duties and have such other powers as the board of Directors may prescribe.
Treasurer
Section 10. The Treasurer shall receive, in the name of the Company, all monies
due or owing to it from any source whatever, and deposit same in the name and to
the account of the Company in authorized depositories, and he shall keep an
accurate account of all cash transactions of the Company. He shall perform such
duties and have such powers as the Board of Directors may prescribe.
Assistant Treasurer
Section 11. The Assistant Treasurer, or if there be more than one, the
Assistant Treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer. He, or they, as the case may be, shall perform
such other duties and have such other powers as the Board of Directors may
prescribe.
Controller
Section 12. The Controller shall act as the principal accounting officer in
charge of the general accounting books, accounting records and forms of the
Company; have general supervision of the accounting records and forms of the
Company; have general supervision of the accounting practices of all subsidiary
corporations; obtain from agents and from departments of the Company all reports
needed for recording the general operations of the Company or for supervising or
directing its accounts. He shall cause to be enforced and maintained the
classification and other accounting rules and regulations prescribed by any
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regulatory body; cause to be prepared, compiled and filed such statutory
accounting reports, statements, statistics, returns, and other data as may be
required by law, prepare the Company's financial reports, and such reports as
required and submit same to the President.
He shall approve for payment all vouchers, drafts, and other accounts payable
where authorized or approved by the President or persons authorized to do so by
the President; and countersign warrants with the Treasurer or Secretary for
deposit or withdrawal of securities from custodian banks; have charge over
preparation and supervision of budgets; and supervision over the purchasing
functions of the Company, and shall perform such other duties and have such
other powers as the Board of Directors may prescribe.
Assistant Controllers
Section 13. The Assistant Controller, or if there shall be more than one, the
Assistant Controllers, in the order determined by the Board of Directors, shall,
in the absence or disability of the Controller, perform the duties and exercise
the powers of the Controller. He, or they, as the case may be, shall perform
such other duties and have such other powers as the Board of Directors may
prescribe.
Actuary
Section 14. The Actuary, or if there shall be more than one, the Actuaries in
the order determined by the Board of Directors, shall have charge of the
Actuarial Department of the Company, and all special work connected therewith.
He shall make all calculations required in transacting the insurance operations
of the Company, and perform such other duties as shall be assigned him by the
Chairman of the Board, President, or Board of Directors.
Assistant Actuaries
Section 15. The Assistant Actuary, or if there be more than one, the Assistant
Actuaries in the order determined by the Board of Directors shall, in the
absence or disability of the Actuary, perform the duties and exercise the powers
of the Actuary. He, or they, as the case may be, shall perform such other
duties and have such other powers as the Board of Directors may prescribe.
Medical Directors
Section 16. The Medical Director shall have general supervision of the Medical
Department of the Company. He shall make recommendations of medical standards
to be adopted by the Company in the selection of risks. He shall examine, or
cause to be examined, every application for insurance and approve or reject
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same; shall examine all proofs of death submitted for his opinion, and shall
perform such other duties as the President or Board of Directors may require.
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General Counsel
Section 17. General Counsel, which may be a firm of attorneys, shall, subject
to the instructions of the Board of Directors, have charge and control of the
legal business and affairs of the Company; shall give legal advice pertaining to
the Company's business submitted to Counsel by any officer of the Company, by
the Chairman of the Board of Directors, or by the Chairman of the Finance
Committee; shall prepare or cause to be prepared legal documents and papers for
the Company; shall, at the request of the Chairman of the Board or the
President, attend any meeting of the Board of Directors or the Finance
Committee; and shall perform such other services as are necessary or appropriate
in the discharge of the Counsel's responsibilities with respect to the business
and affairs of the Company.
ARTICLE VII
Designation of Banks and Withdrawal of Funds
Section 1. Jointly, any two (2) of the following officers: The Chairman of the
Board, the President, a Senior Executive Vice President, an Executive Vice
President, the Secretary, or the Treasurer are authorized and directed to
designate the banks in which funds of this corporation shall be deposited, and
the Treasurer shall deposit or cause to be deposited all of its funds in the
banks so selected. Said banks shall pay out such funds on deposit only upon
drafts or checks signed and countersigned by the persons designated for such
purposes.
Section 2. Jointly, any two (2) of the following officers: the Chairman of the
Board, the President, a Senior Executive Vice President, an Executive Vice
President, the Secretary or the Treasurer are authorized and directed to
designate in writing the persons who are authorized to sign and countersign the
drafts or checks for withdrawal of the funds on deposit.
ARTICLE VIII
Fidelity Bond
Section 1. The Board of Directors shall require a Fidelity Bond, in an amount
fixed by such Board of Directors and payable to the Company, on all officers and
employees, conditioned that each will well and faithfully discharge the duties
of his office and account for all the Company's monies coming into his hands.
