<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. 1 (File No. 333-00041)
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 X
Amendment No. 1 (File No. 811-07475)
ACL VARIABLE ANNUITY ACCOUNT 1
___________________________________________________________________
(Exact Name of Registrant)
American Centurion Life Assurance Company
___________________________________________________________________
(Name of Depositor)
20 Madison Avenue Extension, Albany, NY 12203
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
(Name and Address of Agent for Service)
It is proposed that this filing will become effective September 16,
1996 or as soon as practicable thereafter. (Check approprate box)
DECLARATION REQUIRED BY RULE 24f-2(a)(1)
The Registrant has regitered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section
24-f of the Investment Company Act of 1940.
_____immediately upon filing pursuant to paragraph (b) of Rule 485
_____on (date) pursuant to paragraph (b) of Rule 485
_____60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following box:
_____this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
PAGE 2
CROSS REFERENCE SHEET
Cross reference sheet showing location in the prospectus and
Statement of Additional Information of the information called for
by the items enumerated in Part A and B of Form N-4.
Negative answers omitted from prospectus and Statement of
Additional Information are so indicated.
<TABLE><CAPTION>
PART A PART B
Section in
Section Statement of
Item No. in Prospectus Item No. Additional Information
<S> <C> <C> <C>
1 Cover page 15 Cover page
2 Key terms 16 Table of contents
3(a) Expense summary 17(a) NA
(b) The Annuity in brief (b) NA
(c) About American Centurion Life*
4(a) Condensed financial
information 18(a) NA
(b) Performance information (b) NA
(c) Financial statements (c) Independent auditors
(d) NA
5(a) Cover page; About (e) NA
American Centurion Life (f) NA
(b) The variable account
(c) The funds 19(a) Distribution of the contracts*
(d) Cover page; The funds About American Centurion Life*
(e) Voting rights (b) NA
(f) NA
(g) NA 20(a) Principal underwriter
(b) Principal underwriter
6(a) Charges (c) NA
(b) Charges (d) NA
(c) Charges
(d) NA 21(a) Performance information
(e) The funds (b) Performance information
(f) NA
22 Calculating Annuity Payouts
7(a) Buying your annuity;
Benefits in case of 23(a) Financial Statements
death; (b) Financial Statements
The annuity payout
period
(b) The variable account;
Making the most of your
annuity
(c) The funds; Charges
(d) Cover page
8(a) The annuity payout period
(b) Buying the annuity
(c) The annuity payout period
(d) The annuity payout period
(e) The annuity payout period
(f) The annuity payout period
9(a) Benefits in case of death
(b) Benefits in case of death
10(a) Buying your annuity;
Valuing your investment
(b) Valuing your investment
(c) Buying your annuity; Valuing
your investment
(d) About American Centurion Life
11(a) Surrendering your contract
(b) NA
(c) Surrendering your contract
(d) Buying your annuity
(e) The annuity in brief<PAGE>
PAGE 3
12(a) Taxes
(b) Key terms
(c) NA
13 NA
14 Table of contents of the
Statement of Additional Information
*Designates section in the prospectus, which is hereby incorporated by reference
in this Statement of Additional Information.
/TABLE
<PAGE>
PAGE 4
Privileged Assets (registered trademark symbol) Select Annuity
Prospectus/date____________________
The Privileged Assets (registered trademark symbol) Select Annuity
is a flexible premium group deferred fixed/variable annuity.
The annuity is available for non-qualified and certain qualified
retirement plans.
ACL Variable Annuity Account 1
Sold by: American Centurion Life Assurance Company
(American Centurion Life).
Service Office: 20 Madison Avenue Ext. Albany, NY 12203
Telephone: (518) 452-4150
THIS PROSPECTUS CONTAINS THE INFORMATION ABOUT THE VARIABLE
ACCOUNTS THAT YOU SHOULD KNOW BEFORE INVESTING. Refer to "The
variable accounts" in this prospectus.
THE PROSPECTUS IS ACCOMPANIED OR PRECEDED BY THE FOLLOWING
PROSPECTUSES: IDS LIFE INVESTMENT SERIES, INC., IDS LIFE MANAGED
FUND, INC., IDS LIFE SPECIAL INCOME FUND, INC. AND IDS LIFE
MONEYSHARE FUND, INC., INVESCO VARIABLE INVESTMENT FUNDS, INC.,
JANUS ASPEN SERIES, TCI PORTFOLIOS INC., WARBURG PINCUS TRUST AND
STRONG VARIABLE INSURANCE FUNDS, INC. PLEASE KEEP THESE
PROSPECTUSES FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
AMERICAN CENTURION LIFE IS NOT A FINANCIAL INSTITUTION, AND THE
SECURITIES IT OFFERS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY FINANCIAL INSTITUTION NOR ARE THEY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
A Statement of Additional Information (SAI) dated ________________
(incorporated by reference into this prospectus) has been filed
with the Securities and Exchange Commission (SEC) and available for
reference, along with other related materials, on the SEC Internet
web site (http://www.sec.gov). The SAI is available without charge
by contacting American Centurion Life at the telephone number above
or by completing and sending the order form on the last page of
this prospectus. The table of contents of the SAI is on the last
page of this prospectus.
Participation in the annuity contract will be accounted for
separately by the issuance of an annuity certificate showing your
interest in the contract.
<PAGE>
PAGE 5
Purchase payments may be allocated among different accounts,
providing variable and/or fixed returns. Through the subaccounts
of the variable account, you can invest in mutual funds that are
managed to meet a variety of investment objectives. The
certificate value will vary according to the investment performance
of the funds you select. You bear the entire investment risk under
the annuity.
The annuity offers tax-deferred asset accumulation. This may be
particularly attractive to investors in high federal and state tax
brackets who have made maximum contributions to employer-sponsored
retirement programs and IRAs.
The annuity has no front-end sales charge, nor does it have a
redemption or surrender charge.
The Privileged Assets Select Annuity is designed to allow you to
build up funds for retirement. When you need to access your money,
such as at retirement, you may do so in several ways including the
following: you may take a monthly fixed annuity payout for the
lifetime of the annuitant(s) you have designated, or you may take a
lump-sum or a fixed amount per month on the principal and/or
earnings on the annuity.
<PAGE>
PAGE 6
Contents
Key terms.....................................................
The Privileged Assets (registered trademark symbol)
Select Annuity in brief...................................
Expense summary...............................................
Financial statements..........................................
Performance information.......................................
The variable account..........................................
The funds.....................................................
IDS Life Aggressive Growth Fund..........................
IDS Life International Equity Fund.......................
IDS Life Capital Resource Fund...........................
IDS Life Managed Fund....................................
IDS Life Special Income Fund.............................
IDS Life Moneyshare Fund.................................
INVESCO VIF-Industrial Income Portfolio..................
Janus Aspen Series Worldwide Growth Portfolio............
Janus Aspen Series Growth Portfolio......................
TCI Growth...............................................
TCI Value................................................
Warburg Pincus Trust-Post-Venture Capital Portfolio......
Strong Short-Term Bond Fund II...........................
The fixed account.............................................
Buying your annuity...........................................
Setting the annuity start date...........................
Beneficiary..............................................
Minimum purchase payments................................
Three ways to make purchase payments.....................
Charges.......................................................
Administrative charge....................................
Mortality and expense risk fee...........................
Other information on charges.............................
Valuing your investment.......................................
Number of units..........................................
Accumulation unit value..................................
Net investment factor....................................
Factors that affect variable subaccount
accumulation units....................................
Making the most of your annuity...............................
Automated dollar-cost averaging..........................
Transferring money between accounts......................
Transfer policies........................................
Two ways to request a transfer or a surrender............
Surrendering your annuity.....................................
Surrender policies.......................................
Receiving payment when you request a surrender...........
Changing ownership............................................
Benefits in case of death.....................................
The annuity payout period.....................................
Annuity payout plans.....................................
Death after annuity payouts begin........................
Taxes.........................................................
Voting rights.................................................
Substitution of investments...................................
Distribution of the annuity...................................
About American Centurion Life.................................
<PAGE>
PAGE 7
Regular and special reports...................................
Table of contents of the Statement of Additional
Information................................................
<PAGE>
PAGE 8
Key terms
These terms can help you understand details about your annuity.
American Centurion Life - In this prospectus, "we," "us," "our" and
"American Centurion Life" refer to American Centurion Life
Assurance Company.
Annuity - A contract or the related certificate you receive that
shows your coverage under the contract, purchased from an insurance
company that offers tax-deferred growth of the investment until
earnings are withdrawn, and that can be tailored to meet the
specific needs of the individual during retirement.
Accumulation unit - A measure of the value of each variable
subaccount before annuity payouts begin.
Annuitant - The person on whose life or life expectancy the payouts
are based.
Annuity payout - An amount paid at regular intervals under one of
several plans available to the owner and/or any other payee. This
amount is paid on a fixed basis.
Annuity start date - The date when annuity payouts are scheduled to
begin. This date is established when you start your annuity. As
your financial goals change, you may change the annuity start date.
Beneficiary - The person designated to receive annuity benefits in
case of the owner's or annuitant's death.
Certificate value - The total purchase payments, plus investment
return, less any administrative charges and prior withdrawals.
Certificate year - A period of 12 months, starting on the effective
date of the certificate and on each anniversary of the effective
date.
Close of business - When the New York Stock Exchange (NYSE) closes,
normally 4 p.m. Eastern time.
Code - Internal Revenue Code of 1986, as amended.
Fixed account - An account to which you may allocate purchase
payments. Amounts allocated to this account earn interest at rates
that are declared periodically by American Centurion Life.
Mutual funds (funds) - Mutual funds or portfolios, each with a
different investment objective. (See "The funds.") You may
allocate your purchase payments into variable subaccounts investing
in shares of any or all of these funds.
Owner (you, your) - The person who controls the annuity (decides on
investment allocation, transfers, payout options, etc.).
Purchase payments - Payments made to American Centurion Life for an
annuity.<PAGE>
PAGE 9
Qualified annuity - An annuity purchased for a retirement plan that
is subject to applicable federal law and any rules of the plan
itself. These plans include:
o Individual Retirement Annuities (IRAs), including rollovers from
qualified plans
o Simplified Employee Pension (SEP) Plans
All other annuities we currently issue are considered nonqualified
annuities.
Surrender value - The amount you are entitled to receive if you
surrender your annuity. It is the certificate value. No surrender
charge will apply.
Valuation date - Any normal business day, Monday through Friday,
that the NYSE is open. The value of each variable subaccount is
calculated at the close of business on each valuation date.
Variable account - An account consisting of separate subaccounts to
which you may allocate purchase payments; each invests in shares of
one mutual fund. (See "The variable account.") The value of your
investment in each variable subaccount changes with the performance
of the particular fund.
The Privileged Assets (registered trademark symbol) Select Annuity
in brief
Purpose: The Privileged Assets (registered trademark symbol)
Select Annuity is designed to allow you to build up funds for
retirement. You do this by making one or more investments
(purchase payments) that may earn returns that increase the value
of the annuity. Beginning at a specified future date (the annuity
start date), the annuity provides lifetime or other forms of
annuity payouts to you or to anyone you designate.
Accounts: You may allocate your purchase payments among any or all
of:
o variable subaccounts, each of which invests in a mutual fund
with a particular investment objective. The value of each
variable subaccount varies with the performance of the
particular fund. Therefore, the certificate value at the
annuity start date may be more or less than the total of
purchase payments allocated to the variable subaccounts.
(p.)
o a fixed account, which earns interest at rates that are
declared periodically by American Centurion Life. The
guaranteed minimum interest rate is 3%. (p.)
Buying the annuity: You can purchase an annuity by submitting a
complete application. Applications are subject to acceptance at
our service office. You may buy a nonqualified annuity or a
qualified annuity. Payment may be made either in a lump sum with
the option of additional payments in the future or installments:
<PAGE>
PAGE 10
o Minimum purchase payment - $2,000 ($1,000 for qualified
certificates) unless you pay in installments by means of a
bank authorization or under a group billing arrangement at a
rate of $100/month or more or other payment plan acceptable
to us.
o Minimum additional payment - $100.
o Maximum first-year payment(s) - $50,000 to $1,000,000
depending on your age.
o Maximum payment for each subsequent year - $50,000. (p.)
Thirty-day free look: You may return your annuity for a full
refund within 30 days after you receive it. The portion of your
first purchase payment allocated to the variable account must be
invested initially in the IDS Life Moneyshare subaccount for the
period we estimate or calculate your free look right to be in
existence (generally 35 days after the annuity date.)
If you choose not to keep your annuity, return it to us within the
free look period. The annuity will be canceled and we will refund
promptly the greater of (1) your purchase payment without
investment earnings, or (2) your certificate value plus any amount
deducted from your payment prior to allocation to the variable
account or the fixed account.
Transfers: Subject to certain restrictions you may re-allocate
your money among accounts without charge at any time until annuity
payouts begin. You may establish automated transfers among the
fixed account and variable subaccount(s) and you may request a
transfer by telephone. (p.)
Surrenders: You may surrender all or part of your certificate value
at any time before the annuity start date. You also may establish
systematic surrenders. There is no surrender charge. Earnings on
amounts you surrender may be taxable (and include a 10% penalty if
surrenders are made prior to your reaching age 59 1/2); and have
other tax consequences; also, certain restrictions apply. (p.)
Changing ownership: You may change ownership of a nonqualified
annuity by written instruction. However, such changes of
nonqualified annuities may have federal income tax consequences.
Certain restrictions apply concerning change of ownership of a
qualified annuity. (p.)
Payment in case of death: If you or the annuitant dies before
annuity payouts begin, we will pay the beneficiary the greater of
the certificate value or total purchase payments made less partial
surrenders. (p.)
Annuity payouts: The certificate value of your investment can be
applied to an annuity payout plan that begins on the annuity start
date. You may choose from a variety of plans to make sure that
payouts continue as long as they are needed. If you purchased a
qualified annuity, the payout schedule must meet requirements of
the qualified plan. Payouts will be made on a fixed basis. (p.)
Taxes: Generally, your annuity grows tax-deferred until you
surrender it or begin to receive payouts. (Under certain <PAGE>
PAGE 11
circumstances, IRS penalty taxes may apply.) Even if you direct
payouts to someone else, you will still be taxed on the income if
you are the owner. (p.)
Charges: Your Privileged Assets Select Annuity is subject to a $30
annual administrative charge and a 1% mortality and expense risk
charge against the variable subaccounts. (p.)
Expense summary
The purpose of this summary is to help you understand the various
costs and expenses associated with the annuity.
You pay no sales charge when you purchase the annuity nor do you
pay a surrender charge if you surrender your annuity. All costs
that you bear directly or indirectly for the variable subaccounts
and underlying mutual funds are shown below. Some expenses may
vary as explained under "Charges."
Direct charge. This charge is deducted directly from the
certificate value.
Annual administrative charge: $30. If the total purchase payments
(less partial surrenders) is at least $10,000, we will waive the
charge.
Indirect charges. The variable account pays these expenses out of
its assets. They are reflected in the variable subaccounts' daily
accumulation unit value and are not charged directly to your
account. They include:
Mortality and expense risk fee: 1% per year, deducted from the
variable subaccounts as a percentage of the average daily net
assets of the underlying fund.
Operating expenses of underlying mutual funds: management fees and
other expenses deducted as a percentage of average net assets as
follows:*
<TABLE><CAPTION>
IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life
Growth Equity Resource Managed Income Moneyshare
<S> <C> <C> <C> <C> <C> <C>
Management fees .64% .86% .63% .62% .63% .54%
Other expenses .04 .09 .04 .03 .04 .05
Total** .68% .95% .67% .65% .67% .59%
</TABLE><TABLE><CAPTION>
INVESCO VIF Janus Aspen Warburg Pincus Strong
Industrial Series Worldwide Janus Aspen TCI TCI Trust-Post-Venture Short-Term
Income Growth Series Growth Growth Value Capital Bond Fund II
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees .75% .68% .65% 1.00% 1.00% .64% .625%
Other expenses .28 .22 .13 -- -- .76 .375
Total 1.03%*** .90%*** .78%*** 1.00%*** 1.00%*** 1.40%+ 1.00%++
* Premium taxes imposed by some state and local governments are not reflected in this table.
American Centurion Life has entered into certain agreements under which it is compensated for the administrative services it
provides to the funds.
<PAGE>
PAGE 12
** Annualized operating expenses of the underlying mutual funds at Dec. 31, 1995.
*** The figures given above are based on gross expenses before expense offset arrangements, if any, during 1995, for these five
funds. As of the date of this prospectus, certain fees are being waived or expenses are being assumed by the respective investment
managers or service providers for certain of the underlying mutual funds, in each case on a voluntary basis. Without such waivers
or reimbursements, the "Management fees," "Other expenses" and "Total" that would have been incurred for the last completed fiscal
year would be: 1.56%, .28 and 2.13%, respectively, for the INVESCO VIF - Industrial Income Portfolio; .87%, .22 and 1.09%,
respectively, for Janus Aspen Series Worldwide Growth and .85%, .13 and .98%, respectively, for Janus Aspen Series Growth. See the
Portfolios' prospectuses for a discussion of fee waiver and expense reimbursements.
+ This is a new portfolio, operating expenses are based on annualized estimates of such expenses to be incurred in the current
fiscal year. Absent the waiver of fees by the Portfolio's investment adviser and co-administrator, Management Fees for the
Portfolio would equal 1.25%. Other Expenses would equal .81%, and Total Portfolio Operating Expenses would equal 2.06%. The
investment adviser has undertaken to limit the Portfolio's Total Portfolio Operating Expenses through December 31, 1996.
++Annualized operating expenses of the fund at June 30, 1995.
</TABLE>
Example:* You would pay the following expenses on a $1,000
investment, assuming 5% annual return and surrender, no surrender
or selection of an annuity payout plan at the end of each time
period:
<TABLE><CAPTION>
IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life
Growth Equity Resource Managed Income Moneyshare
<S> <C> <C> <C> <C> <C> <C>
1 year $ 20.15 $ 22.92 $ 20.05 $ 19.84 $ 20.05 $ 19.23
3 years 62.28 70.64 61.97 61.35 61.97 59.48
5 years 106.95 120.97 106.43 105.39 106.43 102.25
10 years 230.85 259.24 229.79 227.65 229.79 221.22
</TABLE><TABLE><CAPTION>
INVESCO VIF Janus Aspen Warburg Pincus Strong
Industrial Series Worldwide Janus Aspen TCI TCI Trust-Post-Venture Short-Term
Income Growth Series Growth Growth Value Capital Bond Fund II
<S> <C> <C> <C> <C> <C> <C>
1 year $ 23.74 $ 22.41 $ 21.18 $ 23.43 $ 23.43 $ 27.53 $ 23.43
3 years 73.10 69.09 65.38 72.18 72.18 84.46 72.18
5 years 125.09 118.39 112.16 123.55 123.55 143.98 123.55
10 years 267.50 254.04 241.45 264.41 264.41 304.89 264.41
</TABLE>
This example should not be considered a representation of past or
future expenses. Actual expenses may be more or less than those
shown.
* In this example, the $30 annual administrative charge is
approximated as a .286% charge based on our estimated average
annuity size. American Centurion Life has entered into certain
arrangements under which it is compensated for the administrative
services it provides to the funds.
Financial statements
The SAI dated _____, 1996, contains:
The statutory financial statements of American Centurion Life
including:
- balance sheets as of Dec. 31, 1995 and Dec. 31, 1994
- related statements of operations, changes in capital and
surplus and cash flows for the years ended Dec. 31, 1995 and
1994
and the unaudited statutory financial statements for American
Centurion Life including:<PAGE>
PAGE 13
- balance sheet as of June 30, 1996 and
- related statements of operations, changes in capital and
surplus and cash flows for the 6 months ended June 30, 1996.
Performance information
Performance information for the variable subaccounts may appear
from time to time in advertisements or sales literature. In all
cases, such information reflects the performance of a hypothetical
investment in a particular account during a particular time period.
Calculations are performed as follows:
Simple yield - IDS Life Moneyshare Subaccount: Income over a given
seven-day period (not counting any change in the capital value of
the investment) is annualized (multiplied by 52) by assuming that
the same income is received for 52 weeks. This annual income is
then stated as an annual percentage return on the investment.
Compound yield - IDS Life Moneyshare Subaccount: Calculated like
simple yield, except that, when annualized, the income is assumed
to be reinvested. Compounding of reinvested returns increases the
yield as compared to a simple yield.
Yield - For accounts investing in income funds: Net investment
income (income less expenses) per accumulation unit during a given
30-day period is divided by the value of the unit on the last day
of the period. The result is converted to an annual percentage.
Average annual total return: Expressed as an average annual
compounded rate of return of a hypothetical investment over a
period of one, five and ten years (or up to the life of the
subaccount if it is less than ten years old). This figure reflects
deduction of all applicable charges, including the administrative
charge, and mortality and expense risk fee.
Aggregate total return: Represents the cumulative change in the
value of an investment for a specified period of time (reflecting
change in a subaccount's accumulation unit value). The calculation
assumes reinvestment of investment earnings and reflects the
deduction of all applicable charges, including the administrative
charge and mortality and expense risk fee. Aggregate total return
may be shown by means of schedules, charts or graphs.
Performance information should be considered in light of the
investment objectives and policies, characteristics and quality of
the fund in which the subaccount invests and the market conditions
during the given time period. Such information is not intended to
indicate future performance. Because advertised yields and total
return figures include all charges attributable to the annuity,
which has the effect of decreasing advertised performance,
subaccount performance should not be compared to that of mutual
funds that sell their shares directly to the public. (See the SAI
for a further description of methods used to determine yield and
total return for the subaccounts.)
If you would like additional information about actual performance,
contact American Centurion Life at telephone number on cover page.
<PAGE>
PAGE 14
The variable account
Purchase payments can be allocated to any or all of the subaccounts
of the variable account that invest in shares of the following
funds:
Subaccount
IDS Life Aggressive Growth Fund DAG
IDS Life International Equity Fund DIE
IDS Life Capital Resource Fund DCR
IDS Life Managed Fund DMG
IDS Life Special Income Fund DSI
IDS Life Moneyshare Fund DMS
INVESCO VIF - Industrial Income Portfolio DII
Janus Aspen Series Worldwide Growth Portfolio DWG
Janus Aspen Series Growth Portfolio DSG
TCI Growth DGR
TCI Value DVL
Warburg Pincus Trust-Post-Venture Capital Portfolio DVC
Strong Short-Term Bond Fund II DSB
The variable account meets the definition of a separate account
under federal securities laws. Income, capital gains and capital
losses of each subaccount are credited or charged to that account
alone. No subaccount will be charged with liabilities of any other
variable account or of our general business. The obligations
arising under the annuities are general obligations of American
Centurion Life.
The variable account was established under New York law and is
registered as a unit investment trust under the Investment Company
Act of 1940 (the 1940 Act). This registration does not involve any
supervision of our management or investment practices and policies
by the SEC.
The funds
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock
of small- and medium-size companies.
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock
of foreign issuers and foreign securities convertible into common
stock.
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common
stocks and other securities convertible into common stock,
diversified over many different companies in a variety of
industries.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in
U.S. common stocks, securities convertible into common stock,
warrants, fixed income securities (primarily high-quality corporate
bonds) and money market instruments.
<PAGE>
PAGE 15
IDS Life Special Income Fund
Objective: to provide a high level of current income while
conserving the value of the investment for the longest time period.
Invests primarily in high-quality, lower-risk corporate bonds
issued by many different companies in a variety of industries, and
in government bonds.
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and
conservation of capital. Invests in high-quality money market
securities with remaining maturities of 13 months or less. The
fund also will maintain a dollar-weighted average portfolio
maturity not exceeding 90 days. The fund attempts to maintain a
constant net asset value of $1 per share.
INVESCO VIF - Industrial Income Portfolio
Objective: to seek the best possible current income while following
sound investment practices with capital growth potential as a
secondary consideration. Invests primarily in income-producing
common stocks, as well as other income-producing securities such as
corporate bonds.
Janus Aspen Series Worldwide Growth Portfolio
Objective: long-term growth of capital in a manner consistent with
the preservation of capital. Invests primarily in common stocks of
foreign and domestic issuers.
Janus Aspen Series Growth Portfolio
Objective: long-term growth of capital in a manner consistent with
the preservation of capital. Invests primarily in common stocks,
with an emphasis on companies with larger market capitalizations.
TCI Growth
Objective: capital growth. Invests primarily in common stocks that
are considered by management to have better-than-average prospects
for appreciation.
TCI Value
Objective: long-term capital growth, with income as a secondary
objective. Invests primarily in securities that management
believes to be undervalued at the time of purchase.
Warburg Pincus Trust-Post-Venture Capital Portfolio
Objective: long-term growth of capital. Invests primarily in
equity securities of issuers in their post-venture capital stage of
development.
Strong Short-Term Bond Fund II
Objective: total return by investing for a high level of current
income with a low degree of share-price fluctuation. Invests
primarily in short- and intermediate-term, investment grade debt
obligations.
All funds are available to serve as the underlying investment for
variable annuities, and some funds are available to serve as the
underlying investment for variable annuities and variable life
insurance contracts and qualified plans. It is conceivable that in
the future it may be disadvantageous for variable annuity separate <PAGE>
PAGE 16
accounts, variable life insurance separate accounts and/or
qualified plans to invest in the available funds simultaneously.
Although American Centurion Life and the funds do not currently
foresee any such disadvantages, the boards of directors or trustees
of the appropriate funds will monitor events in order to identify
any material conflicts between such certificate owners and policy
owners and qualified plans to determine what action, if any, should
be taken in response to a conflict. If a board were to conclude
that separate funds should be established for variable life
insurance, variable annuity and qualified separate accounts, the
variable annuity certificate holders would not bear any expenses
associated with establishing separate funds.
The Internal Revenue Service (IRS) has issued final regulations
relating to the diversification requirements under Section 817(h)
of the Code. Each mutual fund intends to comply with these
requirements.
The U.S. Treasury and the IRS have indicated they may provide
additional guidance concerning how many variable subaccounts may be
offered and how many exchanges among variable subaccounts may be
allowed before the owner is considered to have investment control,
and thus is currently taxed on income earned within variable
subaccount assets. We do not know at this time what the additional
guidance will be or when action will be taken. We reserve the
right to modify the annuity, as necessary, to ensure that the owner
will not be subject to current taxation as the owner of the
variable subaccount assets.
We intend to comply with all federal tax laws to ensure that the
annuity continues to qualify as an annuity for federal income tax
purposes. To the extent permitted under applicable law, we reserve
the right to modify the contract as necessary to comply with any
new tax laws.
IDS Life is the investment manager and American Express Financial
Corporation is the investment advisor for each of the IDS Life
Funds. INVESCO Funds Group, Inc. is the investment advisor and
INVESCO Trust Company is the sub-adviser for the INVESCO VIF -
Industrial Income Portfolio. Janus Capital Corporation is the
investment manager for Janus Aspen Series Worldwide Growth
Portfolio and Janus Aspen Series Growth Portfolio. Investors
Research Corporation serves as the investment manager of TCI
Portfolios, Inc. Warburg, Pincus Counsellors, Inc. is the
investment adviser of Warburg Pincus Trust-Post-Venture Capital
Portfolio. Strong Capital Management, Inc. serves as the
investment advisor to Strong Short-Term Bond Fund II. The
investment managers for the funds cannot guarantee that the funds
will meet their investment objectives. Please read the
prospectuses for the funds for complete information on investment
risks, deductions, expenses and other facts you should know before
investing. They are available by contacting American Centurion
Life at the address or telephone number on the front of this
prospectus.
<PAGE>
PAGE 17
The fixed account
Purchase payments can also be allocated to the fixed account. The
cash value of the fixed account increases as interest is credited
to the account. Purchase payments and transfers to the fixed
account become part of the general account of American Centurion
Life, the company's main portfolio of investments. Interest is
credited daily and compounded annually. We guarantee a minimum
interest rate of 3%. We may declare interest rates above the
guaranteed rate from time to time.
Because of exemptive and exclusionary provisions, interests in the
fixed account have not been registered under the Securities Act of
1933 (1933 Act), nor is the fixed account registered as an
investment company under the 1940 Act. Accordingly, neither the
fixed account nor any interests in it are generally subject to the
provisions of the 1933 or 1940 Acts, and we have been advised that
the staff of the SEC has not reviewed the disclosures in this
prospectus that relate to the fixed account. Disclosures regarding
the fixed account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to
the accuracy and completeness of statements made in prospectuses.
Buying the annuity
Our representative can help you prepare and submit your
application. Alternatively, you may ask us for the forms and
prepare them yourself. As an owner, you have all rights and may
receive all benefits under the annuity. The annuity can be owned
in joint tenancy only in spousal situations (but not IRAs or SEPs).
When you apply, you can select:
o the account(s) in which you want to invest;
o how you want to make purchase payments;
o the date you want to start receiving annuity payouts (the
annuity start date); and
o a beneficiary.
If your application is complete, we will process it and apply your
purchase payment to your account(s) within two days after we
receive it. If your application is accepted, we will send you an
annuity. If we cannot accept your application within five days, we
will decline it and return your payment. We will credit additional
purchase payments you make to an existing annuity to your
account(s) at the next close of business.
Setting the annuity start date
Annuity payouts will be scheduled to begin on the annuity start
date. This date can be aligned with your actual retirement from a
job, or it can be a different future date, depending on your needs
and goals and on certain restrictions. You can also change the
date, provided you send us written instructions at least 30 days
before annuity payouts begin.
<PAGE>
PAGE 18
For nonqualified annuities, the annuity start date must be:
o no earlier than the 60th day after the annuity's effective
date; and
o no later than the annuitant's 85th birthday.
For qualified annuities, to avoid IRS penalty taxes, the annuity
start date generally must be:
o on or after the annuitant reaches age 59 1/2; and
o by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2.
If you are taking the minimum IRA distributions as required by the
Code from another tax-qualified investment, or in the form of
partial surrenders from this annuity, annuity payouts can start as
late as, but not later than, the annuitant's 85th birthday.
Beneficiary
If death benefits become payable before the annuity start date,
your named beneficiary will receive all or part of the certificate
value. If there is no named beneficiary, then you or your estate
will be the beneficiary. (See "Benefits in case of death" for more
about beneficiaries.)
Minimum purchase payments
If single payment:
Nonqualified: $2,000
Qualified: $1,000
If installment payments:
$100 monthly; $50.00 biweekly
Installments must total at least $1,000 in the first year.*
*If you make no purchase payments for the most recent 36 months,
and your previous payments total $1,000 or less, we have the right
to give you 30 days' written notice and pay you the total value of
your annuity in a lump sum.
Minimum additional purchase payment(s): $100
Maximum first-year payment(s):
This maximum is based on your age or age of the annuitant (whomever
is older) on the effective date of the annuity.
Up to age 75 $1 million
76 to 85 $500,000
Maximum payment for each subsequent year: $50,000**
**These limits apply in total to all American Centurion Life
annuities you own. We reserve the right to increase maximum <PAGE>
PAGE 19
limits or reduce age limits. For qualified annuities the qualified
plan's or the Code's limits on annual contributions also apply.
Three ways to make purchase payments
1 By letter
Send your check along with your name and account number to:
Regular mail:
American Centurion Life Assurance Company
Box 5144
Albany, NY 12205
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
2 By scheduled payment plan
Through:
o a bank authorization.
3 Other
o wire transfer; or
o other method acceptable to us.
Charges
Administrative charge
This charge is for establishing and maintaining your records. On
each annuity anniversary we will deduct $30 from the certificate
value. The deduction will be allocated among the subaccounts on a
pro-rata basis.
This charge will be waived for any certificate year where the total
purchase payments (less partial surrenders) on the current annuity
anniversary is $10,000 or more, or if, during the certificate year,
a death benefit is payable or the annuity is surrendered in full.
This charge does not apply after annuity payouts begin.
We do not expect to profit from the administrative charge. We
reserve the right to impose the charge on all annuities, including
those with purchase payments equal to or greater than $10,000.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is
applied daily to the variable subaccounts and reflected in the unit
values of the accounts. Annually it totals 1% of their average
daily net assets. Approximately two-thirds of this amount is for
our assumption of mortality risk, and one-third is for our
assumption of expense risk. This fee does not apply to the fixed <PAGE>
PAGE 20
account.
Mortality risk arises because of our guarantee to pay a death
benefit and our guarantee to make annuity payouts according to the
terms of the contract and certificates, no matter how long a
specific annuitant lives and no matter how long the entire group of
American Centurion Life annuitants live. If, as a group, American
Centurion Life annuitants outlive the life expectancy we have
assumed in our actuarial tables, then we must take money from our
general assets to meet our obligations. If, as a group, American
Centurion Life annuitants do not live as long as expected, we could
profit from the mortality risk fee.
