Document:

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                                                                   EXHIBIT 10.1

                     FIRST AMENDMENT TO FINANCING AGREEMENT

                           FIRST AMENDMENT, dated as of November 28, 2001 (this
"Amendment"), to the SECOND AMENDED AND RESTATED CREDIT Agreement, dated as
of May 31, 2001 (the "Financing Agreement"), by and among PEN HOLDINGS, INC., a
Tennessee corporation (the "Borrower"), the financial institutions from time to
time party thereto (the "Lenders"), ABLECO FINANCE LLC, as collateral agent for
the Lenders (in such capacity, the "Collateral Agent"), and FOOTHILL CAPITAL
CORPORATION, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"; together with the Collateral Agent, each an "Agent" and
collectively, the "Agents").

                                    RECITALS

                           The Borrower, the Lenders and the Agents are parties
to the Financing Agreement, pursuant to which the Lenders agreed, subject to
the terms and conditions thereof, to extend to the Borrower credit consisting
of a term loan facility in an aggregate principal amount not to exceed
$32,000,000 and a revolving loan facility in an aggregate principal amount not
to exceed $15,000,000.

                           Notwithstanding the occurrence on or before August
31, 2001 and the continuance during the period from such date through the date
hereof of one or more Events of Default, and, accordingly, the fact that the
Lenders may at any time exercise any or all of their remedies under the Loan
Documents and the fact that the Lenders at no time since August 31, 2001 have
had any obligation to make any Revolving Loan or Term Loan under the Financing
Agreement, pursuant to the request of the Borrower, (i) the Revolving Loan
Lenders made Revolving Loans to the Borrower on or about September 18, 2001 in
the aggregate principal amount of $2,800,000, pursuant to the Financing
Agreement and a letter dated September 18, 2001 from the Collateral Agent to
the Borrower, (ii) the Lenders and the Agents agreed to the Borrower's use of
cash collateral as set forth in the letter agreement, dated as of September 28,
2001 (the "Cash Collateral Letter"), between the Collateral Agent, acting on
behalf of the Lenders and the Agents, and the Borrower and (iii) the Lenders,
on November 5, 2001, (A) made additional Revolving Loans to the Borrower in the
aggregate principal amount of $2,450,000 in accordance with the Financing
Agreement, (B) made a new term loan to the Borrower in the aggregate principal
amount of $3,000,000, the proceeds of which were used by the Borrower to
simultaneously pay the Bridge Fee (as defined below) and (C) agreed with the
Borrower in principle to certain amendments to the Financing Agreement, in each
case pursuant to a letter agreement, dated as of October 19, 2001 (the
"Amendment Letter"), between the Collateral Agent, acting on behalf of the
Lenders and the Agents, and the Borrower.

                           The Borrower has now requested (i) the Lenders to
extend the forbearance period that is described in the Amendment Letter and
(ii) the Revolving Loan Lenders to agree to make further Revolving Loans to the
Borrower from time to time in an aggregate principal

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amount not to exceed $8,357,152 at any one time outstanding. The Borrower has
also asked the Lenders to agree to certain amendments to the financial
covenants and certain other provisions of the Financing Agreement. The Lenders
are willing to agree to the requested forbearance, and to the requested
amendments, but only upon the terms and subject to the conditions set forth
herein.

                           Accordingly, in consideration of the premises and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:

                  A.       Definitions.

                           All capitalized terms used herein and not otherwise
defined herein are used herein as defined in the Financing Agreement.

                  B.       Forbearance.

                           Pursuant to the request of the Borrower, the Lenders
hereby agree to forbear, during the period from the date hereof through the
earlier of (i) the Final Maturity Date and (ii) the occurrence of a Potential
Default or Event of Default, from exercising their remedies under the Loan
Documents with respect to (a) any Event of Default referred to in the Cash
Collateral Letter and (b) any Event of Default that would otherwise occur under
Section 8.01(c) or 8.01(e) of the Financing Agreement by reason of the
Borrower's delivering to the Agents and the Lenders financial statements (1)
covering the period from May 1, 2001 through September 30, 2001 that
erroneously reported a $3,215,000 gain rather than a loss of $670,000 upon the
sale of certain coal reserves during such period and (2) covering the period
from September 1, 2001 through September 30, 2001 that failed (A) to disclose
the existence of a letter of intent pursuant to which Marine Terminals agreed
to sell to a third party its interest in a partnership that owns an
international marine terminal in Louisiana and (B) to reflect a loss of
$11,444,000 as a result of the adjustment, in such amount and as required by
GAAP, in the carrying value of such partnership interest due to the execution
of such letter of intent for such transaction.

                  C.       Amendments.

                           1.       Existing Defined Terms.

                                    (a)      The definition of the term
"Commitments" in Section 1.01 of the Financing Agreement is hereby amended in
its entirety to read as follows:

                           "Commitments" means, with respect to each Lender,
                           such Lender's Revolving Credit Commitment, Term Loan
                           A Commitment and Term Loan B Commitment.

                                    (b)      Each of the following defined
terms is hereby deleted in its entirety:

                           "Consolidated Adjusted Current Liabilities"
                           "Consolidated Current Assets"
                           "Consolidated Net Worth"

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                           "Consolidated Senior Debt to EBITDA Ratio"
                           "Consolidated Working Capital"
                           "Term Loan"
                           "Term Loan Borrowing Base"
                           "Term Loan Commitment"
                           "Term Loan Lender"
                           "Total Term Loan Commitment"

                                    (c)      The definition of the term "Final
Maturity Date" in Section 1.01 of the Financing Agreement is hereby amended in
its entirety to read as follows:

                           "Final Maturity Date" means January 28, 2002 (unless
                           extended pursuant to Section 2.03(a)), or such
                           earlier date on which any Loan shall become due and
                           payable, in whole or in part, in accordance with the
                           terms of this Agreement and the other Loan
                           Documents.

                                    (d)      The definition of the term "Pro
Rata Share" in Section 1.01 of the Financing Agreement is hereby amended by (i)
deleting the terms "Term Loan", "Term Loan Commitment and "Total Term Loan
Commitment" in paragraph (b) thereof and substituting in lieu thereof "Term
Loan A", "Term Loan A Commitment" and "Total Term Loan A Commitment",
respectively, (ii) deleting the word "and" at the end of paragraph (b) thereof,
(iii) redesignating existing paragraph (c) therein as new paragraph (d), and
(iv) adding after paragraph (b) the following new paragraph (c):

                           (c)      with respect to a Lender's obligation to
                           make the Term Loan B and receive payments of
                           interest, fees, and principal with respect thereto,
                           the percentage obtained by dividing (i) such
                           Lender's Term Loan B Commitment by (ii) the Total
                           Term Loan B Commitment; provided that, if the Term
                           Loan B Commitments have been reduced to zero, the
                           numerator shall be the aggregate unpaid principal
                           amount of such Lender's Term Loan B and the
                           denominator shall be the aggregate unpaid principal
                           amount of the Term Loan B; and

                                    (e)      The definition of the term
"Revolving Loan Borrowing Base" in Section 1.01 of the Financing Agreement is
hereby amended by (i) redesignating clause (ii)(B) thereof as clause (ii)(C)
and (ii) adding immediately after clause (ii)(A) thereof, the following new
clause (ii)(B):

                                    (B)      the Liquidity Reserve plus.

                                    (f)      The definition of the term "Term
Loan Obligations" in Section 1.01 of the Financing Agreement is hereby amended
in its entirety to read as follows:

                                    "Term Loan Obligations" means the Term Loan
                           A Obligations and the Term Loan B Obligations.

                                    (g)      The definition of the term "Total
Commitment" in Section 1.01 of the Financing Agreement is hereby amended in its
entirety to read as follows:

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                                    "Total Commitment" means the sum of the
                           Total Revolving Credit Commitment, the Total Term
                           Loan A Commitment and the Total Term Loan B
                           Commitment.

                           2.       New Defined Terms. The following defined
terms are hereby added in appropriate alphabetical order to Section 1.01 of the
Financing Agreement.

                                            "Bridge Fee" means a fee payable by
                           the Borrower to the Administrative Agent, for the
                           ratable benefit of the Lenders, in the amount of
                           $3,000,000, which shall have been earned and due and
                           payable on the First Amendment Effective Date and
                           paid from the proceeds of the Term Loan B by
                           charging the Borrower's Loan Account in accordance
                           with Section 2.01(b)(iii) herein.

                                            "Cash Collateral Letter" means the
                           letter agreement, dated as of September 28, 2001,
                           between the Collateral Agent, acting on behalf of
                           the Lenders and the Agents, and the Borrower.

                                            "Consolidated Net Operating Cash
                           Flow" means, for any period, an amount equal to net
                           operating cash flow, as determined by subtracting
                           from the total receipts for such period the total
                           expenditures for such period, in each case for the
                           revenue and expense items set forth in the Revised
                           Projections, for the Borrower and its Consolidated
                           Subsidiaries, determined in accordance with GAAP for
                           such period.

                                            "First Amendment" means First
                           Amendment, dated as of November 28, 2001, to the
                           Financing Agreement, among the Borrower, the Lenders
                           and the Agents.

                                            "First Amendment Effective Date"
                           means November 5, 2001, upon satisfaction in full of
                           all of the conditions set forth in Section D of the
                           First Amendment.

                                            "Liquidity Reserve" means a reserve
                           equal to the difference between (a) Availability and
                           (b) $8,357,152.

                                            "Revised Projections" means the
                           projected financial information entitled "Pen
                           Holdings Inc. 26 Week Cash Flow Projection Beginning
                           October 12, 2001," provided by the Borrower to the
                           Lenders prior to the First Amendment Effective Date,
                           a copy of which is attached as Annex IV to the First
                           Amendment.

                                            "Term Loan A" means a term loan
                           made by a Lender to the Borrower pursuant to Section
                           2.01(b)(ii).

                                            "Term Loan A Commitment" means, as
                           to any Lender, the obligation of such Lender to make
                           a Term Loan A to the Borrower in a principal amount
                           not to exceed the amount set forth opposite such

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                           Lender's name under the heading Term Loan A
                           Commitment on Schedule 1.01(A) hereto, as the same
                           may be terminated or reduced in accordance with the
                           terms of this Agreement.

                                            "Term Loan A Lender" means a Lender
                           with a Term Loan A Commitment.

                                            "Term Loan A Obligations" means any
                           Obligations with respect to the Term Loans A
                           (including the principal thereof, the interest
                           thereon, and the fees and expenses specifically
                           related thereto).

                                            "Term Loan B" means a term loan
                           made by a Lender to the Borrower pursuant to Section
                           2.01(b)(iii).

                                            "Term Loan B Commitment" means, as
                           to any Lender, the obligation of such Lender to make
                           a Term Loan B to the Borrower in a principal amount
                           not to exceed the amount set forth opposite such
                           Lender's name under the heading Term Loan B
                           Commitment on Schedule 1.01(A) hereto, as the same
                           may be terminated or reduced in accordance with the
                           terms of this Agreement.

                                            "Term Loan B Lender" means a Lender
                           with a Term Loan B Commitment.

                                            "Term Loan B Obligations" means
                           any Obligations with respect to the Term Loans B
                           (including, without limitation, the principal
                           thereof, the interest thereon (including capitalized
                           interest), and the fees and expenses specifically
                           related thereto).

                                            "Term Loans" means, collectively,
                           the Term Loan A and the Term Loan B.

                                            "Total Term Loan A Commitment"
                           means the sum of the amounts of the Lenders' Term
                           Loan A Commitments.

                                            "Total Term Loan B Commitment"
                           means the sum of the amounts of the Lenders' Term
                           Loan B Commitments.

                           3.       Existing Loans; Commitments.

                                    (a)      Clause (i) of the second sentence
of Section 2.01(a) of the Financing Agreement is hereby amended by deleting the
word "Commitments" and inserting the words "Revolving Credit Commitments and
Term Loan A Commitments" in lieu thereof.

                                    (b)      Clause (ii) of the second sentence
of Section 2.01(a) of the Financing Agreement is hereby amended by deleting the
words "Term Loan" and inserting the words "Term Loan A" in lieu thereof.

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                                    (c)      Section 2.01(b) of the Financing
Agreement is hereby amended by (i) deleting the word "and" at the end of clause
(i) thereof, (ii) deleting clause (ii) thereof and inserting the following in
lieu thereof:

                                    (ii)     each Term Loan A Lender severally
                           agrees to make a Term Loan A within three (3)
                           Business Days after the Closing Date, in an
                           aggregate principal amount not to exceed the amount
                           of such Lender's Term Loan A Commitment; and

, and (iii) adding the following new clause (iii) at the end thereof:

                                    (iii)    each Term Loan B Lender severally
                           agrees to make a Term Loan B on the First Amendment
                           Effective Date, in an aggregate principal amount not
                           to exceed the amount of such Lender's Term Loan B
                           Commitment. The Term Loan B shall be charged to the
                           Borrower's Loan Account on the First Amendment
                           Effective Date.

                                    (d)      Section 2.01(c) of the Financing
Agreement is hereby amended by deleting the first sentence thereof and
inserting the following in lieu thereof:

                                    (c)      Notwithstanding the foregoing
                           provisions of this Section 2.01, the aggregate
                           principal amount of Revolving Loans outstanding at
                           any time to the Borrower shall not exceed the lowest
                           of (A) the Total Revolving Credit Commitment, (B)
                           the then current Revolving Loan Borrowing Base and
                           (C) $8,357,152.

                                    (e)      Section 2.01(d) of the Financing
Agreement is hereby deleted in its entirety and the following inserted in lieu
thereof:

                                    (d)      Notwithstanding the foregoing
                           provisions of this Section 2.01, (i) the aggregate
                           principal amount of the Term Loans A made shall not
                           exceed the Total Term Loan A Commitment and (ii) the
                           aggregate principal amount of the Term Loans B made
                           shall not exceed the Total Term Loan B Commitment.
                           Any principal amount of a Term Loan which is repaid
                           or prepaid may not be reborrowed.

                           4.       Making the Loans.

                                    (a)      Clause (ii) of the second sentence
of Section 2.02(a) of the Financing Agreement is hereby amended by deleting the
term "Term Loan" and inserting the term "Term Loan A" in lieu thereof.