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ARTICLE IX
Directors' Fees
Section 1. All Directors who are not full-time salaried officers shall be paid
a basic fee for each year or part of a year they serve as Directors of the
Company. Such basic fee will be set from time to time by the Board, shall be
payable in a lump sum immediately after the election of a Director. In
addition, all Directors who are not full-time salaried officers shall be paid an
amount set by the Board from time to time for each Board meeting or Executive
Committee meeting attended, payable after each meeting. The Board shall also
set from time to time the amount any Director who is a member of the Audit
Committee and/or Compensation Committee of the Board of Directors and who is not
a full-time salaried officer shall be paid per committee meeting attended.
Section 2. All Directors who are full-time salaried officers shall be paid no
fee for attendance at any regular or special meeting of the Board of Directors.
Section 3. The necessary expenses incurred by the Directors in attending the
meetings of the Board of Directors, and also their necessary expenses when
absent from the place of their residence in the discharge of the official duty
of the Company's business shall be paid by the Company.
ARTICLE X
Capital Stock
Section 1. The amount, classes and par value of the stock of this Company shall
be as stated in the Company's Restated Articles of Incorporation, as such
articles may be amended and restated from time to time.
Certificate of Shares
Section 2. Each Stockholder shall be entitled to a certificate or certificates
for the number of shares of Capital Stock held by him and fully paid for, signed
with the facsimile signature of the Chairman of the Board or the President and
the Secretary, attested with the facsimile seal of the Company.
All transfer of stock, before effective, shall be made upon the proper books of
the Company, by the written order or request of the Stockholders, and the Board
of Directors may require that the certificate of stock be returned and canceled
before a new certificate is issued in name of the person to whom the transfer is
to be made.
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ARTICLE XI
Corporate Seal
Section 1. The seal of the Company shall be as follows:
ARTICLE XII
Amendments
Section 1. The Bylaws may be amended, altered or repealed and additional Bylaws
enacted at any Annual Meeting of the stockholders or any regular meeting of the
Board of Directors, or at any special or rescheduled meeting of either, if in
the notice for such special or rescheduled meeting there is incorporated notice
of the proposed action.
ARTICLE XIII
Indemnification of Officers, Directors,
Employees and Agents
Section 1. (a) The Corporation shall indemnify any person who serves or has
served as a director or officer of the Corporation, or who at the Corporation's
request serves or has served as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary (herein
collectively called "director or officer") of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise (herein collectively called "business
enterprise"), and the respective heirs, administrators, successors and assigns
of any such director or officer against any and all expenses, including
attorneys' fees, judgments, penalties (including excise or similar taxes),
fines, costs and amounts paid in settlement (before or after suit is commenced)
actually and necessarily incurred by any such person in connection with the
defense, settlement or investigation of any actual or threatened claim, action,
suit or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, asserted against such person or at which such person is made a
party by reason of being or having been a director or officer of the Corporation
or such other business enterprise; provided that:
(1) The Corporation shall not indemnify any such person (or his heirs,
administrators, successors or assigns) for obligations resulting from
a proceeding (i) in which the person is found liable on the basis that
personal benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official
capacity, or (ii) in which the person
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is found liable to the Corporation, unless and only to the extent
indemnification is permitted by the Court;
(2) In the case of settlement (before or after suit is commenced) of any
actual or threatened action, suit or proceeding in which any such
person is involved by reason of his having been a director or officer,
indemnification shall be provided if the Board of Directors
determines, in a manner set forth herein that such person conducted
himself in good faith and in a manner he reasonably believed: (i) in
the case of conduct in his official capacity as a director of the
Corporation, that his conduct was in the Corporation's best interest;
and (ii) in all other cases that his conduct was at least not opposed
to the Corporation's best interests; and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct
was unlawful;
(3) A determination of indemnification under Section 1(a)(2) of this
Article shall be made (i) by a majority vote of a quorum consisting of
directors who at the time of the vote are not named defendants or
respondents in the proceeding; (ii) if a quorum cannot be obtained by
a majority vote of a committee of the Board of Directors designated to
act in the matter by a majority vote of all directors consisting
solely of two or more directors who at the time of the vote are not
named defendants or respondents in the proceeding; (iii) by special
legal counsel selected by the Board of Directors or a committee of the
Board by vote as set forth in Subparagraph (i) or (ii) of this Section
1(a)(3), or, if such quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors; or (iv) by
the shareholders in a vote that excludes the shares held by directors
who are named defendants or respondents in the proceeding.
(b) Reasonable expenses, including attorney's fees, incurred by a director or
officer who was, is, or is threatened to be made a named defendant or respondent
in a proceeding may be paid or reimbursed by the Corporation in advance of the
final disposition or the proceeding after:
(1) The Corporation received a written affirmation by the director or
officer of his good faith belief that he has met the standard of
conduct necessary for indemnification under this Article and a written
undertaking by or on behalf of the director or officer to repay the
amount paid or reimbursed if it is
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ultimately determined that he has not met those requirements; and
(2) A determination that the facts then known to those making the
determination would not preclude indemnification under this Article.