Expense risk arises because the administrative charge may not cover
our expenses. Any deficit would have to be made up from our
general assets. We could profit from the expense risk fee if the
annual administrative charge is more than sufficient to meet
expenses.
We do hope to profit from the mortality and expense risk fee. We
may use any profits realized from this fee for any proper corporate
purpose, including, among others, payment of distribution (selling)
expenses.
Other information on charges
There is no surrender charge if you take a total or a partial
surrender from your annuity.
In some cases lower sales and administrative expenses may be
incurred. In such cases, we may be able to reduce or eliminate the
administrative charge. However, we expect this to occur
infrequently.
Valuing your investment
Here is how your accounts are valued:
Fixed account: The amounts allocated to the fixed account are
valued directly in dollars and equal the sum of your purchase
payments plus interest earned, less any amounts surrendered or
transferred.
Variable subaccounts: Amounts allocated to the variable
subaccounts are converted into accumulation units. Each time you
make a purchase payment or transfer amounts into one of the
variable subaccounts, a certain number of accumulation units are
credited to your annuity for that account. Conversely, each time
you take a partial surrender, transfer amounts out of a variable
subaccount or are assessed an administrative charge, a certain
number of accumulation units are subtracted from your annuity.
The accumulation units are the true measure of investment value in
each subaccount during the accumulation period. They are related
to, but not the same as, the net asset value of the underlying
fund.
<PAGE>
PAGE 21
The dollar value of each accumulation unit can rise or fall daily
depending on the performance of the underlying mutual fund and on
certain fund expenses. Here is how unit values are calculated:
Number of units
To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation
unit value.
Accumulation unit value
The current accumulation unit value for each variable subaccount
equals the last value times the subaccount's current net investment
factor.
Net investment factor
o Determined each business day by adding the underlying mutual
fund's current net asset value per share plus per-share
amount of any current dividend or capital gain distribution;
then
o dividing that sum by the previous net asset value per share;
and
o subtracting the percentage factor representing the mortality
and expense risk fee from the result.
Because the net asset value of the underlying mutual fund may
fluctuate, the accumulation unit value may increase or decrease.
You bear this investment risk in a variable subaccount.
Factors that affect variable subaccount accumulation units
Accumulation units may change in two ways; in number and in value.
Here are the factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the variable
subaccounts;
o transfers into or out of the variable subaccount(s);
o partial surrenders; and/or
o administrative charges.
Accumulation unit values may fluctuate due to:
o changes in underlying mutual fund(s) net asset value;
o dividends distributed to the variable subaccount(s);
o capital gains or losses of underlying mutual funds;
o mutual fund operating expenses; and/or
o mortality and expense risk fees.
Making the most of your annuity
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For
example, you might have a set amount transferred monthly from a
relatively conservative variable subaccount to a more aggressive
one, or to several others.
<PAGE>
PAGE 22
This systematic approach can help you benefit from fluctuations in
accumulation unit values caused by fluctuations in the market
value(s) of the underlying mutual fund(s). Since you invest the
same amount each period, you automatically acquire more units when
the market value falls, fewer units when it rises. The potential
effect is to lower your average cost per unit. Contact our service
office for more information.
<TABLE><CAPTION>
How dollar-cost averaging works
Month Amount Accumulation Number of units
invested unit value purchased
<S> <C> <C> <C> <C>
By investing an Jan $100 $20 5.00
equal number of
dollars each month.... Feb 100 16 6.25
March 100 9 11.11
you automatically April 100 5 20.00
buy more units
when the per unit May 100 7 14.29
market price is low....
June 100 10 10.00
July 100 15 6.67
and fewer units Aug 100 20 5.00
when the per unit
market price is Sept 100 17 5.88
high.
Oct 100 12 8.33
</TABLE>
You have paid an average price of only $10.81 per unit over the 10
months, while the average market price actually was $13.10.
Dollar-cost averaging does not guarantee that any subaccount will
gain in value, nor will it protect against a decline in value if
market prices fall. However, if you can continue to invest
regularly throughout changing market conditions, it can be an
effective strategy to help meet your long term goals.
Transferring money between accounts
You may transfer money from any one subaccount or the fixed account
to another at any time before annuity payouts begin. If we receive
your request before the close of business, we will process it that
day. Requests received after the close of business will be
processed the next business day. Before making a transfer, you
should consider the risks involved in switching investments. We
may suspend or modify transfer privileges at any time.
Transfer policies
o You may transfer certificate values at any time between the
variable subaccounts, from the variable subaccount(s) to the
fixed account or from the fixed account to the variable
subaccount(s).
o The amount being transferred to any one account must be at
least $100.
o If you make more than 12 transfers in a certificate year, we
will charge $25 for each transfer in excess of 12.
<PAGE>
PAGE 23
o Excessive trading activity can disrupt mutual fund management
strategy and increase expenses, which are borne by all
annuity owners participating in the mutual fund regardless of
their transfer activity. Therefore, we reserve the right to
limit the number of transfers permitted, but not to fewer
than twelve per certificate year.
Two ways to request a transfer or a surrender
1 By letter
Send your name, contract number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or
surrender to:
Regular mail:
American Centurion Life Assurance Company
Box 5144
Albany, NY 12205
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
Minimum amount
Mail transfers: $100 or entire account balance
Mail surrenders: $100 or entire account balance
Maximum amount
Mail transfers: None (up to certificate value)
Mail surrenders: None (up to certificate value)
2 By automated transfers and automated partial surrenders
o You can set up automated transfers among your accounts or
partial surrenders from the accounts.
You can start or stop this service by written request or other
method acceptable to American Centurion Life. You must allow 30
days for American Centurion Life to change any instructions that
are currently in place.
o Automated transfers and automated partial surrenders are
subject to all of the annuity provisions and terms, including
transfer of certificate values between accounts. Automated
surrenders may be restricted by applicable law under some
annuities.
o Automated partial surrenders may result in IRS taxes and
penalties on all or part of the amount surrendered.
Minimum amount
Automated transfers or surrenders: $100
Maximum amount
Automated transfers or surrenders: None
<PAGE>
PAGE 24
Surrendering your annuity
As owner, you may surrender all or part of your annuity at any time
before annuity payouts begin by sending a written request to
American Centurion Life. For total surrenders we will compute the
certificate value at the close of business after we receive your
request. We may ask you to return the annuity. You may have to
pay IRS taxes and penalties. (See "Taxes.") No surrenders may be
made after annuity payouts begin.
Surrender policies
If you have a balance in more than one account and request a
partial surrender, we will surrender money from all your accounts
in the same proportion as your value in each account correlates to
your total certificate value, unless you request otherwise.
Receiving payment when you request a surrender
By regular or express mail:
o Payable to owner.
o Normally mailed to address of record within seven days after
receiving your request. However, we may postpone the payment
if:
- the surrender amount includes a purchase payment check that
has not cleared;
- the NYSE is closed, except for normal holiday and weekend
closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical
to sell securities or value the net assets of the accounts;
or
- the SEC permits us to delay payment for the protection of
security holders.
Changing ownership
You may change ownership of your non-qualified annuity at any time
by filing a change of ownership with us at our service office. The
change will become binding upon us when we receive and record it.
We will honor any change of ownership request believed to be
authentic and will use reasonable procedures to confirm that it is.
If these procedures are followed, we take no responsibility for the
validity of the change.
If you have a nonqualified annuity, you may lose your tax
advantages by transferring, assigning or pledging any part of it.
(See "Taxes.")
If you have a qualified annuity, you may not sell, assign,
transfer, discount or pledge your annuity as collateral for a loan,
or as security for the performance of an obligation or for any
other purpose to any person except American Centurion Life.
However, if the owner is a trust or custodian, or an employer
acting in a similar capacity, ownership of an annuity may be
transferred to the annuitant. <PAGE>
PAGE 25
Benefits in case of death
If you or the annuitant dies (or, for qualified annuities, if the
annuitant dies) before annuity payouts begin, we will pay the
beneficiary the greater of:
o the annuity value; or
o purchase payments, minus any partial surrenders.
If your spouse is sole beneficiary under a non-qualified annuity
and you die before the annuity start date, your spouse may keep the
annuity as owner. To do this your spouse must, within 60 days
after we receive proof of death, give us written instructions to
keep the annuity in force.
Under a qualified annuity if the annuitant dies before reaching age
70 1/2 and before the annuity start date, and the spouse is the
only beneficiary, the spouse may keep the annuity in force as owner
or until the date on which the annuitant would have reached age 70
1/2 or any other date permitted by the Code. To do this, the
spouse must give us written instructions within 60 days after we
receive proof of death.
Payouts: We will pay the beneficiary in a single sum unless you
have given us other written instructions, or the beneficiary may
receive payouts under any annuity payout plan available under this
annuity if:
o the beneficiary asks us in writing within 60 days after we
receive proof of death;
o payouts begin no later than one year after death; and
o the payout period does not extend beyond the beneficiary's
life or life expectancy.
When paying the beneficiary, we will determine the certificate's
value at the next close of business after our death claim
requirements are fulfilled. Interest, if any, will be paid from
the date of death at a rate no less than required by law. We will
mail payment to the beneficiary within seven days after our death
claim requirements are fulfilled. (See "Taxes.")
The annuity payout period
As owner, you have the right to decide how and to whom annuity
payouts will be made starting at the annuity start date. You may
select one of the annuity payout plans outlined below, or we will
mutually agree on other payout arrangements. The amount available
for payouts under the plan you select is the certificate value on
your annuity start date. Annuity payouts will be made on a fixed
basis.
Amounts of payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex; and
o the annuity table in the annuity.
<PAGE>
PAGE 26
Annuity payout plans
You may choose any one of these annuity payout plans by giving us
written instructions at least 30 days before certificate values are
to be used to purchase the payout plan:
o Plan A - Life annuity - no refund: Monthly payouts are made
until the annuitant's death. Payouts end with the last payout
before the annuitant's death; no further payouts will be made.
This means that if the annuitant dies after only one monthly payout
has been made, no more payouts will be made.
o Plan B - Life annuity with five, 10 or 15 years certain: Monthly
payouts are made for a guaranteed payout period of five, 10 or 15
years that the annuitant elects. This election will determine the
length of the payout period to the beneficiary if the annuitant
should die before the elected period has expired. The guaranteed
payout period is calculated from the annuity start date. If the
annuitant outlives the elected guaranteed payout period, payouts
will continue until the annuitant's death.
o Plan C - Life annuity - installment refund: Monthly payouts are
made until the annuitant's death, with our guarantee that payouts
will continue for some period of time. Payouts will be made for at
least the number of months determined by dividing the amount
applied under this option by the first monthly payout, whether or
not the annuitant is living.
o Plan D - Joint and last survivor life annuity - no refund:
Monthly payouts are made to the annuitant and a joint annuitant
while both are living. If either annuitant dies, monthly payouts
continue at the full amount until the death of the surviving
annuitant. Payouts end with the death of the second annuitant.
o Plan E - Payouts for a specified period: Monthly payouts are
made for a specific payout period of 10 to 30 years chosen by the
annuitant. Payouts will be made only for the number of years
specified whether the annuitant is living or not. Depending on the
time period selected, it is foreseeable that an annuitant can
outlive the payout period selected. In addition, a 10% IRS penalty
tax could apply under this payout plan. (See "Taxes".)
Restrictions for some qualified plans: If you purchased a
qualified annuity, you must select a payout plan that provides for
payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated
beneficiary;
o for a period not exceeding the life expectancy of the
annuitant; or
o for a period not exceeding the joint life expectancies of the
annuitant and a designated beneficiary.
If we do not receive instructions: You must give us written
instructions for the annuity payouts at least 30 days before the <PAGE>
PAGE 27
annuitant's annuity start date. If you do not, we will make
payouts under Plan B, with 120 monthly payouts guaranteed.
If monthly payouts would be less than $20: We will calculate the
amount of monthly payouts at the time the certificate value is used
to purchase a payout plan. If the calculations show that monthly
payouts would be less than $20, we have the right to pay the
certificate value to you in a lump sum.
Death after annuity payouts begin
If you or the annuitant dies after annuity payouts begin, any
amount payable to the beneficiary will be provided in the annuity
payout plan in effect.
Taxes
Generally, under current law, any increase in your certificate
value is taxable to you only when you receive a payout or
surrender. (However, see detailed discussion below.) Any portion
of the annuity payouts and any surrenders you request that
represent ordinary income are normally taxable. You will receive a
1099 tax information form for any year in which a taxable
distribution was made.
Annuity payouts under nonqualified annuities: A portion of each
payout will be ordinary income and subject to tax, and a portion of
each payout will be considered a return of part of your investment
and will not be taxed. All amounts received after your investment
in the annuity is fully recovered will be subject to tax.
Tax law requires that all nonqualified deferred annuities issued by
the same company to the same owner during a calendar year are to be
taxed as a single, unified annuity when distributions are taken
from any one of such annuities.
Annuity payouts under qualified annuities: Under a qualified
annuity, the entire payout generally will be includable as ordinary
income and subject to tax except to the extent that contributions
were made with after-tax dollars. If you invested in your annuity
with pre-tax dollars as part of a qualified retirement plan, such
amounts are not considered to be part of your investment in the
annuity and will be taxed when paid to you.
Surrenders: If you surrender part or all of your annuity before
your annuity payouts begin, your surrender payment will be taxed to
the extent that the value of your annuity immediately before the
surrender exceeds your investment. You also may have to pay a 10%
IRS penalty for surrenders before reaching age 59 1/2. For
qualified annuities, other penalties may apply if you surrender
your annuity before your plan specifies that you can receive
payouts.
Death benefits to beneficiaries: The death benefit under an
annuity is not tax-exempt. Any amount received by the beneficiary
that represents previously deferred earnings within the annuity is
taxable as ordinary income to the beneficiary in the year(s) he or <PAGE>
PAGE 28
she receives the payments.
Annuities owned by corporations, partnerships or trusts: Any
annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that
year. This provision is effective for purchase payments made after
Feb. 28, 1986. However, if the trust was set up for the benefit of
a natural person only, the increase in value will be tax-deferred.
Penalties: If you receive amounts from your annuity before
reaching age 59 1/2, you may have to pay a 10% IRS penalty on the
amount includable in your ordinary income. However, this penalty
will not apply to any amount received by you or your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially
equal periodic payments, made at least annually, over your
life or life expectancy (or joint lives or life expectancies
of you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982
(except for qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if
you surrender your annuity before your plan specifies that payouts
can be made.
Withholding, generally: If you receive all or part of the
certificate value from an annuity, withholding may be imposed
against the taxable income portion of the payment. Any withholding
that is done represents a prepayment of your tax due for the year.
You take credit for such amounts on the annual tax return that you
file.
If the payment is part of an annuity payout plan, the amount of
withholding generally is computed using payroll tables. You can
provide us with a statement of how many exemptions to use in
calculating the withholding. As long as you've provided us with a
valid Social Security Number or Taxpayer Identification Number, you
can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial
or total surrender) withholding is computed using 10% of the
taxable portion. Similar to above, as long as you've provided us
with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have this withholding occur.
Some states also impose withholding requirements similar to the
federal withholding described above. If this should be the case,
any payment from which federal withholding is deducted may also
have state withholding deducted. The withholding requirements may
differ if payment is being made to a non-U.S. citizen or if the
payment is being delivered outside the United States.
Transfer of ownership of a nonqualified annuity: If you make such
a transfer without receiving adequate consideration, the transfer
is considered a gift, and also may be considered a surrender for
federal income tax purposes. If the gift is a currently taxable <PAGE>
PAGE 29
event, the amount of deferred earnings at the time of the transfer
will be taxed to the original owner, who also may be subject to a
10% IRS penalty as discussed earlier. In this case, the new
owner's investment in the annuity will be the certificate value of
at the time of the transfer.
Collateral assignment of a nonqualified certificate: If you
collaterally assign or pledge your annuity, earnings on purchase
payments you made after Aug. 13, 1982 will be taxed to you like a
surrender.
Important: Our discussion of federal tax laws is based upon our
understanding of these laws as they are currently interpreted.
Federal tax laws or current interpretations of them may change.
For this reason and because tax consequences are complex and highly
individual and cannot always be anticipated, you should consult a
tax adviser if you have any questions about taxation of your
annuity.
Tax Qualification
This annuity is intended to qualify for federal income tax purposes
as an annuity. To the extent permitted by applicable law, we will
administer the provisions to be consistent with such qualification.
We reserve the right to amend the annuity to reflect any
clarifications that may be needed or are appropriate to maintain
such qualification or to conform the annuity to any applicable
changes in the tax qualification requirements. We will obtain any
necessary regulatory approvals and send you a copy of any such
amendments.
Voting rights
As an owner with investments in the variable account(s), you may
vote on important mutual fund policies. We will vote fund shares
according to your instructions.
The number of votes you have is determined by applying your
percentage interest in each variable subaccount to the total number
of votes allowed to the subaccount.
We calculate votes separately for each subaccount not more than 60
days before a shareholders' meeting. Notice of these meetings,
proxy materials and a statement of the number of votes to which the
voter is entitled, will be sent.
We will vote shares for which we have not received instructions in
the same proportion as the votes for which we have received
instructions. We also will vote the shares for which we have
voting rights in the same proportion as the votes for which we have
received instructions.
Substitution of Investments
If shares of any fund should not be available for purchase by the
appropriate variable subaccount or if, in the judgment of American
Centurion Life's Management, further investment in such shares is
no longer appropriate in view of the purposes of the subaccount, <PAGE>
PAGE 30
investment in the subaccount may be discontinued or another
registered open-end management investment company may be
substituted for fund shares held in the subaccounts if American
Centurion Life believes it would be in the best interest of persons
having voting rights under the annuity. The variable account may
be operated as a management company under the 1940 Act or it may be
deregistered under this Act if the registration is no longer
required. In the event of any such substitution or change,
American Centurion Life, without the consent or approval of the
owners, may amend the annuity and take whatever action is necessary
and appropriate. However, no such substitution or change will be
made without the necessary approval of the SEC and state insurance
departments. American Centurion Life will notify owners of any
substitution or change.
Distribution of the Annuities
The annuities will be distributed by American Express Service
Corporation, the principal underwriter for the variable account.
About American Centurion Life
The Privileged Assets Select Annuity is issued by American
Centurion Life. American Centurion Life is a wholly owned
subsidiary of IDS Life Insurance Company, which is a wholly owned
subsidiary of American Express Financial Corporation. American
Express Financial Corporation is a wholly owned subsidiary of the
American Express Company. American Express Company is a financial
services company principally engaged through subsidiaries (in
addition to American Express Financial Corporation) in travel
related services, investment services and international banking
services.
American Centurion Life is a stock life insurance company organized
in 1969 under the laws of the State of New York. Its service
office is located at 20 Madison Avenue Ext. Albany, NY 12203.
American Centurion Life is licensed in the state of New York where
it conducts a conventional life insurance business.
American Express Service Corporation is the principal underwriter
for the variable account. Its service office is located at 80
South 8th Street, Minneapolis, MN 55440-0010. American Express
Service Corporation is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. American Express
Service Corporation is a wholly owned subsidiary of American
Express Travel Related Services Company which is a wholly owned
subsidiary of American Express Company.
The American Express Financial Corporation family of companies also
offers mutual funds, investment certificates and a broad range of
financial management services.
Other subsidiaries provide investment management and related
services for pension, profit-sharing, employee savings and
endowment funds of businesses and institutions.
<PAGE>
PAGE 31
Regular and special reports
Services
To help you track and evaluate the performance of your annuity,
American Centurion Life provides:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the certificate
and its underlying investments.
Table of contents of the Statement of Additional Information
Performance information............................
Calculating annuity payouts........................
Rating Agencies....................................
Principal underwriter..............................
Independent auditors...............................
Mortality and expense risk fee.....................
Retirement planning................................
Prospectus.........................................
Financial statements -
American Centurion Life Assurance Company....
___________________________________________________________________
Please check the appropriate box to receive a copy of the Statement
of Additional Information for:
_____ Privileged Assets Select Annuity
_____ IDS Life Retirement Annuity Mutual Funds
_____ INVESCO Variable Investment Funds, Inc.
_____ Janus Variable Investment Funds
_____ TCI Portfolios, Inc.
_____ Warburg Pincus Trust-Post-Venture Capital Portfolio
_____ Strong Short-Term Bond Fund II
Please return this request to:
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
Your name _______________________________________________________
Address _________________________________________________________
City ______________________ State ______________ Zip ___________
<PAGE>
PAGE 32
STATEMENT OF ADDITIONAL INFORMATION
for
PRIVILEGED ASSETS (registered trademark symbol) SELECT ANNUITY
ACL VARIABLE ANNUITY ACCOUNT 1
DATE
ACL Variable Annuity Account 1 is a separate account established
and maintained by American Centurion Life Assurance Company
(American Centurion Life).
This Statement of Additional Information, dated _______________, is
not a prospectus. It should be read together with the Account's
prospectus, dated _______________, which may be obtained by writing
or calling American Centurion Life at the address or telephone
number below.
American Centurion Life Assurance Company
20 Madison Avenue Ext.
Albany, NY 12203
Phone (518) 452-4150
<PAGE>
PAGE 33
TABLE OF CONTENTS
Performance Information.......................................p. 3
Calculating Annuity Payouts...................................p. 5
Rating Agencies...............................................p. 5
Principal Underwriter.........................................p. 6
Independent Auditors..........................................p. 6
Mortality and Expense Risk Fee................................p. 6
Retirement Planning...........................................p. 6
Prospectus....................................................p. 7
Financial Statements
- American Centurion Life Assurance Company.........p. 8
<PAGE>
PAGE 34
PERFORMANCE INFORMATION
The following performance figures are calculated on the basis of
historical performance of the funds. Before the subaccounts began
investing in these funds, the figures show what the subaccount
performance would have been if these subaccounts had existed during
the illustrated periods. Once these subaccounts began investing in
these funds, actual values are used for the calculations.
Calculation of yield for IDS Life Moneyshare Subaccount
Simple yield for the IDS Life Moneyshare subaccount (DMS) will be
based on the: (a) change in the value of a hypothetical investment
(exclusive of capital changes) at the beginning of a seven-day
period for which yield is to be quoted; (b) subtracting a pro rata
share of subaccount expenses accrued over the seven-day period; (c)
dividing the difference by the value of the subaccount at the
beginning of the period to obtain the base period return; and (d)
annualizing the results (i.e., multiplying the base period return
by 365/7). Calculation of compound yield begins with the same base
period return used in the calculation of yield, which is then
annualized to reflect compounding according to the following
formula:
Compound Yield = [(return for seven-day period + 1) 365/7 ]-1
On June 30, 1996, the account's annualized yield was 3.61% and its
compound yield was 3.67%.
The rate of return, or yield, on the subaccount's accumulation unit
may fluctuate daily and does not provide a basis for determining
future yields. Investors must consider, when comparing an
investment in subaccount DMS with fixed annuities, that fixed
annuities often provide an agreed-to or guaranteed fixed yield for
a stated period of time, whereas the variable subaccount's yield
fluctuates. In comparing the yield of subaccount DMS to a money
market fund, you should consider the different services that the
annuity provides.
Calculation of yield for Subaccounts (Investing in income funds)
Quotations of yield will be based on all investment income earned
during a particular 30-day period, less expenses accrued during the
period (net investment income) and will be computed by dividing net
investment income per accumulation unit by the value of an
accumulation unit on the last day of the period, according to the
following formula:
YIELD = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the
period.
b = expenses accrued for the period (net of
reimbursements).<PAGE>
PAGE 35
c = the average daily number of accumulation units
outstanding during the period that were entitled to
receive dividends.
d = the maximum offering price per accumulation unit on
the last day of the period.
Yield on the subaccount is earned from the increase in the net
asset value of shares of the fund in which the subaccount invests
and from dividends declared and paid by the fund, which are
automatically invested in shares of the fund.
Calculation of average annual total return
Quotations of average annual total return for a subaccount will be
expressed in terms of the average annual compounded rate of return
of a hypothetical investment in the annuity contract over a period
of one, five and 10 years (or, if less, up to the life of the
subaccount), calculated according to the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one, five,
or ten year (or other) period at the end of the
one, five, or ten year (or other) period (or
fractional portion thereof).
The Securities and Exchange Commission requires that an assumption
be made that the owner surrenders the entire annuity at the end of
the one, five and ten year periods (or, if less, up to the life of
the subaccount) for which performance is required to be calculated.
Average Annual Total Return Period Ended: Dec. 31, 1995
<TABLE><CAPTION>
Average Annual Total Return with or without Surrender
Since
Subaccount investing in: 1 Year 5 Years 10 Years Inception
<S> <C> <C> <C> <C>
IDS LIFE
Aggressive Growth Fund (1/92)* 30.47% -- % -- % 9.94%
Capital Resource Fund (10/81) 26.57 14.08 12.42 --
International Equity Fund (1/92) 10.04 -- -- 8.24
Managed Fund (4/86) 22.92 11.89 -- 9.98
Moneyshare Fund (10/81) 4.16 2.91 4.54 --
Special Income Fund (10/81) 21.01 10.55 8.89 --
INVESCO VIF
Industrial Income Portfolio (8/94) 27.96 -- -- 19.60
Janus Aspen Series
Worldwide Growth Portfolio (9/93) 26.08 -- -- 19.45
Growth Portfolio (9/93) 28.88 -- -- 13.96
TCI
Growth (11/87) 29.81 13.60 -- 11.56
Warburg Pincus Trust
Post-Venture Capital Portfolio (9/95)** -- -- -- 5.61
Strong
Short-Term Fund II (8/87)*** 5.84 6.78 -- 6.63
* inception dates of the funds are shown in parentheses.
** annualized.
*** For the period ended June 30, 1995.
</TABLE>
<PAGE>
PAGE 36
Aggregate Total Return
Aggregate total return represents the cumulative change in value of
an investment for a given period (reflecting change in a
subaccount's accumulation unit value) and is computed by the
following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one, five,
or ten year (or other) period at the end of the
one, five, or ten year (or other) period (or
fractional portion thereof).
Subaccount total return figures reflect the deduction of the
administrative charge and mortality and expense risk fee.
Performance of the subaccounts may be quoted or compared to
rankings, yields, or returns as published or prepared by
independent rating or statistical services or publishers or
publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes,
Fortune, Global Investor, Institutional Investor, Investor's Daily,
Kiplinger's Personal Finance, Lipper Analytical Services, Money,
Mutual Fund Forecaster, Newsweek, The New York Times, Personal
Investor, Stanger Report, Sylvia Porter's Personal Finance, USA
Today, U.S. News and World Report, The Wall Street Journal and
Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
Your fixed annuity payout amounts are guaranteed. Once calculated,
your payout will remain the same and never change. To calculate
your annuity payouts we:
o take the total value of your fixed account and the subaccounts
at the annuity start date or the date you have selected to begin
receiving your annuity payouts; then
o using an annuity table we apply the value according to the
annuity payout plan you select.
o The annuity payout table we use will be the one in effect at the
time you choose to begin your annuity payouts. The table will be
equal to or greater than the table in the annuity.
RATING AGENCIES
The following chart reflects the ratings given to American
Centurion Life by independent rating agencies. These agencies
evaluate the financial soundness and claims-paying ability of
insurance companies based on a number of different factors. This
information does not relate to the management or performance of the
variable subaccounts of the Privileged Assets Select Annuity. <PAGE>
PAGE 37
This information relates only to the fixed account and reflects
American Centurion Life's ability to make annuity payouts and to
pay death benefits and other distributions from the annuity.
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
PRINCIPAL UNDERWRITER
The principal underwriter for the accounts is American Express
Service Corporation which offers the variable contracts on a
continuous basis.
INDEPENDENT AUDITORS
The statutory basis financial statements of American Centurion Life
Assurance Company (a wholly owned subsidiary of IDS Life Insurance
Company) as of December 31, 1995 and 1994, and for the years then
ended, have been audited by Ernst & Young LLP, independent auditors
as stated in their report appearing herein.
MORTALITY AND EXPENSE RISK FEE
American Centurion Life has represented to the SEC that:
American Centurion Life has reviewed publicly available information
regarding products of other companies. Based upon this review,
American Centurion Life has concluded that the mortality and
expense risk fee is within the range of charges determined by
industry practice. American Centurion Life will maintain at its
administrative office, and make available on request of the SEC or
its staff, a memorandum setting forth in detail the variable
products analyzed and the methodology, and results of, its
comparative review.
American Centurion Life has concluded that there is a reasonable
likelihood that the proposed distribution financing arrangements
made with respect to the annuities will benefit the variable
account and investors in the annuities. The basis for such
conclusion is set forth in a memorandum which will be made
available to the SEC or its staff on request.
RETIREMENT PLANNING
You may have to save more for retirement because social security
and employee savings plans are estimated to cover only 40% of your
retirement savings. The remaining 60% must come from personal
investments, savings and other income.* One way to help save for
retirement is by purchasing a variable annuity. Variable annuity
sales have almost tripled in the last 4 years to over $52 billion
dollars.**
<PAGE>
PAGE 38
Sources:
* Social Security Administration
**LIMRA 1994 Individual Annuity Market Report
PROSPECTUS
The prospectus dated ___________________, is hereby incorporated in
this Statement of Additional Information by reference.
<PAGE>
PAGE 39
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the accompanying statutory basis balance sheets of
American Centurion Life Assurance Company as of December 31, 1995
and 1994, and the related statutory basis statements of operations,
changes in capital and surplus, and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with
accounting practices prescribed or permitted by the New York
Insurance Department. The variances between such practices and
generally accepted accounting principles are described in Note 1.
The effects of these variances are not reasonably determinable but
we believe they are material.
In our opinion, because of the materiality of the effects of the
variances between generally accepted accounting principles and the
accounting practices referred to in the preceding paragraph, the
financial statements referred to above are not intended to and do
not present fairly, in conformity with generally accepted
accounting principles, the financial position of American Centurion
Life Assurance Company at December 31, 1995 and 1994, or the
results of its operations or its cash flows for the years then
ended.
Also, in our opinion, the financial statements referred to above
present fairly, in all material respects, the admitted assets,
liabilities and capital and surplus of American Centurion Life
Assurance Company at December 31, 1995 and 1994, and the results of
its operations and its cash flows for the years then ended, in
conformity with accounting practices prescribed or permitted by the
New York Insurance Department.
Ernst & Young LLP
May 3, 1996
Minneapolis, Minnesota<PAGE>
PAGE 40
American Centurion Life Assurance Company
a wholly owned subsidiary of IDS Life Insurance Company
The financial statements shown below are those of the insurance
company and not those of any other entity. They are included in
the prospectus for the purpose of informing investors as to the
financial condition of the insurance company and its ability to
carry out its obligations under its variable contracts.
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Balance Sheets - Statutory Basis
<TABLE>
<CAPTION>
Dec. 31,
1995 1994
(thousands)
Admitted Assets
<S> <C> <C>
Bonds (Market: 1995, $109,181; 1994, $90,330) $106,810 $91,404
Cash and short-term investments 4,840 4,323
Total cash and invested assets 111,650 95,727
Accrued investment income 1,500 1,230
Receivable from affiliates 85 1,118
Other assets - 6
Total admitted assets $113,235 $98,081
Liabilities and Capital and Surplus
Liabilities:
Future policy benefits for annuities $ 92,315 $79,089
Future policy benefits for life insurance 176 180
Unpaid claims 225 240
Interest maintenance reserve 110 64
Accrued taxes, licenses and fees 654 159
Accrued expenses and other liabilities 3,620 2,417
Asset valuation reserve 864 705
Total liabilities 97,964 82,854
Capital and surplus (Note 4):
Capital stock, $10 par value per share;
100,000 shares authorized, issued and outstanding 1,000 1,000
Additional paid-in capital 6,600 6,600
Unassigned surplus 7,671 7,627
Total capital and surplus 15,271 15,227
Total liabilities and capital and surplus $113,235 $98,081
See accompanying notes.
</TABLE>
<PAGE>
PAGE 41
<TABLE>
<CAPTION>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Statements of Operations - Statutory Basis
Years ended Dec. 31,
1995 1994
(thousands)
<S> <C> <C>
Revenues:
Annuity considerations $20,799 $19,055
Net investment income (Note 2) 7,694 6,427
Amortization of interest maintenance reserve 19 23
Other - 41
Total revenues 28,512 25,546
Benefits and expenses:
Annuity and other contract benefits 12,491 9,524
Increase in liabilities for future policy benefits 13,204 13,568
Commissions - 202
General insurance expenses 1,340 1,136
Insurance taxes, licenses and fees, excluding
federal income taxes 62 155
Total benefits and expenses 27,097 24,585
Net gain from operations before federal
income taxes and realized capital losses 1,415 961
Federal income taxes (Note 3) 1,167 110
Net gain from operations before realized
capital gain (loss) 248 851
Net realized capital gain (loss)(Note 2) - -
Net income $ 248 $ 851
See accompanying notes.
