Document:

Exhibit 10.1

             

            [FORM OF RETENTION AGREEMENT] 

             

            [DATE]

             

            [Name]

            [Title]

            U.S. Cellular 

            8410 West Bryn Mawr Avenue

            Chicago, IL  60631

             

            Re:  Retention Agreement

             

            Dear [Name]:

             

            U.S. Cellular considers your continued service and dedication to USCC Services, LLC (the "Company") essential to our business.  To incentivize you (the "Executive") to remain employed with the Company, we are pleased to offer you a retention package, as described in this letter agreement (the “Agreement”).

             

            	                Continued Employment.  Executive's continued employment with the Company will be subject to the terms and conditions of this Agreement.  Notwithstanding anything in this Agreement, Executive acknowledges and agrees that this Agreement does not constitute a contract of employment and that Executive at all times remains an at-will employee of the Company subject to the Company's employment and/or personnel policies and/or practices.

             

            	                Retention Package.  Provided that Executive has provided the Company with no less than one year prior written notice of an intent to retire with any such notice issued no earlier than September 30, 2018 and has satisfactorily performed his job duties up to and including his retirement date, Executive will be eligible to receive (i) payment of a bonus under the Executive Officer Annual Incentive Plan (or any successor thereto) (the “Executive Bonus Plan”) with respect to the calendar year of his retirement, subject to the terms and conditions of the Executive Bonus Plan; provided, however, that the amount of any such bonus shall be no less than Executive’s target bonus for such calendar year pro-rated to reflect the portion of such calendar year during which Executive was employed by the Company; (ii) the transfer of title to Executive of his company car and (iii) a mutually agreeable written consulting agreement with the Company with a term of three years following his termination with compensation thereunder at the rate of $270,000 per year, contemplating services at the reasonable request of the Chairman or Chief Executive Officer, but not to exceed 10 hours per month (subject to compliance with the terms of such consulting agreement) ((i), (ii) and (iii) collectively, the “Retention Package”), subject to the conditions as set forth in this Agreement and provided that Executive signs the Confidentiality, Non-Solicitation and Non-Competition Agreement attached hereto (the “Noncompete Agreement”) contemporaneously with the signing of this Agreement and does not breach such agreement.

             

            Subject to paragraph 9 of this Agreement, (1) any bonus payable pursuant to this Agreement shall be paid in a lump sum in the year following the calendar year during which Executive terminates, but no later than March 15 of such following year; (2) any compensation payable under a consulting agreement entered into pursuant to this Agreement shall be paid in substantially equal monthly payments over the three year consulting period, commencing in the calendar month following Executive’s termination of employment and (3) any transfer of the title of the company car pursuant to this Agreement shall occur in the calendar month following Executive’s termination of employment.

             

            	                Events of Forfeiture; Death or Disability. In the event of any of the following, all amounts of, or obligations of the Company under, the Retention Package will be immediately forfeited and made void in their entirety and no amount  will be paid to Executive related thereto:

             

            	Executive voluntarily terminates his employment with the Company (any position) other than in accordance with the conditions set forth in paragraph 2 hereof; or

             

            	Executive's employment with the Company (any position) is terminated by the Company for "Cause" (as defined below).

             

            In the event Executive's employment with the Company is terminated due to his death or "Disability" (as defined below) after the execution of this Agreement, Executive shall be entitled to receive the compensation and benefits set forth in clauses (i) and (ii) of paragraph 2 hereof,  only.  

             

            Notwithstanding any provision herein to the contrary, if Executive’s employment is terminated by the Company without “Cause” (as defined below), Executive retains the benefits of the Retention Package in its entirety.

             

            	                Definition of Cause and Disability. For purposes of this Agreement, termination for "Cause" means termination by the Company for any of the following reasons, each as determined by the Company in good faith:

             

            	a material breach by Executive of his employment duties and responsibilities (other than as a result of incapacity due to physical or mental illness) (i) which is the result of Executive's negligence or (ii) which is demonstrably willful and

        
            

                 

                	
                             

                        

                 

            

        

        

        
        
                 

            

        

            	 deliberate on Executive’s part and which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company; 

             

            	the commission by Executive of a felony involving moral turpitude; or 

             

            	a breach by Executive of the Noncompete Agreement or any other agreements concerning confidentiality, trade secrets, nonsolicitation, noncompetition, nondisparagement or other restrictive covenants.

             

            For purposes of this Agreement, termination for "Disability" means termination as a result of a total physical or mental disability which, in the Company’s judgment, prevents Executive from performing substantially his employment duties and responsibilities for a continuous period of at least six months.

             

            	                Administration. The Company shall have the sole and absolute authority and discretion to construe and interpret this Agreement, and to determine all questions that arise in connection with the administration of this Agreement, including without limitation all questions of eligibility for any amount or benefit paid or payable under this Agreement.

             

            	                Validity.  The parties agree that in the event that any part of this Agreement shall be declared invalid, it shall not affect the validity of any of the remaining terms or provisions of this Agreement.  Indeed, the covenants and agreements of the parties set forth in this Agreement shall survive the invalidation of any term or provision of this Agreement to the maximum extent legally permissible.

             

            	                Choice of Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without reference to principles of conflicts of laws.  Each party agrees that he or it shall bring any action or proceeding in connection with any claim arising out of or related to this Agreement, whether in tort or contract or at law or in equity, exclusively in the United States District Court for the Northern District of Illinois or the courts of the State of Illinois (the “Chosen Courts”) and (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts for purposes of any such action or proceeding, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party and (iv) consents to the service of process in any such action or proceeding by certified or registered mailing of the summons and complaint therein directed to Executive at his last known address on file or Company through the President and CEO.  The parties hereby irrevocably waive any right to trial by jury in any legal proceeding arising out of or related to this Agreement.

             

            	                Entire Retention Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives.  This Agreement may not be assigned, or any duties delegated, in whole or in part, by Executive without the prior written consent of the Company.  The Company may assign this Agreement.  This Agreement constitutes the entire agreement between Executive and the Company as it relates to Executive’s employment by the Company, and supersedes any other agreement related to Executive’s employment by the Company, either oral or written, with the exception of any agreements concerning confidentiality, trade secrets, nonsolicitation, noncompetition, nondisparagement or other restrictive covenants all of which shall remain in full force and effect, and are hereby confirmed and ratified.  Executive understands and agrees that nothing in this Agreement shall be understood, argued and/or interpreted to alter his status as an at-will employee whose employment may be terminated by the Company at any time, with or without cause.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors, assigns and legal representatives.

             

            	                Section 409A of the Internal Revenue Code.  Amounts payable or benefits provided under this Agreement are intended to be exempt from or meet the requirements of Section 409A of the Internal Revenue Code (“Code Section 409A”), and shall be interpreted consistent with that intent.  Notwithstanding any other provision of this Agreement, to the extent that an amount or benefit under this Agreement provides for the “deferral of compensation” within the meaning of Code Section 409A and is payable as the result of Executive’s separation, and Executive is a “Specified Employee” under the Section 409A Specified Employee Policy of Telephone and Data Systems, Inc. and its Affiliates as of the date of Executive’s separation, then no such amount or benefit shall be paid or provided during the period beginning on the date of Executive’s separation and ending on the date that is six months following the date of Executive’s separation.  The amount of any payment or benefit that otherwise would be paid or provided to Executive under this Agreement during this period instead shall be paid or provided to Executive on the first business day coincident with or next following the date that is six months and one day following the date of Executive’s separation.  Each payment or benefit under this Agreement shall be treated as a separate payment for purposes of Code Section 409A.