                                    (b)      Clause (iv) of the second sentence
of Section 2.02(a) of the Financing Agreement is hereby amended by (i) deleting
the term "Term Loan" and inserting the term "Term Loan A" in lieu thereof, and
(ii) inserting the following before the period at the end thereof:

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                           , and with respect to the Term Loan B, must be the
                           First Amendment Effective Date.

                                    (c)      Section 2.02(c)(i) of the
Financing Agreement is hereby amended by deleting the phrase "and the Total
Term Loan Commitment" and inserting ", the Total Term Loan A Commitment and the
Total Term Loan B Commitment" in lieu thereof.

                           5.       Repayment of Loans; Evidence of Debt.
Section 2.03 of the Financing Agreement is hereby amended by (i) deleting
paragraph (a) thereof and inserting the following in lieu thereof:

                                    (a)      The aggregate outstanding
                           principal of all Loans shall be due and payable on
                           the Final Maturity Date, provided that the Final
                           Maturity Date shall be extended to April 12, 2002 if
                           (i) no Potential Default or Event of Default except
                           for the Events of Default referred to in the Cash
                           Collateral Letter shall occur and (ii) prior to
                           January 28, 2002, the Borrower or its financial
                           advisor has delivered to the Lenders (A) a letter of
                           intent, in form and substance satisfactory to the
                           Lenders in their reasonable discretion and executed
                           by the Borrower and a third party satisfactory to
                           the Lenders in their reasonable discretion, pursuant
                           to which such third party has agreed to acquire all
                           or substantially all of the business and assets of
                           the Borrower and its Consolidated Subsidiaries (by
                           merger, stock sale or asset sale or a combination of
                           the foregoing) pursuant to terms (including, without
                           limitation, the purchase price and the closing
                           conditions) satisfactory to the Lenders in their
                           reasonable discretion and in any case providing for
                           the payment in full of all the Obligations no later
                           than April 12, 2002 or (B) a definitive binding
                           purchase agreement executed by the Borrower and a
                           third party reasonably satisfactory to the Lenders
                           pursuant to which such third party has agreed to
                           acquire all or substantially all of the business and
                           assets of the Borrower and its Consolidated
                           Subsidiaries (by merger, stock sale or asset sale or
                           a combination of the foregoing) pursuant to terms
                           that provide that all of the Obligations are to be
                           repaid in full no later than April 12, 2002 and that
                           neither the Borrower nor the third party's
                           obligations to close such acquisition is subject to
                           any condition that is within the control of either
                           such Person or anyone controlled by either such
                           Person (other than the delivery of customary closing
                           certificates and customary closing documents).

, (ii) deleting paragraph (b) in its entirety and (iii) redesignating existing
paragraphs (c), (d), (e) and (f) therein as new paragraphs (b), (c), (d) and
(e), respectively.

                           6.       Interest.

                                    (a)      Section 2.04(b) of the Financing
Agreement is hereby amended in its entirety to read as follows:

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                                    "(b)     Term Loan A. The Term Loan A shall
                           bear interest on the principal amount thereof from
                           time to time outstanding, from the date of such Loan
                           until such principal amount becomes due, at a rate
                           per annum equal to the Reference Rate plus the
                           Applicable Term Loan Margin."

                                    (b)      Section 2.04 of the Financing
Agreement is hereby amended by (i) redesignating existing paragraphs (c), (d)
and (e) therein as new paragraphs (d), (e) and (f), respectively, and (ii)
adding after paragraph (b) thereof, the following new paragraph (c):

                                    (c)      Term Loan B. The Term Loan B shall
                           bear interest on the principal amount thereof from
                           time to time outstanding, from the date of such Loan
                           until such principal amount becomes due, at a rate
                           per annum equal to the Reference Rate plus the
                           Applicable Term Loan Margin plus 4%.

                                    (c)      Section 2.04(d) of the Financing
Agreement is hereby amended in its entirety to read as follows:

                                    (e)      Interest Payment. Interest on each
                           Revolving Loan, the Term Loan A and the Term Loan B
                           shall be payable monthly, in arrears, on the first
                           day of each month, commencing on the first day of
                           the month following the month in which such Loan is
                           made and at maturity (whether upon demand, by
                           acceleration or otherwise). Interest at the
                           Post-Default Rate shall be payable on demand. The
                           Borrower hereby authorizes the Administrative Agent
                           to, and the Administrative Agent may, from time to
                           time, charge the Loan Account pursuant to Section
                           3.02 with the amount of any interest payment due
                           hereunder.

                           7.       Reduction of Commitment; Prepayment of
Loans.

                                    (a)      Section 2.05(a) of the Financing
Agreement is hereby amended by (i) deleting clause (ii) thereof and inserting
the following in lieu thereof:

                           (ii)     Term Loan A Commitments. The Term Loan A
                           Commitments shall terminate upon the making by the
                           Lenders of the Term Loan A to the Borrower in
                           accordance with Section 2.01(b)(ii).

and (ii) adding the following new clause (iii) at the end thereof:

                           (iii)    Term Loan B Commitments. The Term Loan B
                           Commitments shall terminate upon the making by the
                           Lenders of the Term Loan B to the Borrower in
                           accordance with Section 2.01(b)(iii).

                                    (b)      Section 2.05(b) of the Financing
Agreement is hereby amended by (i) deleting clause (ii) thereof and inserting
the following in lieu thereof:

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                           (ii)     Term Loan A. The Borrower may prepay,
                           without penalty or premium, the principal of the
                           Term Loan A, in whole, upon at least thirty (30)
                           days' prior written notice to the Administrative
                           Agent, or in part, upon at least five (5) Business
                           Days' prior written notice to the Administrative
                           Agent. Each prepayment made pursuant to this clause
                           (b)(ii) shall be accompanied by the payment of
                           accrued interest to the date of such payment on the
                           amount prepaid.

, and (ii) adding the following new clause (iii) at the end thereof:

                           (iii)    Term Loan B. The Borrower may prepay,
                           without penalty or premium, the principal of the
                           Term Loan B in full, provided that (A) the
                           prepayment made pursuant to this clause (b)(iii)
                           shall (x) only be made concurrently with the
                           termination of the Revolving Credit Commitments and
                           the payment in full of the Obligations and (y) be
                           accompanied by the payment of accrued interest to
                           the date of such payment on the amount prepaid, and
                           (B) if such prepayment is made on or prior to
                           January 28, 2002 in accordance with clause (A)
                           above, then the principal amount of the Term Loan B
                           shall be forgiven as of the date of such prepayment
                           so that the principal amount of the Term Loan B to
                           be paid on such date of prepayment shall be
                           $2,000,000, plus the then accrued interest on the
                           Term Loan B (determined without giving effect to
                           such reduction).

                                    (c)      Section 2.05(c)(ii) of the
Financing Agreement is hereby amended in its entirety to read as follows:

                           (ii)     The Borrower will immediately prepay the
                           outstanding principal amount of the Term Loans in
                           the event that the Total Revolving Credit Commitment
                           is terminated for any reason.

                                    (d)      Section 2.05(c)(iv) of the
Financing Agreement is hereby amended by deleting the clause "Term Loans (or,
if the Term Loans have been paid in full, the Revolving Loans)" and inserting
the clause "Term Loan B (or, if the Term Loan B has been paid in full, the Term
Loan A, or if the Term Loan A has been paid in full, the Revolving Loans)" in
lieu thereof.

                                    (e)      Section 2.05(c)(v) of the
Financing Agreement is hereby amended in its entirety to read as follows:

                                             (v)      Immediately upon any
                           Disposition or the sale of any Property by the
                           Borrower, any Surety or any Consolidated Subsidiary
                           pursuant to Section 7.08, the Borrower shall prepay
                           the outstanding principal amount of the Term Loan B
                           (or, if the Term Loan B has been paid in full, the
                           Term Loan A, or if the Term Loan A has been paid in
                           full, the Revolving Loans) in an amount equal to
                           100% of the Net Available Proceeds received by such
                           Person in connection with such Disposition or 100%
                           of the net proceeds received by such Person in
                           connection with such

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                           sale, as applicable. Nothing contained in this
                           subsection (v) shall permit the Borrower or any of
                           its Consolidated Subsidiaries to make a Disposition
                           of any Property other than in accordance with
                           Section 7.08. Upon any Disposition in accordance
                           with Section 7.08(iii) or (iv) of (A) the Borrower's
                           equity interest in Marine Terminals or any of Marine
                           Terminals' assets or properties (including without
                           limitation any sale of its interest in the
                           partnership that owns an international marine
                           terminal in Louisiana and any release of its
                           interest in funds held in escrow with respect to
                           funding payments of principal of and interest on
                           bonds issued in connection with such terminal) or
                           (B) the Borrower's interest in the office building
                           located at 5110 Maryland Way, Brentwood, Tennessee,
                           the Borrower shall apply the Net Available Proceeds
                           from such Disposition, concurrently with the receipt
                           thereof, (x) first, to prepay the outstanding
                           principal amount of the Revolving Loans in an amount
                           equal to 100% of such Net Available Proceeds in
                           connection with such sale and (y) second, if the
                           Revolving Loans have been paid in full, to fund
                           working capital and capital expenditures in
                           accordance with the Revised Projections, provided
                           that (1) the Borrower has commenced and is taking
                           good faith actions satisfactory to the Lenders in
                           their reasonable discretion to enter into a
                           transaction specified in Section 2.03(a) and (2) no
                           Potential Default or Event of Default except for the
                           Events of Default referred to in the Cash Collateral
                           Letter has occurred.

                                    (f)      The first sentence of Section
2.05(c)(vi) of the Financing Agreement is hereby amended by deleting the clause
"Term Loans (or, if the Term Loans have been paid in full, the Revolving
Loans)" and inserting the clause "Term Loan B (or, if the Term Loan B has been
paid in full, the Term Loan A, or if the Term Loan A has been paid in full, the
Revolving Loans)" in lieu thereof.

                                    (g)      Section 2.05(c)(vii) of the
Financing Agreement is hereby amended by deleting the clause "Term Loans (or,
if the Term Loans have been paid in full, the Revolving Loans)" and inserting
the clause "Term Loan B (or, if the Term Loan B has been paid in full, the Term
Loan A, or if the Term Loan A has been paid in full, the Revolving Loans)" in
lieu thereof.

                                    (h)      Section 2.05(c)(viii) of the
Financing Agreement is hereby amended by deleting the clause "Term Loans (or,
if the Term Loans have been paid in full, the Revolving Loans)" and inserting
the clause "Term Loan B (or, if the Term Loan B has been paid in full, the Term
Loan A, or if the Term Loan A has been paid in full, the Revolving Loans)" in
lieu thereof.

                                    (i)      Section 2.05(d) of the Financing
Agreement is hereby amended in its entirety to read as follows:

                                            (d)       Application of Payments.
                           Each prepayment pursuant to subsections (c)(iv),
                           (c)(v), (c)(vi), (c)(vii) and (c)(viii) above

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                           shall be applied, first, to the Term Loan B, second,
                           to the Term Loan A, and third to the Revolving
                           Loans.

                           8.       Capitalization of Interest. Section 3.02(a)
of the Financing Agreement is hereby amended by adding at the end of the first
sentence thereof the following:

                           ; provided, however, that interest on the Term Loan
                           B that is due on each monthly interest payment date
                           shall be capitalized and added on such date to the
                           principal amount of the Term Loan B unless an Event
                           of Default or Potential Default shall have occurred
                           and then be continuing.

                           9.       Apportionment of Payments.

                                    (a)      Section 3.04(b) of the Financing
Agreement is hereby amended in its entirety to read as follows:

                           After the occurrence and during the continuance of
                           an Event of Default, the Administrative Agent may,
                           and upon the direction of the Required Lenders
                           shall, apply all payments in respect of any
                           Obligations and all proceeds of the Collateral,
                           subject to the provisions of this Agreement, (i)
                           first, ratably to pay the Obligations in respect of
                           any fees, expense reimbursements, indemnities and
                           other amounts then due to the Agents until paid in
                           full; (ii) second, ratably to pay the Term Loan B
                           Obligations in respect of any fees and indemnities
                           then due to the Term Loan B Lenders until paid in
                           full; (iii) third, ratably to pay interest due in
                           respect of the Term Loan B until paid in full; (iv)
                           fourth, ratably to pay principal of the Term Loan B
                           until paid in full; (v) fifth, ratably to pay the
                           Term Loan A Obligations in respect of any fees and
                           indemnities then due to the Term Loan A Lenders
                           until paid in full; (vi) sixth, ratably to pay
                           interest due in respect of the Term Loan A until
                           paid in full; (vii) seventh, ratably to pay
                           principal of the Term Loan A until paid in full,
                           (viii) eighth, ratably to pay the Revolving Loan
                           Obligations in respect of any fees and indemnitees
                           then due to the Revolving Loan Lenders until paid in
                           full; (ix) ninth, ratably to pay interest due in
                           respect of the Revolving Loans and Agent Advances
                           and until paid in full; (x) tenth, ratably to pay
                           principal of the Revolving Loans and Agent Advances
                           until paid in full, and (xi) eleventh, to the
                           ratable payment of all other Obligations then due
                           and payable.

                                    (b)      Section 3.04(c) of the Financing
Agreement is hereby amended by deleting the term "Term Loan" and inserting the
term "Term Loans" in lieu thereof.

                           10.      Reporting and Information Requirements.
Section 6.01 of the Financing Agreement is hereby amended by (i) redesignating
existing paragraph (o) thereof as new paragraph (p) and (ii) adding immediately
after paragraph (n) thereof the following new paragraph (o):

                                     -11-
<PAGE>

                                            (o)       Weekly Certificate. As
                           soon as available and in any event within three (3)
                           Business Days after the end of each week (beginning
                           with the week ending November 30, 2001), the
                           Borrower will furnish to the Agents and the Lenders
                           a certificate, substantially in the form of Exhibit
                           F, setting forth (i) the Consolidated Net Operating
                           Cash Flow and (ii) the number of tons of coal
                           produced by the Borrower and its Consolidated
                           Subsidiaries excluding the coal produced from the
                           Elk Horn reserves by Persons for their own account
                           pursuant to leases between the Borrower or any of
                           its Consolidated Subsidiaries as lessor and any such
                           Person as lessee, in each case for the period
                           commencing October 13, 2001 through the close of
                           business on the Friday of such week, supported by
                           schedules showing the derivation thereof and
                           containing such detail and information as either
                           Agent may reasonably request from time to time.