<PAGE>
PAGE 42
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Statements of Changes in Capital and Surplus -
Statutory Basis
Years ended Dec. 31,
1995 1994
(thousands)
Capital and surplus at beginning of year $15,227 $14,536
Net income 248 851
Change in non-admitted assets (44) -
Increase in asset valuation reserve (160) (160)
Capital and surplus at end of year $15,271 $15,227
See accompanying notes.
</TABLE>
<PAGE>
PAGE 43
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Statements of Cash Flows - Statutory Basis
<TABLE>
<CAPTION>
Years ended Dec. 31,
1995 1994
(thousands)
<C> <C>
Annuity considerations $ 20,799 $ 19,055
Net investment income received, excluding
realized gains and losses 7,539 6,476
Other income 6 59
Contract benefits paid (12,506) (9,784)
Commissions, other expenses and taxes paid,
excluding federal incomes taxes (1,541) (981)
Federal income taxes refunded (paid) (561) 945
Net cash provided by operations 13,736 15,770
Proceeds from bonds sold, matured or repaid 8,863 13,926
Tax on capital gains (41) 10
Cost of bonds acquired (24,270) (26,924)
Other sources (uses) 2,229 (985)
Net increase in cash and short-term investments 517 1,797
Cash and short-term investments at beginning of year 4,323 2,526
Cash and short-term investments at end of year $ 4,840 $ 4,323
See accompanying notes.
</TABLE>
<PAGE>
PAGE 44
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Notes to Financial Statements - Statutory Basis ($ Thousands)
1. Summary of significant accounting policies
Nature of business
American Centurion Life Assurance Company (the Company) issues
direct business consisting primarily of single and installment
premium annuity contracts sold to American Express cardmembers
residing in New York. The Company is licensed to transact
insurance business in New York, Alabama and Delaware at Dec.
31, 1995.
The Company's principal annuity product in terms of amount in
force is the installment premium fixed deferred annuity. The
annuity contract guarantees a minimum interest rate during the
accumulation period (the time before annuity payments begin),
although the Company normally pays a higher rate reflective of
current market rates. The fixed annuity provides for a
surrender charge during the first seven to eight years of the
contract. The Company has also adopted a practice whereby the
higher current rate is guaranteed for a specified period.
Basis of presentation
Effective Jan. 1, 1995, all of the Company's issued and
outstanding stock was dividended by AMEX Life Assurance
Company to American Express Company and then, through a
capital contribution of the net surplus of $15,227,
transferred to IDS Life Insurance Company.
The Company is now a wholly owned subsidiary of IDS Life
Insurance Company (IDS Life), which is a wholly owned
subsidiary of American Express Financial Corporation.
American Express Financial Corporation is a wholly owned
subsidiary of American Express Company. The accompanying
financial statements have been prepared on the basis of
accounting practices prescribed or permitted by the New York
Department of Insurance. Such practices vary from generally
accepted accounting principles for stock life insurance
companies primarily as follows:
-Bonds are carried at cost rather than being classified as
"available for sale" or "held to maturity" and carried at fair
value or cost, respectively.
-Policy acquisition costs, such as commissions and other costs
related to acquiring new business, are expensed in the year
incurred, whereas premiums are recognized over the premium
paying period.
-Reserves for future policy benefits on annuity policies are
based on assumptions recognized by the New York Department of
Insurance rather than the Company's expected mortality,
interest and withdrawals.
<PAGE>
PAGE 45
1. Summary of significant accounting policies (continued)
-The asset valuation reserve is reported as a liability rather
than as surplus. Changes in this reserve are reported
directly in unassigned surplus.
-Deferred income taxes are not provided for the effects of
temporary differences in reporting income for financial and
income tax purposes.
-Net realized gains or losses resulting from changes in market
interest rates are deferred and amortized to investment income
in future periods.
-Net unrealized gain or loss in the carrying value of bonds is
reflected directly in unassigned surplus.
The preparation of statutory-basis financial statements
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Investments
Investment values have been determined in accordance with
methods adopted by the National Association of Insurance
Commissioners (NAIC). Bonds not backed by other loans are
carried at amortized cost with premiums or discounts amortized
using the scientific amoritzation method. Pass-through loan-
backed bonds and structured securities are carried at
amortized cost using the scientific amoritzation method and
include anticipated prepayments at the date of purchase.
Significant changes in estimated cash flows and changes in
coupon interest cash flows from original purchase assumptions
are accounted for using the prospective method for structured
securites purchased at a significant premium over par value,
adjusted rate pass-through loan-backed bonds and adjustable
rate structured securities. The retrospective method is used
for all other pass-through loan-backed bonds and structured
securities. When evidence indicates a decline, which is other
than temporary, in the underlying value or earning power of
individual investments, such investments are written down to a
new cost basis by a charge to income.
Realized investment gain or loss is determined on an
identified cost basis.
Statements of cash flows
The Company considers investments with a maturity at the date
of their acquisition of three months or less to be short-term
investments. These investments are carried principally at
amortized cost which approximates market value. Short-term
<PAGE>
PAGE 46
1. Summary of significant accounting policies (continued)
investments at Dec. 31, 1995 and 1994 amounted to $2,388 and
$4,391, respectively, and have been included in the caption
cash and short-term investments.
Premium revenue
Annuity considerations and deposit-type funds are recognized
as revenue when received.
Liabilities for future policy benefits
Liabilities for single and installment premium deferred
annuities are greater than or equal to reserves based on the
Commissioners Annuity Reserve Valuation Method at interest
rates ranging from 5.25 percent to 6.75 percent. Liabilities
for fixed annuities in a benefit status are based on the 1983a
Table with an interest rate of 6.25%.
Federal income taxes
The Company is included in the consolidated federal income tax
return of American Express Company. The Company provides for
income taxes on a separate return basis, except that, under an
agreement between American Express Financial Corporation and
American Express Company, tax benefit is recognized for losses
to the extent they can be used in the consolidated tax return.
It is the policy of American Express Financial Corporation and
its subsidiaries that American Express Financial Corporation
will reimburse a subsidiary for any tax benefit.
At Dec. 31, 1995 and 1994, included in accrued taxes, licenses
and fees is $624 and $24, respectively, ultimately payable to
American Express Company for federal income taxes.
2. Investments
Market values of investments have been determined as
prescribed by the NAIC.
Changes in net unrealized appreciation (depreciation) of bonds
for the years ended Dec. 31, 1995 and 1994 were $3,445 and
($2,987), respectively.
Net realized capital gains (losses) for the years ended Dec.
31 are summarized as follows:
1995 1994
Gains (losses) on bonds $101 $(30)
Income tax benefit (expense) (36) 10
65 (20)
Net (gains) losses transferred to
interest maintenance reserve (65) 20
$ - $ -
<PAGE>
PAGE 47
2. Investments (continued)
The Company uses the group method of amortization for interest
related gains and losses arising from the sale of fixed income
investments in bonds, notes and debentures, loan-backed bonds
and structured securities.
The amortized cost and market value of investments in bonds
carried at amortized cost at Dec. 31, are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
1995
U.S. Government $ 6,759 $ - $ - $ 6,759
Political subdivisions 997 148 - 1,145
Special revenue 34,485 - - 34,485
Public utilities 8,224 268 33 8,459
Industrial and miscellaneous 56,345 1,994 6 58,333
$106,810 $2,410 $ 39 $109,181
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
1994
U.S. Government $ 3,702 $ - $ 126 $ 3,576
Political subdivisions 997 33 - 1,030
Special revenue 38,214 - - 38,214
Public utilities 6,285 - 525 5,760
Industrial and miscellaneous 42,206 251 707 41,750
$ 91,404 $ 284 $1,358 $ 90,330
</TABLE>
The amortized cost and estimated market value of investments
in bonds at Dec. 31, 1995 by expected maturity are shown below.
Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Estimated
Amortized Market
Cost Value
Due in one year or less $ 9,338 $ 9,545
Due from one to five years 48,693 49,774
Due from five to ten years 38,065 38,910
Due from ten to twenty years 7,549 7,717
Due in more than twenty years 3,165 3,235
$106,810 $109,181
Proceeds from sales of investments in bonds during 1995 and
1994 were $8,863 and $13,926, respectively. During 1995 and
1994, gross gains of $105 and $32, respectively, and gross
losses of $4 and $62, respectively, were realized on those
sales.
At Dec. 31, 1995, bonds carried at $1,134 were on deposit with
the State of New York as required by law.
<PAGE>
PAGE 48
2. Investments (continued)
Net investment income for the years ended Dec. 31 is
summarized as follows:
1995 1994
Bonds $7,561 $6,334
Short-term investments 157 141
Other 21 -
7,739 6,475
Less investments expenses 46 48
$7,693 $6,427
At Dec. 31, 1995, investments in bonds comprised 96 percent of
the Company's total cash and invested assets. Securities are
rated by the Securities Valuation Office of the NAIC except
for approximately $4,002 which are rated by American Express
Financial Corporation internal analysts using criteria similar
to Moody's and Standard & Poor's. As of Dec. 31, 1995,
approximately 96 percent of the bond portfolio was invested in
investment-grade securities.
3. Federal income taxes
The Company qualifies as a life insurance company for federal
income tax purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance
companies.
Statutory income before income taxes differs from taxable
income principally due to the capitalization of certain policy
acquisition expenses and differences between policy and
contract liabilities for tax return and statutory financial
statement purposes.
4. Capital and surplus
Capital and surplus available for distribution as dividends to
parent are limited to the Company's capital and surplus as
determined in accordance with accounting practices prescribed
by state insurance regulatory authorities. All dividends must
be approved by the Department of Insurance of the State of New
York.
The Company is required to maintain minimum capital of $1,000
and minimum surplus of $500.
5. Related party transactions
Charges by affiliates for use of joint facilities and other
services aggregated $105 and $428 for 1995 and 1994,
respectively.
<PAGE>
PAGE 49
6. Reinsurance
The Company has one indemnity reinsurance agreement
involving life insurance which is 100% coinsured. Amounts
ceded under this contract were as follows at Dec. 31:
1995 1994
Policy reserves $ 2,818 $ 3,564
Insurance in force 265,564 297,689
Premiums on reinsurance ceded amounted to $1,397 and $1,374
for the years ended Dec. 31, 1995 and 1994, respectively.
The Company remains contingently liable for all reinsurance
ceded to other companies. This contingent liability would
become an actual liability in the event that an assuming
reinsurer should fail to perform its obligations under its
reinsurance agreement with the Company.
7. Annuity reserves
At Dec. 31, 1995, the Company's annuity reserves that are
subject to discretionary withdrawal (with adjustment), subject
to discretionary withdrawal (without adjustment), and not
subject to discretionary withdrawal provisions are summarized
as follows:
Amount Percent
Subject to discretionary withdrawal:
With market value adjustment $ 1 0.0%
At book value less surrender charge 6,703 7.3
At book value with minimal or no charge
or adjustment 85,527 92.6
Not subject to discretionary withdrawal 85 0.1
Total annuity reserves -- before reinsurance 92,316 100.0%
Less reinsurance 1
Net annuity reserves $92,315
8. Employee benefit plans
The Company participates in the American Express Retirement
Plan. Employer contributions to the plan are based on
participants' age, years of service and total compensation for
the year. Funding of retirement costs for this plan complies
with the applicable minimum funding requirements specified by
ERISA. The Company's share of the total net periodic pension
cost was $nil in 1995 and 1994.
The Company also participates in defined contribution
pension plans of American Express Company which cover all
employees who have met certain employment requirements.
Company contributions to the plans are a percent of either
each employee's eligible compensation or basic contributions.
<PAGE>
PAGE 50
8. Employee benefit plans (continued)
The Company participates in defined benefit health care plans
of American Express Financial Corporation that provide health
care and life insurance benefits to retired employees. The
plans include participant contributions and service related
eligibility requirements. Upon retirement, such employees are
considered to have been employees of American Express Financial
Corporation. American Express Financial Corporation expenses
these benefits and allocates the expenses to it subsidiaries.
Accordingly, costs of such benefits to the Company are included
in employee compensation and benefits and cannot be identified on
a separate company basis. At Dec. 31, 1995 and 1994, the total
accumulated post retirement benefit obligation has been recorded
as a liability to American Express Financial Corporation.
9. Fair values of financial instruments
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is
practical to estimate that value. Fair value of life
insurance obligations, receivables and all non-financial
instruments, such as deferred acquisition costs are excluded.
Off-balance sheet intangible assets are also excluded.
Management believes the value of excluded assets is
significant. The fair value of the Company, therefore, cannot
be estimated by aggregating the amounts presented.
<TABLE>
<CAPTION>
1995 1994
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
<S> <C> <C> <C> <C>
Bonds $106,810 $111,172 $91,404 $87,187
Cash and short-term investments 4,840 4,840 4,323 4,323
Financial Liabilities
Future policy benefits for fixed
annuities 92,230 91,975 79,089 78,870
</TABLE>
At Dec. 31, 1995 and 1994, the carrying value and fair value
of future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $85 and $nil,
respectively. The fair value of these benefits is based on
the status of the annuities at Dec. 31, 1995 and 1994. The
fair value of deferred annuities is estimated as the carrying
amount less applicable surrender charges. The fair value for
annuities in non-life contingent payout status is estimated as
the present value of projected benefit payments at rates
appropriate for contracts issued in 1995 and 1994.
<PAGE>
PAGE 51
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Balance Sheet - Statutory Basis
(Unaudited)
June 30,
1996
(thousands)
Admitted Assets
Bonds (Market: June 30, 1996, $118,963) $118,981
Cash and short-term investments 6,145
Total cash and invested assets 125,126
Accrued investment income 1,710
Receivable from affiliates 12
Other assets -
Total admitted assets $126,848
Liabilities and Capital and Surplus
Liabilities:
Future policy benefits for annuities $108,353
Future policy benefits for life insurance 176
Unpaid claims 225
Interest maintenance reserve 93
Accrued taxes, licenses and fees 23
Accrued expenses and other liabilities 1,697
Asset valuation reserve 1,100
Total liabilities 111,667
Capital and surplus:
Capital stock, $10 par value per share;
100,000 authorized, issued and outstanding 1,000
Additional paid-in capital 6,600
Unassigned surplus 7,581
Total capital and surplus 15,181
Total liabilities and capital and surplus $126,848
See accompanying notes.
<PAGE>
PAGE 52
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Statement of Operations - Statutory Basis
(Unaudited)
Six month
period ended
June 30, 1996
(thousands)
Revenues:
Annuity considerations $20,734
Net investment income 4,263
Amortization of interest maintenance reserve 17
Other -
Total revenues 25,014
Benefits and expenses:
Annuity and other contract benefits 7,108
Increase in liabilities for future policy benefits 16,038
Commissions 558
General insurance expenses 1,001
Insurance taxes, licenses and fees, excluding
federal income taxes 143
Total benefits and expenses 24,848
Net gain from operations before federal income
taxes and net realized capital gain (loss) 166
Federal income taxes (26)
Net gain from operations before realized
capital gain (loss) 192
Net realized capital gain (loss) (46)
Net income $ 146
See accompanying notes.
<PAGE>
PAGE 53
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Statement of Changes in Capital and Surplus - Statutory Basis
(Unaudited)
Six month
period ended
June 30, 1996
(thousands)
Capital and surplus at beginning of period $15,271
Net income 146
Change in non-admitted assets -
Increase in asset valuation reserve (236)
Capital and surplus at end of period $15,181
See accompanying notes.
<PAGE>
PAGE 54
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Statement of Cash Flows - Statutory Basis
(Unaudited)
Six month
period ended
June 30, 1996
(thousands)
Annuity considerations $20,734
Net investment income received, excluding
realized gains and losses 4,097
Other income -
Contract benefits paid (7,108)
Commissions, other expenses and taxes paid,
excluding federal incomes taxes (2,422)
Federal income taxes refunded (paid) (617)
Net cash provided by operations 14,684
Proceeds from bonds sold, matured or repaid 4,691
Tax on capital gains (3)
Cost of bonds acquired (16,975)
Other sources (uses) (1,092)
Net increase in cash and short-term investments 1,305
Cash and short-term investments at beginning
of period 4,840
Cash and short-term investments at end of period $ 6,145
See accompanying notes.
<PAGE>
PAGE 55
AMERICAN CENTURION LIFE ASSURANCE COMPANY
Notes to Financial Statements - Statutory Basis
June 30, 1996 ($ Thousands) (Unaudited)
1. General
In the opinion of the management of American Centurion Life
Assurance Company (the Company), the accompanying unaudited
financial statements contain all adjustments (consisting of normal
recurring adjustments) necessary to present fairly its balance
sheet as of June 30, 1996, and the related statements of
operations, changes in capital and surplus, cash flows for the six
month period ended June 30, 1996.
The Company is a wholly owned subsidiary of IDS Life Insurance
Company which is a wholly owned subsidiary of American Express
Financial Corporation. American Express Financial Corporation is a
wholly owned subsidiary of American Express Company. The
accompanying financial statements have been prepared on the basis
of accounting practices prescribed or permitted by the New York
Department of Insurance.
2. Nature of business
The Company is a stock life insurance company licensed to transact
insurance business in New York, Alabama and Delaware.
3. Statement of cash flows
The Company considers investments with a maturity at the date of
their acquistion of three months or less to be cash equivalents.
These securities are carried principally at amortized cost which
approximates market value.
<PAGE>
PAGE 56
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B of this Registration
Statement:
American Centurion Life Insurance Company:
Balance Sheets as of Dec. 31, 1995 and 1994.
Statements of Operations for the years ended Dec. 31, 1995
1994.
Statements of Changes in Capital and Surplus for the years
ended Dec. 31, 1995 and 1994.
Statements of Cash Flows for the years ended Dec. 31, 1995
and 1994.
Notes to Financial Statements.
Report of Independent Auditors dated May 3, 1996.
Balance Sheet (unaudited) as of June 30, 1996.
Statement of Operations (unaudited) as of June 30, 1996.
Statement of Changes in Capital and Surplus (unaudited) as of
June 30, 1996.
Statement of Cash Flows (unaudited) as of June 30, 1996.
Notes to Financial Statements (unaudited).
(b) Exhibits:
1. Certificate, establishing the ACL Variable Annuity Account 1
dated December 1, 1995, filed electronically as Exhibit 1 to
Registrant's Initial Registration Statement No. 333-00041 is
incorporated herein by reference.
2. Not applicable.
3. Form of Variable Annuity Distribution Agreement, to be filed
by amendment.
4.1 Form of Group Deferred Annuity Certificate for nonqualified
contract (form 38502-NY 10/95), filed electronically as
Exhibit 4.1 to Registrant's Initial Registration Statement
No. 333-00041 is incorporated herein by reference.
4.2 Form of Group Deferred Annuity Certificate for qualified
contract (form 38503-IRA-NY 10/95), filed electronically as
Exhibit 4.2 to Registrant's Initial Registration Statement
No. 333-00041 is incorporated by reference.
4.3 Form of Group Deferred Annuity Contract (form 38501 10/95),
filed electronically as Exhibit 4.3 to Registrant's Initial
Registration Statement No. 333-00041 is incorporated by
reference.
5.1 Form of Group Deferred Variable Annuity Application (form
32041 10/95), filed electronically as Exhibit 5.1 to
Registrant's Initial Registration Statement No. 333-00041 is
incorporated by reference.
<PAGE>
PAGE 57
5.2 Form of Variable Annuity Participant Enrollment Form (form
32027C 10/95), filed electronically as Exhibit 5.2 to
Registrant's Initial Registration Statement No. 333-00041 is
incorporated by reference.
6.1 Amended and Restated Articles of Incorporation of American
Centurion Life, filed electronically as Exhibit 6.1 to
Registrant's Initial Registration Statement No. 333-00041 is
incorporated by reference.
6.2 Amended By-Laws of American Centurion Life, filed
electronically as Exhibit 6.2 to Registrant's Initial
Registration Statement No. 333-00041 is incorporated by
reference.
6.3 Emergency By-Laws of American Centurion Life, filed
electronically as Exhibit 6.3 to Registrant's Initial
Registration Statement No. 333-00041 is incorporated by
reference.
7. Not applicable.
8.1 Form of Participation Agreement, by and among American
Centurion Life and Strong Variable Insurance Funds, Inc. and
Strong Capital Management, Inc. and Strong Funds
Distributors, Inc., filed electronically herewith.
8.2 Form of Participation Agreement, by and among American
Centurion Life and Warburg Pincus Trust and Warburg, Pincus
Counsellors, Inc. and Counsellors Securities, Inc., filed
electronically herewith.
8.3 Form of Participation Agreement, by and among American
Centurion Life, TCI Portfolios, Inc. and Investors Research
Corporation, filed electronically herewith.
8.4 Form of Participation Agreement, between Janus Aspen Series
and American Centurion Life, filed electronically herewith.
8.5 Form of Participation Agreement among INVESCO Variable
Investment Funds, Inc., INVESCO Funds Group, Inc. and
American Centurion Life, filed electronically herewith.
9. Opinion of counsel, filed electronically herewith.
10. Consent of Independent Auditors, filed electronically
herewith.
11. Not applicable.
12. Not applicable.
13. Copy of schedule for computation of each performance
quotation provided in the Registration Statement in response
to Item 21, filed electronically as Exhibit 13 to
Registrant's Initial Registration Statement No. 333-00041 is
incorporated by reference.
<PAGE>
PAGE 58
14.1 Financial Data Schedule, filed electronically herewith.
14.2 Power of Attorney to sign this Registration Statement dated
Dec. 22, 1995, filed electronically as Exhibit 14.2 to
Registrant's Initial Registration Statement No. 333-00041 is
incorporated by reference.
<PAGE>
PAGE 59
Item 25. Directors and Officers of the Depositor (American
Centurion Life Assurance Company)
<TABLE><CAPTION>
Positions and
Name Principal Business Address Offices with Depositor
<S> <C> <C>
Doris A. Anfinson IDS Tower 10 Vice President
Minneapolis, MN 55440
Norma J. Arnold IDS Tower 10 Director
Minneapolis, MN 55440
Robert C. Auriema IDS Tower 10 Director
Minneapolis, MN 55440
Clarence E. Galston IDS Tower 10 Director
Minneapolis, MN 55440
Morris Goodwin, Jr. IDS Tower 10 Vice President and Treasurer
Minneapolis, MN 55440
Jay C. Hatlestad IDS Tower 10 Vice President and Controller
Minneapolis, MN 55440
Robert A. Hatton IDS Tower 10 Director
Minneapolis, MN 55440
William J. Heron, Jr. IDS Tower 10 Director
Minneapolis, MN 55440
Michael J. Hogan IDS Tower 10 Vice President - Variable
Minneapolis, MN 55440 Product Development
Richard W. Kling IDS Tower 10 Director
Minneapolis, MN 55440
David M. Kuplic IDS Tower 10 Vice President - Investments
Minneapolis, MN 55440
Ryan R. Larson IDS Tower 10 Director and Vice President -
Minneapolis, MN 55440 Product Development
Herbert W. Marache Jr. IDS Tower 10 Director
Minneapolis, MN 55440
Kenneth W. Nelson IDS Tower 10 Director
Minneapolis, MN 55440
Doretta Rinaldi IDS Tower 10 Vice President - Marketing
Minneapolis, MN 55440
Stuart A. Sedlacek IDS Tower 10 Director, Chairman and President
Minneapolis, MN 55440
<PAGE>
PAGE 60
Item 25. Directors and Officers of the Depositor (continued)
Positions and
Name Principal Business Address Offices with Depositor
Anne L. Segal IDS Tower 10 Director
Minneapolis, MN 55440
Daniel J. Segner IDS Tower 10 Vice President - Investments
Minneapolis, MN 55440
Guerdon D. Smith IDS Tower 10 Director
Minneapolis, MN 55440
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
American Centurion Life Assurance Company is a wholly
owned subsidiary of IDS Life Insurance Company which is a
wholly owned subsidiary of American Express Financial
Corporation. American Express Financial Corporation is a
wholly owned subsidiary of American Express Company
(American Express).
The following list includes the names of major
subsidiaries of American Express.
Jurisdiction
Name of Subsidiary of Incorporation
I. Travel Related Services
American Express Travel Related
Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
III. Companies engaged in Investors
Diversified Financial Services
American Centurion Life Assurance Company New York
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Financial Advisors Inc. Delaware
American Express Financial Corporation Delaware
American Express Insurance Agency of
Nevada Inc. Nevada
American Express Minnesota Foundation Minnesota
American Express Service Corporation Delaware
American Express Tax and Business Services Minnesota
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Advisory Group Inc. Minnesota
IDS Aircraft Services Corporation Minnesota
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
<PAGE>
PAGE 61
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Deposit Corp. Utah
IDS Fund Management Limited U.K.
IDS Futures Corporation Minnesota
IDS Futures III Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of Mississippi Inc. Mississippi
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Ohio Inc. Ohio
IDS Insurance Agency of Texas Inc. Texas
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS International, Inc. Delaware
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Nevada
Item 27. Number of Contractowners
Not applicable.
Item 28. Indemnification
The By-Laws of the depositor provide that it shall
indemnify a director, officer, agent or employee of the
depositor pursuant to the provisions of applicable
statutes or pursuant to contract.
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to director,
officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by
a director, officer or controlling person of the
registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities
being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
<PAGE>
PAGE 62
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters.
(a) American Express Service Corporation acts as principal
underwriter for the following investment companies:
Strategist Income Fund, Inc.; Strategist Growth Fund, Inc.;
Strategist Growth and Income Fund, Inc.; Strategtist World
Fund, Inc.; Strategist Tax-Free Income Fund, Inc., APL
Variable Annuity Account 1 and IDS Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Name and Principal Position and Offices
Business Address with Underwriter
Norma J. Arnold Vice President-
American Express Company FSD Marketing
American Express Tower
World Financial Center
200 Vesey Street
New York, NY 10285-0001
Robert E. Bruers Vice President and
IDS Tower 10 Chief Financial
Minneapolis, MN 55440 Officer
Colleen Curran Vice President and
IDS Tower 10 Chief Legal Counsel
Minneapolis, MN 55440
Robert Erdman Assistant Treasurer
IDS Tower 10
Minneapolis, MN 55440
George L. Farr Director
American Express Company
American Express Tower
World Financial Center
200 Vesey Street
New York, NY 10285-0001
Janet M. Foster Assistant Secretary
IDS Tower 10
Minneapolis, MN 55440
William J. Heron Jr. President
American Express Company
American Express Tower
World Financial Center
200 Vesey Street
New York, NY 10285-0001
<PAGE>
PAGE 63
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Name and Principal Position and Offices
Business Address with Underwriter
Kevin P. Howe Vice President and
IDS Tower 10 Chief Compliance
Minneapolis, MN 55440 Officer
David R. Hubers Executive Vice
IDS Tower 10 President
Minneapolis, MN 55440
Richard W. Kling Vice President
IDS Tower 10
Minneapolis, MN 55440
Donald J. Ledger Assistant Secretary
IDS Tower 10
Minneapolis, MN 55440
Vicki M. Lubben Assistant Vice
IDS Tower 10 President
Minneapolis, MN 55440
Margaret M. McGrath Assistant Treasurer
IDS Tower 10
Minneapolis, MN 55440
Timothy S. Meehan Secretary
IDS Tower 10
Minneapolis, MN 55440
James A. Mitchell Senior Vice President
IDS Tower 10
Minneapoli, MN 55440
Steven J. Ritter Assistant Treasurer
IDS Tower 10
Minneapolis, MN 55440
Karen L. Stone Vice President
American Express Company
American Express Tower
World Financial Center
200 Vesey Street
New York, NY 10285-0001
Gregg A. Syverson Assistant Treasurer
IDS Tower 10
Minneapolis, MN 55440
Leslie R. Tvedt Assistant Treasurer
IDS Tower 10
Minneapolis, MN 55440
<PAGE>
PAGE 64
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Name and Principal Position and Offices
Business Address with Underwriter
Michael L. Weiner Assistant Treasurer
IDS Tower 10
Minneapolis, Mn 55440
Item 30. Location of Accounts and Records
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
Item 31. Management Services
Not Applicable
Item 32. Undertakings
(a)(b)(c) These undertakings were filed with Registrant's
Initial Registration Statement, File No. 333-
00041.
<PAGE>
PAGE 65
SIGNATURES
As required by the Securities Act of 1933 and the Investment
Company Act of 1940, American Centurion Life Assurance Company, on
behalf of the Registrant has duly caused this Registration
Statement to be signed on its behalf in the City of Minneapolis,
and State of Minnesota, on the 27th day of August, 1996.
ACL VARIABLE ANNUITY ACCOUNT 1
(Registrant)
By American Centurion Life Assurance Company
(Sponsor)
By /s/ Stuart A. Sedlacek*
Stuart A. Sedlacek
Chairman and President
As required by the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities indicated on the 27th day of August, 1996.
Signature Title
/s/ Stuart A. Sedlacek* Director, Chairman and
Stuart A. Sedlacek President
/s/ Jay C. Hatlestad* Vice President and
Jay C. Hatlestad Controller
_____________________________ Director
Norma J. Arnold
/s/ Robert C. Auriema* Director
Robert C. Auriema
/s/ Clarence E. Galston* Director
Clarence E. Galston
/s/ Robert A. Hatton* Director
Robert A. Hatton
/s/ William J. Heron Jr.* Director
William J. Heron Jr.
/s/ Richard W. Kling* Director
Richard W. Kling
/s/ Ryan R. Larson* Director
Ryan R. Larson
/s/ Herbert W. Marache Jr.* Director
Herbert W. Marache Jr.
<PAGE>
PAGE 66
Signature Title
/s/ Kenneth W. Nelson* Director
Kenneth W. Nelson
/s/ Anne L. Segal* Director
Anne L. Segal
/s/ Guerdon D. Smith* Director
Guerdon D. Smith
*Signed pursuant to Power of Attorney dated Dec. 22, 1995, filed
electronically as Exhibit 14.2 to Registrant's Initial Registration
Statement No. 333-00041 is incorporated herein by reference.
______________________________
Mary Ellyn Minenko
<PAGE>
PAGE 67
CONTENTS OF PRE-EFFECTIVE AMENDMENT NO. 1
This Registration Statement is comprised of the following papers
and documents:
The Cover Page.
Cross-reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
Exhibits.
<PAGE>
PAGE 1
ACL VARIABLE ANNUITY ACCOUNT 1
Registration Number 333-00041/811-07475
EXHIBIT INDEX
Exhibit 8.1: Form of Participarion Agreement, by and among
American Centurion Life and Strong Variable
Insurance Funds, Inc. and Strong Capital
Management, Inc. and Strong Funds Distributors,
Inc.
Exhibit 8.2: Form of Participation Agreement, by and among
American Centurion Life and Warburg Pincus Trust
and Warburg, Pincus Counsellors, Inc. and
Counsellors Securities, Inc.
Exhibit 8.3: Form of Participation Agreement, by and among
American Centurion Life, TCI Portfolios, Inc. and
Investors Research Corporation.
Exhibit 8.4: Form of Participation Agreement, between Janus
Aspen Series and American Centurion Life.
Exhibit 8.5: Form of Participation Agreement among INVESCO
Variable Investment Funds, Inc., INVESCO Funds
Group, Inc. and American Centurion Life.
Exhibit 9: Opinion of counsel.
Exhibit 10: Consent of Independent Auditors.
Exhibit 14.1: Financial Data Schedule.
<PAGE>
PAGE 1
PARTICIPATION AGREEMENT
By and Among
AMERICAN CENTURION LIFE ASSURANCE COMPANY
And
STRONG VARIABLE INSURANCE FUNDS, INC.
And
STRONG CAPITAL MANAGEMENT, INC.
And
STRONG FUNDS DISTRIBUTORS, INC.
THIS AGREEMENT, made and entered into this ____ day of ________,
1996 by and among American Centurion Life Assurance Company,
organized under the laws of the State of New York (the "Company"),
on its own behalf and on behalf of each separate account of the
Company named in Schedule 1 to this Agreement, as may be amended
from time to time (each account referred to as the "Account"),
Strong Variable Insurance Funds, Inc., an open-end management
investment company organized under the laws of the State of
Wisconsin (the "Fund"), Strong Capital Management, Inc., the Fund's
investment adviser and transfer agent organized under the laws of
the State of Wisconsin (the "Adviser") and Strong Funds
Distributors, Inc., the distributor for the Fund organized under
the laws of the State of Wisconsin ("Distributors").
WHEREAS, the Fund engages in business as an open-end management
investment company and was established for the purpose of serving
as the investment vehicle for separate accounts established for
variable life insurance contracts and variable annuity contracts to
be offered by insurance companies that have entered into
participation agreements similar to this Agreement (the
"Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular
managed portfolio of securities and other assets (the
"Portfolios"). Reference herein to the "Fund" includes reference
to each Portfolio to the extent the context requires; and
WHEREAS, the Fund has received an order from the Securities &
Exchange Commission (the "SEC") granting Participating Insurance
Companies and variable annuity separate accounts and variable life
insurance separate accounts relief from the provisions of Sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of
1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-
3(T)(b)(15) thereunder, to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity separate
accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans outside of the separate
account context (the "Mixed and Shared Funding Exemptive Order").