(c) The written undertaking required by Section 1(b)(1) of this Article must be
an unlimited general obligation of the director or officer, but need not be
secured. It may be accepted without financial ability to make payment.
Determinations and authorization of payments under Section 1(b) must be made in
the manner specified by Section 1(a)(3) of this Article for determining that
indemnification is possible.
(d) The Corporation shall indemnify a director or officer against reasonable
expenses, including costs and attorney's fees, incurred by him in connection
with an action, suit, or proceeding in which he is a party because he is a
director or officer if he has been wholly successful on the merits or otherwise,
in the defense of the action, suit, or proceeding.
(e) The indemnification provided for in this Article is not exclusive of any
other rights to which persons covered by this Article may be entitled under any
bylaw, agreement, vote of shareholders or disinterested directors or otherwise.
The right to indemnification provided under this Article shall inure to the
benefit of the heirs, executors or administrators of any person covered by this
Article.
(f) The Board of Directors shall have the power to abide by resolution for the
indemnification of individual employees or agents who face exceptional risks of
liability because of the nature of their jobs.
(g) Any indemnification of or advance of expenses to a director in accordance
with this Article shall be reported in writing to the shareholders with or
before the notice or waiver of notice of the next stockholders' meeting or with
or before the next submission to stockholders of a consent to action without a
meeting pursuant to Section A, Article 9.10, of the Texas Business Corporation
Act and in any case, within the 12-month period immediately following the date
of the indemnification or advance.
Section 2. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, other
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enterprise, or employee benefit plan, against any liability asserted against him
and incurred by him in such a capacity or arising out of his status as such a
person, whether or not the Corporation would have the power to indemnify him
against that liability under this Article.
Section 3. This Article XIII is intended to provide the fullest indemnification
possible under the law in consistent with the provisions of this Article. If any
provision of this Article or the application of this Article to any person or
circumstance shall be found to be invalid or unenforceable, the remainder of
this Article or the application of this Article to any person or circumstance
which is not invalid or unenforceable shall not be affected and each provision
of this Article shall be valid and enforced to the full extent permitted by law.
ARTICLE XIV
General Auditor
Section 1. The General Auditor shall assist members of Management in achieving
the most efficient and effective discharge of their responsibilities by
furnishing them with independent and objective analyses, appraisals, and
pertinent comments in order to provide a basis for appropriate corrective action
for the Company and its affiliates, including the recommendation of changes for
the improvement of various phases of their operations. He shall be responsible
for reviewing and appraising the soundness, adequacy, and application of
accounting, financial and operating controls; ascertaining the extent of
compliance with established policies, plans, and procedures; the extent to which
Company and affiliate assets are accounted for and safeguarded from losses of
all kinds; ascertaining the reliability of accounting, financial, and operating
data developed within the Company and its affiliates; appraising the quality of
performance in carrying out assigned responsibilities. He shall report to the
Board of Directors through the President, and shall perform such other duties as
the Board of Directors may prescribe.
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Exhibit 99.B8a
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, entered into on this 1ST day of AUGUST, 1994, among
AMERICAN NATIONAL INSURANCE COMPANY ("Company"), a life insurance company
organized under the laws of the State of Texas, on behalf of itself and AMERICAN
NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT ("Separate Account"), a separate
account established by the Company in accordance with the laws of the State of
Texas, AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. ("Fund"), an open-end
management investment company organized under the laws of the State of Maryland,
and SECURITIES MANAGEMENT AND RESEARCH, INC. ("Distributor"), a Florida
corporation.
W I T N E S S E T H:
WHEREAS, the Separate Account has been established by the Company pursuant
to the Texas Insurance Code in connection with certain variable contracts
("Contracts") issued to the public by the Company; and
WHEREAS, the Separate Account is registered as a unit investment trust
under the Investment Company Act of 1940;
WHEREAS, the income, gains and losses, whether or not realized, from assets
allocated to the Separate Account are, in accordance with the applicable
Contracts, to be credited to or charged against such Separate Account without
regard to other income, gains or losses of the Company; and
WHEREAS, the Separate Account is subdivided into various Subaccounts under
which income, gains and losses, whether or not realized, form assets allocated
to each such Subaccount are, in accordance with the applicable Contracts, to be
credited to or charged against such Subaccounts without regard to other income,
gains or losses of other Subaccounts or of the Company; and
WHEREAS, the Fund is registered as an open-end diversified management
investment company under the Investment Company Act of 1940; and
WHEREAS, the Fund is divided into various series ("Portfolios"), each
Portfolio having a different investment objective and being subject to separate
investment policies and restrictions which may not be changed without the
majority vote of shareowners of such Portfolio; and
WHEREAS, the Fund agrees to make its shares available to serve as
underlying investment media for the Separate Account, with shares of each
Portfolio of the Fund to serve as the underlying investment medium for each of
the various Subaccounts in the Separate Account; and
WHEREAS, Distributor, the principal underwriter for the Contracts to be
funded in the Separate Account, is a broker-dealer registered as such under the
Securities Exchange Act of 1934;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and conditions set forth herein and for other good and valuable consideration,
the Company, the Separate Account, the Fund and the Distributor hereby agree as
follows:
1. The Contracts funded through the Separate Account will provide for the
allocation of net amounts among the various Subaccounts of the Separate
Account for investment in the shares of the Portfolios of the Fund
underlying each Subaccount. The selection of the particular Subaccount is
to be made by the Contract Owner and such selection may be changed in
accordance with the termS of the Contracts.