                           11.      Use of Proceeds. Section 6.10 of the
Financing Agreement is hereby amended in its entirety to read as follows:

                           6.10     Use of Proceeds

                                             (a)      Revolving Loans. The
                           Borrower shall use the proceeds of the Revolving
                           Loans made pursuant to Section 2.01(b)(i) solely to
                           fund capital expenditures and other expenses of the
                           Borrower and the Eligible Subsidiaries in respective
                           amounts not to exceed the respective amounts set
                           forth therefor under the heading Expenditures in the
                           Revised Projections ; provided, however, that in the
                           event that Net Operating Cash Flow for any period
                           set forth in the Revised Projections exceeds the
                           amount set forth therein for such period, the excess
                           shall be used for (i) working capital of the
                           Borrower and its Eligible Subsidiaries and (ii) upon
                           request therefor made by the Borrower in writing
                           delivered to Agents and approved by the Agents in
                           their reasonable discretion, capital expenditures of
                           the Borrower and its Eligible Subsidiaries.

                                             (b)      Term Loan A. The
                           Borrower shall use the proceeds of the Term Loan A
                           made pursuant to Section 2.01(b)(ii) for any and all
                           of the following purposes: (i) for general working
                           capital or general corporate purposes of the
                           Borrower and the Eligible Subsidiaries, (ii) for
                           capital expenditures of the Borrower and the
                           Eligible Subsidiaries, provided that prior to using
                           any such proceeds for any such capital expenditure
                           with respect to the Fork Creek operations of the
                           Borrower and its Consolidated Subsidiaries, the
                           Borrower shall have delivered to the Agents a
                           capital expenditure and improvement plan, in
                           reasonable detail, and the Agents shall be satisfied
                           with such plan, (iii) for Qualified Acquisitions up
                           to the aggregate amount of $250,000 in any fiscal
                           year of the Borrower, and (iv) to relend proceeds to
                           Eligible Subsidiaries as permitted by Section
                           7.04(b), subject to the terms and conditions
                           contained in this Section 6.10. Any re-lending by
                           the Borrower of proceeds of the Term Loan A to an
                           Eligible Subsidiary shall not be in

                                     -12-
<PAGE>

                           amounts which would cause any Eligible Subsidiary to
                           not be able to make the representation set forth in
                           Section 4.28, after giving effect to the relending
                           of any such proceeds.

                                             (c)      Term Loan B. The Borrower
                           shall use the proceeds of the Term Loan B made
                           pursuant to Section 2.01(b)(iii) solely to pay to
                           the Administrative Agent, for the ratable benefit of
                           the Lenders, the Bridge Fee.

                                             (d)      Limits on Use. In no
                           event shall the proceeds of the Revolving Loans or
                           the Term Loan A be used (i) for the purchase of coal
                           inventory produced outside of the United States,
                           (ii), except as permitted in paragraph (e) below,
                           for any purposes other than to support the coal
                           related businesses of the Borrower and the Eligible
                           Subsidiaries or (iii) for capital expenditures,
                           except as permitted in Section 7.13.

                                             (e)      Relending Proceeds.
                           Notwithstanding anything to the contrary contained
                           herein, the Borrower may relend proceeds of the
                           Revolving Loans and the Term Loan A to Marine
                           Terminals for the general working capital and
                           general corporate purposes of such Eligible
                           Subsidiary only up to the aggregate amount of
                           $250,000.

                           12.      Consultants. Article VI of the Financing
Agreement is hereby amended by adding a new Section 6.27 to read in its
entirety as follows:

                           6.27     Consultants. The Borrower shall, no later
                           than November 9, 2001, retain at the Borrower's
                           expense, a mining/operational consultant that is
                           mutually acceptable to both the Borrower and the
                           Lenders. The scope of the engagement shall include
                           but not be limited to monitoring daily operations
                           and reporting requirements and shall be acceptable
                           to both the Borrower and the Lenders. The Lenders
                           hereby agree that five such acceptable consultants
                           are Behre Dolbear & Company, Weir International
                           Mining Consultants, JT Boyd, Metals Strategies,
                           Inc., and Marshall Miller & Associates.

                           13.      Dispositions of Assets. Section 7.08 of the
Financing Agreement is hereby amended by (i) redesignating clause (iii) as
clause (v) and (ii) inserting immediately following clause (ii) the following:

                           , (iii) the sale for not less than the fair market
                           value thereof of (A) the Borrower's interest in
                           Marine Terminals or (B) Marine Terminals' interest
                           in the partnership that owns an international marine
                           terminal in Louisiana, in each case on terms that
                           take into account the ownership and application or
                           release, as the case may be, of funds held in escrow
                           with respect to funding payments of principal of and
                           interest on bonds issued in connection with such
                           terminal provided that the Net Available Proceeds of
                           such Disposition are paid to the Collateral Agent
                           for the benefit of the

                                     -13-
<PAGE>

                           Lenders in accordance with Section 2.05(c)(v) or
                           (iv) the sale to a Person that is not an Affiliate
                           of the Borrower or any of its Subsidiaries for cash
                           in an amount not less than the fair market value
                           thereof of the Borrower's interest in the office
                           building located at 5110 Maryland Way, Brentwood,
                           Tennessee, provided that the Net Available Proceeds
                           of such Disposition are paid to the Collateral Agent
                           for the benefit of the Lenders in accordance with
                           Section 2.05(c)(v)

                           14.      Capital Expenditures. Section 7.13 of the
Financing Agreement is hereby amended in its entirety to read as follows:

                           Without the prior written consent of the Lenders,
                           the Borrower shall not, and shall not permit any of
                           its Consolidated Subsidiaries to, make or commit to
                           make any expenditure (including, without limitation,
                           Capitalized Lease Obligations) that in accordance
                           with GAAP would be debited to fixed asset accounts
                           on a consolidated balance sheet of the Borrower and
                           its Consolidated Subsidiaries during such period in
                           respect of the acquisition, construction,
                           improvement, replacement or betterment of land,
                           buildings, machinery, equipment or of any other
                           fixed assets or leaseholds during such period,
                           except for such expenditures in amounts not to
                           exceed the respective amounts set forth therefor in
                           the Revised Projections.

                           15.      Financial Maintenance Covenants. Section
7.16 of the Financing Agreement is hereby amended in its entirety to read as
follows:

                                    7.16     Financial Maintenance Covenants.
The Borrower shall not:

                                             (a)      Consolidated Debt to
                                    EBITDA Ratio. Permit the Consolidated Debt
                                    to EBITDA Ratio on September 30, 2001 for
                                    the period from June 1, 2001 through
                                    September 30, 2001 to be greater than 6.7
                                    to 1.

                                             (b)      Consolidated EBITDA.
                                    Permit Consolidated EBITDA for any period
                                    set forth below to be less than the amount
                                    set forth opposite such period below:

<TABLE>
<CAPTION>
                                   PERIOD                                               MINIMUM EBITDA
                                   ------                                               --------------

                                   <S>                                                  <C>
                                   June 1, 2001 through June 30, 2001                   $380,000
                                   June 1, 2001 through July 31, 2001                   $2,200,000
                                   June 1, 2001 through August 31, 2001                 $5,160,000
                                   June 1, 2001 through September 30, 2001              $7,540,000
</TABLE>

                                             (c)      Minimum Tons Sold.
                                    Permit the number of tons of coal sold by
                                    the Borrower and its Consolidated
                                    Subsidiaries for any period set forth below
                                    to be less than the amount set forth
                                    opposite such period below:

                                     -14-
<PAGE>

<TABLE>
<CAPTION>
                                   PERIOD                                               MINIMUM TONS SOLD
                                   ------                                               -----------------

                                   <S>                                                  <C>
                                   June 1, 2001 through June 30, 2001                           510,000
                                   June 1, 2001 through July 31, 2001                           930,000
                                   June 1, 2001 through August 31, 2001                       1,450,000
                                   June 1, 2001 through September 30, 2001                    1,950,000
</TABLE>

                                             (d)      Consolidated Net
                                    Operating Cash Flow. Permit Consolidated
                                    Net Operating Cash Flow for any period set
                                    forth below to be less than the amount set
                                    forth opposite such period below:

<TABLE>
<CAPTION>
                                                                                                 MINIMUM
                                                                                                 CONSOLIDATED NET
                                   CUMULATIVE PERIOD FROM OCTOBER 13, 2001 THROUGH:              OPERATING CASH FLOW
                                   -----------------------------------------------               -------------------

                                   <S>                                                           <C>
                                   October 26, 2001                                              $1,763,876
                                   November 30, 2001                                             $(4,821,050)
                                   December 28, 2001                                             $(3,308,881)
                                   January 25, 2002                                              $(2,463,704)
</TABLE>

                                    and if the Final Maturity Date is extended
                                    in accordance with Section 2.03(a):

<TABLE>
                                   <S>                                                           <C>
                                   February 22, 2002                                             $(11,837,258)
                                   March 29, 2002                                                $(12,741,574)
                                   April 12, 2002                                                $(15,369,140)
</TABLE>

                                             (e)      Minimum Tons Produced.
                                    Permit the number of tons of coal produced
                                    by the Borrower and its Consolidated
                                    Subsidiaries excluding coal produced from
                                    the Elk Horn reserves by Persons for their
                                    own account pursuant to leases between the
                                    Borrower or any of its Consolidated
                                    Subsidiaries as lessor and any such Person
                                    as lessee, for any period set forth below
                                    to be less than the amount set forth
                                    opposite such period below:

                                     -15-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 MINIMUM
                                                                                                 TONS
                                   CUMULATIVE PERIOD FROM OCTOBER 13, 2001 THROUGH:              PRODUCED
                                   -----------------------------------------------               --------

                                   <S>                                                           <C>
                                   October 26, 2001                                              162,957
                                   November 30, 2001                                             563,533
                                   December 28, 2001                                             915,363
                                   January 25, 2002                                              1,294,987
</TABLE>

                                    and if the Final Maturity Date is extended
                                    in accordance with Section 2.03(a):

<TABLE>
                                   <S>                                                           <C>
                                   February 22, 2002                                             1,682,121
                                   March 29, 2002                                                2,182,495
                                   April 12, 2002                                                2,379,867
</TABLE>

                                             (f)      Revolving Loan Borrowing
                                    Base. Permit the Revolving Loan Borrowing
                                    Base on each date set forth below to be
                                    less than the amount set forth opposite
                                    such date:

<TABLE>
<CAPTION>

                                                                                        REVOLVING LOAN
                                   DATE                                                 BORROWING BASE
                                   ----                                                 --------------

                                   <S>                                                  <C>
                                   October 19, 2001                                     $11,692,415
                                   October 26, 2001                                     $9,847,045
                                   November 2, 2001                                     $11,663,171
                                   November 9, 2001                                     $12,505,663
                                   November 16, 2001                                    $11,081,353
                                   November 23, 2001                                    $10,843,335
                                   November 30, 2001                                    $10,905,325
                                   December 7, 2001                                     $11,561,940
                                   December 14, 2001                                    $12,750,000
                                   December 21, 2001                                    $12,721,569
                                   December 28, 2001                                    $11,233,059
                                   January 4, 2002                                      $12,292,802
                                   January 11, 2002                                     $12,732,890
                                   January 18, 2002                                     $11,894,444
                                   January 25, 2002                                     $11,610,271
</TABLE>

                                    and if the Final Maturity Date is extended
                                    in accordance with Section 2.03(a):

                                     -16-
<PAGE>

<TABLE>
                                   <S>                                                  <C>
                                   February 1, 2002                                     $12,750,000
                                   February 8, 2002                                     $12,750,000
                                   February 15, 2002                                    $12,493,188
                                   February 22, 2002                                    $12,741,799
                                   March 1, 2002                                        $12,471,527
                                   March 8, 2002                                        $12,420,989
                                   March 15, 2002                                       $12,393,413
                                   March 22, 2002                                       $12,750,000
                                   March 29, 2002                                       $12,691,048
                                   April 5, 2002                                        $12,750,000
                                   April 12, 2002                                       $12,750,000
</TABLE>

                           16.      Notices, Etc. Section 11.01 of the
Financing Agreement is hereby amended by deleting any reference to Schulte Roth
& Zabel LLP as a Person to receive copies of notices sent to the Administrative
Agent.

                           17.      Amendments. Section 11.02(a)(vii) of the
Financing Agreement is hereby amended by (a) deleting the comma after the term
"'Eligible Accounts Receivable'", (b) inserting the word "or" immediately
before the term "'Revolving Loan Borrowing Base'" and (c) deleting the phrase
"or 'Term Loan Borrowing Base'".

                           18.      Schedules. Schedule 1.01(A) to the
Financing Agreement is hereby amended in its entirety to read as set forth on
Annex I attached to this Amendment.

                           19.      Exhibits. (a) Exhibit D to the Financing
Agreement is hereby amended in its entirety to read as set forth on Annex II
attached to the Amendment.

                           (b)      Exhibit F to the Financing Agreement is
hereby added to the Financing Agreement to read as set forth on Annex III
attached to this Amendment.

                           D.       Conditions to Effectiveness. The
forbearance set forth in Section B and the amendments set forth in paragraphs 1
through 19 of Section C, of this Amendment shall become effective as of
November 5, 2001 (the "Amendment Effective Date") upon satisfaction in full of
the following conditions precedent:

                           (a)      The representations and warranties
contained in this Amendment, Article VII of the Financing Agreement and the
other Loan Documents shall be correct in all material respects on and as of the
date of this Amendment as though made on and as of such date (except where such
representations and warranties relate to an earlier date in which case such
representations and warranties shall be true and correct as of such earlier
date); no Potential Default or Event of Default shall have occurred and be
continuing on the date of this Amendment (other than the Events of Default
referred to in the Cash Collateral Letter), or result from this Amendment
becoming effective in accordance with its terms.