The parties to this Agreement agree that the conditions or
undertakings specified in the Mixed and Shared Funding Exemptive
Order and that may be imposed on the Company, the Fund,
Distributors and/or the Adviser by virtue of the receipt of such
order by the SEC will be incorporated herein by reference, and such
parties agree to comply with such conditions and undertakings to
the extent applicable to each such party; and<PAGE>
PAGE 2
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain
variable annuity contracts (the "Contracts") under the 1933 Act;
and
WHEREAS, the Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of
Directors of the Company under the insurance laws of the State of
New York, to set aside and invest assets attributable to the
Contracts; and
WHEREAS, the Company has registered the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the
Portfolios named in Schedule 2, as such schedule may be amended
from time to time (the "Designated Portfolios") on behalf of the
Account to fund the Contracts, and the Fund is authorized to sell
such shares to unit investment trusts such as the Account at net
asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Distributors, the Fund and the Adviser agree as
follows:
ARTICLE I. Sale of Fund Shares
1.1 Distributors agrees on behalf of the Fund to sell to the
Company for the Account and indirectly for the appropriate
subaccount thereof those shares of the Designated Portfolios
that each Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt and
acceptance by Distributors or its designee of the order for
the shares of the Fund all in accordance with the provisions
of this Agreement, the then current prospectus of the Fund
and the Contracts. For purposes of this Section 1.1, the
Company will be the designee of Distributors for receipt of
such orders from each Account and receipt by such designee
will constitute receipt by Distributors. On each day that
the Fund is open for business (a "Business Day"), the Company
shall aggregate and calculate the net purchase and redemption
orders for the Account from the contractowners for shares of
the Fund that it received prior to the close of trading on
the New York Stock Exchange (the "NYSE") (i.e., 3:00 p.m.,
Central time), unless the NYSE closes at an earlier time in
which case such earlier time shall apply, and communicate to
Distributors, by telephone or facsimile (or by such other
means as the parties hereto may agree to in writing), the net
aggregate purchase or redemption order (if any) for the
Account for such Business Day (such Business Day is sometimes
referred to herein as the "Trade Date"). The Company will
communicate such orders to Distributors prior to 9:00 a.m.,
Central Time, on the next Business Day following the Trade
Date. All trades communicated to Distributors by the <PAGE>
PAGE 3
foregoing deadline shall be treated by Distributors as if
they were received by Distributors prior to the close of
trading on the Trade Date. Any trades communicated to
Distributors after the foregoing deadline may be canceled at
Distributors' sole discretion. Distributors will notify the
Company immediately if a trade is canceled.
1.2 Distributors will provide to the Company written instructions
("Purchase Instructions") for wire transfers to the custodian
for the Fund. The Company will wire, or arrange for the wire
of, the purchase price for each purchase order in accordance
with the Purchase Instructions. The Company will initiate
this wire transfer by 12:00 (noon) Central Time on the next
Business Day following the Trade Date. The Company agrees
that if it fails to provide funds to the Fund's custodian by
the close of business on the next Business Day following the
Trade Date, then the transaction may be canceled.
Distributors will notify the Company immediately if a
transaction is canceled.
1.3 The Fund agrees to make shares of the Designated Portfolios
available indefinitely for purchase at the applicable net
asset value per share by Participating Insurance Companies
and their separate accounts on those days on which the Fund
calculates its Designated Portfolio net asset value pursuant
to rules of the SEC, provided, however, that the Board of
Directors of the Fund (the "Fund Board") may refuse to sell
shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Fund Board,
acting in good faith and in light of its fiduciary duties
under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Portfolio.
1.4 The Fund agrees that shares of the Designated Portfolios will
be sold only to Participating Insurance Companies and their
separate accounts, qualified pension and retirement plans or
such other persons as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended,
(the "Internal Revenue Code"), and regulations promulgated
thereunder, the sale to which will not impair the tax
treatment currently afforded the Contracts. No shares of any
Portfolio will be sold to the general public.
1.5 Adviser will use its best efforts to cause to be transmitted
to such custodial account as the Company shall direct in
writing, the proceeds of all redemption orders placed by
Company by 9:00 a.m., Central Time, on the Business Day
immediately following the Trade Date, by wire transfer on
that Business Day. For purposes of this Section 1.5, the
Company will be the designee of Distributors for receipt of
requests for redemption from each Account and receipt by such
designee will constitute receipt by Distributors. The Fund
reserves the right to delay payment of redemption proceeds,
but in no event may such payment be delayed longer than the
period permitted under Section 22(e) of the 1940 Act. The
Fund will not bear any responsibility whatsoever for the <PAGE>
PAGE 4
proper disbursement or crediting of redemption proceeds; the
Company alone will be responsible for such action. If
notification of redemption is received after 9:00 a.m.
Central Time, payment for redeemed shares will be made on the
next following Business Day.
1.6 Company agrees to purchase and redeem the shares of the Fund
in accordance with the provisions of this Agreement, of the
Contracts and of the then current prospectuses for the
Contracts and Fund. Except as necessary to implement
transactions initiated by purchasers of Contracts ("Owners"),
or as otherwise permitted by state and/or federal laws or
regulations, Company shall not redeem Fund shares
attributable to the Contracts.
1.7 Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the
Company or any Account. Purchase and redemption orders for
Fund shares will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.8 Adviser or Distributors will furnish notice (by telephone,
followed by facsimile confirmation) to the Company of the
declaration of any income, dividends or capital gain
distributions payable on each Designated Portfolio's shares
as soon as such information is announced by each Designated
Portfolio. Where possible, the Adviser shall provide the
Company with direct or indirect systems access to the
Adviser's systems for obtaining such information. The
Company hereby elects to receive all such dividends and
distributions as are payable on the Designated Portfolio
shares in the form of additional shares of that Designated
Portfolio. The Company reserves the right to revoke this
election and to receive all such dividends and distributions
in cash. The Fund will notify the Company of the number of
shares so issued as payment of such dividends and
distributions.
1.9 The Fund will make the net asset value per share for each
Designated Portfolio available to the Company on each
Business Day as soon as reasonably practical after the net
asset value per share is calculated and will use its best
efforts to make such net asset value per share available by
5:00 p.m., Central Time.
1.10 In the event adjustments are required to correct any error in
the computation of the net asset value of Fund shares, Fund
or the Adviser shall notify the Company as soon as
practicable after discovering the need for those adjustments
which result in a reimbursement to an Account in accordance
with the Fund's then current policies on reimbursement.
Notification may be made via facsimile or via direct or
indirect systems access. Any such notification shall be
promptly followed by a letter written on the Fund's or
Adviser's letterhead stating for each day for which an error
occurred the incorrect price, the correct price, and, to the
extent communicated to the Fund's shareholders, the reason
for the price change. Fund and Adviser agree that Company <PAGE>
PAGE 5
may send this writing, or derivation thereof (so long as such
derivation is approved in advance by Fund or Adviser, which
approval shall not be unreasonably withheld) to Owners that
are affected by the price change. The parties will negotiate
in good faith to develop a reasonable method for effecting
any required adjustment.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act and that the Contracts
will be issued and sold in compliance with all applicable
federal and state laws, including state insurance suitability
requirements. The Company further represents and warrants
that it is an insurance company duly organized and in good
standing under applicable law and that it has legally and
validly established each Account as a separate account under
applicable state law and has registered the Account as a unit
investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the
Contracts, and that it will maintain such registration for so
long as any Contracts are outstanding. The Company is and
will remain registered and licensed in all material respects
under all applicable federal and state securities and
insurance laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state
and federal laws. The Company will amend the registration
statement under the 1933 Act for the Contracts and the
registration statement under the 1940 Act for the Account
from time to time as required in order to effect the
continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company will register and
qualify the Contracts for sale in accordance with the
securities laws of any state only if and to the extent deemed
necessary by the Company.
2.2 The Company represents that the Contracts are currently and
at the time of issuance will be treated as annuity contracts
under applicable provisions of the Internal Revenue Code, and
that it will make every effort to maintain such treatment and
that it will notify the Fund and the Adviser immediately upon
having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so
treated in the future.
The Company represents that its officers, employees,
investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are at all times
covered by a blanket fidelity bond or similar coverage for
the benefit of the Fund in an amount not less than $5
million. The aforesaid includes coverage for larceny and
embezzlement and is issued by a reputable bonding company.
The Company agrees to make all reasonable efforts to see that
this bond or another bond containing these provisions is
always in effect, and agrees to notify the Fund and the
Adviser in the event that such coverage no longer applies.
Adviser and Distributors, on the one hand, and the Company <PAGE>
PAGE 6
on the other, each represent and warrant to the other that
the execution, performance and delivery of this Agreement
will not result in a violation of any applicable law or
breach or impairment of any contractual obligation.
2.3 The Company represents and warrants that it will not purchase
shares of the Designated Portfolios with assets derived from
tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
2.4 The Adviser represents and warrants that Fund shares of the
Designated Portfolios sold pursuant to this Agreement will be
registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund
is and will remain registered under the 1940 Act as an
investment company or series thereof for as long as such
shares of the Designated Portfolios are sold. The Fund will
amend the registration statement for its shares under the
1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The
Fund will register and qualify the shares of the Designated
Portfolios for sale in accordance with the laws of any state
only if and to the extent deemed advisable by the Fund.
2.5 The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the
Internal Revenue Code, and that it will make every effort to
maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify the
Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might
not so qualify in the future.
2.6 The Adviser represents that the Fund's investment objectives,
policies and restrictions comply with applicable state
investment laws as they may apply to the Fund. The Adviser
makes no representation as to whether any aspect of the
Fund's operations (including, but not limited to, fees and
expenses and investment policies, objections and
restrictions) complies with the insurance laws and
regulations of any state. The Fund and the Adviser agree
that they will furnish the information required by state
insurance laws so that the Company can obtain the authority
needed to issue the Contracts in any applicable state.
2.7 The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under
the 1940 Act or otherwise, although it reserves the right to
make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule
12b-1, the Fund undertakes to have such plan approved in
accordance with the requirements of the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Wisconsin and that it
does and will comply in all material respects with applicable
provisions of the 1940 Act.
<PAGE>
PAGE 7
2.9 The Adviser and Distributors represent and warrant that they
are and will remain duly registered under all applicable
federal and state securities laws and that they will perform
their obligations for the Fund in accordance in all material
respects with any applicable state and federal securities
laws.
2.10 The Fund, Distributors and Adviser represent and warrant that
all of their directors, officers, employees, investment
advisers, and other individuals/entities having access to the
funds and/or securities of the Fund are and continue to be at
all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less
than the minimal coverage as required currently by Rule 17g-
(1) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond includes
coverage for larceny and embezzlement and is issued by a
reputable bonding company.
ARTICLE III. Prospectus and Proxy Statements; Voting
3.1
(a) The Fund will provide the Company, at the Fund's
expense, with as many copies of the current Fund
prospectus for the Designated Portfolios as the Company
may reasonably request for distribution, at the
Company's expense, to existing Owners, prospective
Owners and applicants. The Fund will provide the
copies of said prospectus to the Company or to its
mailing agent.
(b) If requested by the Company in lieu thereof, the Fund
will provide such documentation, including a final copy
of a current prospectus set in type customarily used by
the Fund at the Fund's expense, and other assistance as
is reasonably necessary in order for the Company at
least annually (or more frequently if the Fund
prospectus is amended more frequently) to have the
Fund's prospectus and the prospectuses of other mutual
funds in which assets attributable to the Contracts may
be invested printed together in one document, in which
case the Fund will bear its reasonable share of
expenses as describe above, allocated based on the
proportionate number of pages of the Fund's and other
funds' respective portions of the document, provided,
however, that in no event shall the Fund's share of
said expenses exceed $5,000.00 for said document along
with all amendments thereto.
3.2 The Fund will provide the Company, at the Fund's expense,
with as many copies of the statement of additional
information as the Company may reasonably request for
distribution, at the Company's expense, to existing Owners,
prospective Owners and applicants. The Fund will provide the
copies of said statement of additional information to the
Company or to its mailing agent. The Company will distribute
the statement of additional information as requested or
required.<PAGE>
PAGE 8
3.3 The Adviser or Distributors, as applicable, at its expense,
will provide the Company or its mailing agent with copies of
proxy material, if any, reports to shareholders and other
special communications to shareholders requested by the Fund
in such quantity as the Company will reasonably require. The
Company will distribute to existing Owners at its expense,
reports to shareholders, including annual and semi-annual
reports, and other communications to shareholders undertaken
in the ordinary course of business. The Company will
distribute proxy material and special communications to
existing Owners and tabulate the votes and will bill the Fund
for the reasonable cost of such distribution and tabulation.
3.4 If and to the extent required by law the Company will:
(a) solicit voting instructions from Owners;
(b) vote the shares of the Designated Portfolios held
in the Account in accordance with instructions
received from Owners; and
(c) vote shares of the Designated Portfolios held in
the Account for which no timely instructions have
been received, in the same proportion as shares
of such Designated Portfolio for which
instructions have been received from the Owners;
so long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contractowners. The Company reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
Participating Insurance Companies will be responsible for
assuring that each of their separate accounts participating
in the Fund calculates voting privileges in a manner
consistent with all legal requirements, including the Mixed
and Shared Funding Exemptive Order.
3.5 The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders.
ARTICLE IV. Sales Material and Information
4.1 The Company will furnish, or will cause to be furnished, to
Distributors or Adviser, each piece of sales literature or
other promotional material in which the Fund, Distributors or
the Adviser is named, at least ten (10) business days prior
to its use. No such material will be used if Distributors or
Adviser reasonably object to such use within five (5)
business days after receipt of such material.
Notwithstanding anything to the contrary in this Section 4.1,
at the request of Distributors or Adviser, the Company shall
cease to use any sales literature or other promotional
materials which refer to the Fund, Adviser or Distributors
that Distributors or Adviser determines in good faith to be
inaccurate, misleading or otherwise unacceptable. If the
request to discontinue use of any materials is made within 30
days of Distributors or Adviser not objecting to the use of <PAGE>
PAGE 9
such materials, Distributors or Adviser will pay to
supplement or reprint these materials at the option of the
Company.
4.2 The Company will not give any information or make any
material representations or statements on behalf of the Fund
or concerning the Fund, Distributors or Adviser in connection
with the sale of the Contracts other than the information or
representations contained in the registration statement,
prospectus or statement of additional information for Fund
shares, as such registration statement, prospectus and
statement of additional information may be amended or
supplemented from time to time, or in reports or proxy
statements for the Fund, or in published reports for the Fund
which are in the public domain or reviewed for factual
accuracy by the Fund or the Adviser for distribution, or in
sales literature or other material provided by the Fund or by
the Adviser, except with permission of the Fund or the
Adviser. The Fund and the Adviser agree to respond to any
request for review of factual accuracy on a prompt and timely
basis. The Adviser will not review such materials for
compliance with applicable law. Nothing in this Section 4.2
will be construed as preventing the Company or its employees
or agents from giving advice on investment in the Fund.
4.3 Distributors or the Adviser will furnish, or will cause to be
furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the
Company or each Account is named, at least ten (10) business
days prior to its use. No such material will be used if the
Company reasonably objects to such use within five (5)
business days after receipt of such material.
4.4 The Fund, Distributors and the Adviser will not give any
information or make any material representations or
statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the
information or representations contained in a registration
statement, prospectus or statement of additional information
for the Contracts, as such registration statement, prospectus
and statement of additional information may be amended or
supplemented from time to time, or in published reports for
each Account or the Contracts which are in the public domain
or approved by the Company for distribution to
contractowners, or in sales literature or other material
provided by the Company, except with permission of the
Company. The Company agrees to respond to any request for
approval on a prompt and timely basis.
4.5 Adviser and/or Distributors will provide to the Company at
least one complete copy of all registration statements,
prospectuses, statements of additional information, reports,
proxy statements, solicitations for voting instructions,
applications for exemptions, requests for no-action letters
and all amendments for any of the foregoing that relate to
the Designated Portfolios and the Contracts in final form as
filed with the SEC, NASD and other regulatory authorities
upon request.<PAGE>
PAGE 10
4.6 The Company will provide to Distributors at least one
complete copy of all registration statements, prospectuses,
statements of additional information, reports, solicitations
for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests
for no action letters, and all amendments to any of the
foregoing that relate to the Fund, the Contracts or each
Account in final form as filed with SEC, the NASD and other
regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited
to, advertisements (such as material published, or designed
for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other
public media, (e.g., on-line networks such as the Internet or
other electronic messages), sales literature (i.e., any
written communication distributed or made generally available
to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training
materials or other communications distributed or made
generally available to some or all agents or employees,
registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy
materials.
4.8 The Fund and the Adviser hereby consent to the Company's use
of the names Strong Short Term Bond Fund II, Strong Variable
Insurance Funds, Inc. and any of the Designated Portfolios
named on Schedule 2 hereto in connection with the marketing
of the Contracts, subject to the terms of Sections 4.1 and
4.2 of this Agreement. Such consent will terminate with the
termination of this Agreement. The Company shall not use any
other names, logos, trademarks or servicemarks of the
Adviser, Distributors, the Fund or any affiliate thereof
without the prior written consent of the applicable entity.
ARTICLE V. Fees and Expenses
5.1 The Fund will pay no fee or other compensation to the Company
under this Agreement, except: (a) if the Fund or any
Designated Portfolio adopts and implements a plan pursuant to
Rule 12b-1 under the 1940 Act to finance distribution
expenses, then, subject to obtaining any required exemptive
orders or other regulatory approvals, the Fund may make
payments to the Company or to the underwriter for the
Contracts if and in such amounts agreed to by the Fund in
writing; and (b) the Fund may pay fees to the Company for
services provided to Owners that are not primarily intended
to result in the sale of shares of the Designated Portfolio
or of underlying contracts.
5.2 All expenses incident to performance by the Fund of this
Agreement will be paid by the Fund to the extent permitted by
law. All shares of the Designated Portfolios will be duly <PAGE>
PAGE 11
authorized for issuance and registered in accordance with
applicable federal law and, to the extent deemed advisable by
the Fund, in accordance with applicable state law, prior to
sale. The Fund will bear the expenses for the cost of
registration and qualification of the Fund's shares;
preparation and filing of the Fund's prospectus, statement of
additional information and registration statement, proxy
materials and reports; setting the Fund's prospectus in type;
setting in type and printing proxy materials and reports to
Owners (including the costs of printing a Fund prospectus
that constitutes an annual report); the preparation of all
statements and notices required by any federal or state law;
all taxes on the issuance or transfer of the Fund's shares;
any expenses permitted to be paid or assumed by the Fund
pursuant to a plan, if any, under Rule 12b-1 under the 1940
Act; and the other typesetting, printing, tabulation and
distribution expenses set forth in Article III of this
Agreement.
5.3 The Company shall bear the expenses for the costs of
preparation and filing of the Company's prospectus and
registration statement with respect to the Contracts required
by any federal or state law; expenses for the solicitations
and sale of the Contracts, including all costs of printing
and distributing all copies of advertisements, prospectuses,
statements of additional information, proxy materials, and
reports to Owners or potential purchasers of the Contracts as
required by applicable state and federal law; payment of all
applicable fees, including, without limitation, all fees due
under Rule 24f-2 relating to the Contracts; all costs of
drafting, filing and obtaining approvals of the Contracts in
the various states under applicable insurance laws; filing of
annual reports on Form N-SAR, and all other costs associated
with the ongoing compliance with all such laws and its
obligations hereunder.
ARTICLE VI. Diversification
6.1 The Adviser will cause the Fund to at all times invest money
from the Contracts in such a manner as to ensure that the
Contracts will be treated as variable annuity contracts under
the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing,
Adviser will cause the Fund to comply with Section 817(h) of
the Internal Revenue Code and Treasury Regulation 1.817-5, as
amended from time to time, relating to the diversification
requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications
to such Section or Regulation. In the event of a breach of
this Article VI, the Adviser will take all reasonable steps:
(a) to notify the Company of such breach; and (b) to
adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Treasury Regulation
1.817-5.
ARTICLE VII. Potential Conflicts
<PAGE>
PAGE 12
7.1 The Fund Board will monitor the Fund for any potential or
existing material irreconcilable conflict of interest between
the interests of the Owners of all separate accounts
investing in the Fund, including such conflict of interest
with any other separate account of any insurance company
investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action
by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities
laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a
difference in voting instructions given by contractowners of
different Participating Insurance Companies or by variable
annuity and variable life insurance contractowners; or (f) a
decision by an insurer to disregard the voting instructions
of contractowners. The Fund Board will promptly inform the
Company if it determines that an irreconcilable material
conflict exists and the implications thereof. A majority of
the Fund Board will consist of persons who are not
"interested" persons of the Fund.
7.2 The Company and Adviser will promptly report in writing any
potential or existing material irreconcilable conflicts of
interest of which it is aware to the Fund Board. The Company
agrees to assist the Fund Board in carrying out its
responsibilities, as delineated in the Mixed and Shared
Funding Exemptive Order, under any applicable provisions of
the federal securities laws and/or any exemptive orders
granted by the SEC of which the Company is aware, by
providing the Fund Board, in a timely manner, with all
information reasonably necessary for the Fund Board to
consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Fund
Board whenever Owners' voting instructions are to be
disregarded. The Fund Board will record in its minutes, or
other appropriate records, all reports received by it and all
action with regard to a conflict.
7.3 If it is determined by a majority of the Fund Board, or a
majority of its disinterested directors, that an
irreconcilable material conflict exists, the Company and
other Participating Insurance Companies will, at their
expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors),
take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including, but
not limited to: (a) withdrawing the assets allocable to some
or all of the Accounts from the Fund or any Portfolio and
reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be
implemented to a vote of all affected contractowners and, as
appropriate, segregating the assets of any appropriate group
(i.e., variable annuity contractowners or variable life <PAGE>
PAGE 13
insurance contractowners of one or more Participating
Insurance Companies) that votes in favor of such segregation,
or offering to the affected contractowners the option of
making such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard Owner voting
instructions, and the Company's judgment represents a
minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw
the affected subaccount of the Account's investment in the
Fund and terminate this Agreement with respect to such
subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a
majority of the disinterested directors of the Fund Board.
No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take
place within six (6) months after the Fund gives written
notice to the Company that this provision is being
implemented. Until the end of such six-month period the
Adviser and Fund will, to the extent permitted by law and any
exemptive relief previously granted to the Fund, continue to
accept and implement orders the Company for the purchase (and
redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state
insurance regulators, then the Company will withdraw the
affected subaccount of the Account's investment in the Fund
and terminate this Agreement with respect to such subaccount
within the period of time permitted by such decision but in
no event later than six (6) months after the Fund Board
informs the Company in writing that it has determined that
such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and
termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a
majority of the disinterested directors of the Fund Board.
No charge or penalty will be imposed as a result of such
withdrawal. Until the end of such six-month or shorter
period the Advisor and Fund will, to the extent permitted by
law and any exemptive relief previously granted to the Fund,
continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board will
determine whether any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the
Fund be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.3
to establish a new funding medium for the Contracts if an
offer to do so has been declined by vote of a majority of
Owners affected by the irreconcilable material conflict.
<PAGE>
PAGE 14
In the event that the Fund Board determines that any proposed
action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the affected
subaccount of the Account's investment in the Fund and
terminate this Agreement as quickly as may be required to
comply with applicable law, but in no event later than six
(6) months after the Fund Board informs the Company in
writing of the foregoing determination, provided, however,
that such withdrawal and termination shall be limited to the
extent required by any such material irreconcilable conflict.
7.7 The Company will at least annually submit to the Fund Board
such reports, materials or data as the Fund Board may
reasonably request so that the Fund Board may fully carry out
the duties imposed upon it as delineated in the Mixed and
Shared Funding Exemptive Order, and said reports, materials
and data will be submitted more frequently if deemed
appropriate by the Fund Board.
7.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief
from any provision of the 1940 Act or the rules promulgated
thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on
terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order,
then: (a) the Fund and/or the Participating Insurance
Companies, as appropriate, will take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the
extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the
Fund, Distributors, the Adviser, and each person, if
any, who controls or is associated with the Fund,
Distributors or the Adviser within the meaning of such
terms under the federal securities laws and any
director, trustee, officer, partner, employee or agent
of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any
and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written
consent of the Company) or litigation (including
reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or
settlements:
<PAGE>
PAGE 15
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Contracts or contained in the
Contracts or sales literature or other
promotional material for the Contracts (or any
amendment or supplement to any of the foregoing)
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided
that this agreement to indemnify will not apply
as to any Indemnified Party if such statement or
omission or such alleged statement or omission
was made in reliance upon and in conformity with
information furnished to the Company by or on
behalf of the Adviser or the Fund for use in the
registration statement, prospectus or statement
of additional information for the Contracts or in
the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company
(other than statements or representations
contained in the Fund registration statement,
prospectus, statement of additional information
or sales literature or other promotional material
of the Fund (or any amendment or supplement) not
supplied by the Company or persons under its
control or wrongful conduct of the Company or
persons under its control), with respect to the
sale or distribution of the Contracts or Fund
shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
the Fund registration statement, prospectus,
statement of additional information or sales
literature or other promotional material of the
Fund (or amendment or supplement) or the omission
or alleged omission to state therein a material
fact required to be stated therein or necessary
to make such statements not misleading in light
of the circumstances in which they were made, if
such a statement or omission was made in reliance
upon and in conformity with information furnished
to the Fund or Adviser by or on behalf of the
Company or persons under its control; or
(4) arise as a result of any failure by the Company
to provide the services and furnish the materials
under the terms of this Agreement; or
<PAGE>
PAGE 16
(5) arise out of any material breach of any
representation and/or warranty made by the
Company in this Agreement or arise out of or
result from any other material breach by the
Company of this Agreement;
except to the extent provided in Sections 8.1(b) and
8.4 hereof. This indemnification will be in addition
to any liability that the Company otherwise may have.
(b) No party seeking indemnification will be entitled to
indemnification under Section 8.1(a) if such loss,
claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this
Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this
Agreement.
(c) The Indemnified Parties promptly will notify the
Company of the commencement of any litigation,
proceedings, complaints or actions by regulatory
authorities against them in connection with the
issuance or sale of the Fund shares or the Contracts or
the operation of the Fund.
8.2 Indemnification By Distributors
(a) Distributors agrees to indemnify and hold harmless the
Company and each person, if any, who controls or is
associated with the Company within the meaning of such
terms under the federal securities laws and any
director, trustee, officer, partner, employee or agent
of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any
and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written
consent of the Adviser) or litigation (including
reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Fund or sales literature or
other promotional material of the Fund (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided
that this agreement to indemnify will not apply <PAGE>
PAGE 17
as to any Indemnified Party if such statement or
omission or such alleged statement or omission
was made in reliance upon and in conformity with
information furnished to the Adviser,
Distributors or Fund by or on behalf of the
Company for use in the registration statement,
prospectus or statement of additional information
for the Fund or in sales literature of the Fund
(or any amendment or supplement thereto) or
otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in
the Contract or Fund registration statements,
prospectuses or statements of additional
information or sales literature or other
promotional material for the Contracts or of the
Fund not supplied by the Adviser, Distributors or
the Fund or persons under the control of the
Adviser, Distributors or the Fund respectively or
wrongful conduct of the Adviser, Distributors or
the Fund or persons under the control of the
Adviser, Distributors or the Fund respectively,
with respect to the sale or distribution of the
Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
a registration statement, prospectus, statement
of additional information or sales literature or
other promotional material covering the Contracts
(or any amendment or supplement thereto), or the
omission or alleged omission to state therein a
material fact required to be stated or necessary
to make such statement or statements not
misleading in light of the circumstances in which
they were made, if such statement or omission was
made in reliance upon and in conformity with
information furnished to the Company by or on
behalf of the Adviser, Distributors or the Fund
or persons under the control of the Adviser,
Distributors or the Fund; or
(4) arise as a result of any failure by the Fund or
Distributors to provide the services and furnish
the materials under the terms of this Agreement
(including a failure, whether unintentional or in
good faith or otherwise, to comply with the
diversification requirements and procedures
related thereto specified in Article VI of this
Agreement); or
(5) arise out of or result from any material breach
of any representation and/or warranty made by the
Distributors or the Fund in this Agreement, or
arise out of or result from any other material <PAGE>
PAGE 18
breach of this Agreement by the Distributors or
the Fund;
except to the extent provided in Sections 8.2(b) and
8.4 hereof.
(b) No party seeking indemnification will be entitled to
indemnification under Section 8.2(a) if such loss,
claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this
Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this
Agreement.
(c) The Indemnified Parties will promptly notify the
Adviser and the Fund of the commencement of any
litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with
the issuance or sale of the Contracts or the operation
of the Account.
8.3 Indemnification By the Adviser
(a) The Adviser agrees to indemnify and hold harmless the
Company and each person, if any, who controls or is
associated with the Company within the meaning of such
terms under the federal securities laws and any
director, officer, partner, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written
consent of the Fund) or litigation (including
reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or
settlements:
(i) arise as a result of any failure by the Adviser
to provide the services and furnish the materials
under the terms of this Agreement (including a
failure, whether unintentional or in good faith
or otherwise, to comply with the diversification
and other qualification requirements specified in
Article VI); or
(ii) arise out of or result from any material breach
of any representation and/or warranty made by the
Adviser in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Adviser or persons under its
control; or
<PAGE>
PAGE 19
(iii) arise out of Adviser's gross negligence or
willful misconduct resulting in the incorrect or
untimely calculation or reporting of the daily
net asset value per share or dividend or capital
gain distribution rate;
except to the extent provided in Sections 8.3(b) and
8.4 hereof.
(b) No party seeking indemnification will be entitled to
indemnification under Section 8.3(a) if such loss,
claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this
Agreement, or by reason of such party's reckless
disregard of its obligations and duties under this
Agreement.
(c) The Indemnified Parties will promptly notify the Fund
of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against
them in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this
Article VIII ("Indemnifying Party" for the purpose of this
Section 8.4) will not be liable under the indemnification
provisions of this Article VIII with respect to any claim
made against a party entitled to indemnification under this
Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) unless such Indemnified Party will have notified
the Indemnifying Party in writing within a reasonable time
after the summons or other first legal process giving
information of the nature of the claim will have been served
upon such Indemnified Party (or after such party will have
received notice of such service on any designated agent), but
failure to notify the Indemnifying Party of any such claim
will not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of the
indemnification provision of this Article VIII, except to the
extent that the failure to notify results in the failure of
actual notice to the Indemnifying Party and such Indemnifying
Party is damaged solely as a result of failure to give such
notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to
participate, at its own expense, in the defense thereof. The
Indemnifying Party also will be entitled to assume the
defense thereof, with counsel satisfactory to the party named
in the action. After notice from the Indemnifying Party to
the Indemnified Party of the Indemnifying Party's election to
assume the defense thereof, the Indemnified Party will bear
the fees and expenses of any additional counsel retained by
it, and the Indemnifying Party will not be liable to such
party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in <PAGE>
PAGE 20
connection with the defense thereof other than reasonable
costs of investigation, unless: (a) the Indemnifying Party
and the Indemnified Party will have mutually agreed to the
retention of such counsel; or (b) the named parties to any
such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The Indemnifying Party will not be liable for
any settlement of any proceeding effected without its written
consent but if settled with such consent or if there is a
final judgment for the plaintiff, the Indemnifying Party
agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or
judgment. A successor by law of the parties to this
Agreement will be entitled to the benefits of the
indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII
will survive any termination of this Agreement.
ARTICLE IX. Applicable Law
9.1 This Agreement will be construed and the provisions hereof
interpreted under and in accordance with the laws of the
State of Minnesota.