             

            EXECUTIVE AND THE COMPANY EXPRESSLY WARRANT AND REPRESENT THAT THEY HAVE READ THIS AGREEMENT IN ITS ENTIRETY, THAT THEY UNDERSTAND EACH OF ITS TERMS, THAT THEY HAVE REVIEWED THIS AGREEMENT WITH INDIVIDUALS OF THEIR OWN CHOOSING, AND THAT THEY HAVE ENTERED INTO THIS AGREEMENT VOLUNTARILY AND INTEND TO BE BOUND THEREBY.

             

        
            

                 

                	
                             

                        

                 

            

        

        

        
        
                 

            

        

            AGREED AND ACCEPTED:USCC SERVICES, LLC.

             

             

             

            ________________________________ By:     ______________________________

            [Name]

             

            Title:   ______________________________Title:   ______________________________

             

             

             

             

            Dated: __________________________ Dated: ______________________________

        
            

                 

                	
                             

                        

                 

            

        

        

        

        
        
                 

            

        

            Attachment

            USCC SERVICES, LLC

            CONFIDENTIALITY/NON-SOLICITATION/NON-COMPETITION AGREEMENT

             

            In consideration and as a condition of receipt of benefits under the Retention Agreement dated __________________, 2018 ("Retention Agreement") with USCC Services, LLC, including its parents, subsidiaries and affiliates, and the predecessors, successors or assignors of any of them (hereinafter referred to as "Employer" or "Company"), Executive acknowledges and agrees as follows regarding the confidentiality of information, the non-solicitation of customers and employees of Employer and its affiliates as well as non-competition:

            1.                    Agreement Regarding Confidentiality.  During and after Executive's employment and the period of any written consulting agreement with Employer, except as required in Executive's duties to Employer, Executive agrees to hold in strict confidence and/or not use for Executive's own benefit, and not disclose to or use for the benefit of any person, firm, or corporation, without the express written authorization of Employer, any Confidential Information or Trade Secrets, as defined herein.  In addition, Executive agrees to protect and maintain the privacy and security of any Personal Data obtained during the course of employment and the duration of any written consulting agreement with Employer or to which Executive has access, consistent with Company policies and in accordance with all applicable federal, state and local privacy and security laws and where applicable, comply with the privacy of health and medical information covered by the Health Insurance Portability and Accountability Act of 1996.  Executive will refrain from, by act or omission, placing the Company in violation of any applicable privacy or data protection law.  This promise of confidentiality is in addition to any common law or statutory rights of Company to prevent disclosure of its and its affiliates' Confidential Information and/or Trade Secrets.

            2.                    Confidential Information Defined.  "Confidential Information" means any information that Executive learns or developed during the course of employment or during the period of any written consulting agreement with Company that gives the Company or any of its affiliates a commercial advantage over a competitor that does not have such information and/or information that is not generally known to persons or entities outside the Company, regardless of whether it is labeled confidential.  Such information includes, but is not limited to, Personal Data, proprietary processes, formulas, computer software, programs and communication systems, data, know-how, inventions, improvements, techniques, training methods, business management methods and strategies, marketing plans, forecasts, customer and supplier lists, customer and supplier contracts and contacts, personal and/or financial information of customers, books, records, accounts, data processing information or computer programs, rate structure, price and cost lists, contract expiration dates, discounts or special/non-public promotions or programs, financial information, or any other document or information which refers to or related to Employer's or any of its affiliates' businesses and affairs, which Executive acknowledges may be contained in written manuals, verbal communications, in unwritten knowledge of Executive or of other employees, and/or any other tangible method of expression, including hard disk and soft disk drive mechanisms (hereinafter, along with the information described in paragraph 3 below, "trade secret" and/or "confidential" or "proprietary information").  Confidential Information also includes information of third parties for which the Company or its affiliates have accepted obligations of confidentiality.  Nothing in this Agreement is intended to prohibit Executive from discussing with fellow employees, or with third parties who are not competitors of Employer, wages, hours and other terms and conditions of employment.  Furthermore, nothing in this Agreement shall be construed to prohibit Executive from reporting alleged improper or unlawful conduct to, or participating in any investigation or proceeding conducted by any federal or state government agency or self-regulatory organization.

            3.                    Trade Secret Defined.  "Trade Secret" is information that qualifies as a trade secret under the Illinois Trade Secrets Act, 765 ILCS 1065.

            4.                    Personal Data Defined.  “Personal Data” means any information that refers or relates to an identified or identifiable individual, including but not limited to first and last name, home or other physical address, telephone number, e-mail address or other online contact information, Social Security number or similar governmental identifier, any biometric data, date of birth, consumer, health, financial, or any other information relating to an individual that is combined with any of the above.

            5.                    Non-Solicitation of Customers and Prospective Customers.  Executive specifically acknowledges that by virtue of employment and any written consulting agreement with Employer, that Executive may have substantial access to the Company's and its affiliates' confidential customer lists and/or confidential customer contacts.  Executive further acknowledges that customers have regular or repeated dealings with Employer which results in systematic or frequent actions, contracts, sales, or business relations, and that Employer and its affiliates receive habitual or consecutive business from such customers.  Executive also acknowledges that the customer lists and contacts are not matters of public or general knowledge, that such customer lists or customer contacts have been developed by Employer and its affiliates, at substantial cost and expense, that the customer lists and customer contacts are extremely valuable to Employer and its affiliates and that such customer lists or customer contacts could not be easily replicated.  As such, Executive agrees to the following provisions restricting the solicitation of customers as follows:

            	Non-Solicitation of Customers.  During and for three (3) years following the termination of Executive's employment with Employer, regardless of the reason for the termination, Executive will not directly or indirectly provide, or solicit to provide, to any existing Employer or Employer affiliate customer (or provide any information to a third party in connection with its or their direct or indirect solicitation of said customers), with whom Executive had contact in the one year period immediately prior to the termination of Executive's employment, the same or similar services or products provided by Employer or Employer’s affiliates, other than on Employer’s behalf.

            

        
            

                 

                	
                             

                        

                 

            

        

        

        
        
                 

            

        

             

            	Non-Solicitation of Prospective Customers.  During and for three (3) years following the termination of Executive's employment with Employer, regardless of the reason for the termination, Executive will not directly or indirectly provide, or solicit to provide, to any Employer or Employer affiliate prospective customer (or provide any information to a third party in connection with its or their direct or indirect solicitation of said potential customers), with whom Executive had contact in the one year period immediately prior to termination of Executive's employment, the same or similar services or products provided by Employer or Employer's affiliates, other than on Employer's behalf.  For purposes of this provision, "prospective customer" shall mean any person or entity that is the subject of an open bid or proposal at the time that Executive's employment terminates.

             

            6.                    Non-Solicitation of Employees.  During and for three (3) years following the termination of Executive’s employment with Employer, regardless of the reason for the termination, Executive agrees not to solicit, induce or encourage, or attempt to solicit, induce or encourage, other than on the Employer's behalf, any employee of Employer or its affiliates to leave the employment of Employer or its affiliate or breach his/her employment duties.

            7.                    Non-Compete.  During and for three (3) years following Executive’s employment with Employer, Executive shall not work for any of the following entities:  (i) cable TV and wireline telephone companies which offer high speed broadband internet service in the markets in which the Company offers internet service and (ii) a wireless service carrier that operates in any market within the continental United States in which the Company operates.  For purposes of the foregoing, “wireless carrier” includes any company holding a license granted by the Federal Communications Commission, as well as any reseller or MVNO.  “Work for” includes, whether paid or unpaid, as an employee, officer, director, consultant or advisor.

            8.                    Non-Disparagement.  During and for three (3) years following the termination of Executive’s employment with Employer, Executive will not publicly make (or direct anyone to make) any derogatory comment regarding Employer, its owners, directors, officers, employees, business, services or products.  Nothing in this Agreement shall be construed to prohibit Executive from reporting alleged improper or unlawful conduct to, or participating in any investigation or proceeding conducted by any federal or state government agency or self-regulatory organization.