                           (b)      The Collateral Agent shall have received
(i) counterparts of this Amendment that bear the signatures of each of the
Borrower and the Lenders and (ii) counterparts of an Acknowledgment and
Consent, in the form of Annex V to this Amendment, that bear the signature of
each Surety.

                                     -17-
<PAGE>

                           (c)      All legal matters incident to this
Amendment shall be satisfactory to the Agents and their counsel.

                           (d)      The Administrative Agent shall have
received, for the ratable benefit of the Lenders, a bridge fee (the "Bridge
Fee") in an aggregate amount equal to $3,000,000, which shall have been deemed
to be fully earned and due and payable as of the Amendment Effective Date and
paid on such date from the proceeds of the Term Loan B (as defined in the
Financing Agreement, as amended by this Amendment) by charging the Borrower's
Loan Account in accordance with Section 2.01(b)(iii) of the Financing
Agreement, as amended hereby.

                           E.       Representations and Warranties.

                                    The Borrower represents and warrants to the
Lenders as follows:

                           (a)      The Borrower (i) is duly organized, validly
existing and in good standing under the laws of the state of its organization
and (ii) has all requisite power, authority and legal right to execute, deliver
and perform this Amendment and to perform the Financing Agreement, as amended
hereby.

                           (b)      The execution, delivery and performance by
the Borrower of this Amendment and the performance by the Borrower of the
Financing Agreement, as amended hereby (i) have been duly authorized by all
necessary action, (ii) do not and will not violate or create a default under
such Borrower's organizational documents, any applicable law or any contractual
restriction binding on or otherwise affecting the Borrower or any of the
Borrower's properties, and (iii) except as provided in the Loan Documents, do
not and will not result in or require the creation of any Lien, upon or with
respect to the Borrower's property.

                           (c)      No authorization or approval or other
action by, and no notice to or filing with, any Official Body is required in
connection with the due execution, delivery and performance by the Borrower of
this Amendment or the performance by the Borrower of the Financing Agreement,
as amended hereby.

                           (d)      This Amendment and the Financing Agreement,
as amended hereby, constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their terms
except to the extent the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect affecting generally the enforcement of creditors'
rights and remedies and by general principles of equity.

                           (e)      The representations and warranties
contained in Article IV of the Financing Agreement are correct on and as of the
date hereof as though made on and as of the date hereof (except to the extent
such representations and warranties expressly relate to an earlier date), and
no Potential Default or Event of Default has occurred and is continuing on and
as of the date hereof, other than those referred to in the Cash Collateral
Letter.

                           F.       Continued Effectiveness of Financing
Agreement.

                                     -18-
<PAGE>

                           The Borrower hereby (a) confirms and agrees that
each Loan Document to which it is a party is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects except
that on and after the Amendment Effective Date all references in any such Loan
Document to "the Financing Agreement", the "Agreement", "hereto", "hereof",
"hereunder", "thereto", "thereof", "thereunder" or words of like import
referring to the Financing Agreement shall mean the Financing Agreement as
amended by this Amendment, and (b) confirms and agrees that to the extent that
any such Loan Document purports to assign or pledge to the Collateral Agent for
the ratable benefit of the Lenders, or to grant to the Collateral Agent for the
ratable benefit of the Lenders a security interest in or Lien on, any
collateral as security for the Obligations of the Borrower, or any of its
Consolidated subsidiaries or any surety from time to time existing in respect
of the Financing Agreement and the Loan Documents, such pledge, assignment
and/or grant of the security interest or Lien is hereby ratified and confirmed
in all respects.

                           G.       Miscellaneous

                           (a)      This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Amendment by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Amendment.

                           (b)      Section and paragraph headings herein are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.

                           (c)      This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.

                           (d)      Borrower will pay on demand all reasonable
fees, costs and expenses of the Agents and the Lenders in connection with the
preparation, execution and delivery of this Amendment or otherwise payable
under the Financing Agreement, including, without limitation, reasonable fees
disbursements and other charges of Schulte Roth & Zabel LLP, counsel to the
Agents.

                           (e)      Upon the Amendment Effective Date, this
Amendment shall supersede the Amendment Letter, which thereupon shall have no
further force or effect.

                                     -19-
<PAGE>

                           IN WITNESS WHEREOF, the parties hereto have caused
this Amendment, to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.

                                          BORROWER:

                                          PEN HOLDINGS, INC.

                                          By: /s/ William E. Beckner
                                             -------------------------------
                                             Name: William E. Beckner
                                             Title: President

                                          COLLATERAL AGENT AND LENDER:

                                          ABLECO FINANCE LLC

                                          By: /s/ Kevin Genda
                                             -------------------------------
                                             Name: Kevin Genda
                                             Title: S.V.P./Chief Credit Officer

                                          ADMINISTRATIVE AGENT AND LENDER:

                                          FOOTHILL CAPITAL CORPORATION

                                          By: /s/ Stephen Schwartz
                                             -------------------------------
                                             Name: Stephen Schwartz
                                             Title: Vice President

                                          LENDER:

                                          REGIMENT CAPITAL II, L.P.

                                          By:  Regiment Capital
                                               Management, L.L.C.,
                                               its General Partner

                                               By:  Regiment Capital
                                                    Advisors, L.L.C.,
                                                    its Manager

                                                    By: /s/ Timothy S. Peterson
                                                       -------------------------
                                                       Name: Timothy S. Peterson
                                                       Title: President

                                     -20-<PAGE>
                                                                    EXHIBIT 4(a)

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY

                     A STOCK COMPANY LOS ANGELES, CALIFORNIA

CONTRACT NUMBER   P9999999999

OWNER   JOHN DOE

<TABLE>
<S>                               <C>                            <C>
   STATUTORY HOME OFFICE               EXECUTIVE OFFICE            ANNUITY SERVICE CENTER
2999 NORTH 44TH ST., STE 250          1 SUNAMERICA CENTER              P. O. BOX 54299
     PHOENIX, AZ 85018            LOS ANGELES, CA 90067-6022     LOS ANGELES, CA 90054-0299
</TABLE>

ANCHOR NATIONAL LIFE INSURANCE COMPANY ("We", "Us", the "Company", or "Anchor
National") agrees to provide benefits to the Owner in accordance with the
provisions set forth in this Contract and in consideration of the Application
and Purchase Payments We received.

THE VALUE OF AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DURING THE ACCUMULATION
AND ANNUITY PERIODS IS NOT GUARANTEED AND WILL INCREASE OR DECREASE BASED UPON
THE INVESTMENT EXPERIENCE OF THE INVESTMENTS UNDERLYING THE SUBACCOUNTS YOU
CHOOSE.

THE CASH SURRENDER BENEFIT OF AMOUNTS ALLOCATED TO ANY FIXED MVA ACCOUNT OPTION
INCREASES OR DECREASES BASED ON THE APPLICATION OF THE MARKET VALUE ADJUSTMENT.
THE UNADJUSTED CASH SURRENDER BENEFIT IS AVAILABLE FOR 30 DAYS AFTER THE END OF
THE GUARANTEE PERIOD. THERE IS NO MARKET VALUE ADJUSTMENT FOR ANY CASH SURRENDER
BENEFIT OF AMOUNTS ALLOCATED TO FIXED NON-MVA ACCOUNT OPTIONS.

RIGHT TO EXAMINE - YOU MAY RETURN THIS CONTRACT TO OUR ANNUITY SERVICE CENTER OR
TO THE AGENT THROUGH WHOM THE CONTRACT WAS PURCHASED WITHIN 10 DAYS AFTER YOU
RECEIVE IT, IF YOU ARE NOT SATISFIED WITH IT. THE COMPANY WILL REFUND THE
CONTRACT VALUE ON THE BUSINESS DAY DURING WHICH THE CONTRACT IS RECEIVED. UPON
SUCH REFUND, THE CONTRACT SHALL BE VOID.

For Individual Retirement Annuities, a refund of the Purchase Payment(s) may be
required. Therefore, We reserve the right to allocate your Purchase Payment(s)
to the Cash Management Subaccount until the end of the Right To Examine period.
Thereafter, allocations will be made as shown on the Contract Purchase Payment
Allocation page.

                  THIS IS A LEGAL DOCUMENT. READ IT CAREFULLY.

    /s/ CHRISTINE A. NIXON                             /s/ JAY S. WINTROB
    ----------------------                             ------------------
      Christine A. Nixon                                 Jay S. Wintrob
         Secretary                                          President

                              INDIVIDUAL FIXED AND
                            VARIABLE ANNUITY CONTRACT
                                Nonparticipating

                                       1
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                      <C>
CONTRACT DATA PAGE ................................................       PAGE 3

PURCHASE PAYMENT ALLOCATION .......................................       PAGE 4

DEFINITIONS .......................................................       PAGE 5

PURCHASE PAYMENT PROVISIONS .......................................       PAGE 8

ACCUMULATION PROVISIONS ...........................................       PAGE 8

CHARGES AND DEDUCTIONS ............................................      PAGE 11

TRANSFER PROVISION ................................................      PAGE 12

WITHDRAWAL PROVISIONS .............................................      PAGE 12

GENERAL PROVISIONS ................................................      PAGE 14

DEATH PROVISIONS ..................................................      PAGE 16

ANNUITY PROVISIONS ................................................      PAGE 18

ANNUITY PAYMENT OPTIONS ...........................................      PAGE 20

FIXED ANNUITY PAYMENT OPTIONS TABLE ...............................      PAGE 21

VARIABLE ANNUITY PAYMENT OPTIONS TABLE ............................      PAGE 24
</TABLE>

                                       2
<PAGE>

                               CONTRACT DATA PAGE

<TABLE>
<S>                                           <C>
CONTRACT NUMBER:                              ANNUITY SERVICE CENTER:
         P9999999999                          P. O. BOX 54299
                                              LOS ANGELES, CA 90054-0299

OWNER:                                        AGE AT ISSUE:
       JOHN DOE                                      35

ANNUITANT:                                    INITIAL PURCHASE PAYMENT:
       JOHN DOE                                      $10,000.00

SPECIFIED ANNUITY DATE:                       CONTRACT DATE:
       June 7, 2031                                  June 7, 2001

LATEST ANNUITY DATE:                          MINIMUM GUARANTEE RATE FOR
       June 7, 2061                           FIXED ACCOUNT OPTIONS:
                                                     3.0%

BENEFICIARY:                                  EXPENSE RISK CHARGE:
       As named by You                               [0.35%]

MORTALITY RISK CHARGE:                        GUARANTEED DEATH BENEFIT RISK CHARGE:
       [0.90%]                                       [0.15%]

ANNUAL CONTRACT ADMINISTRATION CHARGE:        DISTRIBUTION EXPENSE CHARGE:
       $35.00                                        [0.15%]

SEPARATE ACCOUNT:
       [Variable Annuity Account Five]

       OPTIONAL ELECTIONS                     OPTIONAL ELECTION CHARGES:
       OPTIONAL DEATH BENEFIT ELECTED:
            Purchase Payment Accumulation            0.25%
</TABLE>

                                  FOR INQUIRIES
                              [CALL 1-800-445-7862]

                                       3
<PAGE>

                           PURCHASE PAYMENT ALLOCATION

                                   Subaccounts

<TABLE>
                     <S>        <C>
                     80.00%     Growth Strategy
                      0.00%     Moderate Growth Strategy
                      0.00%     Balanced Growth Strategy
                      0.00%     Conservative Growth Strategy
                      0.00%     Large Cap Growth Portfolio
                      0.00%     Large Cap Composite Portfolio
                      0.00%     Large Cap Value Portfolio
                      0.00%     Mid Cap Growth Portfolio
                      0.00%     Mid Cap Value Portfolio
                      0.00%     Small Cap Portfolio
                      0.00%     International Equity Portfolio
                      0.00%     Diversified Fixed Income Portfolio
                      0.00%     Cash Management Portfolio
                      0.00%     Focus Growth Portfolio
                      0.00%     Focus Growth and Income Portfolio
                      0.00%     Focus Value Portfolio
                      0.00%     Focus TechNet Portfolio
                      0.00%     Strategic Growth Portfolio
                      0.00%     Conservative Growth Portfolio
                      0.00%     Balanced  Portfolio
                      0.00%     Conservative Balanced Portfolio
                      0.00%     Flexible Income Portfolio
                      0.00%     Short Term Income Fund
                      0.00%     Government Securities Fund
                      0.00%     Income Fund
                      0.00%     Money Market Fund
                      0.00%     Equity Income Fund
                      0.00%     Growth & Income Fund
                      0.00%     Growth Fund of the Northwest
                      0.00%     Growth Fund
                      0.00%     Mid Cap Stock Fund
                      0.00%     Small Cap Stock Fund
                      0.00%     International Growth Fund
</TABLE>

                              Fixed Account Options

<TABLE>
<CAPTION>
                       Guarantee                       Initial
                         Period                     Interest Rate
                       ---------                    -------------
       <S>         <C>                              <C>
       20.00%      1-Year Fixed Non-MVA                  3.00%
        0.00%      3-Year Fixed MVA
</TABLE>

                            DCA Fixed Account Options

<TABLE>
       <S>         <C>
        0.00%      6-Month DCA Fixed Non-MVA
        0.00%      1-Year DCA Fixed Non-MVA
</TABLE>

                                       4
<PAGE>

                                   DEFINITIONS

Defined in this section are some of the words and phrases used in this Contract.
These terms are capitalized when used in the Contract. Other capitalized terms
in the Contract refer to the captioned paragraph explaining that particular
concept in the Contract.

ACCUMULATION UNIT

A unit of measurement used to compute the Contract Value in a Subaccount prior
to the Annuity Date.

AGE

Age as of last birthday.

ANNUITANT

The natural person or persons (collectively, Joint Annuitants) whose life or
lives is/are used to determine the annuity benefits under the Contract. If the
Contract is in force and the Annuitant(s) is/are alive on the Annuity Date, We
will begin payments to the Payee. This Contract cannot have Joint Annuitants if
it is issued in connection with a tax-qualified retirement plan.

ANNUITY SERVICE CENTER

As specified on the Contract Data Page.

ANNUITY DATE

The date on which annuity payments ("income payments") to the Payee begin. This
date cannot be later than the Latest Annuity Date.