2. No representation is made as to the number or amount of such Contracts to
be sold. The Company and the Distributor will make reasonable efforts to
market such Contracts and will comply with all applicable federal or
state laws in connection therewith.
3. Fund shares to be made available to each Subaccount of the Separate
Account shall be sold by each of the respective Portfolio of the Fund and
purchased by the Company for the corresponding Subaccount at the net
asset value (without the imposition of a sales load) next computed after
receipt of each order, as established in accordance with the provisions
of the then current prospectus of the Fund. Shares of a particular
Portfolio shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of
those Contracts issued by the Company in that Subaccount of the Separate
Account for which the Portfolio shares serve as the underlying investment
medium. Orders or payments for shares purchases will be sent promptly to
the Fund and will be made payable in the manner established from time to
time by the Fund for the receipt of such payments. The Fund reserves the
right to delay transfer of its shares until the payment check has
cleared. The Fund has the obligation to insure that its shares are
registered at all times.
4. Transfer of the Fund's shares will be by book entry only. No stock
certificate will be issued to the Separate Account. Shares ordered from a
particular Portfolio of the Fund will be recorded in an appropriate title
for the corresponding Subaccount of the Separate Account by the Company.
5. The Fund shall furnish notice promptly to the Company of any dividend or
distribution payable on its shares. All such dividends and distributions
as are payable on each Portfolio's shares in the title for the
corresponding Subaccount of the Separate Account shall be automatically
reinvested in additional shares of that Portfolio. The Fund shall notify
the Company of the number of shares so issued.
6. All expenses incident to the performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall ensure that all its shares are
registered and authorized for issue in accordance with applicable federal
and state laws prior to their purchase for the Separate Account. The
Company shall bear none of the expenses for the cost of registration of
the Fund's shares, preparation of the Fund's prospectuses, proxy
materials and reports, the preparation of all statements
<PAGE>
and notices required by any federal or state law, or taxes on the issue
or transfer of the Fund's shares subject to this Agreement.
7. The Company and the Distributor shall make no representations concerning
the Fund's shares except those contained in the then current prospectus
of the Fund and in printed information subsequently issued on behalf of
the Fund as supplemental to such prospectus.
8. This Agreement shall terminate:
(a) at the option of the Company or of the Fund upon sixty (60) days'
advance written notice to all other parties to this Agreement;
(b) at the option of the Company if any of the Fund's shares are not
reasonably available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of election to terminate
shall be furnished by the Company;
(c) at the option of the Company upon institution of formal proceedings
against the Fund by the Securities and Exchange Commission;
(d) upon requisite vote of the Contract Owners having an interest in a
particular Subaccount of the Separate Account to substitute the
shares of another investment company for the corresponding Fund
shares in accordance with the terms of the Contracts for which those
Fund shares had been selected to serve as the underlying investment
medium. The Company will give thirty (30) days' prior written notice
to the Fund of the date of any proposed vote to replace the Fund
shares;
(e) in the event the Fund's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment medium
of the Contracts issued or to be issued by the Company. Prompt notice
shall be given by any party to all other parties in the event that
the conditions stated in this subsection (e) or in any subsection of
this Section 8. should occur.