9.2 This Agreement will be subject to the provisions of the 1933
Act, the 1934 Act and the 1940 Act, and the rules and
regulations and rulings thereunder, including such exemptions
from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof will be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to some or all of the Designated Portfolios,
upon ninety (90) days' advance written notice to the
other parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC,
unless otherwise agreed in a separate written agreement
among the parties; or at the option of the Company,
upon reasonable advance written notice to the other
parties with respect to any Designated Portfolio if
shares of the Designated Portfolio are not reasonably
available to meet the requirements of the Contracts as
determined in good faith by the Company; or
(b) at the option of the Company, upon reasonable advance
written notice to the other parties with respect to any
Designated Portfolio is shares of the Designated
Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good
faith by the Company; or
<PAGE>
PAGE 21
(c) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with
respect to any Designated Portfolio in the event any of
the Designated Portfolio's shares are not registered,
issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of
such shares as the underlying investment media of the
Contracts issued or to be issued by Company; or
(d) at the option of the Fund, upon receipt of the Fund's
written notice by the other parties, upon institution
of formal proceedings against the Company by the NASD,
the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the
Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund
shares, provided that the Fund determines in its sole
judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the
Company's ability to perform its obligations under this
Agreement; or
(e) at the option of the Company, upon receipt of the
Company's written notice by the other parties, upon
institution of formal proceedings against the Fund,
Distributors or the Adviser by the NASD, the SEC, or
any state securities or insurance department or any
other regulatory body, provided that the Company
determines in its sole judgment, exercised in good
faith, that any such proceeding would have a material
adverse effect on the Fund's, Distributors' or the
Adviser's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon receipt of the
Company's written notice by the other parties, if the
Fund ceases to qualify as a Regulated Investment
Company under Subchapter M of the Internal Revenue
Code, or under any successor or similar provision, or
if the Company reasonably and in good faith believes
that the Fund may fail to so qualify; or
(g) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with
respect to any Designated Portfolio if the Fund fails
to meet the diversification requirements specified in
Article VI hereof or if the Company reasonably and in
good faith believes the Fund may fail to meet such
requirements;
(h) at the option of any party to this Agreement, upon not
less than thirty (30) days' prior written notice to the
other parties, upon another party's material breach of
any provision of this Agreement not otherwise
contemplated in this Article X, provided that such
breaching party has not cured such breach within 30
days of receiving said notice; or<PAGE>
PAGE 22
(i) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a
majority of the disinterested Fund Board members, that
an irreconcilable material conflict exists among the
interests of: (1) all contractowners of variable
insurance products of all separate accounts; or (2) the
interests of the Participating Insurance Companies
investing in the Fund as set forth in Article VII of
this Agreement; or
(j) at the option of Adviser, Distributors or the Fund in
the event any of the Contracts are not issued or sold
in accordance with applicable federal and/or state law
or such law precludes the use of Fund shares as the
underlying investment media of the Contracts issued or
to be issued by the Company. Termination will be
effective immediately upon such occurrence without
notice.
10.2 Notice Requirement
(a) No termination of this Agreement will be effective
unless and until the party terminating this Agreement
gives prior written notice to all other parties of its
intent to terminate, which notice will set forth the
basis for the termination.
(b) In the event that any termination of this Agreement is
based upon the provisions of Article VII, such prior
written notice will be given in advance of the
effective date of termination as required by such
provisions.
10.3 Effect of Termination
Notwithstanding the termination of this Agreement, each party
shall continue, for so long as any Contracts with values
allocated to a subaccount of the Account invested in a
Designated Portfolio on the date of termination remain
outstanding (hereinafter referred to as "Existing
Contracts"), to perform such of its duties hereunder as are
necessary to ensure the continued tax deferred status of and
the payment of benefits under the Existing Contracts, except
to the extent proscribed by law, the SEC or other regulatory
body. Specifically, without limitation, the Owners of
Existing Contracts will be permitted to reallocate
investments in the Portfolios (as in effect on such date),
redeem investments in the Portfolios and/or invest in the
Portfolios upon the making of additional purchase payments
under the Existing Contracts.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each
party's obligations under Article VIII to indemnify other
parties will survive and not be affected by any termination
of this Agreement. In addition, with respect to Existing
Contracts, all provisions of this Agreement will survive and <PAGE>
PAGE 23
not be affected by any termination of this Agreement except
Section 3.1(b) hereof.
ARTICLE XI. Notices
All notices hereunder shall be given in writing (and shall be
deemed to have been duly given upon receipt) by delivery in person,
by facsimile, by registered or certified mail or by overnight
delivery to the respective parties at the address of such party set
forth below or at such other address as such party may from time to
time specify in writing to the other parties.
If to the Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Jim Mortensen
Manager-Product Development
With a simultaneous copy to:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Mary Ellyn Minenko
Counsel
If to the Fund:
Strong Short-Term Bond Fund II
100 Heritage Reserve
Milwaukee, WI 53051
Attn: General Counsel
If to the Adviser:
Strong Capital Management, Inc.
100 Heritage Reserve
Milwaukee, WI 53051
Attn: General Counsel
If to Distributors:
Strong Funds Distributors, Inc.
100 Heritage Reserve
Milwaukee, WI 53051
Attn: General Counsel
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims
against the Fund as neither the directors, officers,
partners, employees, agents or shareholders assume any
personal liability for obligations entered into on behalf of
the Fund.
12.2 The Fund and the Adviser acknowledge that the identities of
the customers of the Company or any of its affiliates
(collectively the "Protected Parties" for purposes of this <PAGE>
PAGE 24
Section 12.2), information maintained regarding those
customers, and all computer programs and procedures or other
information developed or used by the Protected Parties or any
of their employees or agents in connection with the Company's
performance of its duties under this Agreement are the
valuable property of the Protected Parties. The Fund and the
Adviser agree that if they come into possession of any list
or compilation of the identities of or other information
about the Protected Parties' customers, or any other
information or property of the Protected Parties, other than
such information as may be independently developed or
compiled by the Fund or the Adviser from information supplied
to them by the Protected Parties' customers who also maintain
accounts directly with the Fund or the Adviser, the Fund and
the Adviser will hold such information or property in
confidence and refrain from using, disclosing or distributing
any of such information or other property except: (a) with
the Company's prior written consent; or (b) as required by
law or judicial process, unless such information or property
has come into the public domain. The Fund and the Adviser
acknowledge that any breach of the agreements in this Section
12.2 would result in immediate and irreparable harm to the
Protected Parties for which there would be no adequate remedy
at law and agree that in the event of such a breach, the
Protected Parties will be entitled to equitable relief by way
of temporary and permanent injunctions, as well as such other
relief as any court of competent jurisdiction deems
appropriate.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction
or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute
one and the same instrument.
12.5 If any provision of this Agreement will be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto
without the prior written consent of all the parties.
12.7 Each party to this Agreement will cooperate with each other
party and all appropriate governmental authorities (including
without limitation the SEC, the NASD and state insurance
regulators) and will permit each other and such authorities
reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. The Fund agrees that
the Company will have the right to inspect, audit and copy
all records pertaining to the performance of services under
this Agreement pursuant to the requirements of any state
insurance department. Each party hereto grants to the other
the right to audit at the expense of the party requesting the
audit, its records relating to the terms and conditions of <PAGE>
PAGE 25
this Agreement upon reasonable notice during reasonable
business hours in order to confirm compliance with this
Agreement.
12.8 Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all
necessary corporate or board action, as applicable, by such
party and when so executed and delivered this Agreement will
be the valid and binding obligation of such party enforceable
in accordance with its terms.
12.9 The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating
to the Contracts, the Accounts or the Designated Portfolios
of the Fund or other applicable terms of this Agreement.
12.10 In any dispute arising hereunder, each party waives its right
to demand a trial by jury and hereby consents to a bench
trial of all such disputes.
12.11 No modification of any provision of this Agreement will be
binding unless in writing and executed by the party to be
bound thereby. No waiver of any provision of this Agreement
will be binding unless in writing and executed by the party
granting such waiver. Any valid waiver of a provision set
forth herein shall not constitute a waiver of any other
provision of this Agreement. In addition, any such waiver
shall constitute a present waiver of such provision and shall
not constitute a permanent future waiver of such provision.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed
hereto as of the date specified below.
AMERICAN CENTURION LIFE
ASSURANCE COMPANY
SEAL By:
Name:
Title:
ATTEST
By:
Name:
Title
<PAGE>
PAGE 26
STRONG VARIABLE INSURANCE
FUNDS, INC.
SEAL By:
Name:
Title:
STRONG CAPITAL
MANAGEMENT, INC.
SEAL By:
Name:
Title:
STRONG FUNDS
DISTRIBUTORS, INC.
SEAL By:
Name:
Title:
<PAGE>
PAGE 27
Schedule 1
PARTICIPATION AGREEMENT
By and Among
AMERICAN CENTURION LIFE ASSURANCE COMPANY
And
STRONG VARIABLE INSURANCE FUNDS, INC.
And
STRONG CAPITAL MANAGEMENT, INC.
And
STRONG FUNDS DISTRIBUTORS, INC.
The following separate accounts of American Centurion Life
Assurance Company are permitted in accordance with the provisions
of this Agreement to invest in Designated Portfolios of the Fund
shown in Schedule 2:
ACL Variable Annuity Account 1, established October 12, 1995.
________, 1996
<PAGE>
PAGE 28
Schedule 2
PARTICIPATION AGREEMENT
By and Among
AMERICAN CENTURION LIFE ASSURANCE COMPANY
And
STRONG VARIABLE INSURANCE FUNDS, INC.
And
STRONG CAPITAL MANAGEMENT, INC.
And
STRONG FUNDS DISTRIBUTORS, INC.
The Separate Account(s) shown on Schedule 1 may invest in the
following Designated Portfolios of Strong Variable Insurance Funds,
Inc.:
Strong Short Term Bond Fund II.
________, 1996
<PAGE>
PAGE 1
PARTICIPATION AGREEMENT
By and Among
AMERICAN CENTURION LIFE ASSURANCE COMPANY
And
WARBURG PINCUS TRUST
And
WARBURG, PINCUS COUNSELLORS, INC.
And
COUNSELLORS SECURITIES INC.
THIS AGREEMENT, made and entered into this ____ day of ______,
199_, by and among American Centurion Life Assurance Company,
organized under the laws of the State of New York (the "Company"),
on its own behalf and on behalf of each separate account of the
Company named in Schedule 1 to this Agreement, as may be amended
from time to time (each account referred to as the "Account"),
Warburg Pincus Trust, an open-end management investment company and
business trust organized under the laws of the Commonwealth of
Massachusetts (the "Fund"); Warburg, Pincus Counsellors, Inc. a
corporation organized under the laws of the State of Delaware (the
"Adviser"); and Counsellors Securities Inc., a corporation
organized under the laws of the State of New York ("CSI").
WHEREAS, the Fund engages in business as an open-end management
investment company and was established for the purpose of serving
as the investment vehicle for separate accounts established for
variable life insurance contracts and variable annuity contracts to
be offered by insurance companies that have entered into
participation agreements similar to this Agreement (the
"Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular
managed portfolio of securities and other assets (the
"Portfolios"); and
WHEREAS, the Fund has received an order from the Securities &
Exchange Commission (the "SEC") granting Participating Insurance
Companies and variable annuity separate accounts and variable life
insurance separate accounts relief from the provisions of Sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of
1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-
3(T)(b)(15) thereunder, to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity separate
accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans outside of the separate
account context (the "Mixed and Shared Funding Exemptive Order").
The parties to this Agreement agree that the conditions or
undertakings specified in the Mixed and Shared Funding Exemptive
Order and that may be imposed on the Company, the Fund, the Adviser
and/or CSI by virtue of the receipt of such order by the SEC will
be incorporated herein by reference, and such parties agree to
comply with such conditions and undertakings to the extent
applicable to each such party; and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are <PAGE>
PAGE 2
registered under the Securities Act of 1933, as amended (the " 1933
Act"); and
WHEREAS, the Company has registered or will register certain
variable annuity contracts (the "Contracts") under the 1933 Act;
and
WHEREAS, the Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of
Directors of the Company under the insurance laws of the State of
New York, to set aside and invest assets attributable to the
Contracts; and
WHEREAS, the Company has registered the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, CSI, the Fund's distributor, is registered as a broker-
dealer with the SEC under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the
Portfolios named in Schedule 2, as such schedule may be amended
from time to time (the "Designated Portfolios") on behalf of the
Account to fund the Contracts, and the Fund is authorized to sell
such shares to unit investment trusts such as the Account at net
asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund, the Adviser and CSI agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Fund agrees to sell to the Company those shares of the
Designated Portfolios that each Account orders, executing
such orders on a daily basis at the net asset value next
computed after receipt and acceptance by the Fund or its
designee of the order for the shares of the Fund. For
purposes of this Section 1.1, the Company will be the
designee of the Fund for receipt of such orders from each
Account and receipt by such designee will constitute receipt
by the Fund; provided that the Fund receives notice of such
order by 10:00 a.m. Eastern Time on the next following
business day ("T+1"). "Business Day" will mean any day on
which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the
rules of the SEC.
1.2 The Company will pay for Fund shares on T+1 that an order to
purchase Fund shares is made in accordance with Section 1.1
above. Payment will be in federal funds transmitted by wire.
This wire transfer will be initiated by 12:00 p.m. Eastern
Time.
1.3 The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable net asset value per
share by Participating Insurance Companies and their <PAGE>
PAGE 3
separate accounts on those days on which the Fund calculates
its Designated Portfolio net asset value pursuant to rules of
the SEC; provided, however, that the Board of Trustees of the
Fund (the "Fund Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering
of shares of any Portfolio if such action is required by law
or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Fund Board, acting in good faith
and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of such Portfolio.
1.4 On each Business Day on which the Fund calculates its net
asset value, the Company will aggregate and calculate the net
purchase or redemption orders for each Account maintained by
the Fund in which contractowner assets are invested. Net
orders will only reflect orders that the Company has received
prior to the close of regular trading on the New York Stock
Exchange, Inc. (the "NYSE") (currently 4:00 p.m., Eastern
Time) on that Business Day. Orders that the Company has
received after the close of regular trading on the NYSE will
be treated as though received on the next Business Day. Each
communication of orders by the Company will constitute a
representation that such orders were received by it prior to
the close of regular trading on the NYSE on the Business Day
on which the purchase or redemption order is priced in
accordance with Rule 22c-1 under the 1940 Act. Other
procedures relating to the handling of orders will be in
accordance with the prospectus and statement of additional
information of the relevant Designated Portfolio or with oral
or written instructions that CSI or the Fund will forward to
the Company from time to time.
1.5 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate
accounts, qualified pension and retirement plans or such
other persons as are permitted under applicable provisions of
the Internal Revenue Code of 1986, as amended, (the "Internal
Revenue Code"), and regulations promulgated thereunder, the
sale to which will not impair the tax treatment currently
afforded the Contracts. No shares of any Portfolio will be
sold to the general public except as set forth in this
Section 1.5.
1.6 The Fund agrees to redeem for cash, upon the Company's
request, any full or fractional shares of the Fund held by
the Company, executing such requests on a daily basis at the
net asset value next computed after receipt and acceptance by
the Fund or its agent of the request for redemption. For
purposes of this Section 1.6, the Company will be the
designee of the Fund for receipt of requests for redemption
from each Account and receipt by such designee will
constitute receipt by the Fund, provided the Fund receives
notice of request for redemption by 10:00 a.m. Eastern Time
on the next following Business Day. Payment will be in
federal funds transmitted by wire to the Company's account as
designated by the Company in writing from time to time, on
the same Business Day the Fund receives notice of the <PAGE>
PAGE 4
redemption order from the Company. The Fund reserves the
right to delay payment of redemption proceeds, but in no
event may such payment be delayed longer than the period
permitted by the 1940 Act. The Fund will not bear any
responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds; the Company alone will be
responsible for such action. If notification of redemption is
received after 10:00 a.m. Eastern Time, payment for redeemed
shares will be made on the next following Business Day.
1.7 The Company agrees to purchase and redeem the shares of the
Designated Portfolios offered by the then current prospectus
of the Fund in accordance with the provisions of such
prospectus.
1.8 Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the
Company or any Account. Purchase and redemption orders for
Fund shares will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund will furnish same day notice (by telecopier,
followed by written confirmation) to the Company of the
declaration of any income, dividends or capital gain
distributions payable on each Designated Portfolio's shares.
The Company hereby elects to receive all such dividends and
distributions as are payable on the Designated Portfolio
shares in the form of additional shares of that Designated
Portfolio. The Fund will notify the Company of the number of
shares so issued as payment of such dividends and
distributions. The Company reserves the right to revoke this
election upon reasonable prior notice to the Fund and to
receive all such dividends and distributions in cash.
1.10 The Fund will make the net asset value per share for each
Designated Portfolio available to the Company on a daily
basis as soon as reasonably practical after the net asset
value per share is calculated and will use its best efforts
to make such net asset value per share available by 6:00
p.m., Eastern Time, but in no event later than 7:00 p.m.,
Eastern Time, each business day.
1.11 In the event adjustments are required to correct any error in
the computation of the net asset value of the Fund's shares,
the Fund or CSI will notify the Company as soon as
practicable after discovering the need for those adjustments
that result in an aggregate reimbursement of $150 or more to
any one Account maintained by a Designated Portfolio (or, if
greater, result in an adjustment of $10 or more to each
contractowner's account). Any such notice will state for each
day for which an error occurred the incorrect price, the
correct price and, to the extent communicated to the Fund's
shareholders, the reason for the price change. The Company
may send this notice or a derivation thereof (so long as such
derivation is approved in advance by CSI or the Adviser) to
contractowners whose accounts are affected by the price
change. The parties will negotiate in good faith to develop a
reasonable method for effecting such adjustments.<PAGE>
PAGE 5
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act and that the Contracts
will be issued and sold in compliance with all applicable
federal and state laws, including state insurance suitability
requirements. The Company further represents and warrants
that it is an insurance company duly organized and in good
standing under applicable law and that it has legally and
validly established each Account as a separate account under
applicable state law and has registered the Account as a unit
investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the
Contracts, and that it will maintain such registration for so
long as any Contracts are outstanding. The Company will amend
the registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act
for the Account from time to time as required in order to
effect the continuous offering of the Contracts or as may
otherwise be required by applicable law. The Company will
register and qualify the Contracts for sale in accordance
with the securities laws of any state only if and to the
extent deemed necessary by the Company.
2.2 The Company represents that the Contracts are currently and
at the time of issuance will be treated as annuity contracts
under applicable provisions of the Internal Revenue Code, and
that it will make every effort to maintain such treatment and
that it will notify the Fund and the Adviser immediately upon
having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so
treated in the future.
2.3 The Company represents and warrants that it will not purchase
shares of the Designated Portfolios with assets derived from
tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
2.4 The Fund represents and warrants that Fund shares of the
Designated Portfolios sold pursuant to this Agreement will be
registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund
is and will remain registered under the 1940 Act for as long
as such shares of the Designated Portfolios are sold. The
Fund will amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its
shares. The Fund will register and qualify the shares of the
Designated Portfolios for sale in accordance with the laws of
any state only if and to the extent deemed advisable by the
Fund.
2.5 The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the
Internal Revenue Code, and that it will make every effort to
maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify the
Company immediately upon having a reasonable basis for <PAGE>
PAGE 6
believing that it has ceased to so qualify or that it might
not so qualify in the future.
2.6 The Fund represents and warrants that in performing the
services described in this Agreement, the Fund will comply
with all applicable laws, rules and regulations. The Fund
makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses
and investment policies, objectives and restrictions)
complies with the insurance laws and regulations of any
state. The Fund and CSI agree that upon request they will use
their best efforts to furnish the information required by
state insurance laws so that the Company can obtain the
authority needed to issue the Contracts in any applicable
state.
2.7 The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under
the 1940 Act, although it reserves the right to make such
payments in the future. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the
Fund undertakes to have its Fund Board, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses in
accordance with the 1940 Act.
2.8 CSI represents and warrants that it will distribute the Fund
shares of the Designated Portfolios in accordance with all
applicable federal and state securities laws including,
without limitation, the 1933 Act, the 1934 Act and the 1940
Act.
2.9 The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts
and that it does and will comply in all material respects
with applicable provisions of the 1940 Act.
2.10 CSI represents and warrants that it is and will remain duly
registered under all applicable federal and state securities
laws and that it will perform its obligations for the Fund in
accordance in all material respects with any applicable state
and federal securities laws.
2.11 The Fund and CSI represent and warrant that all of their
trustees, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or
securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for
the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the
1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding
company.
ARTICLE III. Prospectus and Proxy Statements; Voting
3.1 The Fund or CSI will provide the Company, at the Fund's or
its affiliate's expense, with as many copies of the current <PAGE>
PAGE 7
Fund prospectus for the Designated Portfolios as the Company
may reasonably request for distribution, at the Company's
expense, to prospective contractowners and applicants. The
Fund or CSI will provide, at the Fund's or its affiliate's
expense, as many copies of said prospectus as necessary for
distribution, at the Company's expense, to existing
contractowners. The Fund or CSI will provide the copies of
said prospectus to the Company or to its mailing agent. If
requested by the Company in lieu thereof, the Fund or CSI
will provide such documentation, including a computer
diskette or a final copy of a current prospectus set in type
at the Fund's or its affiliate's expense, and such other
assistance as is reasonably necessary in order for the
Company at least annually (or more frequently if the Fund
prospectus is amended more frequently) to have the Fund's
prospectus and the prospectuses of other mutual funds in
which assets attributable to the Contracts may be invested
printed together in one document, in which case the Fund or
its affiliate will bear its reasonable share of expenses as
described above, allocated based on the proportionate number
of pages of the Fund's and other funds' respective portions
of the document.
3.2 The Fund or CSI will provide the Company, at the Fund's or
its affiliate's expense, with as many copies of the statement
of additional information as the Company may reasonably
request for distribution, at the Company's expense, to
prospective contractowners and applicants. The Fund or CSI
will provide, at the Fund's or its affiliate's expense, as
many copies of said statement of additional information as
necessary for distribution, at the Company's expense, to any
existing contractowner who requests such statement or
whenever state or federal law otherwise requires that such
statement be provided. The Fund or CSI will provide the
copies of said statement of additional information to the
Company or to its mailing agent.
3.3 The Fund or CSI, at the Fund's or its affiliate's expense,
will provide the Company or its mailing agent with copies of
its proxy material, if any, reports to shareholders and other
communications to shareholders in such quantity as the
Company will reasonably require. The Company will distribute
this proxy material, reports and other communications to
existing contractowners and tabulate the votes.
3.4 If and to the extent required by law the Company will:
(a) solicit voting instructions from contractowners;
(b) vote the shares of the Designated Portfolios held
in the Account in accordance with instructions
received from contractowners; and
(c) vote shares of the Designated Portfolios held in
the Account for which no timely instructions have
been received, as well as shares it owns, in the
same proportion as shares of such Designated
Portfolio for which instructions have been <PAGE>
PAGE 8
received from the Company's contractowners;
so long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contractowners. Except as set forth
above, the Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the
extent permitted by law. The Company will be responsible for
assuring that each of its separate accounts participating in
the Fund calculates voting privileges in a manner consistent
with all legal requirements, including the Mixed and Shared
Funding Exemptive Order.
3.5 The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular, the Fund
either will provide for annual meetings (except insofar as
the SEC may interpret Section 16 of the 1940 Act not to
require such meetings) or, as the Fund currently intends, to
comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, the Fund will act in accordance
with the SEC's interpretation of the requirements of Section
16(a) with respect to periodic elections of trustees and with
whatever rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 CSI will provide the Company on a timely basis with
investment performance information for each Designated
Portfolio in which the Company maintains an Account,
including total return for the preceding calendar month and
calendar quarter, the calendar year to date, and the prior
one-year, five-year, and ten-year (or life of the Fund)
periods. The Company may, based on the SEC-mandated
information supplied by CSI, prepare communications for
contractowners ("Contractowner Materials"). The Company will
provide copies of all Contractowner Materials concurrently
with their first use for CSI's internal recordkeeping
purposes. It is understood that neither CSI nor any
Designated Portfolio will be responsible for errors or
omissions in, or the content of, Contractowner Materials
except to the extent that the error or omission resulted from
information provided by or on behalf of CSI or the Designated
Portfolio. Any printed information that is furnished to the
Company other than each Designated Portfolio's prospectus or
statement of additional information (or information
supplemental thereto), periodic reports and proxy
solicitation materials is CSI's sole responsibility and not
the responsibility of any Designated Portfolio or the Fund.
The Company agrees that the Portfolios, the shareholders of
the Portfolios and the officers and governing Board of the
Fund will have no liability or responsibility to the Company
in these respects.
4.2 The Company will not give any information or make any
representations or statements on behalf of the Fund or
concerning the Fund in connection with the sale of the<PAGE>
PAGE 9
Contracts other than the information or representations
contained in the registration statement, prospectus or
statement of additional information for Fund shares, as such
registration statement, prospectus and statement of
additional information may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund,
or in published reports for the Fund which are in the public
domain or approved by the Fund or CSI for distribution, or in
sales literature or other material provided by the Fund or by
CSI, except with permission of the Fund or CSI. The Fund and
CSI agree to respond to any request for approval on a prompt
and timely basis. Nothing in this Section 4.2 will be
construed as preventing the Company or its employees or
agents from giving advice on investment in the Fund.
4.3 The Fund, the Adviser or CSI will furnish, or will cause to
be furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the
Company or its Account is named, at least ten (10) business
days prior to its use. No such material will be used if the
Company reasonably objects to such use within five (5)
business days after receipt of such material.
4.4 The Fund, the Adviser and CSI will not give any information
or make any representations or statements on behalf of the
Company or concerning the Company, each Account, or the
Contracts other than the information or representations
contained in a registration statement, prospectus or
statement of additional information for the Contracts, as
such registration statement, prospectus and statement of
additional information may be amended or supplemented from
time to time, or in published reports for each Account or the
Contracts which are in the public domain or approved by the
Company for distribution to contractowners, or in sales
literature or other material provided by the Company, except
with permission of the Company. The Company agrees to respond
to any request for approval on a prompt and timely basis.
4.5 The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, statements
of additional information, reports, proxy statements, sales
literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or
its shares, contemporaneously with the filing of such
document with the SEC, the NASD or other regulatory
authority.
4.6 The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, statements
of additional information, reports, solicitations for voting
instructions, sales literature and other promotional
materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that
relate to the Contracts or each Account, contemporaneously
with the filing of such document with the SEC, the NASD or
other regulatory authority.
<PAGE>
PAGE 10
4.7 For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited
to, advertisements (such as material published, or designed
for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other
public media, (e.g., on-line networks such as the Internet or
other electronic messages), sales literature (i.e., any
written communication distributed or made generally available
to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training
materials or other communications distributed or made
generally available to some or all agents or employees,
registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy
materials and any other material constituting sales
literature or advertising under the NASD rules, the 1933 Act
or the 1940 Act.
4.8 The Fund and CSI hereby consent to the Company's use of the
names Warburg Pincus Trust - Post Venture Capital Portfolio
and Warburg, Pincus Counsellors, Inc. in connection with the
marketing of the Contracts, subject to the terms of Sections
4.1 and 4.2 of this Agreement. Such consent will terminate
with the termination of this Agreement.
ARTICLE V. Fees and Expenses
5.1 The Fund, the Adviser and CSI will pay no fee or other
compensation to the Company under this Agreement except if
the Fund or any Designated Portfolio adopts and implements a
plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses, then, subject to obtaining any
required exemptive orders or other regulatory approvals, the
Fund may make payments to the Company or to the underwriter
for the Contracts if and in such amounts agreed to by the
Fund in writing.
5.2 All expenses incident to performance by the Fund of this
Agreement will be paid by the Fund to the extent permitted by
law. The Fund will bear the expenses for the cost of
registration and qualification of the Fund's shares;
preparation and filing of the Fund's prospectus, statement of
additional information and registration statement, proxy
materials and reports; setting in type and printing the
Fund's prospectus; setting in type and printing proxy
materials and reports by it to contractowners (including the
costs of printing a Fund prospectus that constitutes an
annual report); the preparation of all statements and notices
required by any federal or state law; all taxes on the
issuance or transfer of the Fund's shares; any expenses
permitted to be paid or assumed by the Fund pursuant to a
plan, if any, under Rule 12b-1 under the 1940 Act; and all
other expenses set forth in Article III of this Agreement.
<PAGE>
PAGE 11
ARTICLE VI. Diversification
6.1 The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated
as variable annuity contracts under the Internal Revenue Code
and the regulations issued thereunder. Without limiting the
scope of the foregoing, the Fund will comply with Section
817(h) of the Internal Revenue Code and Treasury Regulation
1.817-5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment,
or life insurance contracts and any amendments or other
modifications to such Section or Regulation. In the event of
a breach of this Article VI by the Fund, it will take all
reasonable steps: (a) to notify the Company of such breach;
and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury
Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1 The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the
contractowners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-
action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting
instructions given by Participating Insurance Companies or by
variable annuity and variable life insurance contractowners;
or (f) a decision by an insurer to disregard the voting
instructions of contractowners. The Fund Board will promptly
inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2 The Company will report any potential or existing conflicts
of which it is aware to the Fund Board. The Company agrees to
assist the Fund Board in carrying out its responsibilities,
as delineated in the Mixed and Shared Funding Exemptive
Order, by providing the Fund Board with all information
reasonably necessary for the Fund Board to consider any
issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Fund Board whenever
contractowner voting instructions are to be disregarded. The
Company's responsibilities hereunder will be carried out with
a view only to the interest of contractowners.
7.3 If it is determined by a majority of the Fund Board, or a
majority of its disinterested directors, that an
irreconcilable material conflict exists, the Company will, at
its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors),
take whatever steps are necessary to remedy or eliminate the <PAGE>
PAGE 12
irreconcilable material conflict, up to and including: (a)
withdrawing the assets allocable to some or all of the
Accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a
vote of all affected contractowners and, as appropriate,
segregating the assets of any appropriate group (i.e.,
variable annuity contractowners or variable life insurance
contractowners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or
offering to the affected contractowners the option of making
such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard contractowner voting
instructions, and the Company's judgment represents a
minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw
the affected subaccount of the Account's investment in the
Fund and terminate this Agreement with respect to such
subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a
majority of the disinterested directors of the Fund Board. No
charge or penalty will be imposed as a result of such
withdrawal.
7.5 If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state
insurance regulators, then the Company will withdraw the
affected subaccount of the Account's investment in the Fund
and terminate this Agreement with respect to such subaccount;
provided, however, that such withdrawal and termination will
be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority
of the disinterested directors of the Fund Board. No charge
or penalty will be imposed as a result of such withdrawal.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board will
determine whether any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the
Fund or the Adviser (or any other investment adviser to the
Fund) be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.3 to
establish a new funding medium for the Contracts if an offer
to do so has been declined by vote of a majority of
contractowners materially affected by the irreconcilable
material conflict.
7.7 The Company will at least annually submit to the Fund Board
such reports, materials or data as the Fund Board may
reasonably request so that the Fund Board may fully carry out
the duties imposed upon it as delineated in the Mixed and
Shared Funding Exemptive Order, and said reports, materials <PAGE>
PAGE 13
and data will be submitted more frequently if deemed
appropriate by the Fund Board.
7.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief
from any provision of the 1940 Act or the rules promulgated
thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on
terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order,
then: (a) the Fund and/or the Participating Insurance
Companies, as appropriate, will take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as amended,
and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the
extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the
Fund, the Adviser, CSI, and each person, if any, who
controls or is associated with the Fund, the Adviser or
CSI within the meaning of such terms under the federal
securities laws and any director, trustee, officer,
partner, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes
of this Section 8.1) against any and all losses,
claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal
and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(1) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Contracts or contained in the
Contracts or sales literature or other
promotional material for the Contracts (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided
that this agreement to indemnify will not apply
as to any Indemnified Party if such statement or
omission or such alleged statement or omission
was made in reliance upon and in conformity with <PAGE>
PAGE 14
written information furnished to the Company by
the Fund, the Adviser or CSI for use in the
registration statement, prospectus or statement
of additional information for the Contracts or in
the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company or
wrongful conduct of the Company or persons under
its control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
the Fund registration statement, prospectus,
statement of additional information or sales
literature or other promotional material of the
Fund (or amendment or supplement) or the omission
or alleged omission to state therein a material
fact required to be stated therein or necessary
to make such statements not misleading in light
of the circumstances in which they were made, if
such a statement or omission was made in reliance
upon and in conformity with information furnished
to the Fund by or on behalf of the Company or
persons under its control; or
(4) arise as a result of any failure by the Company
to provide the services and furnish the materials
under the terms of this Agreement; or
(5) arise out of any material breach of any
representation and/or warranty made by the
Company in this Agreement or arise out of or
result from any other material breach by the
Company of this Agreement;
except to the extent provided in Sections 8.1(b) and
8.4 hereof. This indemnification will be in addition to
any liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under
Section 8.1(a) to the extent such loss, claim, damage,
liability or litigation is due to the willful
misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this
Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this
Agreement by the party seeking indemnification.
(c) The Indemnified Parties promptly will notify the
Company of the commencement of any litigation,
proceedings, complaints or actions by regulatory
authorities against them in connection with the
issuance or sale of the Fund shares or the Contracts <PAGE>
PAGE 15
or the operation of the Fund.