            9.                    Notice to Subsequent Employer(s).  Within five (5) business days of Executive’s acceptance of a position with any person or entity during and for three (3) years following Executive’s employment with Employer, Executive agrees to give prior written notice to Employer of the name of such person or entity.  In any event, Executive hereby consents to Employer contacting each such person or entity, including providing a copy of this Agreement to each such person or entity, to ensure that Executive remains in full compliance with the provisions of this Agreement.

            10.                Return of Materials.  Executive agrees that upon Employer's request at any time, but, in no event, not later than the voluntary or involuntary termination of the employment or consulting relationship, to deliver to Employer and not keep or deliver to anyone else, at anytime, any and all records, documents, notes, memoranda, specifications, devices, electronic data, emails, computer disks, and, in general, any and all material relating to Employer's business and/or any "Confidential Information", "Trade Secrets" "Personal Data" or "Creations" as described in paragraphs 2, 3 and 4 above, and shall not retain any copies thereof and further agrees not to make any summaries of, take any notes with respect to, or memorize any such information for Executive's benefit or that of any person, firm or corporation other than Employer.

            11.                Improper Use During Employment or Consulting Period.  Executive acknowledges that improperly using or disclosing Confidential Information, Trade Secret or Personal Data information subjects Executive to disciplinary action, up to and including termination of employment or the consulting relationship, and/or legal action, even if he or she does not actually benefit from the disclosed information.

            12.                Remedies.  Executive hereby acknowledges and agrees that the services rendered by Executive to Employer, and the information disclosed to Executive during and by virtue of Executive’s employment, are of a special, unique and extraordinary character, and the breach of any such provisions of this Agreement will cause Employer irreparable injury and damage, and consequently Employer shall be entitled to, in addition to all other remedies available to it, injunctive and equitable relief to prevent a breach of this Agreement, or any part of it, and to secure the enforcement of this Agreement.  Employer shall be entitled to collect from Executive, Employer's reasonable attorneys' fees incurred in connection with: (1) Employer's enforcement of any of the provisions of this Agreement including, but not limited to, its enforcement of the forum-selection clause, and (2) any suit for damages stemming from Executive's breach of any of the provisions of this Agreement.

            In addition, Executive may not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made: (a) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and provided that such disclosure is solely for the purpose of reporting or investigating a suspected violation of the law, or (b) in a complaint or other document filed in a lawsuit or other proceeding, provided that such filing is made under seal.  Additionally, in the event Executive files a lawsuit against Employer for retaliation by the Employer against the Executive for reporting a suspected violation of law, Executive has the right to provide trade secret information to his or her attorney and use the trade secret information in the court proceeding, although Executive must file any document containing the trade secret under seal and may not disclose the trade secret, except pursuant to court order.

            

        
            

                 

                	
                             

                        

                 

            

        

        

        
        
                 

            

        

            13.                Agreement as to Reasonableness.  Executive agrees and acknowledges that the provisions of this Agreement are fair and reasonable in both scope and content and are reasonably necessary for the protection of Employer’s and its affiliates' businesses.  Executive further agrees and acknowledges that the provisions of this Agreement do not, and will not, unduly impair Executive's ability to earn a living after Executive's employment with Employer ends.

            14.                No Waiver.  Employer’s waiver of a breach by Executive of any provision of this Agreement or failure to enforce any such provision with respect to Executive shall not operate or be construed as a waiver of any subsequent breach by Executive of any such provision or of any other provision, or of Employer’s right to enforce any such provision or any other provision with respect to Executive.  No act or omission of Employer shall constitute a waiver of any of its rights hereunder except for a written waiver signed by the Employer.

            15.                Miscellaneous.  This Agreement may not be assigned, or any duties delegated, in whole or in part, by Executive without the prior written consent of Employer.  Employer may assign this Agreement to another entity upon written notice to Executive.  This Agreement, and any written employment agreement between the Executive and the Company, constitutes the entire agreement between Executive and Employer as it relates to Executive’s employment by Employer, and supersedes any other agreement, either oral or written with the exception of any agreements concerning confidentiality, trade secrets, non-solicitation or non-competition, all of which shall remain in full force and effect, and are hereby confirmed and ratified.  Executive understands and agrees that nothing in this Agreement shall be understood, argued and/or interpreted to alter Executive's status as an at-will employee whose employment may be terminated by Employer at any time, with or without cause.  This Agreement may not be amended or modified other than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

            16.                Controlling Law and Forum.  This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Illinois, without reference to principles of conflicts of laws.  Each party agrees to bring any action or proceeding in connection with any claim arising out of or related to this Agreement, whether in tort or contract or at law or in equity, exclusively in the United States District Court for the Northern District of Illinois or the courts of the State of Illinois (the “Chosen Courts”) and (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts for purposes of any such action or proceedings, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party and (iv) consents to the service of process in any such action or proceeding by certified or registered mailing of the summons and complaint therein directed to Executive at Executive's last known address on file with Employer or Employer through the Senior Vice President of Human Resources at its principal place of business in Chicago, Illinois. 

            17.                Modification and Severability.  It is the intention of the parties that if, in any action before any court empowered to enforce such covenants, any term, restriction, covenant, or promise is found to be unenforceable, then such term, restriction, covenant, or promise shall be deemed modified to the extent necessary to make it enforceable by such court.  The parties agree that in the event that any part of the Agreement shall be declared invalid, it shall not affect the validity of any of the remaining terms or provisions of the Agreement.  The covenants and agreements of Executive above shall survive the termination of this Agreement for any reason.

            EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS READ AND UNDERSTANDS THIS AGREEMENT IN ITS ENTIRETY, HAS REVIEWED THIS AGREEMENT WITH INDIVIDUALS OF EMPLOYEE'S OWN CHOOSING, AND THAT EMPLOYEE HAS ENTERED INTO THIS AGREEMENT VOLUNTARILY, AND INTENDS TO BE BOUND THEREBY.

             

            	
                        Accepted and Agreed:

                         

                        ______________________________

                        Executive (signature)

                         

                        ______________________________

                        Printed Executive Name

                         

                        Date: ______________________________

                    	
                         

                    	
                        USCC Services, LLC

                         

                        By: ______________________________

                         

                         

                        Title: ______________________________

                         

                         

                        Date: ______________________________Allianz Life Insurance Company

of North America

[PO Box 561

Minneapolis, MN 55440-0561]

[800.624.0197]

	
Individual Flexible Purchase Payment Variable Deferred

Annuity Contract

Purchase Payments we receive for this contract accumulate to provide Annuity Payments or a Death Benefit.  This is a variable annuity contract with Contract Value increasing or decreasing depending on the experience of the Variable Account and Index Options.  This contract is nonparticipating, with no dividends payable.  Benefits available under this contract are not less than those required by statute of the state in which this contract is delivered.

Signed for the Company at its home office on the Issue Date.

[                       ]

[Gretchen Cepek] [Walter R. White]

 Secretary President and CEO

RIGHT TO EXAMINE: This contract can be returned within 10 days after you receive it.  It can be mailed or delivered to either us or the representative who sold it.  Return of this contract by mail is effective on being postmarked, properly addressed and postage paid.  We promptly refund the Contract Value.  This may be more or less than the Purchase Payments.  We have the right to allocate Purchase Payments to the Interim Fund(s) until the end of the Right to Examine period.  The Interim Fund(s) are located on the Contract Schedule. If we so allocate Purchase Payments, we refund the greater of the Purchase Payments less any Withdrawals, or the Contract Value.

This is a legal contract between you and the Company.

Read this contract carefully.