9. Each notice required by this agreement may be given by wire or facsimile
transmission and confirmed in writing to:
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Investment Accounts, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Variable Annuity Separate Account
One Moody Plaza
<PAGE>
Galveston, Texas 77550
ATTN: President
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
ATTN: President
10. This agreement shall be construed in accordance with the
laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
duly executed and attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
By:
__________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL VARIABLE ANNUITY
SEPARATE ACCOUNT
By: __________________________________________________
Carl R. Robertson, Senior
Executive Vice President
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By: __________________________________________________
Michael W. McCroskey, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: __________________________________________________
Michael W. McCroskey, President
<PAGE>
Exhibit 99.B8b
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
AMERICAN NATIONAL INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 16th day of August, 1993 by
and among AMERICAN NATIONAL INSURANCE COMPANY, (hereinafter the "Company"), a
Texas corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and
FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
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<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life and annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1., the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by
2
<PAGE>
10:00 a.m. Boston time on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life and variable annuity contracts with the form
number(s) which are listed on Schedule B attached hereto and
3
<PAGE>
incorporated herein by this reference, as such Schedule B may be amended from
time to time hereafter by mutual written agreement of all the parties hereto,
(the "Contracts") shall be invested in the Fund, in such other Funds advised by
the Adviser as may be mutually agreed to in writing by the parties hereto, or in
the Company's general account, provided that such amounts may also be invested
in an investment company other than the Fund if (a) such other investment
company, or series thereof, has investment objectives or policies that are
substantially different from the investment objectives and policies of all the
Portfolios of the Fund; or (b) the Company gives the Fund and the Underwriter 45
days written notice of its intention to make such other investment company
available as a funding vehicle for the Contracts; or (c) such other investment
company was available as a funding vehicle for the Contracts prior to the date
of this Agreement and the Company so informs the Fund and Underwriter prior to
their signing this Agreement; or (d) the Fund or Underwriter consents to the use
of such other investment company.
1.7 The company shall pay for Fund shares on the next business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally 6:30 p.m.
Boston time) and shall use its best efforts to make such net asset value per
share available by 7 p.m. Boston time.
4
<PAGE>
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 3.75 of the Texas Insurance Code and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Texas and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Company represents that the Contracts are currently treated
as endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such
5
<PAGE>
payments in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-
1 Plan under which it makes no payments for distribution expenses. To the extent
that it decides to finance distribution expenses pursuant to Rule 12b-1, the
Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Texas and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Texas to the extent required to perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of Texas and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Texas and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
6
<PAGE>
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund, in an amount not less than the minimal coverage as required currently
by entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
3.1 The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2 The Fund's prospectus shall state that the statement of
Additional Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is available
from the Fund), and the Underwriter (or the Fund), at its expense, shall print
and provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3 The Fund, at its expense, shall provide the Company with copies
of its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii)vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such portfolio
for which instructions have been received;
7
<PAGE>
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940
Act requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect to
periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee object to such use within fifteen business
days after receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to
8
<PAGE>
such use within fifteen Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, application for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6 The company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. FEES AND EXPENSES
9
<PAGE>
5.1 The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
all taxes on the issuance or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION
6.1 The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations.
ARTICLE VII. POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of
10
<PAGE>
the contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
7.2 The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be
11
<PAGE>
required, at the Fund's election, to withdraw the affected Account's investment
in the Fund and terminate this Agreement with respect to such Account; provided,
however that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Underwriter and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated
12
<PAGE>
thereunder with respect to mixed or shared funding (as defined in the Shared
Funding Exemptive Order) on terms and conditions materially different from those
contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5,
7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such Sections
are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
13
<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not
supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against
14
<PAGE>
whom such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Company shall be entitled to participate, at its own expense, in the defense
of such action. The Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Company to such party of the Company's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Fund (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or
15
<PAGE>
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance
with the provisions of Section 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against
16
<PAGE>
an Indemnified Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to notify
the Underwriter of any such claim shall not relieve the Underwriter from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Underwriter will be
entitled to participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Underwriter
to such party of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification By the Fund
---------------------------
8.3(a) The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement); or
17
<PAGE>
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
--------------
18
<PAGE>
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
19
<PAGE>
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to
the Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty-five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Fund and the Underwriter the opinion of counsel for the
20
<PAGE>
Company (which counsel shall be reasonably satisfactory to the Fund and the
Underwriter) to the effect that any redemption pursuant to clause (ii) above is
a Legally Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contracts, the Company shall not prevent Contract Owners
from allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
One Moody Plaza
Galveston, Texas 77550
Attention: Sr. VP & Chief Actuary
with a copy to:
Jerry L. Adams
Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or
21
<PAGE>
utilize such names and addresses and other confidential information until such
time as it may come into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The Fund and Underwriter agree that to the extent any advisory
or other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in legal or administrative proceedings under the 1973
NAIC model variable life insurance regulation in the states of California,
Colorado, Maryland or Michigan, the Underwriter shall indemnify and reimburse
the Company for any out of pocket expenses and actual damages the Company has
incurred as a result of any such proceeding; provided however that the
provisions of Section 8.2(b) of this and 8.2(c) shall apply to such
indemnification and reimbursement obligation. Such indemnification and
reimbursement obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund and/or the Underwriter under this
Agreement.