8.2 Indemnification By The Adviser, the Fund and CSI
(a) The Adviser, the Fund and CSI, in each case solely to
the extent relating to such party's responsibilities
hereunder, agree to indemnify and hold harmless the
Company and each person, if any, who controls or is
associated with the Company within the meaning of such
terms under the federal securities laws and any
director, trustee, officer, partner, employee or agent
of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any
and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written
consent of the Adviser) or litigation (including
reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Fund or sales literature or
other promotional material of the Fund (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided
that this agreement to indemnify will not apply
as to any Indemnified Party if such statement or
omission or such alleged statement or omission
was made in reliance upon and in conformity with
information furnished to the Adviser, CSI or the
Fund by or on behalf of the Company for use in
the registration statement, prospectus or
statement of additional information for the Fund
or in sales literature of the Fund (or any
amendment or supplement thereto) or otherwise for
use in connection with the sale of the Contracts
or Fund shares; or
(2) arise out of or as a result of statements or
representations or wrongful conduct of the
Adviser, the Fund or CSI or persons under the
control of the Adviser, the Fund or CSI
respectively, with respect to the sale of the
Fund shares; or
(3) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
a registration statement, prospectus, statement
of additional information or sales literature or <PAGE>
PAGE 16
other promotional material covering the Contracts
(or any amendment or supplement thereto), or the
omission or alleged omission to state therein a
material fact required to be stated or necessary
to make such statement or statements not
misleading in light of the circumstances in which
they were made, if such statement or omission was
made in reliance upon and in conformity with
written information furnished to the Company by
the Adviser, the Fund or CSI or persons under the
control of the Adviser, the Fund or CSI; or
(4) arise as a result of any failure by the Fund, the
Adviser or CSI to provide the services and
furnish the materials under the terms of this
Agreement (including a failure, whether
unintentional or in good faith or otherwise, to
comply with the diversification requirements and
procedures related thereto specified in Article
VI of this Agreement); or
(5) arise out of or result from any material breach
of any representation and/or warranty made by the
Adviser, the Fund or CSI in this Agreement, or
arise out of or result from any other material
breach of this Agreement by the Adviser, the Fund
or CSI;
except to the extent provided in Sections 8.2(b) and
8.4 hereof.
(b) No party will be entitled to indemnification under
Section 8.2(a) to the extent such loss, claim, damage,
liability or litigation is due to the willful
misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this
Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this
Agreement by the party seeking indemnification.
(c) The Indemnified Parties will promptly notify the
Adviser, the Fund and CSI of the commencement of any
litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with
the issuance or sale of the Contracts or the operation
of the Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this
Article VIII ("Indemnifying Party" for the purpose of this
Section 8.4) will not be liable under the indemnification
provisions of this Article VIII with respect to any claim
made against a party entitled to indemnification under this
Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) unless such Indemnified Party will have notified
the Indemnifying Party in writing within a reasonable time
after the summons or other first legal process giving <PAGE>
PAGE 17
information of the nature of the claim will have been served
upon such Indemnified Party (or after such party will have
received notice of such service on any designated agent), but
failure to notify the Indemnifying Party of any such claim
will not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of the
indemnification provision of this Article VIII, except to the
extent that the failure to notify results in the failure of
actual notice to the Indemnifying Party and such Indemnifying
Party is damaged solely as a result of failure to give such
notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to
participate, at its own expense, in the defense thereof. The
Indemnifying Party also will be entitled to assume the
defense thereof, with counsel satisfactory to the party named
in the action. After notice from the Indemnifying Party to
the Indemnified Party of the Indemnifying Party's election to
assume the defense thereof, the Indemnified Party will bear
the fees and expenses of any additional counsel retained by
it, and the Indemnifying Party will not be liable to such
party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in
connection with the defense thereof other than reasonable
costs of investigation, unless: (a) the Indemnifying Party
and the Indemnified Party will have mutually agreed to the
retention of such counsel; or (b) the named parties to any
such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential offering interests
between them. The Indemnifying Party will not be liable for
any settlement of any proceeding effected without its written
consent but if settled with such consent or if there is a
final judgment for the plaintiff, the Indemnifying Party
agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or
judgment. A successor by law of the parties to this Agreement
will be entitled to the benefits of the indemnification
contained in this Article VIII. The indemnification
provisions contained in this Article VIII will survive any
termination of this Agreement.
ARTICLE IX. Applicable Law
9.1 This Agreement will be construed and the provisions hereof
interpreted under and in accordance with the laws of the
State of Minnesota.
9.2 This Agreement will be subject to the provisions of the 1933
Act, the 1934 Act and the 1940 Act, and the rules and
regulations and rulings thereunder, including such exemptions
from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof will be
interpreted and construed in accordance therewith.
<PAGE>
PAGE 18
ARTICLE X. Termination
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to some or all of the Designated Portfolios,
upon ninety (90) days' advance written notice to the
other parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC,
unless otherwise agreed in a separate written agreement
among the parties; or
(b) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with
respect to any Designated Portfolio if shares of the
Designated Portfolio are not reasonably available to
meet the requirements of the Contracts as determined in
good faith by the Company; or
(c) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with
respect to any Designated Portfolio in the event any of
the Designated Portfolio's shares are not registered,
issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of
such shares as the underlying investment media of the
Contracts issued or to be issued by Company; or
(d) at the option of the Fund, upon receipt of the Fund's
written notice by the other parties, upon institution
of formal proceedings against the Company by the NASD,
the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the
Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund
shares, provided that the Fund determines in its sole
judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the
Company's ability to perform its obligations under this
Agreement; or
(e) at the option of the Company, upon receipt of the
Company's written notice by the other parties, upon
institution of formal proceedings against the Fund or
CSI by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body,
provided that the Company determines in its sole
judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the
Fund's or CSI's ability to perform its obligations
under this Agreement; or
(f) at the option of the Company, upon receipt of the
Company's written notice by the other parties, if the
Fund ceases to qualify as a Regulated Investment
Company under Subchapter M of the Internal Revenue
Code, or under any successor or similar provision, or <PAGE>
PAGE 19
if the Company reasonably and in good faith believes
that the Fund may fail to so qualify; or
(g) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with
respect to any Designated Portfolio if the Fund fails
to meet the diversification requirements specified in
Article VI hereof or if the Company reasonably and in
good faith believes the Fund may fail to meet such
requirements; or
(h) at the option of any party to this Agreement, upon
written notice to the other parties, upon another
party's material breach of any provision of this
Agreement; or
(i) at the option of the Company, if the Company determines
in its sole judgment exercised in good faith, that
either the Fund, the Adviser or CSI has suffered a
material adverse change in its business, operations or
financial condition since the date of this Agreement or
is the subject of material adverse publicity which is
likely to have a material adverse impact upon the
business and operations of the Company, such
termination to be effective sixty (60) days' after
receipt by the other parties of written notice of the
election to terminate; or
(j) at the option of the Fund or CSI, if the Fund or CSI
respectively, determines in its sole judgment exercised
in good faith, that the Company has suffered a material
adverse change in its business, operations or financial
condition since the date of this Agreement or is the
subject of material adverse publicity which is likely
to have a material adverse impact upon the business and
operations of the Fund or the Adviser, such termination
to be effective sixty (60) days' after receipt by the
other parties of written notice of the election to
terminate; or
(k) at the option of the Company or the Fund upon receipt
of any necessary regulatory approvals and/or the vote
of the contractowners having an interest in the Account
(or any subaccount) to substitute the shares of another
investment company for the corresponding Designated
Portfolio shares of the Fund in accordance with the
terms of the Contracts for which those Designated
Portfolio shares had been selected to serve as the
underlying investment media. The Company will give
sixty (60) days' prior written notice to the Fund of
the date of any proposed vote or other action taken to
replace the Fund's shares; or
(l) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a
majority of the disinterested Fund Board members, that
an irreconcilable material conflict exists among the
interests of: (1) all contractowners of variable <PAGE>
PAGE 20
insurance products of all separate accounts; or (2) the
interests of the Participating Insurance Companies
investing in the Fund as set forth in Article VII of
this Agreement; or
(m) at the option of the Fund in the event any of the
Contracts are not issued or sold in accordance with
applicable federal and/or state law. Termination will
be effective immediately upon such occurrence without
notice.
10.2 Notice Requirement
No termination of this Agreement will be effective unless and
until the party terminating this Agreement gives prior
written notice to all other parties of its intent to
terminate, which notice will set forth the basis for the
termination.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund
and CSI will, at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect
on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts.") .
Specifically, without limitation, the owners of the Existing
Contracts will be permitted to reallocate investments in the
Portfolios (as in effect on such date), redeem investments in
the Portfolios and/or invest in the Portfolios upon the
making of additional purchase payments under the Existing
Contracts.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each
party's obligations under Article VIII to indemnify other
parties will survive and not be affected by any termination
of this Agreement. In addition, each party's obligations
under Section 12.7 will survive and not be affected by any
termination of this Agreement. Finally, with respect to
Existing Contracts, all provisions of this Agreement also
will survive and not be affected by any termination of this
Agreement.
ARTICLE XI. Notices
11.1 Any notice will be deemed duly given when sent by registered
or certified mail to the other party at the address of such
party set forth below or at such other address as such party
may from time to time specify in writing to the other
parties.
<PAGE>
PAGE 21
If to the Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Jim Mortensen
Manager-Product Development
With a simultaneous copy to:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attn: Mary Ellyn Minenko
Counsel
If to the Fund, the Adviser and/or CSI:
466 Lexington Avenue
New York, NY 10017
Attn: Eugene P. Grace
Senior Vice President
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims
against the Fund as neither the directors, trustees,
officers, partners, employees, agents or shareholders assume
any personal liability for obligations entered into on behalf
of the Fund. No Portfolio or series of the Fund will be
liable for the obligations or liabilities of any other
Portfolio or series.
12.2 The Fund, the Adviser and CSI acknowledge that the identities
of the customers of the Company or any of its affiliates
(collectively the "Company Protected Parties" for purposes of
this Section 12.2), information maintained regarding those
customers, and all computer programs and procedures or other
information developed or used by the Company Protected
Parties or any of their employees or agents in connection
with the Company's performance of its duties under this
Agreement are the valuable property of the Company Protected
Parties. The Fund, the Adviser and CSI agree that if they
come into possession of any list or compilation of the
identities of or other information about the Company
Protected Parties' customers, or any other information or
property of the Company Protected Parties, other than such
information as is publicly available or as may be
independently developed or compiled by the Fund, the Adviser
or CSI from information supplied to them by the Company
Protected Parties' customers who also maintain accounts
directly with the Fund, the Adviser or CSI, the Fund, the
Adviser and CSI will hold such information or property in
confidence and refrain from using, disclosing or distributing
any of such information or other property except: (a) with
the Company's prior written consent; or (b) as required by
law or judicial process. The Company acknowledges that the
identities of the customers of the Fund, the Adviser, CSI or <PAGE>
PAGE 22
any of their affiliates (collectively the "Adviser Protected
Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer
programs and procedures or other information developed or
used by the Adviser Protected Parties or any of their
employees or agents in connection with the Funds', the
Adviser's or CSI's performance of their respective duties
under this Agreement are the valuable property of the Adviser
Protected Parties. The Company agrees that if it comes into
possession of any list or compilation of the identities of or
other information about the Adviser Protected Parties'
customers, or any other information or property of the
Adviser Protected Parties, other than such information as is
publicly available or as may be independently developed or
compiled by the Company from information supplied to them by
the Adviser Protected Parties' customers who also maintain
accounts directly with the Company, the Company will hold
such information or property in confidence and refrain from
using, disclosing or distributing any of such information or
other property except: (a) with the Fund's, the Adviser's or
CSI's prior written consent; or (b) as required by law or
judicial process. Each party acknowledges that any breach of
the agreements in this Section 12.2 would result in immediate
and irreparable harm to the other parties for which there
would be no adequate remedy at law and agree that in the
event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of
competent jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction
or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute
one and the same instrument.
12.5 If any provision of this Agreement will be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto
without the prior written consent of all the parties.
12.7 Each party to this Agreement will maintain all records
required by law, including records detailing the services it
provides. Such records will be preserved, maintained and made
available to the extent required by law and in accordance
with the 1940 Act and the rules thereunder. Each party to
this Agreement will cooperate with each other party and all
appropriate governmental authorities (including without
limitation the SEC, the NASD and state insurance regulators)
and will permit each other and such authorities reasonable
access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. Upon request by the Fund <PAGE>
PAGE 23
or CSI, the Company agrees to promptly make copies or, if
required, originals of all records pertaining to the
performance of services under this Agreement available to the
Fund or CSI, as the case may be. The Fund agrees that the
Company will have the right to inspect, audit and copy all
records pertaining to the performance of services under this
Agreement pursuant to the requirements of any state insurance
department. Each party also agrees to promptly notify the
other parties if it experiences any difficulty in maintaining
the records in an accurate and complete manner. This
provision will survive termination of this Agreement.
12.8 Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all
necessary corporate or board action, as applicable, by such
party and when so executed and delivered this Agreement will
be the valid and binding obligation of such party enforceable
in accordance with its terms.
12.9 The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly,
under this agreement, will be satisfied solely out of the
assets of the Fund and that no trustee, officer, agent or
holder of shares of beneficial interest of the Fund will be
personally liable for any such liabilities.
12.10 The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating
to the Contracts, the Accounts or the Designated Portfolios
of the Fund or other applicable terms of this Agreement.
<PAGE>
PAGE 24
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed
hereto as of the date specified below.
AMERICAN CENTURION LIFE
ASSURANCE COMPANY
SEAL By:
Name:
Title:
ATTEST:
By:
Name:
Title:
WARBURG PINCUS TRUST
SEAL By:
Name:
Title:
WARBURG, PINCUS
COUNSELLORS, INC.
SEAL By:
Name:
Title:
COUNSELLORS SECURITIES
INC.
SEAL By:
Name:
Title:
<PAGE>
PAGE 25
Schedule 1
PARTICIPATION AGREEMENT
By and Among
AMERICAN CENTURION LIFE ASSURANCE COMPANY
And
WARBURG PINCUS TRUST
And
WARBURG, PINCUS COUNSELLORS, INC.
And
COUNSELLORS SECURITIES INC.
The following separate accounts of American Centurion Life
Assurance Company are permitted in accordance with the provisions
of this Agreement to invest in Designated Portfolios of the Fund
shown in Schedule 2:
ACL Variable Annuity Account 1, established October 12, 1995.
<PAGE>
PAGE 26
Schedule 2
PARTICIPATION AGREEMENT
By and Among
AMERICAN CENTURION LIFE ASSURANCE COMPANY
And
WARBURG PINCUS TRUST
And
WARBURG, PINCUS COUNSELLORS, INC.
And
COUNSELLORS SECURITIES INC.
The Separate Account(s) shown on Schedule 1 may invest in the
following Designated Portfolios of the Warburg Pincus Trust:
Post Venture Capital Portfolio
________, 199_
<PAGE>
PAGE 1
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT is made and entered into as
of ____________, 1996 by and among AMERICAN CENTURION LIFE
ASSURANCE COMPANY (the "Company") TCI PORTFOLIOS, INC. (the
"Issuer") and the investment adviser of the Issuer, INVESTORS
RESEARCH CORPORATION ("Investors Research").
WHEREAS, the Company offers to the public certain qualified
and nonqualified variable annuity contracts (collectively, the
"Contracts"), which the Company has registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company wishes to offer as investment options
under the Contracts, TCI Growth and TCI Value (collectively the
"Fund"), a series of mutual fund shares registered under the
Investment Company act of 1940, as amended (the "1940 Act"), and
issued by the Issuer; and
WHEREAS, on the terms and conditions hereinafter set forth,
Investors Research and the Issuer desire to make shares of the
Funds available as investment options under the Contracts;
NOW, THEREFORE, the Company, the Issuer and Investors Research
agree as follows:
1. Transactions in the Funds. Subject to the terms and
conditions of this Agreement, The Issuer will make shares of the
Funds available to be purchased, exchanged, or redeemed, by the
Company on behalf of the Account (defined in Section 6(a) below)
through a single account per Fund at the net asset value applicable
to each order. The Funds' shares shall be purchased and redeemed
on a net basis in such quantity and at such time as determined by
the Company to satisfy the requirements of the Contracts for which
the Funds serve as underlying investment media. Dividends and
capital gains distributions will be automatically reinvested in
full and fractional shares of the Funds.
2. Administrative Services. The Company shall be solely
responsible for providing all administrative services for the
Contracts owners. The Company agrees that it will maintain and
preserve all records as required by law to be maintained and
preserved, and will otherwise comply with all laws, rules and
regulations applicable to the marketing of the Contracts and the
provision of administrative services to the Contract owners.
3. Processing and Timing of Transactions
(a) The Issuer hereby appoints the Company as its agent for
the limited purpose accepting purchase and redemption orders for
Fund shares from the Contract owners. On each day the New York
Stock Exchange (the "Exchange") is open for business (each, a
"Business Day"), the Company may receive instructions from the
Contract owners for the purchase or redemption of shares of the
Funds ("Orders"). Orders received and accepted by the Company
<PAGE>
PAGE 2
prior to the close of regular trading on the Exchange (the "Close
of Trading") on any given Business Day (currently, 3:00 p.m.
Central time) and transmitted to the Issuer at the next asset value
determined as of the Close of Trading on the previous Business Day
("Day 1"). Any Orders received by the Company after the Close of
Trading, and all Orders that are transmitted to the Issuer after
9:00 a.m. Central time on the next following Business Day, will be
executed by the Issuer at the net asset value determined following
receipt by the Issuer of such Order. The day as of which an Order
is executed by the Issuer pursuant to the provisions set forth
above is referred to herein as the "Effective Trade Date".
(b) 5:30 p.m. Central time on each Business Day, Investors
Research will provide to the Company via facsimile or other
electronic transmission acceptable to the Company the Funds' net
asset value, dividend and capital gain information and, in the case
of income funds, the daily accrual for interest rate factor (mil
rate), determined at the Close of Trading.
(c) By 9:00 a.m. Central time on each Business Day, the
Company will provide to Investors Research via facsimile or other
electronic transmission acceptable to Investors Research a report
(referred to in subsection (a) above) stating whether the Orders
received by the Company from Contract owners by the Close of
Trading on the preceding Business Day resulted in the Account being
a net purchaser or net seller of shares of the Funds. As used in
this Agreement, the phrase "other electronic transmission
acceptable to Investors Research" includes the use of remote
computer terminals located at the premises of the Company, its
agents or affiliates, which terminals may be linked electronically
to the computer system of Investors Research, its agents or
affiliates (hereinafter, "Remote Computer Terminals").
(d) Upon the timely receipt from the Company of the report
described in subsection (c) above, Investors Research will execute
the purchase or redemption transactions (as the case may be) at the
net asset value computed as at the Close of Trading on Day 1.
Payment for net purchase transactions shall be made by wire
transfer by the Company to the custodial account designated by the
Fund on the Business Day next following the Effective Trade Date.
Such wire transfers shall be initiated by the Company's bank prior
to 3:00 p.m. Central time and received by the Funds prior to 5:00
p.m. Central time on the Business Day next following the Effective
Trade Date. If payment for a purchase Order is not timely
received, such Order will be executed at the net asset value next
computed following receipt of payment. Payments for net redemption
transactions shall be made by wire transfer by the Issuer to the
account designated by the Company within the time period set forth
in the applicable Fund's then-current prospectus; provided,
however, Investors Research will use all reasonable efforts to
settle all redemptions on the Business Day next following the
Effective Trade Date. On any Business Day when the Federal Reserve
Wire Transfer System is closed, all communication and processing
rules will be suspended for the settlement of Orders. Orders will
be settled on the next Business Day on which the Federal Reserve
Wire Transfer System is open and the Effective Trade Date will
apply.<PAGE>
PAGE 3
4. Prospectus and Proxy Materials.
(a) Investors Research shall provide to the shareholder of
record copies of the Issuer's proxy materials, periodic reports to
shareholders and other materials that are required by law to be
sent to the Issuer's shareholders. In addition, Investors Research
shall provide the Company copies of the Fund's prospectuses and
periodic reports to shareholders in sufficient quantity to
distribute to each Contract owner, together with such additional
copies of the Fund's prospectuses as may be reasonably requested by
Company. If the Company provides for pass-through voting by the
Contract owners, Investors Research will provide the Company with a
sufficient quantity of proxy materials for each Contract owner.
(b) The cost of preparing, typesetting, printing and shipping
to the Company the Fund's separate prospectuses, proxy materials,
periodic reports to shareholders and other materials shall be paid
by Investors Research or its agents or affiliates. If the Company
elects to print a prospectus that combines the separate
prospectuses of the Fund with the prospectuses of other investment
options under the Contracts, Investors Research shall provide the
Company a copy of the Fund's prospectus in electronic format. The
cost of preparing, typesetting and printing the combined prospectus
shall be borne by the Company.
(c) The cost of mailing prospectuses, proxy materials,
periodic fund reports and other materials of the Issuer to the
Contract owners and prospective Contract owners shall be paid by
the Company and shall not be the responsibility of Investors
Research or the Issuer.
5. Compensation and Expenses.
(a) Investors Research will pay no fee or other compensation
to the Company under this Agreement.
(b) All expenses incident to performance by the Issuer of its
duties under this including, but not limited to, the cost of
registration and qualification of the Fund's shares, will be paid
by Investors Research to the extent permitted by law. All expenses
incident to performance by the Company of its duties under this
Agreement, including, but not limited to, the cost of providing the
administrative services to Contract owners, shall be paid by the
Company.
6. Representations and Warranties.
(a) The Company represents and warrants that: (i) this
Agreement has been duly authorized by all necessary corporate
action and, when executed and delivered, shall constitute the
legal, valid and binding obligation of the Company, enforceable in
accordance with its terms; (ii) it has established the ACL Variable
Annuity Account 1 (the "Account"), which is a separate account
under New York Insurance law, and has registered each Account as a
unit investment trust under the Investment Company Act of 1940 (the
"1940 Act") to serve as an investment vehicle for the Contracts;
<PAGE>
PAGE 4
(iii) each Contract provides for the allocation of net amounts
received by the Company to an Account for investment in the shares
of one or more specified investment companies selected among those
companies available through the Account to act as underlying
investment media; (iv) selection of a particular investment company
is made by the Contract owner under a particular Contract, who may
change such selection from time to time in accordance with the
terms of the applicable Contract; and (v) the activities of the
Company contemplated by this Agreement comply in all material
respects with all provisions of federal and state insurance,
securities, and tax laws applicable to such activities.
(b) Investors Research represents that: (i) this Agreement
has been duly authorized by all necessary corporate action and,
when executed and delivered, shall constitute the legal, valid and
binding obligation of Investors Research and Issuer, enforceable in
accordance with its terms; and (ii) the investments of the Funds
will at all times be adequately diversified within the Section
817(h) of the Internal Revenue Service Code of 1986, as amended
(the "Code"), and the regulations thereunder, and that at all times
while this Agreement is in effect, all beneficial interests in each
of the Funds will be owned by one or more insurance companies or by
any other party permitted under Section 1.817-5(f)(3) of the
Regulations promulgated under the Code. In the event of a breach,
Investors Research will take reasonable steps to notify the Company
of such breach and to adequately diversify the Fund so as to
achieve compliance within the grace period afforded by Regulation
1.817-5.
(c) Investors Research represents that the Fund's investment
objectives, policies, and restrictions comply in all material
respects with applicable state investment laws as they may apply to
the Fund. Neither the Issuer nor Investors Research makes any
representation as to whether any aspect of the Fund's operations
(including, but not limited to, fees and expenses and investment
policies, objections and restrictions) complies with the insurance
laws and regulations of any state. Investors Research agrees that
it will use reasonable effort to furnish such information regarding
the Funds as may be reasonably required by state insurance laws so
that the Company may obtain the authority needed to issue the
Contracts in any applicable state.
7. Additional Covenants and Agreements.
(a) Each party shall comply with all provisions of federal
and state laws applicable to its respective activities under this
Agreement.
(b) Each party shall promptly notify the other parties in the
event that it is, for any reason, unable to perform any of its
obligations under this Agreement.
(c) The Company covenants and agrees that all Orders accepted
and transmitted by in hereunder with respect to each Account on any
Business Day will be based upon instructions that it received from
the Contract owners in proper form prior to the Close of Trading of
the Exchange on the previous Business Day.<PAGE>
PAGE 5
(d) The Company covenants and agrees that all Orders
transmitted to the Issuer, whether by telephone, telecopy, or other
electronic transmission acceptable to Investors Research, shall be
sent by or under the authority and direction of a person designated
by the Company as being duly authorized to act on behalf of the
owner of the Account. Absent actual knowledge to the contrary,
Investors Research shall be entitled to rely on the existence of
such authority and to assume that any person transmitting Orders
for the purchase, redemption or transfer of Fund shares on behalf
of the Company is "an appropriate person" as used in Sections 8-308
and 8-404 of the Uniform Commercial Code with respect to the
transmission of instructions regarding Fund shares on behalf of the
owner of such Fund shares. The Company shall maintain the
confidentiality of all passwords and security procedures issued,
installed or otherwise put in place with respect to the use of
Remote Computer Terminals and assumes full responsibility for the
security therefor. The Company further agrees to be solely
responsible for the accuracy, propriety, and consequences of all
data transmitted to Investors Research by the Company by telephone,
telecopy, or other electronic transmission acceptable to Investors
Research.
(e) The Company agrees to make every reasonable effort to
market its Contracts. It will use its best efforts to give equal
emphasis and promotion to shares of the Funds as is given to other
underlying investments of the Account.
(f) The Company or its employees or agents will not give any
information or advice, or make any representations or statements on
behalf of or concerning the Issuer or the Fund, in connection with
the sale of the Contracts unless based upon information or
representations contained in the registration statement for the
Fund's shares, as such registration statement may be amended or
supplemented from time to time, or in reports or proxy statements
of the Fund, or in published reports for the Fund that are
published in reputable financial publications or approved by
Investors Research for distribution, or in sales literature or
other material provided by Investors Research. Investors Research
agrees to use reasonable efforts to respond to any request for
approval on a prompt and timely basis.
(g) Notwithstanding anything in Section 7(f) above, the
Company will furnish, or will cause to be furnished, to the Issuer
or Investors Research, each piece of sales literature or other
promotional material in which the Fund or the Issuer or Investors
Research is named, at least ten (10) business days prior to its
use. No such material will be used if Investors Research
reasonably objects to such use. Investors Research agrees to use
reasonable efforts to respond to any request for approval on a
prompt and timely basis.
(i) Investors Research will not give any information or
statements on behalf of the Company or concerning the Company, the
Account, or the Contracts unless based upon such information or
representations contained in the registration statement for the
Contracts, as such registration statement may be amended or
<PAGE>
PAGE 6
supplemented from time to time, or in reports for the Contracts, or
in published reports for the Account or the Contracts that are
published in reputable financial publications or are approved by
the Company for distribution, or in sales literature or other
material provided by the Company. The Company agrees to use
reasonable efforts to respond to any request for approval on a
prompt and timely basis.
(j) The Company will provide to Investors Research at least
on complete copy of all registration statements, annual and semi-
annual reports, proxy statements, and all amendments or supplements
to any of the above that include a description of or information
regarding the Funds promptly after the filing of such document with
the SEC or other regulatory authority.
(k) For purposes of this Section 7, the phrase "sales
literature or other promotional material" includes, but is not
limited to, advertisements (such as material published, or designed
for use in, a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs
or billboards, motion pictures, or other public media (e.g., online
networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made
generally available to customers or the public, including
brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational
or training materials or other communications distributed or made
generally available to some or all agents or employees,
registration statements, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising
under the NASD rules, the 1933 Act or the 1940 Act.
8. Use of Names. Except as otherwise expressly provided for
in this Agreement, neither Investors Research nor the Funds shall
use any trademark, trade name, service mark or logo of the Company,
or any variation of any such trademark, trade name, service mark or
logo, without the Company's prior written consent, the granting of
which shall be at the Company's sole option. Except as otherwise
expressly provided for in this Agreement, the Company shall not use
any trademark, trade name, service mark or logo of the Issuer or
Investors Research, or any variation of any such trademarks, trade
names, service marks, or logos, without the prior written consent
of either the Issuer or Investors Research, as appropriate, the
granting of which shall be at the sole option of Investors Research
and/or the Issuer.
9. Proxy Voting
(a) The Company shall provide pass-through voting privileges
to all Contract owners so long as the SEC continues to interpret
the 1940 Act as requiring such privileges. It shall be the
responsibility of the Company to assure that it and the separate
accounts of the other Participating Companies (as defined in
Section 11(a) below) participating in any Fund calculate voting
privileges in a consistent manner.
<PAGE>
PAGE 7
(b) The Company will distribute to Contract owners all proxy
material furnished by Investors Research and will vote shares in
accordance with instructions received from such Contract owners.
The Company shall vote Fund shares for which no instructions have
been received in the same proportion as shares for which such
instructions have been received. The Company and its agents shall
not oppose or interfere with the solicitation shares held for such
Contract owners.
10. Indemnity.
(a) Investors Research agrees to indemnify and hold harmless
the Company and each person, if any, who controls the Company
within the meaning of the Securities Act of 1933, and any officers,
directors, employees, agents, and affiliates of the foregoing
(collectively, the "Indemnified Parties" for purposes of this
Section 10(a)) against any losses, claims, expenses, damages or
liabilities (including amounts paid in settlement thereof) or
litigation expenses (including reasonable legal and other expenses)
(collectively, "Losses"), to which the Indemnified Parties may
become subject, insofar as such Losses (i) result from a breach by
Investors Research of a material provision of this Agreement,
including the incorrect calculation or reporting of the
daily net asset value per share or dividend or capital gain
distribution rate, or (ii) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement or any prospectus of the
Fund or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Investors Research will reimburse any legal or other expenses
reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. Investors Research
shall not be liable for indemnification hereunder if such Losses
are attributable to the negligence or misconduct of the Company
performing its obligations under this Agreement or as a result of a
breach of Section 21.
(b) The Company agrees to indemnify and hold harmless
Investors Research and the Issuer and each person, if any, who
controls the Issuer or Investors Research within the meaning of the
Securities Act of 1933, and their respective officers, directors,
employees, agents, and affiliates of the foregoing (collectively,
the "Indemnified Parties" for purposes of this Section 10(b))
against any Losses to which the Indemnified Parties may become
subject, insofar as such Losses (i) result from a breach by the
Company of a material provision of this Agreement, or (ii) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the sales literature of
the Company or in a registration statement or any prospectus of the
Company regarding the Contracts or the Account, if any, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arise out of or
as a result of conduct, statements or representations of the
Company or its agents (other than statements or representations
<PAGE>
PAGE 8
contained in the prospectuses or sales literature of the Fund),
with respect to the sale and distribution of Contracts for which
the Fund's shares serve as the underlying investment, or (iii)
result from the use by any person of a Remote Computer Terminal.
The Company will reimburse any legal or other expenses reasonably
incurred by connection with investigating or defending any such
Losses. The Company shall not be liable for indemnification
hereunder if such Losses are attributable to the negligence or
misconduct of Investors Research or the Issuer in performing their
obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party of the
commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section
10. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish to, assume the defense
thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party
of its election to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such
action, the indemnifying party shall not, without the prior written
consent of the indemnified parties in such action, settle or
compromise the liability of the indemnified parties in such action,
or permit a default or consent to the entry of any judgement in
respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such
claimant an unconditional release from all liability in respect of
such claim.
11. Potential Conflicts.
(a) The Company has received a copy of an application for
exemptive relief, as amended, filed by Investors Research on
December 21, 1987, with the SEC and the order issued by the SEC in
response thereto (the "Shared Funding Exemptive Order"). The
Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in
such application, the Board of Directors of the Issuer (the
"Board") will monitor the Issuer for the existence of any material
irreconcilable conflict between the interests of the contract
owners of all separate accounts ("Participating Companies")
investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an
action by any state insurance regulatory authority; (ii) a change
in applicable federal or state insurance, tax, or securities laws
<PAGE>
PAGE 9
or regulations, or a public ruling, private letter ruling, no-
action or interpretative letter, or any similar actions by
insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding;
(iv) the manner in which the investments of any portfolio are being
managed; (v) a difference in voting instructions given by variable
annuity contract owners and variable life insurance contract
owners; or (vi) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform
the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
(b) The Company will report any potential or existing
conflicts of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the
Shared Funding Exemptive Order by providing the Board with all
information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
(c) If a majority of the Board, or a majority of its
disinterested Board members, determines that a material
irreconcilable conflict exists with regard to contract owner
investments in a Fund, the Board shall give prompt notice to all
Participating Companies. If the Board determines that the Company
is responsible for causing or creating said conflict, the Company
shall at its sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the disinterested Board
members), take such action as is necessary to remedy or eliminate
the irreconcilable material conflict. Such necessary action may
include but shall not be limited to:
(i) withdrawing the assets allocable to the Account from
the Fund and reinvesting such assets in a different
investment medium or submitting the question of
whether such segregation should be implemented to a
vote of all affected contract owners and as
appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract
owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to
the affected contract owners the option of making
such a change; and/or
(ii) establishing a new registered management investment
company or managed separate account.