L40538-IAI                                                                                                   1                                                                                           [Admin Tracking Identifier]

 

	
Table of Contents

Contract Schedule  3

Definitions                  4

Purchase Payments 6

Variable Account     7

Contract Value          7

Transfers                      8

Contract Charges    8

Withdrawals               9

Annuity Payments 10

Death Benefit         12

Ownership                13

General Provisions 14

L40538-IAI                                                                                                   2                                                                                           [Admin Tracking Identifier]

  

	
Definitions

Some of the terms found in this contract are defined below.  Additional terms are defined throughout this contract where they are used.  Section titles, provision titles, and terms used on the Contract Schedule are also capitalized to help you easily recognize them.

We, Our, Us, and the Company

Allianz Life Insurance Company of North America.  The terms We, Our, and Us may not be capitalized throughout this contract.

You, Your

The Owner of this contract.  The terms You and Your may not be capitalized throughout this contract.  The term Contract Owner may also be used to mean Owner in some endorsements or riders.

Accumulation Phase

The period of time beginning on the Issue Date and before you begin Annuity Payments.  The Accumulation Phase ends on the earliest of the following.

	
·

	
The Business Day we process your request for a Full Withdrawal.

	
·

	
The Business Day before the Annuity Date.

	
·

	
The Business Day that the Service Center receives a Valid Claim from all Beneficiaries upon the death of an Owner (or Annuitant if the Owner is a non-individual), unless this contract is continued by the deceased Owner's Spouse.

Age

An individual's age on his or her most recent birthday, unless otherwise specified.

Allocation Options

The Index Options available to you.

Annuitant

An individual whose Age determines the Annuity Payments.  You may be an Annuitant or you may name someone else.  The Annuitant is shown on the Contract Schedule.

Annuity Date

The Index Anniversary your Annuity Payments begin. The date Annuity Payments are scheduled to begin, the Scheduled Annuity Date, is shown on the Contract Schedule.

Annuity Phase

The period of time beginning on the Annuity Date during which we make Annuity Payments.  The Annuity Phase terminates on the earliest of the following.

	
·

	
Under Annuity Options 1 and 3, the death of the last surviving Annuitant.

	
·

	
Under Annuity Options 2 and 4, the death of the last surviving Annuitant and the end of the guaranteed period.

	
·

	
Under Annuity Option 5, the death of the Annuitant and payment of any lump sum refund.

Authorized Request

A request that is received by the Service Center in good order, in a form that is satisfactory to us, and that is received by the Service Center within any timelines provided on such form.

Beneficiary

An individual or non-individual entitled to the Death Benefit under this contract.

Business Day

Each day on which the New York Stock Exchange is open for trading, except, with regard to the Interim Fund(s), when an Interim Fund does not value its shares.  Our Business Day closes when regular trading on the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern Time.  We process any instructions received after the close of any Business Day on the next Business Day.

L40538-IAI                                                                                                   3                                                                                           [Admin Tracking Identifier]

 

	
Definitions continued from the previous page

Charge Base

We base the Product Fee on the Charge Base.  On the Issue Date, the Charge Base is equal to the Initial Purchase Payment.  On each Quarterly Contract Anniversary, or the next Business Day if the Quarterly Contract Anniversary is not on a Business Day, the Charge Base is equal to the Contract Value at the end of the Business Day after we process any Additional Purchase Payments or Withdrawals and deduct any Withdrawal Charges and Contract Charges and, if this is also an Index Anniversary, after we apply any credits.

At the end of each Business Day, we:

	
·

	
Increase the Charge Base by the amount of any Additional Purchase Payments received that day; and

	
·

	
Reduce the Charge Base proportionately by the percentage of any Contract Value withdrawn that day, including any Withdrawal Charge and Contract Charges.

Contract Anniversary

A twelve-month anniversary of the Issue Date or any subsequent twelve-month Contract Anniversary.

Contract Year

A period of 12 months.  The first Contract Year begins on the Issue Date.  Subsequent Contract Years begin on the Contract Anniversaries.

Index Anniversary

A twelve-month anniversary of the Index Effective Date or any subsequent twelve-month Index Anniversary.

Index Effective Date

The first day of the first Index Year.  The Index Effective Date is shown on your Index Options statement. The Index Effective Date can be any Business Day from the Issue Date up to and including the first Quarterly Contract Anniversary. However, it cannot be the 29th, 30th, or 31st of a month. If the Index Effective Date would occur on the 29th, 30th, or 31st of a month, or on a day that is not a Business Day, we change the Index Effective Date to be the next available Business Day.

Index Options

The Index Options available to you are shown on the Index Options Contract Schedule(s).

Index Year

A period of 12 months.  The first Index Year begins on the Index Effective Date.  Subsequent Index Years begin on the Index Anniversaries.

Issue Date

The first day this contract is effective.  The Issue Date is shown on the Contract Schedule.

Joint Annuitant

You can add a Joint Annuitant for the Annuity Phase subject to our approval.  If we allow Joint Annuitants, we determine Annuity Payments using the Ages of both Joint Annuitants.

Joint Owner

Joint Owners have equal contract Ownership rights and must authorize the exercise of these rights in writing, unless otherwise allowed by us.  If Joint Owners are named, all references to Owner shall mean Joint Owners.

Owner

A purchaser of this contract, who is entitled to the ownership rights described in this contract.  Owners are shown on the Contract Schedule.

Payee

The individual or non-individual to whom we make Annuity Payments.  Generally we require the Owner to be the Payee, but we may allow you to name a different Payee subject to our approval.

L40538-IAI                                                                                                   4                                                                                           [Admin Tracking Identifier]

 

	
Definitions continued from the previous page

Purchase Payment

Any payment you make to this contract.

Quarterly Contract Anniversary

A three-month anniversary of the Issue Date or any subsequent three-month Quarterly Contract Anniversary.

Service Center

The office shown at the top of the first page of your contract.

Spouse

An individual who is recognized as a spouse under federal law.

Valid Claim

An Authorized Request of the Death Benefit payment option, due proof of death, and any required governmental forms.  Due proof of death includes a certified copy of the death certificate, a decree of court of competent jurisdiction as to the finding of death, or any other proof satisfactory to us.  Due proof of death is required only if we have not already received it.

Variable Account Value

The sum of the values in the Interim Fund(s).

Purchase Payments

Initial Purchase Payment

The Initial Purchase Payment is all Purchase Payments we receive on the Issue Date and is shown on the Contract Schedule.  The Initial Purchase Payment cannot be greater than the Maximum Total Purchase Payments shown on the Contract Schedule without our prior approval.

Additional Purchase Payments

Additional Purchase Payments are Purchase Payments we receive during the Accumulation Phase and before the first Valid Claim.  Additional Purchase Payments must be greater than or equal to the Minimum Additional Purchase Payment shown on the Contract Schedule.  We may decline any Additional Purchase Payment. Each Index Year during the Accumulation Phase total Purchase Payments cannot be greater than the total amount of Purchase Payments received before the first Quarterly Contract Anniversary of the first Contract Year. You may pay Additional Purchase Payments up to that amount for the remainder of the first Index Year. Total Purchase Payments cannot be greater than the Maximum Total Purchase Payments without our prior approval.

No Default

This contract is not in default if you do not make Additional Purchase Payments.

Allocation of Purchase Payments

If the Issue Date is the Index Effective Date, we allocate Purchase Payments to one or more of the Allocation Options according to your Index Effective Date allocation instructions.  However, if we exercise our right to allocate to the Interim Fund(s) during the Right to Examine Period, we will allocate the Initial Purchase Payment to the Interim Fund(s) until the end of the Right to Examine Period. If your requested Index Effective Date would occur during this time, we change your Index Effective Date to the next Business Day after the Right to Examine Period that is not the 29th, 30th or 31st of the month. We will then rebalance your Contract Value among your selected Allocation Options according to your Index Effective Date allocation instructions on the Index Effective Date.