12.8 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
22
<PAGE>
12.9 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.10 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally
accepted accounting principles ("GAAP"), as soon as practical and in
any event within 105 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory and GAAP), as
soon as practical and in any event within 45 days after the end of
each quarterly period;
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Company, as soon as practical after
the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY:
AMERICAN NATIONAL INSURANCE
COMPANY
23
<PAGE>
By its authorized officer,
By: Rex D. Hemme
--------------------------
Title: Vice President and
------------------------
Actuary
----------------------
Date: August 17, 1993
------------------------
FUND:
VARIABLE INSURANCE PRODUCTS
FUND
By its authorized officer,
By: J. Gary Burkhead
---------------------------
Title: Senior Vice President
------------------------
Date: 8/27/93
------------------------
UNDERWRITER:
FIDELITY DISTRIBUTORS
CORPORATION
By its authorized officer,
By: ___________________________
Title: President
------------------------
Date: 8/28/93
-------------------------
24
<PAGE>
Schedule A
----------
Accounts
--------
Name of Account Date of Resolution of Company's
Board which Established the
Account
Variable Universal Life July 30, 1987
Insurance
Variable Annuity Contracts December 20, 1991
25
<PAGE>
Schedule B
----------
Contracts
---------
1. Contract Forms:
FL89
VA93-NQ
VA93-PQ
GUA93
SPIVA93
26
<PAGE>
SCHEDULE C
----------
PROXY VOTING PROCEDURE
----------------------
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step#2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
27
<PAGE>
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (this is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareholder. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for
postmark information would be due to an insurance company's
internal procedure and has not been required by Fidelity in the
past.
28
<PAGE>
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee", then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
29
<PAGE>
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
30
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Exhibit 99.B8c
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
AMERICAN NATIONAL INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 16th day of August, 1993 by and
among AMERICAN NATIONAL INSURANCE COMPANY, (hereinafter the "Company"), a Texas
corporation, on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account"), and the VARIABLE
INSURANCE PRODUCTS FUND II, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and FIDELITY
DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a Massachusetts
corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated September 17, 1986 (File No. 812-6422), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life and annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1., the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by
2
<PAGE>
10:00 a.m. Boston time on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life and variable annuity contracts with the form
number(s) which are listed on Schedule B attached hereto and
3
<PAGE>
incorporated herein by this reference, as such Schedule B may be amended from
time to time hereafter by mutual written agreement of all the parties hereto,
(the "Contracts") shall be invested in the Fund, in such other Funds advised by
the Adviser as may be mutually agreed to in writing by the parties hereto, or in
the Company's general account, provided that such amounts may also be invested
in an investment company other than the Fund if (a) such other investment
company, or series thereof, has investment objectives or policies that are
substantially different from the investment objectives and policies of all the
Portfolios of the Fund; or (b) the Company gives the Fund and the Underwriter 45
days written notice of its intention to make such other investment company
available as a funding vehicle for the Contracts; or (c) such other investment
company was available as a funding vehicle for the Contracts prior to the date
of this Agreement and the Company so informs the Fund and Underwriter prior to
their signing this Agreement; or (d) the Fund or Underwriter consents to the use
of such other investment company.
1.7 The company shall pay for Fund shares on the next business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally 6:30 p.m.
Boston time) and shall use its best efforts to make such net asset value per
share available by 7 p.m. Boston time.
4
<PAGE>
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 3.75 of the Texas Insurance Code and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Texas and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Company represents that the Contracts are currently treated
as endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such
5
<PAGE>
payments in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-
1 Plan under which it makes no payments for distribution expenses. To the extent
that it decides to finance distribution expenses pursuant to Rule 12b-1, the
Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Texas and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Texas to the extent required to perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Texas and all applicable state and
federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Texas and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
6
<PAGE>
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund, in an amount not less than the minimal coverage as required currently
by entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
3.1 The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2 The Fund's prospectus shall state that the statement of
Additional Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is available
from the Fund), and the Underwriter (or the Fund), at its expense, shall print
and provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3 The Fund, at its expense, shall provide the Company with copies
of its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such portfolio for which
instructions have been received;
7
<PAGE>
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee object to such use within fifteen business
days after receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to
8
<PAGE>
such use within fifteen Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, application for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6 The company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. FEES AND EXPENSES
9
<PAGE>
5.1 The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
all taxes on the issuance or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION
6.1 The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations.
ARTICLE VII. POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of
10
<PAGE>
the contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
7.2 The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be
11
<PAGE>
required, at the Fund's election, to withdraw the affected Account's investment
in the Fund and terminate this Agreement with respect to such Account; provided,
however that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Underwriter and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated
12
<PAGE>
thereunder with respect to mixed or shared funding (as defined in the Shared
Funding Exemptive Order) on terms and conditions materially different from those
contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5,
7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such Sections
are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund for use
in the Registration Statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
13
<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by the
Company, or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus, or
sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against
14
<PAGE>
whom such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Company shall be entitled to participate, at its own expense, in the defense
of such action. The Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Company to such party of the Company's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or
15
<PAGE>
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance
with the provisions of Section 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account whichever is applicable.