ANNUITY UNIT

A unit of measurement used to compute annuity payments from the Subaccounts.

BENEFICIARY

The Beneficiary is as named by You unless later changed by You in a written
request to Us at Our Annuity Service Center.

CONTINUATION DATE

The Date on which We receive, at Our Annuity Service Center: (a) the Spousal
Beneficiary's written request to continue the Contract inforce, and (b) Due
Proof of Death of the Owner. If We receive (a) and (b) on different dates, the
Continuation Date will be the later date.

CONTRACT DATE

The date Your Contract is issued, as shown on the Contract Data Page. It is the
date from which Contract Years and anniversaries are measured.

CONTRACT VALUE

The sum of: (1) Your share of the Subaccounts' Accumulation Unit values and (2)
the value of amounts allocated to the Fixed Account Options.

CONTRACT YEAR

One year starting from the Contract Date in one calendar year and ending on the
day preceding the anniversary of such date in the succeeding calendar years.

                                       5
<PAGE>

CURRENT INTEREST RATE

The rate(s) of interest declared by Us applicable to allocations of Subsequent
Purchase Payments to the Fixed Account Options. The Current Interest Rate will
not be less than the Minimum Guaranteed Rate as shown on the Contract Data Page.

DOLLAR COST AVERAGING PROGRAM (DCA)

An optional program under which You authorize the automatic transfer of
specified amounts or percentages from the DCA Fixed Account Option(s), the
1-Year Fixed Account Option or any Subaccount(s) into any Subaccount(s) other
than the source account. Any portion of a Purchase Payment allocated to the DCA
Fixed Account Option(s) must be transferred out within the specified DCA Fixed
Account Option Period. Upon termination of a DCA Program or annuitization, any
amounts remaining in the DCA Fixed Account Options will be transferred to the
1-Year Fixed Account Option. The unit values credited and applied to Your
Contract are determined on each date of transfer.

FIXED ACCOUNT OPTIONS

The investment options under this Contract that are credited with a fixed rate
of interest declared by the Company. All amounts allocated to the Fixed Account
Options become part of the Company's general asset account. The general asset
account contains all the assets of the Company except for the Separate Account
and other segregated asset accounts. The Fixed Account Options for this Contract
are shown on page 4.

FIXED ANNUITY

A series of periodic annuity payments of predetermined amounts that do not vary
with investment experience. Such payments are made from the Company's general
asset account.

GUARANTEE PERIOD

The period for which either the Initial Interest Rate, the Current Interest Rate
or the Renewal Interest Rate is credited to the amounts allocated to the Fixed
Account Options.

INITIAL INTEREST RATE

The rate(s) of interest credited to any portion of the Initial Purchase Payment
allocated to the Fixed Account Option(s), as described in the Accumulation
Provisions section. The Initial Interest Rate(s) for this Contract is/are listed
on page 4. The Initial Interest Rate(s) may not be less than the Minimum
Guaranteed Rate as shown on the Contract Data Page.

IRC

The Internal Revenue Code of 1986 as amended or as it may be amended or
superseded.

JOINT OWNER

If Joint Owners are named, they must be spouses. Each Joint Owner has an equal
ownership interest in the Contract unless We are advised otherwise in writing.

NYSE

New York Stock Exchange

                                       6
<PAGE>

OWNER

The person or entity named in the Contract who is entitled to exercise all
rights and privileges of ownership under the Contract. Owner means both Joint
Owners if applicable.

PAYEE

The person receiving payment of annuity benefits under this Contract.

PURCHASE PAYMENTS

Payments in U.S. currency made by or on behalf of the Owner to the Company for
the Contract.

RENEWAL INTEREST RATE

The rate(s) of interest declared by Us applicable to transfers from the
Subaccount(s) and/or Fixed Account Option(s) into any of the Fixed Account
Options and to amounts previously allocated to a Fixed Account Option wherein
the Guarantee Period has expired. The Renewal Interest Rate(s) may not be less
than the Minimum Guarantee Rate as shown on the Contract Data Page.

SEPARATE ACCOUNT

The segregated asset account named on the Contract Data Page. The Separate
Account consists of several Subaccounts each investing in shares of the
Underlying Fund(s) of the trust(s). The assets of the Separate Account are not
commingled with the general assets and liabilities of the Company. Each
Subaccount is not chargeable with liabilities arising out of any other
Subaccount. The value of amounts allocated to the Subaccounts of the Separate
Account is not guaranteed.

SPECIFIED ANNUITY DATE

The anticipated Annuity Date specified by You as shown on the Contract Data
Page. This date may be changed by You in writing prior to the Annuity Date, but
in no event can it be later than the Latest Annuity Date. If this date is not
specified, it will be the Latest Annuity Date.

SPOUSAL BENEFICIARY

The deceased Owner's surviving spouse who is designated as the primary
Beneficiary and has the option to continue the Contract as the Owner on the
Continuation Date.

SUBACCOUNT

One or more divisions of the Separate Account, which provides for the variable
investment options available under this Contract. Each Subaccount has its own
investment objective and is invested in the Underlying Fund(s) of the trust(s).
A Subaccount is not chargeable with liabilities arising out of any other
Subaccount. The available Subaccounts are shown on page 4. Additional
Subaccounts may become available in the future.

SUBSEQUENT PURCHASE PAYMENTS

Purchase Payments made subsequent to the Initial Purchase Payment.

TOTAL INVESTED AMOUNT

The sum of all Purchase Payments less amounts previously withdrawn that incurred
a Withdrawal Charge, less Purchase Payments withdrawn that were no longer
subject to a Withdrawal Charge.

UNDERLYING FUND

The variable investment options in which the corresponding Subaccount(s) invest.

                                       7
<PAGE>

VARIABLE ANNUITY

A series of periodic annuity payments, which vary in amount according to the
investment experience of one or more Subaccounts, as selected by You.

WE, OUR, US, THE COMPANY

Anchor National Life Insurance Company.

YOU, YOUR

The Owner.

                           PURCHASE PAYMENT PROVISIONS

PURCHASE PAYMENTS

Purchase Payments are flexible. This means that, subject to Company declared
minimums and maximums, You may change the amounts, frequency and/or timing of
Purchase Payments. Purchase Payments will be allocated to the Fixed Account
Option(s) and/or one or more Subaccounts in accordance with instructions from
You. We reserve the right to specify the minimum Purchase Payment that may be
allocated to a Subaccount or a Fixed Account Option under the Contract.

SUBSTITUTION OF INVESTMENT PORTFOLIOS

If: (a) the shares of the underlying investment portfolios in which the
Subaccounts invest should no longer be available for investment by the Separate
Account; or (b) in the judgement of the Board of Trustees, further investment in
the shares of an investment portfolio is no longer appropriate in view of the
purpose of the Contract, then We may substitute shares of another underlying
investment series for shares already purchased, or to be purchased in the future
by Purchase Payments under the Contract. No substitution of securities may take
place without prior approval from the Securities and Exchange Commission and
under such requirements as it may impose.

                             ACCUMULATION PROVISIONS

SEPARATE ACCOUNT ACCUMULATION VALUE

The Separate Account Accumulation Value under the Contract shall be the sum of
the values of the Accumulation Units held in the Subaccounts for the Owner.

NUMBER OF ACCUMULATION UNITS

Your Contract is credited with Accumulation Units of the Separate Account when
amounts are allocated to the Subaccounts. For that portion of each Purchase
Payment and/or transfer amount allocated to a Subaccount, the number of
Accumulation Units credited is equal to the sum of each Purchase Payment and/or
transfer amount allocated to that Subaccount, reduced by premium taxes, if any:

Divided by

The Accumulation Unit value for that Subaccount for the NYSE business day on
which the Purchase Payment or transfer amount is allocated.

                                       8
<PAGE>

The number of Accumulation Units will be reduced for withdrawals of Contract
Value, annuitizations, amounts transferred out of a Subaccount, and the Contract
Administration Charge. Reductions will be made as of the end of the NYSE
business day in which We receive all requirements for the transaction, as
appropriate.

ACCUMULATION UNIT VALUE (AUV)

The AUV of a Subaccount for any NYSE business day is calculated by subtracting
(2) from (1) and dividing the result by (3) where:

(1)    is the total value at the end of the given NYSE business day of the
       assets attributable to the Accumulation Units of the Subaccount minus the
       total liabilities;

(2)    is the cumulative unpaid charge for assumption of Expense Risk,
       Distribution Expense and Mortality Risk charges (See CHARGES AND
       DEDUCTIONS);

(3)    is the number of Accumulation Units outstanding at the end of the given
       NYSE business day.

FIXED ACCOUNT ACCUMULATION VALUE

Under a Contract, the Fixed Account Accumulation Value shall be the sum of all
monies allocated or transferred to the Fixed Account Option(s), reduced by any
applicable premium taxes, plus all interest credited to the Fixed Account
Option(s) during the period that the Contract has been in effect. This amount
shall be adjusted for withdrawals (which includes any applicable charges
associated with such withdrawals), annuitizations, transfers, any applicable MVA
on such transactions, and the Contract Administration Charge. The Fixed Account
Accumulation Value shall not be less than the minimum values required by law in
the state where this Contract is issued.

FIXED ACCOUNT GUARANTEE PERIOD OPTIONS AND INTEREST CREDITING

Any amounts allocated to the Fixed Account Options from the Initial Purchase
Payment will earn interest at the Initial Interest Rate for the Fixed Account
Option(s) selected for the duration of the Guarantee Period.

Subsequent Purchase Payments, if any, allocated to the Fixed Account Options
will earn interest at the Current Interest Rate for the Fixed Account Option(s)
selected for the duration of the Guarantee Period.

Transfers to the Fixed Account Options and amounts renewing in the Fixed Account
Options will earn interest at the Renewal Interest Rate for the Fixed Account
Option(s) selected for the duration of the Guarantee Period.

For thirty (30) days following the date of expiration of a Guarantee Period, You
may renew for the same or any other Guarantee Period at the Renewal Interest
Rate or You may transfer all or a portion of the amount to the Subaccount(s)
and/or Fixed Account Option(s). If You do not specify a Guarantee Period at the
time of renewal, We will select the same Guarantee Period as has just expired,
crediting the Contract with the Renewal Interest Rate in effect on the date of
expiration of the Guarantee Period, so long as such Guarantee Period does not
extend beyond the Annuity Date. If a renewal occurs within one year of the
Annuity Date, We will credit interest up to the Annuity Date at the Renewal
Interest Rate for the 1-Year Fixed Account Option.

If You are participating in the DCA program, Purchase Payments may be allocated
to the DCA Fixed Account Option(s) or the 1-Year Fixed Account Option. Upon
termination of the DCA program, any amounts remaining in the DCA Fixed Account
Option(s) will be automatically transferred to the 1-Year Fixed Account Option.
Such amounts will earn interest at the Renewal Interest Rate for the 1-Year
Fixed Account Option.

                                       9
<PAGE>

MARKET VALUE ADJUSTMENT (MVA)

Any payments and values based on a Fixed MVA Account Option may be subject to an
MVA, the operation of which may result in upward or downward adjustments in the
Contract Value, if withdrawn, transferred or annuitized prior to the end of the
respective Guarantee Period. The MVA will be calculated by multiplying the
amount withdrawn, transferred or annuitized from a Fixed MVA Account Option by
the formula described below:

        {(1 + I)/(1+J+0.0050)}(N/12)-1

I = The interest rate currently in effect for that Guarantee Period.

J = The Initial Interest Rate available for the Guarantee Period equal to the
number of years (rounded up to an integer) remaining in the current Guarantee
Period at the time of withdrawal, transfer or annuitization. In the
determination of J, if the Company currently does not offer the applicable
Guarantee Period, then the rate will be determined by linear interpolation of
the Initial Interest Rate for the nearest two Guarantee Periods that are
available.

N = The number of full months remaining in the current Guarantee Period at the
time the withdrawal, transfer or annuitization request is processed.

If a Withdrawal Charge is applied to a withdrawal, then the MVA will be applied
to the withdrawal amount net of the Withdrawal Charge.

There will be no MVA on withdrawals from a Fixed MVA Account Option in the
following situations: (1) to pay a Death Benefit upon death of the Owner; (2) on
amounts withdrawn to pay fees or charges in the Contract; (3) on amounts
withdrawn or transferred from any of the Fixed Account Option within thirty (30)
days after the end of the Guarantee Period; (4) on annuitizations on the Latest
Annuity Date; (5) on amounts withdrawn from the 1-Year Fixed Account Option or
the DCA Fixed Account Options.

                                       10
<PAGE>

                             CHARGES AND DEDUCTIONS

We will deduct the following charges from the Contract:

CONTRACT ADMINISTRATION CHARGE

The charge specified on the Contract Data Page will be deducted on each Contract
anniversary that occurs on or prior to the Annuity Date. It will also be
deducted when the Contract Value is withdrawn in full if withdrawal is not on
the Contract anniversary. We reserve the right to assess a charge on a class
basis, which is less than the charge specified on the Contract Data Page. This
charge is not deducted when the Contract Value is greater than [$50,000].

WITHDRAWAL CHARGE

This charge may be deducted upon withdrawal of any portion of the Contract
Value. See WITHDRAWAL PROVISIONS.

MORTALITY RISK CHARGE

This charge, as shown on the Contract Data Page, on an annualized basis equals a
percentage of the average daily ending value of the assets attributable to the
Accumulation Units of the Subaccounts to which the Contract is allocated. We
subtract this charge daily. This charge is to compensate Us for assuming the
mortality risks under the Contract.

EXPENSE RISK CHARGE

This charge, as shown on the Contract Data Page, on an annualized basis equals a
percentage of the average daily ending value of the assets attributable to the
Accumulation Units of the Subaccounts to which the Contract is allocated. We
subtract this charge daily. This charge is to compensate Us for assuming the
expense risks under the Contract.

DISTRIBUTION EXPENSE CHARGE

This charge, as shown on the Contract Data Page, on an annualized basis equals a
percentage of the average daily ending value of the assets attributable to the
Accumulation Units of the Subaccounts to which the Contract is allocated. We
subtract this charge daily. This charge is to compensate Us for distribution
expenses associated with the Contract.