If the Issue Date is not the Index Effective Date, any Purchase Payment that we receive before the Index Effective Date, we place in the Interim Fund(s) until the Index Effective Date.  We will then rebalance your Contract Value among your selected Allocation Options according to your Index Effective Date allocation instructions on the Index Effective Date.

We will place any Additional Purchase Payments we receive after the Index Effective Date in the Interim Fund(s) until the next Index Anniversary. On the next Index Anniversary, we will rebalance your Contract Value among your selected Allocation Options according to your future allocation instructions.

If at any time we have more than one Interim Fund available, you may elect which Interim Fund to which you would like to have your Initial and any Additional Purchase Payments allocated.

Your future allocation instructions and Index Effective Date allocation instructions must comply with the Allocation Guidelines shown on the Contract Schedules.

L40538-IAI                                                                                                   5                                                                                           [Admin Tracking Identifier]

  

	
Variable Account

The Variable Account is shown on the Contract Schedule.  It consists of assets we have set aside and have kept separate from the rest of our assets and those of our other separate accounts.  The assets of the Variable Account, equal to reserves and other liabilities of this contract and all other contracts issued through the Variable Account, will not be charged with liabilities arising out of any other business we may conduct.

The Variable Account assets are divided into subaccounts corresponding to the Interim Fund(s).

	
Contract Value

The Contract Value is equal to the sum of the Index Option Values and the Variable Account Value. The Index Option Values are the values in a selected Index Option as discussed in the attached riders.

How the Variable Account Value increases and decreases

The Variable Account Value increases and decreases based on Purchase Payments, transfers out of the subaccounts, Withdrawals (including any applicable Withdrawal Charges), the deduction of Contract Charges , and the investment performance of the Interim Fund(s).

We place Purchase Payments you allocate to the Allocation  Options into subaccounts of the Variable Account.  Each subaccount invests exclusively in one  Interim Fund.  We use Accumulation Units to account for all amounts allocated to or withdrawn from each subaccount as a result of Purchase Payments, Withdrawals (including any applicable Withdrawal Charges), transfers out of the subaccounts, or the deduction of Contract Charges.  We determine the Variable Account Value by multiplying the number of subaccount Accumulation Units by the subaccount's Accumulation Unit Value and then adding these results together.

Number of Accumulation Units

On the Issue Date, the number of Accumulation Units in each subaccount is equal to the Initial Purchase Payment amount allocated to that subaccount, divided by that subaccount's Accumulation Unit Value.

At the end of each Business Day, we adjust the number of Accumulation Units in each subaccount as follows. Additional Purchase Payments will increase the number of Accumulation Units. Withdrawals (including any applicable Withdrawal Charges), transfers out of subaccounts, and the deduction of any Contract Charges will decrease the number of Accumulation Units. The change in the number of Accumulation Units is equal to the net amount allocated to or deducted from the subaccount, divided by that subaccount's Accumulation Unit Value.

Accumulation Unit Value

We arbitrarily set the initial Accumulation Unit Value for each subaccount.  At the end of each Business Day for each subaccount, we multiply the Accumulation Unit Value at the end of the prior Business Day by the percentage change in value of an Interim Fund(s) since the prior Business Day.  The percentage change includes the market performance of the Interim Fund(s).

L40538-IAI                                                                                                   6                                                                                           [Admin Tracking Identifier]

 

	
Transfers

During the Accumulation Phase, you can transfer all or a part of the Contract Value in an Allocation Option into another Allocation Option by providing an Authorized Request.  Transfers can only occur on the Index Effective Date and on subsequent Index Anniversaries by providing an Authorized Request.

All Transfers are subject to the following:

	
·

	
We may limit Transfers until the end of the Right to Examine period.

	
·

	
Any Transfer request must clearly specify the amount you wish to transfer and the Allocation Options involved.

Suspension of Payments or Transfers

We may suspend or postpone Transfers or payments for Withdrawals for any period when:

	
·

	
The New York Stock Exchange is closed, other than customary weekend and holiday closings.

	
·

	
Trading on the New York Stock Exchange is restricted.

	
·

	
An emergency, as determined by the Securities and Exchange Commission, exists as a result of which disposal of the Interim Fund(s) shares are not reasonably practicable or we cannot reasonably value the Interim Fund(s) shares.

	
·

	
During any other period when the Securities and Exchange Commission, by order, so permits for the protection of Owners.

L40538-IAI                                                                                                   7                                                                                           [Admin Tracking Identifier]

 

	
Contract Charges

Product Fee

The Product Fee is shown on the Contract Schedule.

The Product Fee is assessed as a percentage of the Charge Base as an annualized rate that we accrue each day during the Accumulation Phase and when paying the Death Benefit as noted under Death Benefit Payment Options.  If any day that we are to accrue this charge is not a Business Day, we use the Charge Base at the end of the previous Business Day. We deduct the Product Fee for each quarter on the earlier of the following: (a) the next Quarterly Contract Anniversary, or the next Business Day if the next Quarterly Contract Anniversary is not a Business Day; or (b) when we deduct the final Product Fee.  We deduct the Product Fee from the Contract Value on each Quarterly Contract Anniversary (or the next Business Day if the Quarterly Contract Anniversary is not on a Business Day) before we use that Contract Value to compute any guaranteed value(s) under this contract.

When we deduct the Product Fee, we deduct it proportionately from each Allocation Option.  The deduction of the Product Fee reduces the Contract Value.  The deduction of the Product Fee does not reduce the amount we use to determine the Free Withdrawal Privilege or the Withdrawal Charge Basis, and is not treated as a Withdrawal when calculating the guaranteed value(s) provided by the Death Benefit.

We deduct the final Product Fee on the Business Day you withdraw the total Contract Value, you annuitize the contract, or when paying a Death Benefit as noted under the "Death Benefit Payment Options" provision.  However, if on a Quarterly Contract Anniversary the Contract Value is less than the Product Fee, we deduct any remaining Contract Value to cover the final Product Fee and reduce the Contract Value to zero.

Contract Maintenance Charge

Your annual Contract Maintenance Charge is shown on the Contract Schedule. We waive this charge as follows:

	
·

	
During the Accumulation Phase if the Entire Contract Value is at least equal to the Contract Maintenance Charge Waiver Minimum at the end of the last Business Day before the Contract Anniversary.

	
·

	
During the Accumulation Phase if the Contract Value on the Contract Anniversary is at least equal to the Contract Maintenance Charge Waiver Minimum.

	
·

	
During the Annuity Phase if the Entire Contract Value is at least equal to the Contract Maintenance Charge Waiver Minimum at the end of the last Business Day before the Annuity Date.

The Contract Maintenance Charge Waiver Minimum and Entire Contract Value are shown on the Contract Schedule.  We use the Owner's social security number, and for non-individually owned contracts we use the Annuitant's social security number in determining the Entire Contract Value.

During the Accumulation Phase, we deduct the Contract Maintenance Charge from the Contract Value on the Contract Anniversary. If the Contract Anniversary is not a Business Day, we deduct the charge on the next Business Day. If you take a Full Withdrawal from your contract (other than on a Contract Anniversary), we deduct the Contract Maintenance Charge. We deduct the Contract Maintenance Charge proportionately from each Allocation Option.  During the Annuity Phase, we deduct the Contract Maintenance Charge proportionately from each Annuity Payment.

L40538-IAI                                                                                                   8                                                                                           [Admin Tracking Identifier]

 

	
Withdrawals

During the Accumulation Phase and before the first Valid Claim, you can request a Full or Partial Withdrawal from this contract by providing an Authorized Request. We pay the amount of any Withdrawal within seven days of receipt of an Authorized Request unless the Suspension of Payments or Transfers provision of this contract is in effect.