8.2(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against
16
<PAGE>
an Indemnified Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to notify
the Underwriter of any such claim shall not relieve the Underwriter from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Underwriter will be
entitled to participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Underwriter
to such party of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification By the Fund
8.3(a) The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement); or
17
<PAGE>
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
--------------
18
<PAGE>
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision, or if
the Company reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof; or
19
<PAGE>
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the Underwriter the
written notice specified in Section 1.6(b) hereof and at the time such
notice was given there was no notice of termination outstanding under any
other provision of this Agreement; provided, however any termination under
this Section 10.1(h) shall be effective forty-five (45) days after the
notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Fund and the Underwriter the opinion of counsel for the
20
<PAGE>
Company (which counsel shall be reasonably satisfactory to the Fund and the
Underwriter) to the effect that any redemption pursuant to clause (ii) above is
a Legally Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contracts, the Company shall not prevent Contract Owners
from allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
One Moody Plaza
Galveston, Texas 77550
Attention: Sr. VP & Chief Actuary
with a copy to:
Jerry L. Adams
Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or
21
<PAGE>
utilize such names and addresses and other confidential information until such
time as it may come into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The Fund and Underwriter agree that to the extent any advisory
or other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in legal or administrative proceedings under the 1973
NAIC model variable life insurance regulation in the states of California,
Colorado, Maryland or Michigan, the Underwriter shall indemnify and reimburse
the Company for any out of pocket expenses and actual damages the Company has
incurred as a result of any such proceeding; provided however that the
provisions of Section 8.2(b) of this and 8.2(c) shall apply to such
indemnification and reimbursement obligation. Such indemnification and
reimbursement obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund and/or the Underwriter under this
Agreement.
12.8 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
22
<PAGE>
12.9 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.10 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally
accepted accounting principles ("GAAP"), as soon as practical and in
any event within 105 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory and GAAP), as soon
as practical and in any event within 45 days after the end of each
quarterly period;
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Company, as soon as practical after
the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY:
AMERICAN NATIONAL INSURANCE
COMPANY
23
<PAGE>
By its authorized officer,
By: Rex D. Hemme
-----------------------
Title: Vice President and
Actuary
Date: August 17, 1993
FUND:
VARIABLE INSURANCE PRODUCTS
FUND II
By its authorized officer,
By: J. Gary Burkhead
------------------------
Title: Senior Vice President
Date: 8/27/93
UNDERWRITER:
FIDELITY DISTRIBUTORS
CORPORATION
By its authorized officer,
By:
------------------------
Title: President
Date: 8/28/93
24
<PAGE>
Schedule A
----------
Accounts
--------
Name of Account Date of Resolution of Company's
Board which Established the Account
Variable Universal Life July 30, 1987
Insurance
Variable Annuity Contracts December 20, 1991
25
<PAGE>
Schedule B
----------
Contracts
---------
1. Contract Forms:
FL89
VA93-NQ
VA93-PQ
GUA93
SPIVA93
26
<PAGE>
SCHEDULE C
----------
PROXY VOTING PROCEDURE
----------------------
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step#2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
27
<PAGE>
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (this is a
small, single sheet of paper that requests Customers to vote
as quickly as possible and that their vote is important. One
copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareholder. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
28
<PAGE>
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee", then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
29
<PAGE>
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
30
<PAGE>
Exhibit 99.B14
CONTROL LIST
The Registrant, American National Variable Annuity Separate Account, is a
separate account organized under the laws of the State of Texas. The Registrant
is a separate account of American National Insurance Company, a Texas insurance
company. The Moody Foundation owns approximately 23.7% and the Libbie Shearn
Moody Trust owns approximately 37.58% of the outstanding stock of American
National Insurance Company.
The Trustees of The Moody Foundation are Mrs. Frances Moody Newman, Robert
L. Moody and Ross Rankin Moody. Robert L. Moody is a beneficiary of the Libbie
Shearn Moody Trust and Chairman of the Board, Director, President and Chief
Executive Officer of American National Insurance Company. Robert L. Moody is
also Chairman of the Board, a Director and controlling shareholder of National
Western Life Insurance Company, a Colorado insurance company. National Western
Life Insurance Company directly or indirectly owns the following entities: The
Westcap Corporation, Westcap Securities Management, Inc., Westcap Securities
Investment, Inc. and Westcap Securities, L.P.
The Moody National Bank of Galveston is the trustee of the Libbie Shearn
Moody Trust and various other trusts which, in the aggregate, own approximately
46.87% of the outstanding stock of American National Insurance Company. Moody
Bank Holding Company, Inc. owns approximately 97% of the outstanding shares of
The Moody National Bank of Galveston. Moody Bank Holding Company, Inc. is a
wholly owned subsidiary of Moody Bancshares, Inc. The Three R Trusts, trusts
created by Robert L. Moody for the benefit of his children, are controlling
stockholders of Moody Bancshares, Inc.