GUARANTEED DEATH BENEFIT RISK CHARGE

This charge, as shown on the Contract Data Page, on an annualized basis equals a
percentage of the average daily ending value of the assets attributable to the
Accumulation units of the Subaccounts to which the Contract is allocated. This
charge is to compensate Us for the risk assumed as a result of contractual
obligations to provide a minimum guaranteed Death Benefit prior to the Annuity
Date.

                                       11
<PAGE>

                               TRANSFER PROVISION

Prior to the Annuity Date, You may transfer all or part of Your Contract Value
from a Subaccount to any Subaccount or Fixed Account Option subject to certain
restrictions. We reserve the right to charge a fee for transfers if the number
of transfers exceeds the limit specified by Us. The minimum amount that can be
transferred and the amount that can remain in a Subaccount or a Fixed Account
Option are subject to Company limits.

TRANSFERS OF ACCUMULATION AND ANNUITY UNITS BETWEEN SUBACCOUNTS

Prior to and after the Annuity Date, You may transfer all or a portion of Your
Contract Value from one Subaccount to another Subaccount. Before the Annuity
Date, a transfer will result in the redemption of Accumulation Units in a
Subaccount and the purchase of Accumulation Units in the other Subaccount. After
the Annuity Date, a transfer will result in the redemption of Annuity Units in a
Subaccount and the purchase of Annuity Units in the other Subaccount(s).
Transfers will be effected at the end of the NYSE business day in which We
receive Your completed request for the transfer.

TRANSFERS OF ACCUMULATION UNITS TO AND FROM THE FIXED ACCOUNT

Prior to the Annuity Date, You may transfer all or any part of Your Contract
Value from the Subaccount(s)to any Fixed Account Option(s) other than the DCA
Fixed Account Options or from the Fixed Account Option(s) to the Subaccount(s)
and/or the Fixed Account Option(s) of the Contract. Transfers from the Fixed
Account Option(s) may be subject to a Market Value Adjustment as discussed in
the Market Value Adjustment Provision.

After the Annuity Date, transfers into or out of the Fixed Account Options are
not allowed.

                              WITHDRAWAL PROVISIONS

On or before the Annuity Date and while the Owner is living, You may withdraw
all or part of Your Contract Value under this Contract by informing Us at Our
Annuity Service Center. For a full withdrawal, this Contract must be returned to
Our Annuity Service Center. The minimum amount that can be withdrawn and the
amount remaining after withdrawal are subject to Company limits.

Without a written notice to the contrary, withdrawals will be deducted from the
Contract Value in proportion to their allocation among the Fixed Account Options
and the Subaccounts. Withdrawals will be based on values at the end of the NYSE
business day in which the request for withdrawal and the Contract (in the case
of a full withdrawal) are received at the Annuity Service Center. Unless the
SUSPENSION OF PAYMENTS or DEFERMENT OF PAYMENTS section is in effect, payment of
withdrawals will be made within seven calendar days.

WITHDRAWAL CHARGE

Withdrawals of all or a portion of the Contract Value may be subject to a
Withdrawal Charge as shown in the chart below. The Withdrawal Charge percentage
applied to any withdrawal will depend on how long the Purchase Payment to which
the withdrawal is attributed has been in the Contract. No Withdrawal Charge is
made on an amount withdrawn, which is considered to be a withdrawal of
penalty-free earnings.

For the purpose of determining the Withdrawal Charge, a withdrawal will be
attributed to amounts in the following order: (1) penalty-free earnings in the
Contract; (2) Purchase Payments which are both no longer subject to the
Withdrawal Charge and are not yet withdrawn; (3) any remaining Penalty-Free
Withdrawal amount (except in the case of a full surrender); and (4) Purchase
Payments subject to a

                                       12
<PAGE>

Withdrawal Charge. Purchase Payments, when withdrawn, are assumed to be
withdrawn on a first-in-first-out (FIFO) basis. You will not receive the benefit
of a Penalty-Free Withdrawal in a full surrender.

<TABLE>
<CAPTION>
     Number of Full Years Elapsed             Withdrawal Charge as a
Between Purchase Payment Contribution        Percentage of Withdrawn
        And Date of Withdrawal                   Purchase Payment
-------------------------------------        -----------------------
<S>                                          <C>
                  0                                     7%
                  1                                     6%
                  2                                     6%
                  3                                     0%
</TABLE>

The Withdrawal Charge will be assessed against the Subaccounts and the Fixed
Account Options in the same proportion that the remaining Contract Value is
allocated unless You request that the withdrawal come from a particular Fixed
Account Option or Subaccount. After a Withdrawal is taken, the remaining
Contract Value must be sufficient to cover any Withdrawal Charge remaining upon
full surrender of the Contract.

PENALTY-FREE WITHDRAWALS

As of any day, You may make a withdrawal of up to the Penalty-Free Withdrawal
amount for that day without incurring a Withdrawal Charge. Any Penalty-Free
Withdrawal made in excess of penalty-free earnings in the Contract is considered
to be a withdrawal of future penalty-free earnings and is therefore not a
withdrawal of the Total Invested Amount. On any day, penalty-free earnings in
the Contract are calculated as the Contract Value at the end of that day less
the Total Invested Amount.

During the first Contract Year, the Penalty-Free Withdrawal amount is equal to
the penalty-free earnings in the Contract as of the date of withdrawal.

Alternatively, during the first Contract Year, You may make withdrawals of the
Penalty-Free Withdrawal amount through the Systematic Withdrawal Program. The
Penalty-Free Withdrawal amount as of any systematic withdrawal date is 10% of
the Total Invested Amount less any withdrawals already made during the Contract
Year.

After the first Contract Year, the maximum Penalty-Free Withdrawal amount as of
the date of the withdrawal is the greater of:

(a)    penalty-free earnings in the Contract as of that date; or

(b)    10% of the Total Invested Amount on deposit for at least one year, less
       any withdrawals already made during the year.

Although amounts withdrawn free of a Withdrawal Charge may reduce principal,
they do not reduce the Total Invested Amount for purposes of calculating the
Withdrawal Charge or for the purposes of calculating penalty-free earnings in
the Contract. As a result, You will not receive the benefit of a Penalty-Free
Withdrawal in a full surrender.

SYSTEMATIC WITHDRAWAL PROGRAM

Prior to the Annuity Date, You may elect to participate in the Systematic
Withdrawal Program by informing Us at Our Annuity Service Center. The Systematic
Withdrawal Program allows You to make automatic withdrawals from Your account
monthly, quarterly, semiannually, or annually. The minimum systematic withdrawal
amount is subject to Company limits. Any amount withdrawn through the

                                       13
<PAGE>

Systematic Withdrawal Program may be subject to a Withdrawal Charge and/or a
Market Value Adjustment as discussed in the WITHDRAWAL CHARGE, PENALTY-FREE
WITHDRAWALS and MARKET VALUE ADJUSTMENT provisions. You may terminate Your
participation in the Systematic Withdrawal Program at any time by sending Us a
written request. We reserve the right to modify, suspend or terminate the
Systematic Withdrawal Program at any time.

Systematic withdrawals will be deducted from the Penalty-Free Withdrawal amount
available each Contract Year.

                               GENERAL PROVISIONS

ENTIRE CONTRACT

The entire contract between You and Us consists of the Application Form as
completed by You at the time of purchase, this Contract and any attached
endorsement(s). An agent cannot change the terms or conditions of this Contract.
Any change must be in writing and approved by Us. Only Our President, Secretary,
or one of Our Vice-Presidents can give Our approval.

CHANGE OF ANNUITANT

If the Owner is an individual, the Owner may change the Annuitant at any time
prior to the Annuity Date. To make a change, the Owner must send a written
notice to Us at least 30 days before the Annuity Date. If the Owner is not an
individual, the Owner may not change the Annuitant.

DEATH OF ANNUITANT

If the Owner and Annuitant are different and the Annuitant dies before the
Annuity Date, the Owner becomes the Annuitant until such time as the Owner
elects a new Annuitant. If there are Joint Annuitants, upon the death of any
Annuitant prior to the Annuity Date, the Owner may elect a new Joint Annuitant.
However, if the Owner is a non-natural person, We will treat the death of any
Annuitant as the death of the "primary Annuitant" and as the death of the Owner,
see DEATH PROVISIONS.

MISSTATEMENT OF AGE OR SEX

If the Age or sex of any Annuitant has been misstated, future annuity payments
will be adjusted using the correct Age and sex, according to Our rates in effect
on the date that annuity payments were determined. Any overpayment from the
Fixed Annuity Payment Options, plus interest at the rate of 4% per year, will be
deducted from the next payment(s) due. Any underpayment from the Fixed Annuity
Payment Options, plus interest at the rate of 4% per year, will be paid in full
with the next payment due. Any overpayment from the Subaccounts will be deducted
from the next payment(s) due. Any underpayment from the Subaccounts will be paid
in full with the next payment due.

PROOF OF AGE, SEX, OR SURVIVAL

The Company may require satisfactory proof of correct Age or sex at any time. If
any payment under this Contract depends on the Annuitant being alive, the
Company may require satisfactory proof of survival.

                                       14
<PAGE>

DEFERMENT OF PAYMENTS

We may defer making payments from the Fixed Account Options for up to six (6)
months. Interest, subject to state requirements, will be credited during the
deferral period.

SUSPENSION OF PAYMENTS

We may suspend or postpone any payments from the Subaccounts if any of the
following occur:

(a)    the NYSE is closed;

(b)    trading on the NYSE is restricted;

(c)    an emergency exists such that it is not reasonably practical to dispose
       of or determine the value of the assets held in a Subaccount; or

(d)    the Securities and Exchange Commission, by order, so permits for the
       protection of Owners.

Conditions in (b) and (c) will be decided by or in accordance with rules of the
Securities and Exchange Commission.

CONFORMITY WITH STATE LAWS

The provisions of this Contract will be interpreted by the laws of the state in
which the Application Form was signed or such other state as is required by law.
Any provision which, on the Contract Date, is in conflict with the law of such
state is amended to conform to the minimum requirements of such law.

CHANGES IN LAW

If the laws governing this Contract or the taxation of benefits under the
Contract change, We reserve the right to amend this Contract to comply with
these changes.

ASSIGNMENT

You may assign this Contract before the Annuity Date, but We will not be bound
by an assignment unless it is received by Us in writing. Your rights and those
of any other person referred to in this Contract will be subject to the
assignment. Certain assignments may be taxable. We do not assume any
responsibility for the validity or tax consequences of any assignment.

CLAIMS OF CREDITORS

To the extent permitted by law, no rights or proceeds payable under this
Contract will be subject to claims of creditors or legal process.

PREMIUM TAXES AND OTHER TAXES

The Company may deduct from Your Contract Value any premium tax and/or other
taxes payable to a state or other government entity, if applicable. Should We
advance any amount so due, We are not waiving any right to collect such amount
at a later date. The Company will deduct any withholding taxes required by
applicable law.

WRITTEN NOTICE

Any notice We send to You will be sent to Your address shown in the Application
Form unless You request otherwise. Any written request or notice to Us must be
sent to Our Annuity Service Center, at the address specified on the Contract
Data Page.

PERIODIC REPORTS

                                       15
<PAGE>

During each Contract Year, We will send You quarterly statements of the account
activity of the Contract as well as confirmation reports after each financial
transaction. The statement will include all transactions which have occurred
during the quarterly accounting period shown on the statement.

INCONTESTABILITY

This Contract will be incontestable from the Contract Date.

NONPARTICIPATING

This Contract does not share in Our surplus.

                                DEATH PROVISIONS

Notwithstanding any provision of this Contract to the contrary, all payments of
benefits under this Contract will be made in a manner that satisfies the
requirements of IRC Section 72(s), as amended from time to time. If the Contract
is owned by a trust or other non-natural person, We will treat the death of any
Annuitant as the death of the "Primary Annuitant", as defined in IRC Section
72(s)(6), as the death of any Owner.

DUE PROOF OF DEATH

Due Proof of Death means:

              1.     a certified copy of a death certificate; or

              2.     a certified copy of a decree of a court of competent
                     jurisdiction as to the finding of death; or

              3.     a written statement by a medical doctor who attended the
                     deceased Owner at the time of death; or

              4.     any other proof satisfactory to Us.

DEATH OF OWNER BEFORE THE ANNUITY DATE

We will pay a death benefit to the Beneficiary upon Our receiving: (a) due proof
that the Owner died before the Annuity Date, (b) an election form specifying the
payment option and (c) any other documentation We may require. Unless You have
previously designated a payment option on behalf of the Beneficiary, the
Beneficiary must select one of the following payment options:

1.     Immediately collect the death benefit in a lump sum. If a lump sum
       payment is elected, payment will be in accordance with any applicable
       laws and regulations governing payments and death; or

2.     Collect the death benefit in the form of one of the Annuity Payment
       Options. If an Annuity Payment Option is desired, an option must be
       elected within 60 days of Our receipt of: (a) Due Proof of Death of the
       Owner; (b) an election form specifying the payment option and (c) any
       other documentation We may require. The payments must be over the life of
       the Beneficiary or over a period not extending beyond the life expectancy
       of the Beneficiary. Payments under this death benefit option must
       commence within one year after the Owner's death, otherwise, the death
       benefit will be paid in accordance with death benefit option 1; or

3.     If eligible, continue the Contract as a Spousal Beneficiary. On the
       Continuation Date, We will contribute to the Contract any amount by which
       the Death Benefit exceeds the Contract Value, calculated as of the
       Owner's date of death. This amount is not considered a Purchase Payment.
       If an amount is contributed by Us to the Contract on the Continuation
       Date, then upon death of the Spousal Beneficiary the subsequent death
       benefit will be calculated as if the Contract was issued to

                                       16
<PAGE>

       the Spousal Beneficiary on the Continuation Date. Otherwise, the death
       benefit payable upon death of the Spousal Beneficiary will be calculated
       as if the Contract was issued to the Spousal Beneficiary on the original
       Contract Date.

       You cannot change any elected death benefit option specified on the
       Contract Data Page. Your Spousal Beneficiary may discontinue the death
       benefit option on the Continuation Date but cannot change the elected
       death benefit option. Upon the Spousal Beneficiary's death, the entire
       interest of the Contract must be distributed immediately under option 1
       or 2 as provided under DEATH OF OWNER BEFORE THE ANNUITY DATE.