Full Withdrawal

A Full Withdrawal is a request for the total Contract Value.  We process a Full Withdrawal on the Business Day we receive an Authorized Request, based on the values at the end of the Business Day.  The Full Withdrawal amount is equal to the total Contract Value minus any final Contract Charges, and Withdrawal Charge.  This contract terminates upon a Full Withdrawal.

Partial Withdrawals

A Partial Withdrawal is a request for an amount less than the total Contract Value.   Each Partial Withdrawal must be greater than or equal to the Minimum Partial Withdrawal shown on the Contract Schedule.  When you request a Partial Withdrawal, we deduct the amount you request, plus any applicable Withdrawal Charge from the total Contract Value.  We apply the Withdrawal Charge to this total amount.

We deduct Partial Withdrawals proportionately from the Allocation Options, unless we receive alternate instructions. We deduct a Partial Withdrawal from the Contract Value at the end of the Business Day that we process the Withdrawal request.

If you request a Partial Withdrawal that causes the Contract Value to be less than the Minimum Required Value shown on the Contract Schedule, we treat your request as a Full Withdrawal.

Withdrawal Charge

Upon a Full or Partial Withdrawal of this contract we assess a Withdrawal Charge.  A Withdrawal Charge applies if any part of a Withdrawal comes from a Purchase Payment that is still within the Withdrawal Charge period.  We assess the Withdrawal Charge against the Withdrawal Charge Basis, which is equal to total Purchase Payments, less any Purchase Payments withdrawn (excluding any Penalty-free Withdrawals), and less any applicable Withdrawal Charges outlined below.  Penalty-free Withdrawals include Withdrawals under the Free Withdrawal Privilege and waiver of Withdrawal Charge benefit, and if applicable, withdrawals taken as a Required Minimum Distribution as defined below.  We do not reduce the Withdrawal Charge Basis for Penalty-free Withdrawals and amounts we deduct to pay Contract Charges.  If the Withdrawal Charge Basis is zero, we do not assess a Withdrawal Charge.  For purposes of calculating any Withdrawal Charge we withdraw Purchase Payments on a first-in-first-out (FIFO) basis.  We calculate the charge at the time of each Withdrawal.  We take each Withdrawal from your contract in the following order.

	1.	
Purchase Payments that are beyond the Withdrawal Charge period shown in the Withdrawal Charge Percentages Table.  This Withdrawal is not subject to a Withdrawal Charge and it reduces the Withdrawal Charge Basis.

	2.	
Purchase Payments that are available under the Free Withdrawal Privilege.  This Withdrawal is not subject to a Withdrawal Charge and it does not reduce the Withdrawal Charge Basis.

	3.	
Purchase Payments that are within the Withdrawal Charge period shown in the Withdrawal Charge Percentages Table on a FIFO basis.  This Withdrawal is subject to a Withdrawal Charge, which is determined by multiplying each Purchase Payment by its applicable Withdrawal Charge percentage and then totaling the charges.  This Withdrawal reduces the Withdrawal Charge Basis.

	4.	
Any contract earnings.  This Withdrawal is not subject to a Withdrawal Charge and it does not reduce the Withdrawal Charge Basis.

The Withdrawal Charge Percentages Table is shown on the Contract Schedule. We will not assess the Withdrawal Charge on any payments paid out as Annuity Payments or as death benefits.

Free Withdrawal Privilege

Each Contract Year you can take multiple Withdrawals without incurring a Withdrawal Charge if, when added together, they do not exceed the Free Withdrawal Amount shown on the Contract Schedule.  Any unused Free Withdrawal Privilege in one Contract Year is not added to the Free Withdrawal Amount available in the next year.  If you take a Full Withdrawal, we assess a Withdrawal Charge with no reductions for the Free Withdrawal Privilege.

Required Minimum Distributions

 If this contract is an Individual Retirement Annuity (IRA) or owned by a qualified retirement plan, you may be required by the Internal Revenue Code to take Required Minimum Distributions. To satisfy such requirement for this contract only, you may take a withdrawal as a Required Minimum Distribution by providing us an Authorized Request. The portion of the withdrawal you take that is treated as a Required Minimum Distribution may not be greater than the Required Minimum Distribution of the current calendar year less any amount previously withdrawn. If you take a Required Minimum Distribution, Withdrawal Charges will not apply to the Required Minimum Distribution, but it will reduce your Free Withdrawal Amount and any other contract values accordingly. If you take a withdrawal and do not indicate through an Authorized Request that it is a Required Minimum Distribution, it will be treated as a Partial Withdrawal.

L40538-IAI                                                                                                   9                                                                                           [Admin Tracking Identifier]

 

	
Annuity Payments

This contract provides for Annuity Payments.

How Annuity Payments Begin

You may begin Annuity Payments by providing an Authorized Request.  If you do not begin Annuity Payments before the Scheduled Annuity Date, we will begin Annuity Payments on the Scheduled Annuity Date if the Contract Value on that date is greater than zero. You may request a later Annuity Date by providing an Authorized Request at least 30 days before the Annuity Date. Your requested Annuity Date must be on an Index Anniversary, is subject to our approval and cannot be earlier than two years after the Issue Date or later than the last Annuity Date permitted by applicable state or federal law.

We make Annuity Payments according to the Annuity Option and payment frequency you select.  You can select a monthly, quarterly, semi-annual, or annual payment frequency.  We send Annuity Payments to the Payee. For Annuity Payments to begin, we may require that Annuity Payments be greater than or equal to the Minimum Annuity Payment shown on the Contract Schedule. If the Annuity Payments would not be greater than or equal to the Minimum Annuity Payment, we reserve the right to require you to take a Full Withdrawal and your contract will then terminate.

If you do not select an Annuity Option or payment frequency before the Annuity Date, we will make monthly Annuity Payments, according to Option 2 – Life Annuity with a 10-year guaranteed period.

We may require proof of the Age and gender of an Annuitant before making any Annuity Payments.

During the Annuity Phase, you cannot change the Annuity Option or the payment frequency.

If a sole Owner dies during the Annuity Phase, and we are still required to make Annuity Payments under the terms of the selected Annuity Option, the Beneficiary(ies) becomes the Owner(s) of this contract.  If a Joint Owner dies during the Annuity Phase, and we are still required to make Annuity Payments under the terms of the selected Annuity Option, the surviving Joint Owner becomes the sole Owner of this contract. Any remaining payments will continue at least as rapidly as under the method of distribution in effect at such Owner's death.

How we calculate Annuity Payments

We calculate Annuity Payments on the Annuity Date using the Contract Value and current purchase rates for the Annuity Option you select.  Current purchase rates cannot be less than the rates in the Guaranteed Purchase Rate Table shown on the Contract Schedule.  The guaranteed purchase rates are based on the Annuity Mortality Table and the Minimum Annual Annuity Payment Rate shown on the Contract Schedule.  You may contact us at any time to get the current purchase rates that we would use if you were to begin Annuity Payments at that time.

Annuity Payments are equal to the Contract Value, divided by $1,000, and then multiplied by the applicable purchase rate for the Annuity Option you select.  Annuity Payments will not change, unless as described in Annuity Option 3 – Joint and Last Survivor Annuity.

L40538-IAI                                                                                                   10                                                                                           [Admin Tracking Identifier]

 

	
Annuity Payments continued from the previous page

Annuity Options

You may select an Annuity Option other than Options 1 through 5 by Authorized Request and with our written consent.

Option 1 – Life Annuity

We make Annuity Payments during the life of the Annuitant.  The last payment will be the one that is due before the Annuitant's death.