The Moody Foundation owns 33.0% and the Libbie Shearn Moody Trust owns
51.0% of the outstanding stock of Gal-Tex Hotel Corporation, a Texas
corporation. Gal-Tex Hotel Corporation has the following wholly-owned
subsidiaries, listed in alphabetical order:
Gal-Tenn Corporation
Gal-Tex Management Company
Gal-Tex Woodstock, Inc.
GTG Corporation
New Paxton Hotel Corporation
American National owns a direct or indirect interest in the following
entities, listed in alphabetical order:
Entity: American Hampden Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
98% interest.
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Entity: American National - Clear Lake 2 Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
88% interest.
Entity: American National of Delaware Corporation
Entity Form: a Delaware corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
Entity: American National Financial Corporation
Entity Form: a Texas corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: American National Financial Corporation (Delaware)
Entity Form: a Delaware corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: American National Financial Corporation (Nevada)
Entity Form: a Nevada corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: American National General Insurance Company
Entity Form: a Missouri insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: American National Growth Fund, Inc.
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Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns .88 percent of the outstanding stock of the Company.
American National Insurance Company owns 3.13 percent of the outstanding stock
of the Company.
Entity: American National Income Fund, Inc.
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns .21 percent of the outstanding stock of the Company.
Entity: American National Insurance Service Company
Entity Form: a Missouri corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: American National Investment Accounts, Inc.
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns 10.2 percent of the outstanding stock of the Company, and
American National Insurance Company owns 89.8 percent of the outstanding stock
of the Company.
Entity: American National Life Insurance Company of Texas
Entity Form: a Texas insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
Entity: American National Lloyds Insurance Company
Entity Form: a Texas corporation
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Ownership or Other Basis for Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: American National Property and Casualty Company
Entity Form: a Missouri insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: ANPAC General Agency of Texas
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: ANPAC Lloyds Insurance Management, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis for Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: ANREM Corporation
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of Securities
Management and Research, Inc.
Entity: ANTAC, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Base Securities Systems, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of ANREM Corp.
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Entity: Garden State Life Insurance Company
Entity Form: a New Jersey insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Gateway Park Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: South Shore Harbour Development, Ltd. has
a 50% interest.
Entity: Harbour Title Company
Entity Form: a Texas corporation
Ownership or Other Basis of Control: South Shore Harbour Development, Ltd. owns
50% of the outstanding stock.
Entity: Kearns Building Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National owns a 85% interest.
Entity: Lighthouse Refreshment Company, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of ANREM
Corporation
Entity: Maya Energy Limited Partnership
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: National Institute of Family Economics, Inc.
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Entity Form: a Texas corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
Entity: Pacific Property and Casualty Company
Entity Form: a California corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: Panther Creek Limited Partnership
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest
Entity: Ridgedale Festival Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
50% interest.
Entity: Rodeo Square
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
95% interest. ANREM Corp. owns a 5% interest.
Entity: Securities Management and Research, Inc.
Entity Form: a Florida corporation - registered broker-dealer and registered
investment adviser
Ownership or Other Basis of Control: 100% owned by American National Insurance
Company
Entity: SM&R Capital Funds, Inc.
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Entity Form: a Maryland corporation - a registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Company consists of three (3)
different series: Government Income Fund Series, Primary Fund Series, and Tax
Free Fund Series. Securities Management and Research, Inc. owns 10.03 percent
of the outstanding stock of the Government Income Fund Series, and American
National Insurance Company owns 27.65 percent of the outstanding stock of the
Government Income Fund Series. Securities Management and Research, Inc. owns
13.71 percent of the outstanding stock of the Primary Fund Series, and American
National Insurance Company owns 17.22 percent of the outstanding stock of the
Primary Fund Series. Securities Management and Research, Inc. owns 12.06 percent
of the outstanding stock of the Tax Free Fund Series, and American National
Insurance Company owns 59.78 percent of the outstanding stock of the Tax Free
Fund Series.
Entity: South Shore Harbour Development, Ltd.
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
95% limited partnership interest. ANREM Corp. owns a 5% general partnership
interest.
Entity: Standard Life and Accident Insurance Company
Entity Form: an Oklahoma insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Terra Venture Bridgeton Project Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: Wholly owned by American National
Insurance Company.
Entity: Third and Catalina, Ltd.
Entity Form: a Texas limited partnership
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Ownership or Other Basis of Control: American National Insurance Company owns a
49% limited partnership interest.
Entity: Timbermill, Ltd.
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: Town and Country Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: Triflex Fund, Inc.
Entity Form: a Maryland corporation - a registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns 7.68 percent of the outstanding stock of the Company, and
American National Insurance Company owns 12.86 percent of the outstanding stock
of the Company.
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