(d) If a material irreconcilable conflict arises as a result
of a decision by the Company to disregard its contract owner voting
instructions and said decision represents a minority position or
would preclude a majority vote by all of its contract owners having
an interest in the Issuer, the Company at its sole cost, may be
required, at the Board's election, to withdraw an Account's
investment in the Issuer and terminate this Agreement; provided,
<PAGE>
PAGE 10
however, that such withdrawal and termination shall be limited to
the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members
of the Board.
(e) For the purpose of this Section 11, a majority of the
disinterested Board members shall determine whether or not any
proposed action adequately remedies any irreconcilable material
conflict, but in no event the Issuer be required to establish a new
funding medium for any Contract. The Company shall not be required
by this Section 11 to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a
majority of the Contract owners materially adversely affected by
the irreconcilable material conflict.
12. Termination. This agreement shall terminate as to the
sale and issuance of new Contracts:
(a) at the option of either the Company, Investors Research
or the Issuer upon six months' advance written notice, except that
if exemptive relief or an exemptive order from the SEC is required
in connection with such termination, at such later date as may be
necessary to obtain such exemptive relief;
(b) at the option of the Company if the Funds' shares are not
available for any reason to meet the requirement of Contracts as
determined by the Company. Reasonable advance notice of election to
terminate shall be furnished by Company;
(c) at the option of either the Company, Investors Research
or the Issuer, upon institution of formal proceedings against the
broker-dealer or broker-dealers marketing the Contracts, the
Account, the Company, or the Issuer by the National Association of
Securities Dealers, Inc. (the "NASD"), the SEC or any other
regulatory body;
(d) upon termination of the Management Agreement between the
Issuer and Investors Research. Notice of such termination shall be
promptly furnished to the Company. This Section 12(d) shall not be
deemed to apply if contemporaneously with such termination a new
contract of substantially similar terms is entered into between the
Issuer and Investors Research;
(e) upon the requisite vote of Contract owners having an
interest in the Issuer to substitute for the Issuer's shares the
shares of another investment company in accordance with the terms
of Contracts for which the Issuer's shares had been selected to
serve as the underlying investment medium. The Company will give
60 days' written notice to the Issuer and Investors Research of any
proposed vote to replace the Funds' shares;
(f) upon assignment of this Agreement unless made with the
written consent of all other parties hereto;
<PAGE>
PAGE 11
(g) if the Issuer's shares are not registered, issued or sold
in conformance with Federal law or such law precludes the use of
Fund shares as an underlying investment medium of Contracts issued
or to be issued by the Company. Prompt notice shall be given by
either party should such situation occur; or
(h) at the option of the Issuer, if the Issuer reasonably
determines in good faith that the Company is not offering shares of
the Fund in conformity with the terms of this Agreement or
applicable law.
(i) at the option of any party hereto upon a determination
that continuing to perform under this Agreement would, in the
reasonable opinion of the terminating party's counsel, violate any
applicable federal or state law, rule, regulation or judicial
order.
(j) at the option of the Company, if the Company determines,
in its sole judgement exercised in good faith, that Investors
Research has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement
or is the subject of material adverse publicity that is likely to
have a material adverse impact upon the business and operations of
the Company, such termination to be effective sixty (60) days'
after receipt by Investors Research of written notice of the
Company's election to terminate this Agreement.
(k) at the option of Investors Research, if Investors
Research determines, in its sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity that is
likely to have a material adverse impact upon the business and
operations of the Fund or Investors Research, such termination to
be effective sixty (60) days' after receipt by the Company of
written notice of Investors Research's election to terminate this
Agreement
13. Continuation of Agreement. Termination as the result of
any cause listed in Section 12 shall not affect the Issuer's
obligation to furnish, under the terms of this Agreement, its
shares to Contracts then in force for which its shares serve or may
serve as the underlying medium (unless such further sale of Fund
shares is proscribed by law or the SEC or other regulatory body).
14. Non-Exclusivity. Each of the parties acknowledges and
agrees that this Agreement and the arrangement described herein are
intended to be non-exclusive and that each is free to enter into
similar agreements and arrangements with other entities.
15. Survival. The provisions of Section 8 (use of names) and
Section 10 (indemnity) of this Agreement shall survive termination
of this Agreement.
<PAGE>
PAGE 12
16. Amendment. Neither this Agreement, nor any provision
hereof, may be amended, waived, discharged or terminated orally,
but only by an instrument in writing signed by all of the parties
hereto.
17. Notices. All notices and other communications hereunder
shall be given or made in writing and shall be delivered
personally, or sent by telex, telecopier, express delivery or
registered or certified mail, postage prepaid, return receipt
requested, to the party or parties to whom they are directed at the
following addresses or at such other addresses as may be designated
by notice from such party to all other parties.
To the Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, Minnesota 55440
Attention: Jim Mortensen, Manager-Product
Development
(612) 671-2269 (telecopy number)
With a simultaneous copy to:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, Minnesota 55440
Attention: Mary Ellyn Minenko, Counsel
(612) 671-3767 (telecopy number)
To the Issuer or Investors Research:
Twentieth Century Mutual Funds
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner
prescribed in this Section 17 shall be deemed to have been
delivered on receipt.
18. Successors and Assigns. This Agreement may not be
assigned without the written consent of all parties to the
Agreement at the time of such assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective permitted successors and assigns.
19. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute this
Agreement by signing any such counterpart.
<PAGE>
PAGE 13
20. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
21. Confidentiality.
(a) Investors Research acknowledges that the identities of
the customers of the Company or any of its affiliates
(collectively, the "Protected Parties" for purposes of this Section
21), information maintained regarding those customers, and all
computer programs and procedures or other confidential information
developed or used by the Protected Parties or any of their
employees or agents in connection with the Company's performance of
its duties under this Agreement are the valuable property of the
Protected Parties. Investors Research agrees that if in connection
with the performance of its duties under this Agreement it comes
into possession of any list or compilation of the identities of or
other confidential information about the Protected Parties'
customers, or any other confidential information or property of the
Protected Parties, other than such information as may be
independently developed, compiled or obtained by Investors
Research, whether from information supplied by the Protected
Parties' customers who also maintain accounts directly with the
Issuer or another affiliate of Investors Research or otherwise,
Investors Research will hold such information or property in
confidence and refrain from using, disclosing or distributing any
of such information or other property except: (a) with the
Company's prior written consent; or (b) as required by law or
judicial process. Investors Research acknowledges that any breach
of this Section 21(a) would result in immediate and irreparable
harm to the Protected Parties for which there would be no adequate
or quantifiable remedy at law. As a result, the parties agree that
in the event of a breach, as their sole remedy, the Protected
Parties will be entitled to equitable relief by way of temporary
and permanent injunctions, as well as such other equitable relief
as a court of competent jurisdiction deems appropriate.
(b) The parties acknowledge that it is not contemplated that
any confidential information of the Protected Parties is necessary
for the performance by Investors Research or the Issuer of their
respective duties under this Agreement. If the parties determine
that the communication of such confidential information is
necessary or desirable, the parties agree to cooperate in the
establishment of procedures to identify such information as
confidential in order to ensure its protection.
22. Access to Books and Records. Each party to this
Agreement agrees to cooperate with each other party and all
appropriate governments authorities (including without limitation
the SEC, the NASD and state insurance regulators) and will permit
each other and such authorities reasonable access to its books and
records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby. Each party
agrees to permit the other party or the appropriate governmental
<PAGE>
PAGE 14
authority to make copies of portions of its books and records that
relate to the party's performance of its duties under this
Agreement an which are the subject matter of the investigation or
inquiry.
23. Entire Agreement. This Agreement, including the
Attachments hereto, constitutes the entire agreement between the
parties with respect to the matters dealt with herein, and
supersedes all previous agreements, written or oral, with respect
to such matters.
<PAGE>
PAGE 15
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth above.
INVESTORS RESEARCH CORPORATION AMERICAN CENTURION LIFE
ASSURANCE COMPANY
By:/s/ William M. Lyons By:/s/
William M. Lyons Name: Stuart A. Sedlacek
Executive Vice President Title: Chairman and President
TCI PORTFOLIOS, INC.
By:/s/ William M. Lyons
William M. Lyons
Executive Vice President
<PAGE>
PAGE 1
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made this ____ day of _______, 199_, between
JANUS ASPEN SERIES, an open-end management investment company
organized as a Delaware business trust (the "Trust"), and American
Centurion Life Assurance Company, a life insurance company
organized under the laws of the State of New York (the "Company"),
on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to
time (the "Accounts").
WITNESSETH:
WHEREAS, the Trust has registered with the Securities and
Exchange Commission as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940
Act"), and has registered the offer and sale of its shares under
the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for
separate accounts established for variable life insurance policies
and variable annuity contracts to be offered by insurance companies
have entered into "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into
several series of shares, each series representing an interest in a
particular managed portfolio of securities and other assets (the
"Portfolios"); and
WHEREAS, the Trust has received an order from the Securities
and Exchange Commission granting Participating Insurance Companies
and their separate accounts exemptions from the provisions of
Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary
to permit shares of the Trust to be sold to and held by variable
annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain
qualified pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) certain variable
life insurance policies and/or variable annuity contracts under the
1933 Act (the "Contracts"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) each Account as
a unit investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize shares of the
Portfolios listed on Schedule B, as may be amended from time to
time, as an investment vehicle of the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the
parties agree as follows:
<PAGE>
PAGE 2
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make shares of its Portfolios available
to the Accounts at the net asset value next computed after receipt
of such purchase order by the Trust (or its agent), as established
in accordance with the provisions of the then current prospectus of
the Trust. Shares of a particular Portfolio of the Trust shall be
ordered in such quantities and at such times as determined by the
Company to be necessary to meet the requirements of the Contracts.
The Trustees of the Trust (the "Trustees") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by
law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Trustees acting in good faith and in light
of their fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such
Portfolio.
1.2 The Trust will redeem any full or fractional shares of
any Portfolio when requested by the Company on behalf of an Account
at the net asset value next computed after receipt by the Trust (or
its agent) of the request for redemption, as established in
accordance with the provisions of the then current prospectus of
the Trust. The Trust shall make payment for such shares on the
same Business Day (as defined below) as the Trust receives notice
of redemption orders in accordance with Section 1.3 and in the
manner established from time to time by the Trust, except that the
Trust reserves the right to suspend payment consistent with Section
22(e) of the 1940 Act and any rules thereunder.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust
hereby appoints the Company as its agent for the limited purpose of
receiving and accepting purchase and redemption orders resulting
from investment in and payments under the Contracts. Receipt by
the Company shall constitute receipt by the Trust provided that i)
such orders are received by the Company in good order prior to the
time the net asset value of each Portfolio is priced in accordance
with its prospectus and ii) the Trust receives notice of such
orders by 11:00 a.m. New York time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Trust calculates its
net asset value pursuant to the rules of the Securities and
Exchange Commission.
1.4 Purchase orders that are transmitted to the Trust in
accordance with Section 1.3 shall be initiated by wire no later
than 12:00 noon New York time on the same Business Day that the
Trust receives notice of the order. Payments shall be made in
federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's shares will be by
book entry only. Stock certificates will not be issued to the
Company or the Account. Shares ordered from the Trust will be
recorded in the appropriate title for each Account or the
appropriate subaccount of each Account.
<PAGE>
PAGE 3
1.6 The Trust shall furnish same-day notice (by wire or
telephone followed by written confirmation) to the Company of any
income dividends or capital gain distributions payable on the
Trust's shares. The Company hereby elects to receive all such gain
distributions as are payable on a Portfolio's shares in additional
shares of that Portfolio. The Company reserves the right to revoke
this election and to receive all such dividends and distributions
in cash upon 90 days' prior notice to the Trust. The Trust shall
notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.7 The Trust shall make the net asset value per share for
each Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset
value per share available by 6 p.m. New York time.
1.8 The Trust agrees that its shares will be sold only to
Participating Insurance Companies and their separate accounts and
to certain qualified pension and retirement plans to the extent
permitted by the Exemptive Order. No shares of any Portfolio will
be sold directly to the general public. The Company agrees that
Trust shares will be used only for the purposes of funding the
Contracts and Accounts listed in Schedule A, as amended from time
to time.
1.9 The Trust agrees that all Participating Insurance
Companies shall have the obligations and responsibilities regarding
pass-through voting and conflicts of interest corresponding to
those contained in Section 2.8 and Article IV of this Agreement.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing
with the Securities and Exchange Commission and any state
regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional
information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and
filing of the documents listed in this Section 2.1 and all taxes to
which an issuer is subject on the issuance and transfer of its
shares.
2.2 At the option of the Company, the Trust shall either (a)
provide the Company (at the Company's expense) with as many copies
of the Trust's current prospectus, annual report, semi-annual
report and other shareholder communications, including any
amendments or supplements to any of the foregoing, as the Company
shall reasonably request; or (b) provide the Company with a camera
ready copy or a computer disk of such documents in a form suitable
for printing. The Trust shall provide the Company with a copy of
its statement of additional information in a form suitable for
duplication by the Company. The Trust (at its expense) shall
provide the Company with copies of any Trust-sponsored proxy
materials in such quantity as the Company shall reasonably require
for distribution to Contract owners.<PAGE>
PAGE 4
2.3 The Company shall bear the costs of printing and
distributing the Trust's prospectus, statement of additional
information, shareholder reports and other shareholder
communications to owners of and applicants for policies for which
the Trust is serving or is to serve as an investment vehicle. The
Company shall bear the costs of distributing proxy materials (or
similar materials such as voting solicitation instructions) to
Contract owners. The Company assumes sole responsibility for
ensuring that such materials are delivered to Contract owners in
accordance with applicable federal and state securities laws.
2.4 The Company agrees and acknowledges that the Trust's
adviser, Janus Capital Corporation ("Janus Capital"), is the sole
owner of the name and mark "Janus" and that all use of any
designation comprised in whole or part of Janus (a "Janus Mark")
under this Agreement shall inure to the benefit of Janus Capital.
Except as provided in Section 2.5, the Company shall not use any
Janus Mark on its own behalf or on behalf of the Accounts or
Contracts in any registration statement, advertisement, sales
literature or other materials relating to the Accounts or Contracts
without the prior written consent of Janus Capital. Upon
termination of this Agreement for any reason, the Company shall
cease all use of any Janus Mark(s) as soon as reasonably
practicable.
2.5 The Company shall furnish, or cause to be furnished, to
the Trust or its designee, a copy of each Contract prospectus or
statement of additional information in which the Trust or its
investment adviser is named prior to the filing of such document
with the Securities and Exchange Commission. The Company shall
furnish, or shall cause to be furnished, to the Trust or its
designee, each piece of sales literature or other promotional
material in which the Trust or its investment adviser is named, at
least ten Business Days prior to its use. No such material shall
be used if the Trust or its designee reasonably objects to such use
within five Business Days after receipt of such material.
2.6 The Trust shall furnish, or cause to be furnished, to the
Company or its designee, a copy of each Trust prospectus or
statement of additional information in which the Company is named
prior to the filing of such document with the Securities and
Exchange Commission. The Trust shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company is
named, at least ten Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably
objects to such use within five Business Days after receipt of such
material.
2.7 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning
the Trust or its investment adviser in connection with the sale of
the Contracts other than information or representations contained
in and accurately derived from the registration statement,
prospectus or statement of additional information for the Trust
shares (as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to
time), reports of the Trust, Trust-sponsored proxy statements, or <PAGE>
PAGE 5
in sales literature or published reports in the public domain or
other promotional material approved by the Trust or its designee,
except as required by legal process or regulatory authorities or
with the written permission of the Trust or its designee. Nothing
in this Section 2.7 will be construed as preventing the Company or
its employees or agents from giving advice on investments in the
Trust.
2.8 The Trust shall not give any information or make any
representations or statements on behalf of the Company or
concerning the Company, the Accounts or the Contracts other than
information or representations contained in and accurately derived
from the registration statement, prospectus or statement of
additional information for the Contracts (as such registration
statement, prospectus and statement of additional information may
be amended or supplemented from time to time), or in materials
approved by the Company for distribution including sales literature
or other promotional materials, except as required by legal process
or regulatory authorities or regulatory authorities or with the
written permission of the Company.
2.9 So long as, and to the extent that the Securities and
Exchange Commission interprets the 1940 Act to require pass-through
voting privileges for variable policyowners, the Company will
provide pass-through voting privileges to owners of policies whose
cash values are invested, through the Accounts, in shares of the
Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the
Company shall be responsible for assuring that the Accounts
calculate voting privileges in the manner established by the Trust.
With respect to each Account, the Company will vote shares of the
Trust held by the Account and for which no timely voting
instructions from policyowners are received as well as shares it
owns that are held by that Account, in the same proportion as those
shares for which voting instructions are received. The Company and
its agents will in no way recommend or oppose or interfere with the
solicitation of proxies for Trust shares held by Contract owners
without the prior written consent of the Trust, which consent may
be withheld in the Trust's sole discretion.
2.10 The Company shall notify the Trust of any applicable
state insurance laws of which it becomes aware that restrict the
Portfolios' investments or otherwise affect the operation of the
Trust and shall notify the Trust of any changes in such laws.
ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that it is an
insurance company duly organized and in good standing under the
laws of the State of New York and that it has legally and validly
established each Account as a segregated asset account under such
law on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account (1)
has been registered or, prior to any issuance or sale of the
Contracts, will be registered as a unit investment trust in
accordance with the provisions of the 1940 Act or, alternatively <PAGE>
PAGE 6
(2) has not been registered in proper reliance upon an exclusion
from registration under the 1940 Act.
3.3 The Company represents and warrants that the Contracts or
interests in the Accounts (1) are or, prior to issuance, will be
registered as securities under the 1933 Act or, alternatively (2)
are not registered because they are properly exempt from
registration under the 1933 Act or will be offered exclusively in
transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the
Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws; and the sale
of the contracts shall comply in all material respects with state
insurance suitability requirements.
3.4 The Trust represents and warrants that it is duly
organized and validly existing under the laws of the State of
Delaware.
3.5 The Trust represents and warrants that the Trust shares
offered and sold pursuant to this Agreement will be registered
under the 1940 Act prior to any issuance or sale of such shares.
The Trust shall amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect
the continuous offering of its shares. The Trust shall register
and qualify its shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the
Trust.
3.6 The Trust represents and warrants that the investments of
each Portfolio will comply with the diversification requirements
set forth in Section 817(h) of the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder. In the event
the Trust fails to comply with these diversification requirements,
the Trust will take all reasonable steps: (a) to notify the Company
of such noncompliance; and (b) to adequately diversify the Trust so
as to achieve compliance within the grace period afforded by
Treasury Regulation 1.817-5.
3.7 The Trust represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code, and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon
having a reasonable basis for believing that it has ceased to so
qualify or that it might not so qualify in the future.
3.8 The Trust represents that its investment objectives,
policies and restrictions comply in all material respects with any
applicable state securities laws of which the Trust is aware as
they may apply to the Trust. The Trust makes no representation as
to whether any aspect of its operations (including, but not limited
to, fees and expenses and investment policies, objectives and
restrictions) complies with the insurance laws and regulations of
any state. The Trust agrees that it will furnish the information
required by state insurance laws and requested by the Company to
assist the Company in obtaining the authority needed to issue the
Contracts in any applicable state.<PAGE>
PAGE 7
3.9 The Trust represents and warrants that all of its
trustees, officers, employees, investment advisors, and other
individuals/entities having access to the funds and/or securities
of the Trust are and continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the
Trust in an amount not less than the minimal coverage as required
currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes
coverage for larceny and embezzlement and is issued by a reputable
bonding company.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust's shares may be
made available for investment to other Participating Insurance
Companies. In such event, the Trustees will monitor the Trust for
the existence of any material irreconcilable conflict between the
interests of the contract owners of all Participating Insurance
Companies. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Trustees
shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications
thereof.
4.2 The Company agrees to promptly report any potential or
existing conflicts of which it is aware to the Trustees. The
Company will assist the Trustees in carrying out their
responsibilities under the Exemptive Order by providing the
Trustees with all information reasonably necessary for the Trustees
to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract
owner voting instructions.
4.3 If it is determined by a majority of the Trustees, or a
majority of its disinterested Trustees, that a material
irreconcilable conflict exists that affects the interests of
Contract owners, the Company shall, in cooperation with other
Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably practicable
(as determined by the Trustees) take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, which
steps could include: (a) withdrawing the assets allocable to some
or all of the subaccounts of the Accounts from the Trust or any
Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the
Trust, or submitting the question of whether or not such
segregation should be implemented to a vote of all affected <PAGE>
PAGE 8
Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Contract owners the option
of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a
decision by the Company Contract owner voting instructions and that
decision represents a minority position or would preclude a
majority vote, the Company may be required, at the Trust's
election, to withdraw the affected subaccount of the Account's
investment in the Trust and terminate this Agreement with respect
to such subaccount of the Account; provided, however that such
withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by
a majority of the disinterested Trustees. No charge or penalty
will be imposed as a result of such withdrawal. Any such
withdrawal and termination must take place within six (6) months
after the Trust gives written notice that this provision is being
implemented. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for
the purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state regulators, then
the Company will withdraw the affected subaccount of the Account's
investment in the Trust and terminate this Agreement with respect
to such subaccount of the Account within six (6) months after the
Trustees inform the Company in writing that it has determined that
such decision has created an irreconcilable material conflict;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the
disinterested Trustees. No charge or penalty will be imposed as a
result of such withdrawal. Until the end of such six (6) month
period, the Trust shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this
Agreement, a majority of the disinterested Trustees shall determine
whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Company be required to
establish a new funding medium for the Contracts if an offer to do
so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material
conflict. In the event that the Trustees determine that any
proposed action does not adequately remedy any irreconcilable
material conflict, then the Company will withdraw the subaccount of
the Account's investment in the Trust and terminate this Agreement
within six (6) months after the Trustees inform the Company in
writing of the foregoing determination provided, however, that such
withdrawal and termination shall be limited to the extent required
by any such material irreconcilable conflict as determined by a
majority of the disinterested Trustees. No charge or penalty will
be imposed as a result of such withdrawal.<PAGE>
PAGE 9
4.7 The Company shall at least annually submit to the
Trustees such reports, materials or data as the Trustees may
reasonable request so that the Trustees may fully carry out the
duties imposed upon them by the Exemptive Order, and said reports,
materials and data shall be submitted more frequently of deemed
appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended or Rule 6e-3 is adopted, to provide exemptive relief from
any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding (as defined in the
Exemptive Order) on terms and conditions materially different from
those contained in the Exemptive Order, then the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(t), as
amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to
indemnify and hold harmless the Trust and each person, if any, who
controls the Trust within the meaning of Section 15 of the 1933 Act
and any Trustees, officers, employees and agents of the foregoing
(collectively, the "Indemnified Parties" for purposes of this
Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of
the Company) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in a registration statement, prospectus or
statement of additional information for the Contracts or in
the Contracts themselves or in sales literature generated or
approved by the Company on behalf of the Contracts or
Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the
purposes of this Article V), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that
this indemnity shall not apply as to any Indemnified Party if
such statement or omission was made in reliance upon and was
accurately derived from written information furnished to the
Company by or on behalf of the Trust for use in Company
Documents or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(b) arise out of or result from statements or
representations (other than or representations contained in
and accurately derived from Trust Documents as defined in
Section 5.2(a)) or wrongful conduct of the Company or persons<PAGE>
PAGE 10
under its the sale or acquisition of the Contracts or Trust
shares: or
(c) arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in
Trust Documents as defined in Section 5.2(a) or the omission
or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made
in reliance upon and accurately derived from written
information furnished to the Trust by or on behalf of the
Company; or
(d) arise out of or result from any failure by the
Company to furnish the materials required under the terms of
this Agreement; or
(e) arise out of or result from any material breach of
any representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company.
5.2 Indemnification By the Trust. The Trust agrees to
indemnify and hold harmless the Company and each person, if any,
who controls the Company within the meaning of Section 15 of the
1933 Act and any directors, officers, employees and agents of the
foregoing (collectively, the "Indemnified Parties" for purposes of
this Article V) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Trust) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred
therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in the registration statement, prospectus or
statement of additional information for the Trust or any
sales literature generated or approved by the Trust (or any
amendment or supplement thereto), (collectively, "Trust
Documents" for the purposes of this Article V), or arise out
of or are based upon the omission or the alleged omission to
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
was accurately derived from written information furnished to
the Trust by or on behalf of the Company for use in Trust
Documents or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Company Documents)
or wrongful conduct of the Trust or persons under its<PAGE>
PAGE 11
control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
(c) arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in
Company Documents or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon and
accurately derived from written information furnished to the
Company by or on behalf of the Trust; or
(d) arise out of or result from any failure by the
Trust to provide the services or furnish the materials
required under the terms of this Agreement, including, but
not limited to, any material (based on current standards of
the Securities and Exchange Commission) errors in or untimely
calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate; or
(e) arise out of or result from any material breach of
any representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any material breach
of this Agreement by the Trust.
5.3 Neither the Company nor the trust shall be liable under
the indemnification provisions of Sections 5.1 or 5.2, ass
applicable, with respect to any Losses incurred or assessed against
an Indemnified Party that arise from such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard
of obligations or duties under this Agreement.
5.4 Neither the Company nor the trust shall be liable under
the indemnification provisions of Sections 5.1 or 5.2, as
applicable, with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the other
party in writing within a reasonable time after the summons, or
other first written notification, giving information of the nature
of the claim, complaint or action by a regulatory authority shall
have been served upon or otherwise received by such Indemnified
Party (or after such Indemnified Party shall have received notice
of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought
of any such claim shall not relieve that party from any liability
which it may have to the Indemnified Party in the absence of
Sections 5.1 and 5.2.
5.5 in case any such action is brought against the
Indemnified Parties, the indemnifying party shall be entitled to
participate, at its own expense, in the defense of such action.
The indemnifying party also shall be entitled to assume the defense
thereof, with counsel reasonably satisfactory to the party named in
the action. After notice from the indemnifying party shall bear
the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified Party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.<PAGE>
PAGE 12
ARTICLE VI
Termination
6.1 This Agreement may be terminated by either party for any
reason by ninety (90) days' advance written notice delivered to the
other party or as otherwise agreed in writing by both parties.
This Agreement may be terminated at the option of the Trust
immediately of the company is no longer controlled by or under
common control with IDS Life Insurance Company.
6.2 Notwithstanding any termination of this Agreement, the
Trust shall, at the option of the Company, continue to make
available additional shares of the Trust (or any Portfolio)
pursuant to the terms and conditions of this Agreement for all
Contracts in effect on the effective date of termination of this
Agreement, provided that the company continues to pay the costs set
forth in Section 2.3.
6.3 The provisions of Article V shall survive the termination
of this Agreement, and as long as shares of the trust are held on
behalf on Contract owners in accordance with Section 6.2, the
provisions of this Agreement shall survive the termination of this
Agreement with respect to those Contract owners.
ARTICLE VII
Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party
set forth below or at such other address as such party may from
time to time specify in writing to the other party.
If to the Trust:
100 Fillmore Street, Suite 300
Denver, Colorado 80206
Attention: David C. Tucker, Esq.
If to the Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attention: Jim Mortensen
Manager-Product Development
With a simultaneous copy to:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
Attention: Mary Ellyn Minenko
Counsel
<PAGE>
PAGE 13
ARTICLE VIII
Miscellaneous
8.1 The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any
of the provisions hereof or otherwise affect their construction or
effect.
8.2 this Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute
one and the same instrument.
8.3 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of State
of Colorado. This Agreement will be subject to the provisions of
the 1933 Act, the Securities Exchange Act of 1934 and the 1940 Act,
and the rules and regulations and rulings thereunder, including
such exemptions from those statues, rules and regulations as the
Securities and Exchange commission may grant (including, but not
limited to, the Exemptive Order) and the terms hereof will be
interpreted and construed in accordance therewith.
8.5 The parties to this Agreement acknowledge and agree that
all liabilities of the Trust arising directly or indirectly, under
this Agreement, of any and every nature whatsoever, shall be
satisfied solely out of the assets of the trust and that no
Trustee, officer, agent or holder of shares of beneficial interest
of the Trust shall be personally liable for any such liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation
the Securities and Exchange Commission, the National Association of
Securities Dealers, Inc., and state insurance regulators) and shall
permit such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby. The Trust
agrees that the Company will have the right to inspect, audit and
copy all records pertaining to the performance of services under
this Agreement to the extent required by any state insurance
department upon reasonable notice to the Trust and during the
Trust's normal business hours.
8.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that
this Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written
approval of the other party.
<PAGE>
PAGE 14
8.10 No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly
authorized and executed by both parties.
8.11 The Trust acknowledges that the identities of the
customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 8.11), information
maintained regarding those customers, and all computer programs and
procedures or other information developed or used by the Protected
Parties or any of their employees or agents in connection with the
Company's performance of its duties under this Agreement are the
valuable property of the Protected Parties. The Trust agrees that
if it comes into possession of any list or compilation of the
identities of or other information about the Protected Parties'
customers, or any other information or property of the Protected
Parties, other than such information as may be independently
developed or compiled by the Trust from information supplied to it
by the Protected Parties' customers who also maintain accounts
directly with the Trust, the Trust will hold such information or
property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a)
with the Company's prior written consent; or (b) as required by law
or judicial process. The Trust acknowledges that any breach of the
agreements in this Section 8.11 would result in immediate and
irreparable harm to the Protected Parties for which there would be
no adequate remedy at law and agree that in the event of such a
breach, the Protected Parties will be entitled to equitable relief
by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems
appropriate.
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Participation Agreement as of
the date and year first above written.
AMERICAN CENTURION LIFE
ASSURANCE COMPANY
By:___________________________
Name:_________________________
Title:________________________
JANUS ASPEN SERIES
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
PAGE 15
Schedule A
Separate Accounts and Associated Contract and Certificates
Name of Separate Account and Contracts and
Date Established by Certificates Funded
Board of Directors By Separate Account
ACL Variable Annuity Account 1, Contract Form 38501
established October 12, 1995 Certificate Form 38502-NY
Certificate Form 38503-IRA-NY
<PAGE>
PAGE 16
Schedule B
Portfolios of Janus Aspen Series
Available as an Investment Vehicle of the Accounts
Growth Portfolio
Worldwide Growth Portfolio
<PAGE>
PAGE 1
PARTICIPATION AGREEMENT
Among
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO FUNDS GROUP, INC.
and
AMERICAN CENTURION LIFE ASSURANCE COMPANY
THIS AGREEMENT, made and entered into this ____ day of
______________, 1996 by and among AMERICAN CENTURION LIFE ASSURANCE
COMPANY, (hereinafter the "Insurance Company"), a New York
corporation, on its own behalf and on behalf of each separate
account of the Insurance Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter
referred to as the "Account"), INVESCO VARIABLE INVESTMENT FUNDS,
INC., a Maryland corporation (the "Company") and INVESCO FUNDS
GROUP, INC. ("INVESCO"), a Delaware corporation.
WHEREAS, the Company engages in business as an open-end
management investment company and is available to act as the
investment vehicle for separate accounts established for variable
annuity and life insurance contracts to be offered by insurance
companies which have entered into participation agreements
substantially identical to this Agreement ("Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Company is divided into
several series of shares, each designated a "Fund" and representing
the interest in a particular managed portfolio of securities and
other assets; and
WHEREAS, the Company has obtained an order from the Securities
and Exchange Commission (the "Commission"), dated December 29, 1993
(File No. 812-8590), granting Participating Insurance Companies and
their separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and l5(b) of the Investment Company Act of
1940, as amended, (the "1940 Act") and Rules 6e2(b)(15) and 6e-
3(T)(b)(15) thereunder, to the extent necessary to permit shares of
the Company to be sold to and held by variable annuity and variable
life insurance separate accounts of life insurance companies that
may or may not be affiliated with one another (the "Mixed and
Shared Funding Exemptive Order"); and
WHEREAS, the Company is registered as an open-end management
investment company under the 1940 Act and its shares are registered
under the Securities Act of 1933, as amended (hereinafter the
"1933 Act"); and
WHEREAS, INVESCO is duly registered as an investment adviser
under the Investment Advisers Act of 1940 and any applicable state
securities law and as a broker dealer under the Securities Exchange
Act of 1934, as amended, (the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and<PAGE>
PAGE 2
WHEREAS, the Insurance Company has registered under the 1933
Act, or will register under the 1933 Act, certain variable annuity
contracts identified by the form number(s) listed on Schedule B to
this Agreement, as amended from time to time hereafter by mutual
written agreement of all the parties hereto (the "Contracts"); and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the board of
directors of the Insurance Company on the date shown for that
Account on Schedule A hereto, to set aside and invest assets
attributable to the Contracts; and
WHEREAS, the Insurance Company has registered or will register
each Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Insurance Company intends to purchase shares
in the Funds designated on Schedule C to this Agreement, as it may
be amended from time to time, on behalf of the Accounts to fund the
Contracts and INVESCO is authorized to sell such shares to unit
investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Company and INVESCO agree as follows:
ARTICLE I. Sale of Company Shares
1.1. INVESCO agrees to sell to the Insurance Company those
shares of the Company which each Account orders, executing such
orders on a daily basis at the net asset value next computed after
receipt by the Company or its designee of the order for the shares
of the Company. For purposes of this Section 1.1, the Insurance
Company shall be the designee of the Company for receipt of such
orders from the Accounts and receipt by such designee shall
constitute receipt by the Company; provided that the Company
receives notice of such order by 9:00 a.m., Mountain Time, on the
next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which
the Company calculates its net asset value pursuant to the rules of
the Commission.