Option 2 – Life Annuity with  a Guaranteed Period over 5, 10, 15 or 20 years

We make Annuity Payments during the life of the Annuitant.  If the Annuitant dies before the end of the selected guaranteed period, we continue to make Annuity Payments to the Payee for the rest of the guaranteed period.  If the Payee and Annuitant were the same person, we will make payments to the Owner. If the Payee, Annuitant and Owner were the same person, we will make payments to the Beneficiary.

Option 3- Joint and Last Survivor Annuity

We make Annuity Payments during the lifetimes of the Annuitant and Joint Annuitant.  Upon the death of one Annuitant, Annuity Payments to the Payee continue during the lifetime of the surviving Joint Annuitant at a level of 100%, 75% or 50% of the previous amount, as selected by the Owner.  The last payment will be the one that is due before the last surviving Joint Annuitant's death.

Option 4 – Joint and Last Survivor Annuity with a Guaranteed Period over 5, 10, 15 or 20 years

We make Annuity Payments during the lifetimes of the Annuitant and Joint Annuitant.  Upon the death of one Annuitant, Annuity Payments to the Payee continue during the lifetime of the surviving Joint Annuitant at 100% of the previous amount.  If the surviving Joint Annuitant dies after the selected guaranteed period, the last payment will be the one that is due before the Annuitant's death.  However, if both Joint Annuitants die before the end of the selected guaranteed period, we continue to make Annuity Payments to the Payee for the rest of the guaranteed period.  If the Payee and Annuitant were the same person, we will make payments to the Owner. If the Payee, Annuitant and Owner were the same person, we will make payments to the Beneficiary.

Option 5 – Refund Life Annuity

We make Annuity Payments during the lifetime of the Annuitant.  The last payment will be the one that is due before the Annuitant's death.  After the Annuitant's death, the Payee can receive a lump sum refund.  The amount of the refund equals the Contract Value on the Annuity Date minus all Annuity Payments made. If the Payee and Annuitant were the same person, we will make payments to the Owner. If the Payee, Annuitant and Owner were the same person, we will make payments to the Beneficiary.

L40538-IAI                                                                                                   11                                                                                           [Admin Tracking Identifier]

 

	
Death Benefit

Who receives the Death Benefit

If the sole Owner dies during the Accumulation Phase, we pay the Death Benefit to the Beneficiary(ies).

If a Joint Owner dies during the Accumulation Phase, the surviving Joint Owner automatically becomes the sole primary Beneficiary, replacing all the primary Beneficiaries previously named, and we pay the Death Benefit to the surviving Joint Owner.

If the Owner is a non-individual and the Annuitant dies during the Accumulation Phase, we pay the Death Benefit to the Beneficiary(ies).

If a Beneficiary predeceases you, or you and a Beneficiary die simultaneously as defined by applicable state law or regulation, that Beneficiary's interest in this contract ends, unless your Beneficiary designation specifies otherwise. For multiple Beneficiaries, any surviving Beneficiaries receive equal portions of the Death Benefit unless your Beneficiary designation specifies unequal percentages. If you specify unequal percentages, we pay the deceased Beneficiary's percentage of the Death Benefit to the surviving Beneficiaries proportionally, unless you have specified otherwise.

If there are no surviving primary Beneficiaries, we pay the Death Benefit to the contingent Beneficiaries who survive you.  If there are no surviving Beneficiaries or if there is no named Beneficiary, we pay the Death Benefit to your estate or the Owner (if the Owner is a non-individual).

Death Benefit

During the Accumulation Phase, the Death Benefit is each surviving Beneficiary's portion of the Contract Value determined at the end of the Business Day we receive his or her Valid Claim.

Each Beneficiary's portion of the Death Benefit remains in the Allocation Options until we receive his or her Valid Claim.

Payment of the Death Benefit

We require a Valid Claim before we pay any Death Benefit.

All Death Benefits are paid in accordance with applicable law or regulations governing Death Benefit payments under Option A, B, or C.

Continuation of Contract by the Surviving Spouse

During the Accumulation Phase, the surviving Spouse of the deceased Owner who is a primary Beneficiary may choose to continue their portion of this contract as the sole Owner instead of receiving payment of the Death Benefit.  Continuation may be elected by providing us a Valid Claim, and this continuation will be effective when we receive a Valid Claim.

If a Joint Owner is the surviving Spouse of the deceased Owner, he or she is eligible to continue this contract as the sole Owner because the surviving Spouse automatically becomes the sole primary Beneficiary of the deceased Owner.

If this contract is owned by a qualified retirement plan or an IRA held by a third party custodian, the surviving Spouse of the deceased Annuitant is eligible to continue this contract as the Annuitant if the qualified retirement plan or IRA third party custodian is designated as the primary Beneficiary under this contract and the surviving Spouse is designated as the primary beneficiary under the qualified retirement plan or IRA.

If a surviving Spouse continues this contract as the sole Owner, he or she may exercise all Ownership rights under this contract.

If the contract continues, the Death Benefit payment that would have otherwise been processed will be placed in the Interim Fund(s).  On the next Index Anniversary, we then rebalance your Contract Value among your selected Allocation Options according to your future allocation instructions.

L40538-IAI                                                                                                   12                                                                                           [Admin Tracking Identifier]

 

	
Death Benefit continued from the previous page

Death Benefit Payment Options

If death occurs during the Accumulation Phase, a Beneficiary must request that the Death Benefit be paid by one of the payment options below or with our written agreement under a payment option other than Option A, Option B or Option C listed below.  We do not deduct the Contract Maintenance Charge under these payment options.

Option A  - A lump sum payment of the Death Benefit.  We deduct the final Product Fee before calculating the Death Benefit.

Option B  - Deferral of payment of the Death Benefit for up to five years from the date of the death of any Owner.  During the deferral period, the Beneficiary can make transfers within their portion of the contract among the Allocation Options.  At the end of the fifth year, any remaining Death Benefit is paid in a lump sum.  If you select Option B, we continue to assess the Product Fee shown on the Contract Schedule.

Option C  - If the Beneficiary is an individual, payment of the Death Benefit as Annuity Payments under an Annuity Option under Annuity Options 1, 2 or 5, over the lifetime of the Beneficiary. We deduct the final Product Fee before calculating Annuity Payments.   With our written consent, other options may be available for payment over a period not extending beyond the life expectancy of the Beneficiary under which we continue to assess the Product Fee shown on the Contract Schedule.

If no Death Benefit Payment Option is selected, we default payment to Option B.

Any Beneficiary's portion of the Death Benefit not applied to Annuity Payments under an Annuity Option within one year of the date of the Owner's death must be distributed within five years of the date of death.

If a Beneficiary requests a lump sum payment, we pay the amount from the Variable Account within seven days of receipt of a Valid Claim from the Beneficiary, unless the Suspension of Payments or Transfers provision in this contract is in effect.

In cases of multiple Beneficiaries, we will continue to assess the Product Fee  shown on the Contract Schedule after receiving the first Valid Claim from any one Beneficiary until there has been a complete distribution of the death benefit.

	
Ownership

Assignment of this Contract

You may, by Authorized Request and our written consent, assign or otherwise transfer specific rights under this contract during the Accumulation Phase.  We may refuse to consent to such assignments or transfers at any time on a non-discriminatory basis.  We will not consent if the assignment or transfer would violate or result in noncompliance with any applicable state or federal law or regulation.  Upon consent, we will record the assignment, subject to our approval guidelines at the time of the request. We will not be responsible for the validity or effect of the assignment, including the tax consequences of such assignment.  We will not be liable to the assignee for any actions we take or payments we make before we consent and record the assignment or transfer.

If you assign this contract, you can exercise your rights only with the written consent of the assignee.  An assignment does not change the Annuitant or Beneficiary(ies).  An assignment that is not an absolute assignment does not change the Owner.