In any event, the entire interest in the Contract will be distributed within
five years from the date of death of the Owner unless payment option 2 or 3 as
provided under DEATH OF OWNER BEFORE THE ANNUITY DATE.

AMOUNT OF DEATH BENEFIT

Before You attain age 75 the amount of death benefit is equal to the greater of:

       1.      the Contract Value at the end of the NYSE business day during
               which We receive at Our Annuity Service Center the required due
               proof of the Owner's death and an election of the type of payment
               to be made; or

       2.      Purchase Payments, reduced for partial withdrawals (including any
               charges applicable to such withdrawals) in the same proportion
               that the Contract Value was reduced on the date of any such
               withdrawals, compounded until the date of death at 3% interest,
               plus any Purchase Payments recorded after the date of death. This
               amount is further reduced for partial withdrawals recorded after
               the date of death (including any charges applicable to such
               withdrawals) in the same proportion that the Contract Value was
               reduced on the date of any such withdrawals.

After You attain age 75 the amount of death benefit is equal to the greater of:

       1.      the Contract Value at the end of the NYSE business day during
               which We receive at Our Annuity Service Center required due proof
               of the Owner's death and an election of the type of payment to be
               made; or

       2.      Purchase Payments reduced for partial withdrawals (including any
               charges applicable to such withdrawals) in the same proportion
               that the Contract Value was reduced on the date of any such
               withdrawals, compounded until the attainment of age 75 at 3%
               interest, plus any Purchase Payments recorded after the
               attainment of age 75. This amount is further reduced for partial
               withdrawals recorded after the attainment of age 75 (including
               any charges applicable to such withdrawals) in the same
               proportion that the Contract Value was reduced on the date of any
               such withdrawals.

DEATH OF OWNER OR ANNUITANT ON OR AFTER THE ANNUITY DATE

If the Owner or Annuitant dies on or after the Annuity Date and before the
entire interest in the Contract has been distributed, We will pay the remaining
portion of the interest of the Contract as under the Annuity Payment Option
being distributed on the date of death upon our receipt of Due Proof of Death.
For further information pertaining to death of the Annuitant, see ANNUITY
PAYMENT OPTIONS.

BENEFICIARY

                                       17
<PAGE>

The Beneficiary is selected by the Owner. While (a) the Owner is living; and (b)
before the Annuity Date, the Owner may change the Beneficiary by written notice
in a form satisfactory to Us. A change in Beneficiary will take effect on the
date the notice of change was signed. Such change, however, will not apply to
any payment or action taken by Us before the notice was received at Our Annuity
Service Center. If two or more persons are named, (a) those surviving the Owner
will share equally unless otherwise stated; and (b) the Beneficiaries must elect
to receive their respective portions of the death benefit according to the
options listed under DEATH OF OWNER BEFORE THE ANNUITY DATE. If the Annuitant
survives the Owner, and there are no surviving Beneficiaries, the Annuitant will
be deemed the Beneficiary.

Joint Owners, if applicable, shall be each other's primary Beneficiary. Joint
Annuitants, if any, when the Owner is a non-natural person, shall be each
other's primary Beneficiary. Any other Beneficiary designated will be treated as
a contingent Beneficiary.

If the Owner is also the Annuitant and there are no surviving Beneficiaries upon
death of the Owner, the death benefit will be paid to the estate of the Owner in
accordance with option 1 under DEATH OF OWNER BEFORE THE ANNUITY DATE.

                               ANNUITY PROVISIONS

ANNUITY DATE

The Owner specifies an anticipated Annuity Date (the date on which annuity
payments are to begin). The date provided by the Owner to Us at the time of
application is shown on the Contract Data Page as the Specified Annuity Date.
The Owner may change the Specified Annuity Date at any time, at least seven days
prior to the Annuity Date, by written notice to the Company at its Annuity
Service Center. The Annuity Date must always be the first day of the calendar
month and must be at least two years after the Contract Date, but not beyond the
later of the Owner's 95th birthday or ten years after the Contract Date. If the
Owner is a non-natural person, the latest Annuity Date is the later of the
Annuitant's 95th birthday or ten years after the Contract Date. If no Annuity
Date is specified, the Annuity Date will be the Latest Annuity Date, as set by
the Company.

PAYMENTS TO OWNER

Unless You request otherwise, We will make annuity payments to You. If You want
the annuity payments to be made to some other Payee, We will make such payments
subject to receipt of a written request filed at the Annuity Service Center no
later than thirty (30) days before the due date of the first annuity payment.

Any such request is subject to the rights of any assignee. No payments available
to or being paid to the Payee while the Annuitant is alive can be transferred,
commuted, anticipated or encumbered.

FIXED ANNUITY PAYMENTS

If a Fixed Annuity payment option has been elected, the proceeds payable under
this Contract less any applicable premium taxes, shall be applied to the payment
of the Fixed Annuity payment option elected at rates which are at least equal to
the annuity rates based upon the applicable tables in the Contract. In no event
will the Fixed Annuity payments be changed once they begin.

AMOUNT OF FIXED ANNUITY PAYMENTS

The amount of each Fixed Annuity payment will be determined by applying the
portion of the Contract Value allocated to Fixed Account Options less any
applicable premium taxes to the annuity table applicable to the Fixed Annuity
payment option chosen.

                                       18
<PAGE>

AMOUNT OF VARIABLE ANNUITY PAYMENTS

(a)    FIRST VARIABLE ANNUITY PAYMENT: The dollar amount of the first Variable
       Annuity payment will be determined by applying the portion of the
       Contract Value allocated to the Subaccount, less any applicable premium
       taxes, to rates which are at least equal to the annuity rates based upon
       the annuity table applicable to the Variable Annuity payment option
       chosen. If the Contract Value is allocated to more than one Subaccount,
       the value of Your interest in each Subaccount is applied separately to
       the Variable Annuity payment option table to determine the amount of the
       first annuity payment attributable to each Subaccount.

(b)    NUMBER OF VARIABLE ANNUITY UNITS: The number of Annuity Units for each
       applicable Subaccount is the amount of the first annuity payment
       attributable to that Subaccount divided by the value of the applicable
       Annuity Unit for that Subaccount as of the Annuity Date. The number will
       not change as a result of investment experience.

(c)    VALUE OF EACH VARIABLE ANNUITY UNIT: The value of an Annuity Unit may
       increase or decrease from one month to the next. For any month, the value
       of an Annuity Unit of a particular Subaccount is the value of that
       Annuity Unit as of the last NYSE business day of the preceding month,
       multiplied by the Net Investment Factor for that Subaccount for the last
       NYSE business day of the current month.

The Net Investment Factor for any Subaccount for a certain month is determined
by dividing (1) by (2) where:

              (1)    the Accumulation Unit Value of the Subaccount determined as
                     of the last business day at the end of that month;

              (2)    the Accumulation Unit Value of the Subaccount determined as
                     of the last business day at the end of the preceding month.

The result is then multiplied by a factor that neutralizes the assumed
investment rate of 3.5%.

(d)    SUBSEQUENT VARIABLE ANNUITY PAYMENTS: After the first Variable Annuity
       payment, payments will vary in amount according to the investment
       performance of the applicable Subaccount(s) to which Your Purchase
       Payments are allocated. The amount may change from month to month. The
       amount of each subsequent payment for each Subaccount is:

The number of Annuity Units for each Subaccount as determined for the first
annuity payment

Multiplied by

The value of an Annuity Unit for that Subaccount at the end of the month
immediately preceding the month in which payment is due.

We guarantee that the amount of each Variable Annuity payment will not be
affected by variations in expenses or mortality experience.

                                       19
<PAGE>

                             ANNUITY PAYMENT OPTIONS

During the Annuitant's life, upon written election and the return of this
Contract to the Company at its Annuity Service Center, the Contract Value may be
applied to provide one of the following options or any annuity payment option
that is mutually agreeable. After two years from the Contract Date, and prior to
the Annuity Date, You can choose one of the options described below. If no
option has been elected by the Annuity Date, You will automatically receive
Option 4 below with 120 monthly payments guaranteed.

OPTIONS 1 & 1v - LIFE ANNUITY, LIFETIME MONTHLY PAYMENTS GUARANTEED

Payments payable to a Payee during the lifetime of the Annuitant. No further
payments are payable after the death of the Annuitant.

OPTIONS 2 & 2v - JOINT AND SURVIVOR LIFE ANNUITY

Payments payable to the Payee during the lifetime of the Annuitant and during
the lifetime of a designated second person. No further payments are payable
after the deaths of both the Annuitant and the designated second person.

OPTIONS 3 & 3v - JOINT AND SURVIVOR LIFE ANNUITY - 120 OR 240 MONTHLY PAYMENTS
GUARANTEED

Payments are payable to the Payee during the lifetime of the Annuitant and
during the lifetime of a designated second person. If, at the death of the
survivor, payments have been made for less than 120 or 240 monthly periods, the
remaining guaranteed annuity payments will be continued to the Beneficiary.

OPTIONS 4 & 4v - LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED

Payments payable to the Payee during the lifetime of the Annuitant. If, at the
death of the Annuitant, payments have been made for less than the 120 or 240
monthly periods, as selected at the time of annuitization, the remaining
guaranteed annuity payments will be continued to the Beneficiary.

OPTIONS 5 & 5v - FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN

Payments are payable to the Payee for any specified period of time of five (5)
years or more, but not exceeding thirty (30) years, as selected at the time of
annuitization. The selection must be made for full twelve-month periods. In the
event of death of the Annuitant, any remaining annuity payments will be
continued to the Beneficiary. If Variable Annuity Payments are elected under
this Annuity Payment Option, any remaining guaranteed Variable Annuity payments
may be redeemed for a discounted value determined by Us. Any applicable
Withdrawal Charges will be deducted from the discounted value as if You fully
surrendered Your Contract.

                                       20
<PAGE>

                       FIXED ANNUITY PAYMENT OPTIONS TABLE

BASIS OF COMPUTATION

The actuarial basis for the Table of Annuity Rates is the 1983a Annuity
Mortality Table with projection and a guaranteed interest rate of 3%. The
mortality table is projected using Projection Scale G factors, assuming
annuitization in the year 2000. The Fixed Annuity Payment Options Table does not
include any applicable premium tax.

            OPTIONS 1 & 4 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.

   (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)

<TABLE>
<CAPTION>
                        OPTION 1                     OPTION 4                    OPTION 4
                                                   LIFE ANNUITY                LIFE ANNUITY
  AGE OF                                         (W/120 PAYMENTS             (W/240 PAYMENTS
 ANNUITANT             LIFE ANNUITY                 GUARANTEED)                 GUARANTEED)
-----------         -------------------         -------------------         -------------------
                    MALE         FEMALE         MALE         FEMALE         MALE         FEMALE
                    ----         ------         ----         ------         ----         ------
<S>                 <C>          <C>            <C>          <C>            <C>          <C>
        55          4.23          3.84          4.19          3.82          4.05          3.76
        56          4.32          3.91          4.27          3.88          4.11          3.81
        57          4.41          3.98          4.35          3.95          4.17          3.87
        58          4.51          4.05          4.44          4.02          4.24          3.93
        59          4.61          4.13          4.54          4.10          4.31          4.00
        60          4.72          4.22          4.64          4.18          4.37          4.06
        61          4.84          4.31          4.74          4.27          4.44          4.13
        62          4.96          4.40          4.85          4.36          4.51          4.20
        63          5.10          4.51          4.97          4.45          4.58          4.27
        64          5.24          4.62          5.10          4.55          4.65          4.35
        65          5.40          4.73          5.22          4.66          4.72          4.42
        66          5.56          4.86          5.36          4.78          4.79          4.50
        67          5.74          4.99          5.50          4.90          4.86          4.57
        68          5.93          5.14          5.65          5.02          4.92          4.65
        69          6.13          5.29          5.80          5.16          4.99          4.73
        70          6.35          5.46          5.96          5.30          5.05          4.80
        71          6.58          5.64          6.13          5.46          5.10          4.88
        72          6.82          5.84          6.29          5.62          5.16          4.95
        73          7.08          6.05          6.47          5.78          5.20          5.02
        74          7.36          6.28          6.64          5.96          5.25          5.08
        75          7.66          6.53          6.82          6.14          5.29          5.14
        76          7.98          6.80          7.00          6.33          5.33          5.19
        77          8.33          7.09          7.19          6.53          5.36          5.24
        78          8.69          7.41          7.37          6.73          5.39          5.29
        79          9.09          7.75          7.55          6.94          5.41          5.33
        80          9.51          8.11          7.73          7.14          5.43          5.36
        81          9.97          8.51          7.91          7.35          5.45          5.39
        82         10.45          8.94          8.08          7.55          5.47          5.42
        83         10.97          9.41          8.24          7.76          5.48          5.44
        84         11.52          9.92          8.40          7.95          5.49          5.46
        85         12.10         10.47          8.54          8.13          5.50          5.48
</TABLE>

                                       21
<PAGE>

              OPTION 2 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
    (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
                       JOINT & 100% SURVIVOR LIFE ANNUITY

<TABLE>
<CAPTION>
 AGE OF
  MALE
ANNUITANT                                 AGE OF FEMALE ANNUITANT
---------          ----------------------------------------------------------------------
                    55         60         65         70         75         80         85
                   ----       ----       ----       ----       ----       ----       ----
<S>                <C>        <C>        <C>        <C>        <C>        <C>        <C>
       55          3.54       3.69       3.84       3.96       4.06       4.13       4.17
       60          3.63       3.83       4.04       4.23       4.39       4.52       4.60
       65          3.70       3.95       4.23       4.51       4.78       5.00       5.16
       70          3.75       4.04       4.39       4.78       5.18       5.56       5.85
       75          3.78       4.11       4.51       5.01       5.57       6.14       6.65
       80          3.81       4.15       4.60       5.18       5.89       6.70       7.52
       85          3.82       4.18       4.66       5.30       6.14       7.18       8.35
</TABLE>

              OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
    (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
         JOINT & 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)

<TABLE>
<CAPTION>
 AGE OF
  MALE
ANNUITANT                                 AGE OF FEMALE ANNUITANT
---------          ----------------------------------------------------------------------
                    55         60         65         70         75         80         85
                   ----       ----       ----       ----       ----       ----       ----
<S>                <C>        <C>        <C>        <C>        <C>        <C>        <C>
       55          3.54       3.69       3.83       3.96       4.05       4.12       4.16
       60          3.63       3.83       4.03       4.22       4.38       4.50       4.57
       65          3.70       3.95       4.22       4.50       4.76       4.97       5.10
       70          3.75       4.04       4.38       4.76       5.15       5.48       5.72
       75          3.78       4.10       4.50       4.98       5.50       6.00       6.40
       80          3.80       4.14       4.58       5.13       5.78       6.46       7.04
       85          3.81       4.16       4.62       5.22       5.97       6.80       7.55
</TABLE>

              OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
    (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
         JOINT & 100% SURVIVOR LIFE ANNUITY (W/240 PAYMENTS GUARANTEED)

<TABLE>
<CAPTION>
 AGE OF
  MALE
ANNUITANT                                 AGE OF FEMALE ANNUITANT
---------          ----------------------------------------------------------------------
                    55         60         65         70         75         80         85
                   ----       ----       ----       ----       ----       ----       ----
<S>                <C>        <C>        <C>        <C>        <C>        <C>        <C>
       55          3.53       3.68       3.81       3.92       3.99       4.03       4.04
       60          3.62       3.81       4.00       4.16       4.27       4.34       4.37
       65          3.68       3.92       4.16       4.39       4.56       4.66       4.71
       70          3.72       3.99       4.29       4.58       4.81       4.96       5.03
       75          3.74       4.03       4.36       4.70       4.99       5.17       5.26
       80          3.75       4.05       4.40       4.77       5.09       5.30       5.40
       85          3.76       4.06       4.42       4.80       5.13       5.35       5.46
</TABLE>

                                       22
<PAGE>

              OPTION 5 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.