Change of Ownership

You may, by Authorized Request and our written consent, change ownership of this contract to a new Owner during the Accumulation Phase.  We may refuse to consent to any change of ownership at any time on a non-discriminatory basis.  We will not consent if the change in ownership would violate or result in noncompliance with any applicable state or federal law or regulation.  Upon consent, we will record the change of ownership, subject to our approval guidelines at the time of the request.  An Ownership change will take effect as of the date you signed the Authorized Request. We will not be responsible for the validity or effect of the change of ownership, including the tax consequences of such transfer.  We will not be liable to the new Owner for any actions we take or payments we make before we consent and record the change of ownership.

A change of ownership does not change the Annuitant or Beneficiary(ies).  The new Owner can request a change of Annuitant or Beneficiary by providing an Authorized Request.

L40538-IAI                                                                                                   13                                                                                           [Admin Tracking Identifier]

 

	
Ownership continued from the previous page

Change of Annuitant

If you have an individually owned non-qualified contract, you may, upon Authorized Request, change the Annuitant during the Accumulation Phase.

For solely owned individual contracts, where the sole Owner is not the Annuitant, the sole Owner automatically becomes the Annuitant if the Annuitant dies during the Accumulation Phase.  The Owner may name another Annuitant at any time.

For jointly owned contracts, where neither Joint Owner is the Annuitant, the younger Joint Owner automatically becomes the Annuitant if the Annuitant dies during the Accumulation Phase.  The Joint Owners may name another Annuitant at any time.   If instead the deceased Annuitant was also a Joint Owner, the Joint Owners were Spouses, and the surviving Joint Owner continues the Contract, the surviving Joint Owner automatically becomes the Annuitant and may name another Annuitant at any time.

For non-individually owned contracts, the Annuitant may not be changed.

An Annuitant change takes effect as of the date you signed the Authorized Request, subject to our approval guidelines at that time.  We will not be liable for any actions we take or payments we make before the Service Center receives the Authorized Request.

Change of Beneficiary

You may, upon Authorized Request, change the Beneficiary(ies) subject to the following limitations.

For solely owned individual or non-individual contracts, you may change the Beneficiary(ies) at any time before an Owner's death, if individually owned, or before an Annuitant's death, if non-individually owned.

For jointly owned contracts, you may change the contingent Beneficiary(ies) at any time. Upon the first Joint Owner's death, the surviving Joint Owner is the sole primary Beneficiary and may not be changed.

An irrevocable Beneficiary must give written consent before we will change the Beneficiary.

A Beneficiary change takes effect as of the date you signed the Authorized Request.  We are not liable for any actions we take or payments we make before the Service Center receives the Authorized Request.

	
General Provisions

Entire Contract

We have issued this contract in consideration of the Initial Purchase Payment.  This contract, any amendments, any endorsements, and any riders together are the Entire Contract.

Incontestability of this Contract

We will not contest this contract, except as described in the "Misstatement of Age or Gender" provision.

Misstatement of Age or Gender

If there is a misstatement of Age or gender of the Owner or Annuitant, we will correct the applicable Age or gender, except as further described below.

Before Annuity Payments begin, if there is a misstatement of the Age of the Owner or Annuitant and this contract was issued after the Maximum Issue Age, we will refund Purchase Payments paid minus any prior distributions, and we will void this contract.  The Maximum Issue Age is shown on the Contract Schedule.

After the Annuity Date, if there is a misstatement of the Age or gender of the Annuitant, we recalculate the Annuity Payments based on the correct Age and gender.  If the misstatement caused an underpayment, we pay the Payee the difference in one payment.  If the misstatement caused an overpayment, we reduce the next payment by the amount of the difference.  If the amount of the difference is larger than the next payment, we reduce the subsequent payment, and so on until the entire difference has been subtracted.  If the future payments are insufficient to cover the difference, we bill the Payee for the amount due.  Any underpayment or overpayment will not include interest.

Annual Report

At least once each calendar year during the Accumulation Phase, we send you a report that shows contract activity and the Contract Value.

L40538-IAI                                                                                                   14                                                                                           [Admin Tracking Identifier]

 

	
General Provisions continued from the previous page

No Dividends are Payable

This contract is nonparticipating.  This contract does not participate in our profits or surplus.

Changes to an Index or Interim Fund

We will send notice to you and any assignee of record at your last known address if we add an Index or an Interim Fund. We will send notice to you and any assignee of record at your last known address if we substitute an Index or Interim Fund, and any portion of your Contract Value is allocated to the Index or Interim Fund being substituted. An Index or Interim Fund may be substituted with a new Index or Interim Fund because:

· the Index or Interim Fund is discontinued;

	
·

	
we are unable to use the Index because changes to the Index make it impractical or expensive to purchase derivative securities to hedge the Index;

· we are not licensed to use the Index or Interim Fund; or

	
·

	
if the method of calculation of the Index or Interim Fund values changes substantially resulting in significantly different performance results.

We will seek regulatory approval prior to substituting an Index. If an Index or Interim Fund is renamed, we will send notice of the new name to you and any assignee of record at your last known address.

Who can make changes in this contract

Only our President together with our Secretary has the authority to make any changes to this contract.  Any change must be in writing.

Taxes

Taxes paid to any governmental entity results in an amount equivalent to the tax being charged against the Contract Value.  We, in our sole discretion, determine whether taxes have resulted from the investment experience of the Variable Account, our receipt of Purchase Payments, or commencement of Annuity Payments.  We may, at our discretion, pay taxes when due and deduct that amount from the Contract Value at a later date.  This will not waive any right we may have to deduct previously paid amounts at a later date.

We may establish a provision for federal income taxes if we determine, in our sole discretion, that we will incur such tax as a result of the operation of the Variable Account.  We will deduct for any income taxes incurred as a result of the operation of the Variable Account whether or not there was a provision for taxes and whether or not it was sufficient.

We deduct any withholding taxes from any payment we make, as required by applicable law.

Divorce

If Spouses divorce on or after the Issue Date, we will treat any request to transfer or divide benefits under the contract as a request for a Full or Partial Withdrawal payable to you.  The Full or Partial Withdrawal will be subject to any applicable taxes and Withdrawal Charges.  If we receive notice of divorce as an Authorized Request, we will remove one former Spouse from the contract as an Owner, Joint Owner, Annuitant or Beneficiary.

Protection of the Death Benefit

To the extent permitted by law, the Death Benefit will not be subject to claims of creditors.

Evidence of Survival

Where any benefits under this contract are contingent on a person being alive on a given date, we may require proof satisfactory to us that the condition has been met.

Termination

The contract terminates when:

	
·

	
the Accumulation Phase and/or the Annuity Phase terminates; and

	
·

	
if a Valid Claim has been received and all applicable Death Benefit payments have been made.

The contract provisions that do not apply to our Annuity Payment obligations terminate on the Annuity Date.

Amendments

We may amend this contract to retain its qualification for treatment as an annuity, whether under state or federal law, including the following.

	
·

	
The Internal Revenue Code, as amended.

	
·

	
Internal Revenue Service Rulings and Regulations.

	
·

	
Any requirements imposed by the Internal Revenue Service.

L40538-IAI                                                                                                   15                                                                                           [Admin Tracking Identifier]]

 

Allianz Life Insurance Company

of North America

[PO Box 561]

[Minneapolis, MN 55440-0561]

[800.624.0197]

Individual Flexible Purchase Payment Variable Deferred Annuity Contract

Purchase Payments we receive for this contract accumulate to provide Annuity Payments or a Death Benefit.  This is a variable annuity contract with Contract Value increasing or decreasing depending on the experience of the Variable Account and Index Options.  This contract is nonparticipating, with no dividends payable.  Benefits available under this contract are not less than those required by statute of the state in which this contract is delivered.

L40538-IAI                                                                                                   16                                                                                           [Admin Tracking Identifier]

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