<TABLE>
<CAPTION>
                         PAYMENTS FOR A SPECIFIED PERIOD
 NUMBER       MONTHLY     NUMBER    MONTHLY    NUMBER     MONTHLY    NUMBER     MONTHLY
OF YEARS      PAYMENT    OF YEARS   PAYMENT   OF YEARS    PAYMENT   OF YEARS    PAYMENT
--------      -------    --------   -------   --------    -------   --------    -------
<S>           <C>        <C>        <C>       <C>         <C>       <C>         <C>
                              10       9.61         17       6.23         24       4.84
                              11       8.86         18       5.96         25       4.71
       5        17.91         12       8.24         19       5.73         26       4.59
       6        15.14         13       7.71         20       5.51         27       4.47
       7        13.16         14       7.26         21       5.32         28       4.37
       8        11.68         15       6.87         22       5.15         29       4.27
       9        10.53         16       6.53         23       4.99         30       4.18
</TABLE>

                                       23
<PAGE>

                     VARIABLE ANNUITY PAYMENT OPTIONS TABLE

BASIS OF COMPUTATION

The actuarial basis for the Table of Annuity Rates is the 1983a Annuity
Mortality Table with projection and an effective annual Assumed Investment Rate
of 3.5%. The mortality table is projected using Projection Scale G factors,
assuming annuitization in the year 2000. The Variable Annuity Payment Options
Table does not include any applicable premium tax.

            OPTIONS 1v& 4v - TABLE OF MONTHLY INSTALLMENTS PER $1,000

   (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)

<TABLE>
<CAPTION>
                       OPTION 1v                     OPTION 4v                   OPTION 4v
                                                   LIFE ANNUITY                 LIFE ANNUITY
  AGE OF                                          (W/120 PAYMENTS              (W/240 PAYMENTS
ANNUITANT             LIFE ANNUITY                  GUARANTEED)                 GUARANTEED)
---------          -------------------          ------------------          ------------------
                   MALE         FEMALE          MALE        FEMALE          MALE        FEMALE
                   ----         ------          ----        ------          ----        ------
<S>                <C>          <C>             <C>         <C>             <C>         <C>
       55          4.53           4.13          4.48          4.11          4.33          4.05
       56          4.62           4.20          4.56          4.18          4.39          4.10
       57          4.71           4.27          4.64          4.24          4.45          4.16
       58          4.80           4.34          4.73          4.31          4.52          4.22
       59          4.90           4.42          4.82          4.39          4.58          4.28
       60          5.01           4.51          4.92          4.47          4.65          4.34
       61          5.13           4.60          5.03          4.55          4.71          4.41
       62          5.26           4.69          5.14          4.64          4.78          4.48
       63          5.39           4.80          5.25          4.74          4.85          4.55
       64          5.54           4.91          5.38          4.84          4.92          4.62
       65          5.69           5.02          5.51          4.94          4.99          4.69
       66          5.86           5.15          5.64          5.06          5.05          4.77
       67          6.03           5.28          5.78          5.18          5.12          4.84
       68          6.22           5.43          5.93          5.30          5.18          4.92
       69          6.43           5.58          6.08          5.44          5.24          4.99
       70          6.64           5.75          6.23          5.58          5.30          5.06
       71          6.87           5.93          6.40          5.73          5.36          5.14
       72          7.12           6.13          6.56          5.89          5.41          5.21
       73          7.38           6.34          6.73          6.06          5.46          5.27
       74          7.66           6.57          6.91          6.23          5.50          5.33
       75          7.96           6.82          7.09          6.41          5.54          5.39
       76          8.28           7.09          7.27          6.60          5.57          5.44
       77          8.63           7.38          7.45          6.79          5.61          5.49
       78          9.00           7.70          7.63          6.99          5.63          5.54
       79          9.40           8.04          7.81          7.19          5.66          5.58
       80          9.82           8.41          7.98          7.40          5.68          5.61
       81         10.28           8.81          8.16          7.60          5.70          5.64
       82         10.76           9.24          8.32          7.81          5.71          5.66
       83         11.28           9.71          8.48          8.00          5.72          5.69
       84         11.83          10.23          8.64          8.19          5.73          5.70
       85         12.42          10.78          8.78          8.38          5.74          5.72
</TABLE>

                                       24
<PAGE>

              OPTION 2v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
    (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
                       JOINT & 100% SURVIVOR LIFE ANNUITY

<TABLE>
<CAPTION>
 AGE OF
  MALE
ANNUITANT                                 AGE OF FEMALE ANNUITANT
---------          ----------------------------------------------------------------------
                    55         60         65         70         75         80         85
                   ----       ----       ----       ----       ----       ----       ----
<S>                <C>        <C>        <C>        <C>        <C>        <C>        <C>
       55          3.83      3.98        4.12       4.24       4.34       4.42       4.46
       60          3.92      4.11        4.32       4.51       4.67       4.80       4.89
       65          3.99      4.23        4.50       4.79       5.05       5.28       5.44
       70          4.04      4.33        4.67       5.05       5.46       5.83       6.13
       75          4.07      4.39        4.79       5.28       5.84       6.41       6.93
       80          4.10      4.44        4.88       5.45       6.16       6.97       7.79
       85          4.11      4.47        4.94       5.57       6.41       7.45       8.61
</TABLE>

              OPTION 3v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
    (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
        JOINT AND 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)

<TABLE>
<CAPTION>
 AGE OF
  MALE
ANNUITANT                                 AGE OF FEMALE ANNUITANT
---------        --------------------------------------------------------------------------
                  55          60          65         70          75         80          85
                 ----        ----        ----       ----        ----       ----        ----
<S>              <C>         <C>         <C>        <C>         <C>        <C>         <C>
       55        3.83        3.98        4.12       4.24        4.34       4.40        4.45
       60        3.92        4.11        4.31       4.50        4.66       4.78        4.86
       65        3.99        4.23        4.50       4.78        5.03       5.24        5.38
       70        4.04        4.32        4.66       5.03        5.41       5.75        5.99
       75        4.07        4.38        4.78       5.25        5.77       6.26        6.66
       80        4.09        4.43        4.86       5.40        6.05       6.72        7.29
       85        4.10        4.45        4.90       5.50        6.24       7.05        7.80
</TABLE>

              OPTION 3v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
    (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
         JOINT & 100% SURVIVOR LIFE ANNUITY (W/240 PAYMENTS GUARANTEED)

<TABLE>
<CAPTION>
 AGE OF
  MALE
ANNUITANT                                 AGE OF FEMALE ANNUITANT
---------          ----------------------------------------------------------------------
                    55         60         65         70         75         80         85
                   ----       ----       ----       ----       ----       ----       ----
<S>                <C>        <C>        <C>        <C>        <C>        <C>        <C>
       55          3.82       3.97       4.10       4.20       4.27       4.31       4.33
       60          3.91       4.09       4.28       4.44       4.55       4.61       4.64
       65          3.97       4.20       4.44       4.66       4.83       4.93       4.97
       70          4.01       4.27       4.56       4.84       5.07       5.21       5.28
       75          4.03       4.31       4.64       4.97       5.25       5.42       5.51
       80          4.04       4.33       4.67       5.03       5.34       5.55       5.65
       85          4.05       4.34       4.69       5.06       5.38       5.60       5.70
</TABLE>

                                       25
<PAGE>

              OPTION 5v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.

<TABLE>
<CAPTION>
                              PAYMENTS FOR A SPECIFIED PERIOD
 NUMBER       MONTHLY      NUMBER     MONTHLY     NUMBER     MONTHLY     NUMBER     MONTHLY
OF YEARS      PAYMENT     OF YEARS    PAYMENT    OF YEARS    PAYMENT    OF YEARS    PAYMENT
--------      -------     --------    -------    --------    -------    --------    -------
<S>           <C>         <C>         <C>        <C>         <C>        <C>         <C>
                              10        9.83         17        6.47         24        5.09
                              11        9.09         18        6.20         25        4.96
       5       18.12          12        8.46         19        5.97         26        4.84
       6       15.35          13        7.94         20        5.75         27        4.73
       7       13.38          14        7.49         21        5.56         28        4.63
       8       11.90          15        7.10         22        5.39         29        4.53
       9       10.75          16        6.76         23        5.24         30        4.45
</TABLE>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY

                     A STOCK COMPANY LOS ANGELES, CALIFORNIA

                                       26
<PAGE>

                              INDIVIDUAL FIXED AND
                            VARIABLE ANNUITY CONTRACT
                                Nonparticipating

                                       27
<PAGE>

                           PURCHASE PAYMENT ALLOCATION

                                   Subaccounts

                                   STRATEGIES

<TABLE>
                 <S>        <C>
                 80.00%     Growth Strategy
                  0.00%     Moderate Growth Strategy
                  0.00%     Balanced Growth Strategy
                  0.00%     Conservative Growth Strategy
</TABLE>

                                      PORTFOLIOS

<TABLE>
                 <S>        <C>
                  0.00%     Large Cap Growth Portfolio
                  0.00%     Large Cap Composite Portfolio
                  0.00%     Large Cap Value Portfolio
                  0.00%     Mid Cap Growth Portfolio
                  0.00%     Mid Cap Value Portfolio
                  0.00%     Small Cap Portfolio
                  0.00%     International Equity Portfolio
                  0.00%     Diversified Fixed Income Portfolio
                  0.00%     Cash Management Portfolio
</TABLE>

                                  FOCUSED PORTFOLIOS

<TABLE>
                 <S>        <C>
                  0.00%     Focus Growth Portfolio
                  0.00%     Focus Growth and Income Portfolio
                  0.00%     Focus Value Portfolio
                  0.00%     Focus TechNet Portfolio
</TABLE>

                              Fixed Account Options
                              ---------------------

<TABLE>
<CAPTION>
                            Guarantee                        Initial
                             Period                       Interest Rate
                            ---------                     -------------
                 <S>        <C>                           <C>
                 20.00%     3-Year Fixed MVA                   3.00%
</TABLE>

<TABLE>
<CAPTION>
                      DCA Fixed Account Options
                      -------------------------
                 <S>        <C>
                  0.00%     6-Month DCA Fixed Non-MVA
                  0.00%     1-Year DCA Fixed Non-MVA
</TABLE>

                                       4
<PAGE>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY

                                   ENDORSEMENT

This endorsement forms a part of the Contract to which it is attached.

The 1-Year Fixed Account Option is not available as an investment option under
this Contract and all references to the 1-Year Fixed Account Option are hereby
deleted. The Contract is also endorsed as follows to reflect this modification:

1. The definition of "DOLLAR COST AVERAGING PROGRAM (DCA)" is modified to: "An
optional program under which You authorize the automatic transfer of specified
amounts or percentages from the DCA Fixed Account Option(s) or any
[Subaccount(s) or Variable Portfolio(s)] into any [Subaccount(s) or Variable
Portfolio(s)] other than the source account. Any portion of a Purchase Payment
allocated to the DCA Fixed Account Option(s) must be transferred out within the
specified DCA Fixed Account Option Period. Upon termination of the DCA program
any amounts remaining in the DCA Fixed Account Option(s) will be transferred to
the DCA target allocation(s) for the program being terminated. Upon
annuitization, any amounts remaining in the DCA Fixed Account Option(s) will be
applied to the Fixed Annuity Payments. The unit values credited and applied to
Your Contract are determined on each date of transfer. We reserve the right to
change the terms and conditions of the DCA program at any time."

2. The last two paragraphs of the section captioned "FIXED ACCOUNT GUARANTEE
PERIOD OPTIONS AND INTEREST CREDITING" are replaced by: "For thirty (30) days
following the date of expiration of a Guarantee Period, You may renew for the
same Guarantee Period at the Renewal Interest Rate or You may transfer all or a
portion of the amount to the [Subaccounts or Variable Portfolios]. If You do not
specify a Guarantee Period at the time of renewal, We will select the same
Guarantee Period as has just expired, crediting the Contract with the Renewal
Interest Rate in effect on the date of expiration of the Guarantee Period."

All other terms and conditions of the Contract remain unchanged. Signed for the
Company at Los Angeles, California, to be effective as of the Contract Date.

    /s/ CHRISTINE A. NIXON                             /s/ JAY S. WINTROB
    ----------------------                             ------------------
      Christine A. Nixon                                 Jay S. Wintrob
         Secretary                                          President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}]]