1.2. The Company agrees to make its shares available for
purchase at the applicable net asset value per share by the
Insurance Company and its Accounts on those days on which the
Company calculates its Funds' net asset values pursuant to rules of
the Commission and the Company shall use reasonable efforts to
calculate its Funds' net asset values on each day on which the New
York Stock Exchange is open for trading. Notwithstanding the
foregoing, the board of directors of the Company (hereinafter the
"Board") may refuse to sell shares of any Fund to any person, or
suspend or terminate the offering of shares of any Fund if such
action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in
good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the
shareholders of that Fund.
<PAGE>
PAGE 3
1.3. The Company and INVESCO agree that shares of the Company
will be sold only to Participating Insurance Companies and their
separate accounts. No shares of any Fund will be sold to the
general public.
1.4. The Company and INVESCO will not sell Company shares to
any insurance company or separate account unless an agreement
containing provisions substantially the same as Sections 2.1, 3.4,
3.5 and Article VII of this Agreement is in effect to govern such
sales.
1.5. The Company agrees to redeem, on the Insurance Company's
request, any full or fractional shares of the Company held by the
Insurance Company, executing such requests on a daily basis at the
net asset value next computed after receipt by the Company or its
designee of the request for redemption. For purposes of this
Section 1.5, the Insurance Company shall be the designee of the
Company for receipt of requests for redemption from each Account
and receipt by that designee shall constitute receipt by the
Company; provided that the Company receives notice of the request
for redemption by 9:00 a.m., Mountain Time, on the next following
Business Day.
1.6. The Insurance Company agrees to purchase and redeem the
shares of each Fund offered by the then-current prospectus of the
Company in accordance with the provisions of that prospectus.
1.7. The Insurance Company shall pay for Company shares by 9:00
a.m., Mountain Time, on the next Business Day after an order to
purchase Company shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire. For the purpose of Sections 2.10 and 2.11,
upon receipt by the Company of the federal funds so wired, such
funds shall cease to be the responsibility of the Insurance Company
and shall become the responsibility of the Company. Payment of
aggregate redemption proceeds (aggregate redemptions of a Fund's
shares by an Account) for a given Business Day will be made by
wiring federal funds to the Insurance Company on the next Business
Day after receipt of the redemption request. Notwithstanding the
foregoing, in the event that one or more Funds has insufficient
cash on hand to pay aggregate redemptions on the next Business Day,
and if such Fund has determined to settle redemption transactions
for all of its shareholders on a delayed basis (more than one
Business Day, but in no event more than seven calendar days, after
the date on which the redemption order is received, unless
otherwise permitted by an order of the Commission under Section
22(e) of the 1940 Act), the Company shall be permitted to delay
sending redemption proceeds to the Insurance Company by the same
number of days that the Company is delaying sending redemption
proceeds to the other shareholders of the Fund.
1.8. Issuance and transfer of the Company's shares will be by
book entry only. Stock certificates will not be issued to the
Insurance Company or any Account. Shares ordered from the Company
will be recorded in an appropriate title for each Account or the
appropriate subaccount of each Account.
<PAGE>
PAGE 4
1.9. The Company shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Insurance
Company of any income, dividends or capital gain distributions
payable on the Funds' shares. The Insurance Company hereby elects
to receive all income dividends and capital gain distributions
payable on a Fund's shares in additional shares of that Fund. The
Insurance Company reserves the right to revoke this election and to
receive all such income, dividends and capital gain distributions
in cash. The Company shall notify the Insurance Company of the
number of shares issued as payment of dividends and distributions.
1.10. The Company shall make the net asset value per share for
each Fund available to the Insurance Company on a daily basis as
soon as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make those per-share
net asset values available by 4:00 p.m., Mountain Time. If there
are dividends or capital gain distributions payable on the Funds'
Shares, the Company will use its best efforts to make the per share
net asset values and dividend or distribution amounts available by
5:00 p.m., Mountain Time, but in no event later than 6:00 p.m.,
Mountain Time. In the event adjustments are required to correct any
error in the computation of the net asset value of Fund shares made
by the Company or INVESCO, INVESCO shall notify the Insurance
Company as soon as possible after discovering the need for such
adjustments. The parties shall negotiate in good faith to develop a
reasonable method for effecting such adjustments.
ARTICLE II. Representations and Warranties
2.1. The Insurance Company represents and warrants that the
Contracts are, or will be, registered under the 1933 Act; that the
Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws and that the
sale of the Contracts shall comply in all material respects with
applicable state insurance suitability requirements. The Insurance
Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law
and that it has legally and validly established the Account prior
to any issuance or sale thereof as a segregated asset account under
Section 4240 of the New York Insurance Law and has registered, or
prior to any issuance or sale of the Contracts will register, the
Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment
account for the Contracts.
2.2. The Company represents and warrants that Company shares
sold pursuant to this Agreement shall be registered under the 1933
Act, duly authorized for issuance and sale in compliance with the
laws of the State of Maryland and all applicable federal securities
laws and that the Company is and shall remain registered under the
1940 Act. The Company shall amend the registration statement for
its shares under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its shares.
The Company shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the
extent deemed advisable by the Company or INVESCO.
<PAGE>
PAGE 5
2.3. The Company represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended, (the "Code") and that it will
make every effort to maintain that qualification (under Subchapter
M or any successor or similar provision) and that it will notify
the Insurance Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not
so qualify in the future.
2.4. The Insurance Company represents and warrants that the
Contracts are currently treated as annuity contracts under
applicable provisions of the Code and that it will make every
effort to maintain such treatment and that it will notify the
Company and INVESCO immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that
they might not be so treated in the future.
2.5. The Company currently does not intend to make any payments
to finance distribution expenses pursuant to Rule 12b-1 under the
1940 Act or otherwise, although it may make such payments in the
future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Company undertakes to have a
board of directors, a majority of whom are not interested persons
of the Company, formulate and approve any plan under Rule 12b-1 to
finance distribution expenses.
2.6. The Company makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and
expenses and investment policies) complies with the insurance laws
or regulations of any state.
2.7. INVESCO represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with
the Commission. INVESCO further represents that it will sell and
distribute the Company shares in accordance with the laws of the
State of New York and all applicable state and federal securities
laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.8. The Company represents that it is lawfully organized and
validly existing under the laws of the State of Maryland and that
it does and will comply in all material respects with the 1940 Act.
2.9. INVESCO represents and warrants that it is and shall
remain duly registered in all material respects under all
applicable federal and state securities laws and that it shall
perform its obligations for the Company in compliance in all
material respects with the laws of the State of Colorado and any
applicable state and federal securities laws.
2.10. The Company and INVESCO represent and warrant that all of
their officers, employees, investment advisers, investment sub-
advisers, and other individuals or entities dealing with the money
and/or securities of the Company are, and shall continue to be at
all times, covered by a blanket fidelity bond or similar coverage
for the benefit of the Company in an amount not less than the
minimum coverage required currently by Section 17g-(1) of the 1940
<PAGE>
PAGE 6
Act or related provisions as may be promulgated from time to time.
That fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11. The Insurance Company represents and warrants that all of
its officers, employees, investment advisers and other
individuals/entities dealing with the money and/or securities of
the Company are covered by a blanket fidelity bond or similar
coverage for the benefit of the Company, in an amount not less than
$5 million. The aforesaid includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The
Insurance Company agrees to make all reasonable efforts to see that
this bond or another bond containing these provisions is always in
effect, and agrees to notify the Company and INVESCO in the event
that such coverage no longer applies. The Insurance Company further
represents and warrants that the employees of Insurance Company, or
such other persons designated by Insurance Company, listed on
Schedule D have been authorized by all necessary action of
Insurance Company to give directions, instructions and
certifications to the Company and INVESCO on behalf of Insurance
Company. The Company and INVESCO are authorized to act and rely
upon any directions, instructions and certifications received from
such persons unless and until they have been notified in writing by
the Insurance Company of a change in such persons, and the Company
and INVESCO shall incur no liability in doing so.
2.12. The Insurance Company represents and warrants that it
will not purchase Company shares with Account assets derived from
tax-qualified retirement plans except indirectly, through Contracts
purchased in connection with such plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1 INVESCO shall provide the Insurance Company (at INVESCO's
expense) with as many copies of the Company's current prospectus as
the Insurance Company may reasonably request for distribution, at
the Insurance Company's expense, to prospective Contract owners and
applicants. The Company will provide, at the Company's expense, as
many copies of said prospectus as necessary for distribution, at
the Company's expense, to existing Contract owners whose Contract
values are invested in the Company. INVESCO (or the Company) will
provide the copies of said prospectus to the Insurance Company or
to its mailing agent. The Insurance Company will distribute the
prospectus to existing Contract owners and will bill the Company
for the reasonable cost of such distribution. If requested by the
Insurance Company in lieu thereof, the Company shall provide such
documentation (including a final copy of the new prospectus as set
in type at the Company's expense) and other assistance as is
reasonably necessary in order for the Insurance Company once each
year (or more frequently if the prospectus for the Company is
amended) to have the Company's prospectus and the prospectuses of
other mutual funds in which assets attributable to the Contracts
may be invested printed together in one document, in which case the
Company or INVESCO will bear its reasonable share of expenses as
described above, allocated based on the proportionate number of
pages of the Company's and other funds' respective portions of the
document.
<PAGE>
PAGE 7
3.2. The Company's prospectus shall state that the Statement of
Additional Information for the Company (the "SAI") is available
from INVESCO (or in the Company's discretion, the Prospectus shall
state that the SAI is available from the Company), and INVESCO, at
its expense, shall print and provide the SAI free of charge to the
Insurance Company for distribution, at INVESCO's expense, to
prospective Contract owners and applicants. The Company will
provide, at the Company's expense, as many copies of said SAI as
necessary for distribution, at the Company's expense, to any
existing Contract owner whose Contract values are invested in the
Company who requests such SAI or whenever state or federal law
otherwise requires that such SAI be provided. INVESCO (or the
Company) will provide the copies of said SAI to the Insurance
Company or to its mailing agent. The Insurance Company will
distribute the SAI as requested or required and will bill the
Company or INVESCO for the reasonable cost of such distribution.
3.3. The Company, at its expense, shall provide the Insurance
Company or its mailing agent with copies of its proxy material,
reports to stockholders and other communications to stockholders
in such quantity as the Insurance Company shall reasonably require
for distributing to Contract owners. The Insurance Company will
distribute this proxy material, reports and other communications to
existing Contract owners and tabulate the votes and will bill the
Company for the reasonable cost of such distribution and
tabulation.
3.4. If and to the extent required by law, the Insurance
Company shall:
(i) solicit voting instructions from Contract
owners;
(ii) vote the Company shares in accordance with
instructions received from Contract owners; and
(iii) vote Company shares for which no instructions
have been received in the same proportion as
Company shares of such portfolio for which
instructions have been received:
so long as and to the extent that the Commission continues to
interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Insurance Company reserves the
right to vote Company shares held in any segregated asset account
in its own right, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that each of
their separate accounts participating in the Company calculates
voting privileges in a manner consistent with the standards agreed
to by the parties, which standards will also be consistent with
those of the other Participating Insurance Companies. The Insurance
Company shall fulfill its obligations under, and abide by the terms
and conditions of, the Mixed and Shared Funding Exemptive Order.
3.5. The Company will comply with all provisions of the 1940
Act requiring voting by shareholders, and in particular the Company
will either provide for annual meetings (except insofar as the
<PAGE>
PAGE 8
Commission may interpret Section 16 of the 1940 Act not to require
such meetings) or, as the Company currently intends, comply with
Section 16(c) of the 1940 Act (although the Company is not one of
the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the
Company will act in accordance with the Commission's interpretation
of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Insurance Company shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company, a
sub-adviser of one of the Funds, or INVESCO is named, at least ten
calendar days prior to its use. No such material shall be used if
the Company or its designee objects to such use within five
calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or
make any representations or statements on behalf of the Company or
concerning the Company in connection with the sale of the Contracts
other than the information or representations contained in the
registration statement, prospectus or SAI for the Company's shares,
as such registration statement, prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements
for the Company, or in published reports for the Company which are
in the public domain and approved by the Company or INVESCO for
distribution, or in sales literature or other promotional material
approved by the Company or its designee or by INVESCO, except with
the permission of the Company or INVESCO. The Company and INVESCO
agree to respond to any request for approval on a reasonably prompt
and timely basis. Nothing in this Section 4.2 will be construed as
preventing the Insurance Company or its employees or agents from
giving advice on investment in the Company.
4.3. The Company, INVESCO, or its designee shall furnish, or
shall cause to be furnished, to the Insurance Company or its
designee, each piece of sales literature or other promotional
material in which the Insurance Company and/or its separate
account(s), is named at least ten calendar days prior to its use.
No such material shall be used if the Insurance Company or its
designee object to such use within five calendar days after receipt
of that material.
4.4. The Company and INVESCO shall not give any information or
make any representations on behalf of the Insurance Company or
concerning the Insurance Company, the Account, or the Contracts
other than the information or representations contained in a
registration statement, prospectus or statement of additional
information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for the
Account which are in the public domain and approved by the
Insurance Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Insurance
<PAGE>
PAGE 9
Company or its designee, except with the permission of the
Insurance Company. The Insurance Company agrees to respond to any
request for approval on a reasonably prompt and timely basis.
4.5. The Company will provide to the Insurance Company at least
one complete copy of each registration statement, prospectus, SAI,
report, proxy statement, piece of sales literature or other
promotional material, application for exemption, request for no-
action letter, and any amendment to any of the above, that relate
to the Company or its shares, contemporaneously with the filing of
the document with the Commission, the NASD, or other regulatory
authorities.
4.6. The Insurance Company will provide to the Company at least
one complete copy of each registration statement, prospectus,
statement of additional information, report, solicitation for
voting instructions, piece of sales literature and other
promotional material, application for exemption, request for no
action letter, and any amendment to any of the above, that relates
to the Contracts or the Account, contemporaneously with the filing
of the document with the Commission, the NASD, or other regulatory
authorities.
4.7. For purposes of this Agreement, the phrase "sales
literature or other promotional material" includes, but is not
limited to, advertisements, newspaper, magazine, or other
periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other
public media (e.g., on-line networks such as the Internet or other
electronic messages), sales literature (i.e., any written
communication distributed or made generally available to customers
or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts
of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, and registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other
party will make available to the other party's independent auditors
and/or representative of the appropriate regulatory agencies, all
records, data and access to operating procedures that may be
reasonably requested. However, Company and INVESCO shall own and
control all of their respective records pertaining to their
performance of the services under this Agreement.
4.9. The Company and INVESCO hereby consent to the Insurance
Company's use of the names INVESCO and INVESCO VIF-Industrial
Income Portfolio in connection with marketing the Contracts,
subject to Sections 4.1 and 4.2 of this Agreement. Such consent
will terminate with the termination of this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Company and INVESCO shall pay no fee or other
compensation to the Insurance Company under this Agreement, except
that if the Company or any Fund adopts and implements a plan <PAGE>
PAGE 10
pursuant to Rule 12b-1 to finance distribution expenses, then
INVESCO may make payments to the Insurance Company if and in
amounts agreed to by INVESCO in writing, subject to review by the
board of directors of the Company. No such payments shall be made
directly by the Company.
5.2. All expenses incident to performance by the Company under
this Agreement shall be paid by the Company. The Company shall see
to it that all its shares are registered and authorized for
issuance in accordance with applicable federal law and, if and to
the extent deemed advisable by the Company or INVESCO, in
accordance with applicable state laws prior to their sale. The
Company shall bear the expenses for the cost of registration and
qualification of the Company's shares, preparation and filing of
the Company's prospectus, SAI and registration statement, proxy
materials and reports, setting the prospectus in type, setting in
type and printing the proxy materials and reports to shareholders
(including the costs of printing a prospectus that constitutes an
annual report), the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or
transfer of the Company's shares and other typesetting, printing
and distribution expenses set forth in Article III of this
Agreement.
5.3. The Insurance Company shall bear the expenses of printing
and distributing to Contract owners the Contract prospectuses.
ARTICLE VI. Diversification
6.1. The Company will, at the end of each calendar quarter,
comply with Section 817(h) of the Code and Treasury Regulation
1.817-5 relating to the diversification requirements for variable
annuity, endowment, modified endowment or life insurance contracts
and any amendments or other modifications to that Section or
Regulation. In the event of a breach of this Article VI by the
Company, it will take all reasonable steps to: (i) notify the
Insurance Company of such breach; and (ii) adequately diversify the
Company so as to achieve compliance within the grace period
afforded by Treasury Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Company for the existence of
any material irreconcilable conflict between the interests of the
variable contract owners of all separate accounts investing in the
Company. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretive letter, or
any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Fund are being managed; (e) a difference in voting instructions
given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by a Participating Insurance
Company to disregard the voting instructions of variable contract
<PAGE>
PAGE 11
owners. The Board shall promptly inform the Insurance Company if it
determines that an irreconcilable material conflict exists and the
implications thereof. The Board shall have sole authority to
determine whether an irreconcilable material conflict exists and
such determination shall be binding upon the Insurance Company.
7.2 The Insurance Company will report promptly any potential or
existing conflicts of which it is aware to the Board. The Insurance
Company will assist the Board in carrying out its responsibilities
under the Mixed and Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited
to, an obligation by the Insurance Company to inform the Board
whenever Contract owner voting instructions are to be disregarded.
Such responsibilities shall be carried out by Insurance Company
with a view only to the interests of the Contract owners.
7.3. If it is determined by a majority of the Board, or a
majority of its directors who are not interested persons of the
Company, INVESCO, or any sub-adviser to any of the Funds (the
"Independent Directors"), that a material irreconcilable conflict
exists, the Insurance Company and/or other Participating Insurance
Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and
including: (1), withdrawing the assets allocable to some or all of
the separate accounts from the Company or any Fund and reinvesting
those assets in a different investment medium, including (but not
limited to) another Fund of the Company, or submitting the question
whether such segregation should be implemented to a vote of all
affected variable contract owners and, as appropriate, segregating
the assets of any appropriate group (e.g., annuity contract owners,
life insurance contract owners, or variable contract owners of one
or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected variable contract
owners the option of making such a change; and (2), establishing a
new registered management investment company or managed separate
account and obtaining approval thereof by the Commission.
7.4. If a material irreconcilable conflict arises because of a
decision by the Insurance Company to disregard Contract owner
voting instructions and that decision represents a minority
position or would preclude a majority vote, the Insurance Company
may be required, at the Company's election, to withdraw the
affected Account's investment in the Company and terminate this
Agreement with respect to that Account; provided, however that such
withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by
a majority of the Independent Directors. No charge or penalty will
be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Company
gives written notice that this provision is being implemented, and
until the end of that six month period INVESCO and the Company
shall continue to accept and implement orders by the Insurance
Company for the purchase (and redemption) of shares of the Company.
<PAGE>
PAGE 12
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Insurance Company conflicts with the majority of other state
regulators, then the Insurance Company will withdraw the affected
Account's investment in the Company and terminate this Agreement
with respect to that Account within six months after the Board
informs the Insurance Company in writing that it has determined
that the state insurance regulator's decision has created an
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by
a majority of the Independent Directors. No charge or penalty will
be imposed as a result of such withdrawal. Until the end of the
foregoing six month period, INVESCO and the Company shall continue
to accept and implement orders by the Insurance Company for the
purchase (and redemption) of shares of the Company.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the Independent Directors shall determine
whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Company be required to
establish a new funding medium for the Contracts. The Insurance
Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not
adequately remedy any irreconcilable material conflict, then the
Insurance Company will withdraw the Account's investment in the
Company and terminate this Agreement within six (6) months after
the Board informs the Insurance Company in writing of the foregoing
determination, provided, however, that the withdrawal and
termination shall be limited to the extent required by the material
irreconcilable conflict, as determined by a majority of the
Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provision of the Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Mixed and
Shared Funding Exemptive Order) on terms and conditions materially
different from those contained in the Mixed and Shared Funding
Exemptive Order, then (a) the Company and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent those rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this
Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to those Sections are
contained in the Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Insurance Company
8.1(a). The Insurance Company agrees to indemnify and hold
harmless the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act and any <PAGE>
PAGE 13
director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Insurance Company) or litigation (including
reasonable legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Company's
shares or the Contracts and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Contracts or contained in the
Contracts or sales literature for the Contracts (or
any amendment or supplement to any of the
foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished in writing
to the Insurance Company by or on behalf of the
Company for use in the registration statement,
prospectus or statement of additional information
for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of
the Contracts or shares of the Company;
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus, SAI or sales literature of
the Company (or any amendment or supplement) not
supplied by the Insurance Company, or persons under
its control) or wrongful conduct of the Insurance
Company or persons under its control, with respect
to the sale or distribution of the Contracts or
Company Shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, SAI or sales
literature of the Company or any amendment thereof
or supplement thereto or the omission or alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading if such a
<PAGE>
PAGE 14
statement or omission was made in reliance upon
information furnished in writing to the Company by
or on behalf of the Insurance Company: or
(iv) arise as a result of any failure by the Insurance
Company to provide the services and furnish the
materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Insurance Company in this Agreement or arise out of
or result from any other material breach of this
Agreement by the Insurance Company,
as limited by and in accordance with the provisions of Sections
8.1(b) and 8.1(c) hereof.
8.1(b). The Insurance Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against an
Indemnified Party that may arise from that Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of that Indemnified Party's duties or by reason of that
Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to the Company, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless that Indemnified Party shall have notified
the Insurance Company in writing within a reasonable time after the
summons or other first legal process giving information of the
nature of the claim shall have been served upon that Indemnified
Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the
foregoing, the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Insurance Company of its
obligations hereunder except to the extent that the Insurance
Company has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify the
Insurance Company of any such claim shall not relieve the Insurance
Company from any liability which it may have to the Indemnified
Party against whom the action is brought otherwise than on account
of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Insurance Company
shall be entitled to participate, at its own expense, in the
defense of the action. The Insurance Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action; provided, however, that if the
Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to
those available to the Insurance Company, the Insurance Company
shall not have the right to assume said defense, but shall pay the
costs and expenses thereof (except that in no event shall the
Insurance Company be liable for the fees and expenses of more than
one counsel for Indemnified Parties in connection with any one
action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
<PAGE>
PAGE 15
circumstances). After notice from the Insurance Company to the
Indemnified Party of the Insurance Company's election to assume the
defense thereof, and in the absence of such a reasonable conclusion
that there may be different or additional defenses available to the
Indemnified Party, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the
Insurance Company will not be liable to that party under this
Agreement for any legal or other expenses subsequently incurred by
the party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Insurance Company of the commencement of any litigation or
proceedings against them in connection with the issuance or sale of
the Company's shares or the Contracts or the operation of the
Company.
8.2. Indemnification by INVESCO
8.2(a). INVESCO agrees to indemnify and hold harmless the
Insurance Company and each person, if any, who controls the
Insurance Company within the meaning of Section 15 of the 1933 Act
and any director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of INVESCO) or litigation (including reasonable legal and
other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or
acquisition of the Company's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement,
prospectus, SAI or sales literature of the Company
(or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified
Party if the statement or omission or alleged
statement or omission was made in reliance upon and
in conformity with information furnished in writing
to INVESCO or the Company by or on behalf of the
Insurance Company for use in the registration
statement, prospectus or SAI for the Company or in
sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of
the Contracts or Company shares: or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
<PAGE>
PAGE 16
statement, prospectus, statement of additional
information or sales literature for the Contracts
(or any amendment or supplement) not supplied by
INVESCO or persons under its control) or wrongful
conduct of the Company, INVESCO or persons under
their control, with respect to the sale or
distribution of the Contracts or shares of the
Company; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, statement of
additional information or sales literature covering
the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statement or statements therein not misleading, if
such statement or omission was made in reliance
upon information furnished in writing to the
Insurance Company by or on behalf of the Company;
or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials
under the terms of this Agreement (including a
failure, whether unintentional or in good faith or
otherwise, to comply with the diversification
requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by INVESCO
in this Agreement or arise out of or result from
any other material breach of this Agreement by
INVESCO; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b) INVESCO shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities
or litigation incurred or assessed against an Indemnified Party
that may arise from the Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of the
Indemnified Party's duties or by reason of the Indemnified Party's
reckless disregard of obligations and duties under this Agreement
or to the Insurance Company or the Account, whichever is
applicable.
8.2(c) INVESCO shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless the Indemnified Party shall have notified INVESCO in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of
any Indemnified Party to give notice as provided herein shall not
<PAGE>
PAGE 17
relieve INVESCO of its obligations hereunder except to the extent
that INVESCO has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify INVESCO of
any such claim shall not relieve INVESCO from any liability which
it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification
provision. In case any such action is brought against the
Indemnified Parties, INVESCO will be entitled to participate, at
its own expense, in the defense thereof. INVESCO also shall be
entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action; provided, however, that if the
Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to
those available to INVESCO, INVESCO shall not have the right to
assume said defense, but shall pay the costs and expenses thereof
(except that in no event shall INVESCO be liable for the fees and
expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from INVESCO to the
Indemnified Party of INVESCO's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that
there may be different or additional defenses available to the
Indemnified Party, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and INVESCO will
not be liable to that party under this Agreement for any legal or
other expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Insurance Company agrees to notify INVESCO promptly
of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.3 Indemnification By the Company
8.3(a). The Company agrees to indemnify and hold harmless the
Insurance Company, and each person, if any, who controls the
Insurance Company within the meaning of Section 15 of the 1933 Act
and any director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including reasonable legal
and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as
those losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any
member thereof, are related to the operations of the Company and:
(i) arise as a result of any failure by the Company to
provide the services and furnish the materials
under the terms of this Agreement (including a
failure to comply with the diversification
requirements specified in Article VI of this
Agreement); or<PAGE>
PAGE 18
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the
Company in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Company;
as limited by, and in accordance with the provisions of, Sections
8.3(b) and 8.3(c) hereof.
8.3(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against an
Indemnified Party that may arise from the Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the
Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Insurance Company, the Company,
INVESCO or the Account, whichever is applicable.
8.3(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless the Indemnified Party shall have notified
the Company in writing within a reasonable time after the summons
or other first legal process giving information of the nature of
the claim shall have been served upon the Indemnified Party (or
after the Indemnified Party shall have received notice of such
service on any designated agent). Notwithstanding the foregoing,
the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Company of its obligations hereunder
except to the extent that the Company has been prejudiced by such
failure to give notice. In addition, any failure by the Indemnified
Party to notify the Company of any such claim shall not relieve the
Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Company will be
entitled to participate, at its own expense, in the defense
thereof. The Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the
action; provided, however, that if the Indemnified Party shall have
reasonably concluded that there may be defenses available to it
which are different from or additional to those available to the
Company, the Company shall not have the right to assume said
defense, but shall pay the costs and expenses thereof (except that
in no event shall the Company be liable for the fees and expenses
of more than one counsel for Indemnified Parties in connection with
any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances). After notice from the Company to the Indemnified
Party of the Company's election to assume the defense thereof, and
in the absence of such a reasonable conclusion that there may be
different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Company will not be
liable to that party under this Agreement for any legal or other
expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.<PAGE>
PAGE 19
8.3(d). The Insurance Company and INVESCO agree promptly to
notify the Company of the commencement of any litigation or
proceedings against it or any of its respective officers or
directors in connection with this Agreement, the issuance or sale
of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Company.
8.4. A successor by law of the parties to this Agreement shall
be entitled to the benefits of indemnification contained in this
Article VIII. The indemnification provisions contained in this
Article VIII shall survive any termination of this Agreement.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of
Colorado.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934, and 1940 acts, and the rules and regulations and
rulings thereunder, including any exemptions from those statutes,
rules and regulations the Commission may grant (including, but not
limited to, the Mixed and Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon ninety (90) days'
advance written notice to the other parties or, if
later, upon receipt of any required exemptive relief or
orders from the SEC, unless otherwise agreed among the
parties; provided, however such notice shall not be
given earlier than one year following the date of this
Agreement; or
(b) at the option of the Insurance Company to the
extent that shares of Funds are not reasonably
available to meet the requirements of the
Contracts as determined by the Insurance Company,
provided however, that such a termination shall
apply only to the Fund(s) not reasonably
available. Prompt written notice of the election
to terminate for such cause shall be furnished by
the Insurance Company; or
(c) at the option of the Company in the event that
formal administrative proceedings are instituted
against the Insurance Company by the NASD, the
Commission, an insurance commissioner or any
other regulatory body regarding the Insurance
Company's duties under this Agreement or related
to the sale of the Contracts, the operation of
any Account, or the purchase of the Company's
shares, provided, however, that the Company
<PAGE>
PAGE 20
determines in its sole judgment exercised in good
faith, that any such administrative proceedings
will have a material adverse effect upon the
ability of the Insurance Company to perform its
obligations under this Agreement; or
(d) at the option of the Insurance Company in the
event that proceedings are instituted against the
Company or INVESCO by the NASD, the Commission,
or any state securities or insurance department
or any other regulatory body, provided, however,
that the Insurance Company determines in its sole
judgment exercised in good faith, that any such
administrative proceedings will have a material
adverse effect upon the ability of the Company or
INVESCO to perform its obligations under this
Agreement; or
(e) with respect to any Account, upon requisite vote
of the Contract owners having an interest in that
Account (or any subaccount) to substitute the
shares of another investment company for the
corresponding Fund shares in accordance with the
terms of the Contracts for which those Fund
shares had been selected to serve as the
underlying investment media. The Insurance
Company will give at least 30 days' prior written
notice to the Company of the date of any proposed
vote to replace the Company's shares; or
(f) at the option of the Insurance Company, in the
event any of the Company's shares are not
registered, issued or sold in accordance with
applicable state and/or federal law or exemptions
therefrom, or such law precludes the use of those
shares as the underlying investment media of the
Contracts issued or to be issued by the Insurance
Company; or
(g) at the option of the Insurance Company, if the
Company ceases to qualify as a regulated
investment company under Subchapter M of the Code
or under any successor or similar provision, or
if the Insurance Company reasonably believes that
the Company may fail to so qualify; or
(h) at the option of the Insurance Company, if the
Company fails to meet the diversification
requirements specified in Article VI hereof; or
(i) at the option of either the Company or INVESCO,
if (1) the Company or INVESCO, respectively,
shall determine, in their sole judgment
reasonably exercised in good faith, that the
Insurance Company has suffered a material adverse
change in its business or financial condition or
is the subject of material adverse publicity and
<PAGE>
PAGE 21
that material adverse change or material adverse
publicity will have a material adverse impact
upon the business and operations of either the
Company or INVESCO, (2) the Company or INVESCO
shall notify the Insurance Company in writing of
that determination and its intent to terminate
this Agreement, and (3) after considering the
actions taken by the Insurance Company and any
other changes in circumstances since the giving
of such a notice, the determination of the
Company or INVESCO shall continue to apply on the
sixtieth (60th) day following the giving of that
notice, which sixtieth day shall be the effective
date of termination; or
(j) at the option of the Insurance Company, if (1)
the Insurance Company shall determine, in its
sole judgment reasonably exercised in good faith,
that either the Company or INVESCO has suffered a
material adverse change in its business or
financial condition or is the subject of material
adverse publicity and that material adverse
change or material adverse publicity will have a
material adverse impact upon the business and
operations of the Insurance Company, (2) the
Insurance Company shall notify the Company and
INVESCO in writing of the determination and its
intent to terminate the Agreement, and (3) after
considering the actions taken by the Company
and/or INVESCO and any other changes in
circumstances since the giving of such a notice,
the determination shall continue to apply on the
sixtieth (60th) day following the giving of the
notice, which sixtieth day shall be the effective
date of termination; or
(k) at the option of any party to this Agreement upon
another party's material breach of any provision
of this Agreement.
10.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 10.1(a) may
be exercised for any reason or for no reason.
10.3 Notice Requirement. No termination of this Agreement
shall be effective unless and until the party terminating this
Agreement gives prior written notice to all other parties to this
Agreement of its intent to terminate, which notice shall set forth
the basis for the termination. Furthermore,
(a) in the event that any termination is based upon
the provisions of Article VII, or the provisions
of Section 10.1(a), 10.1(i), or 10.1(j) of this
Agreement, the prior written notice shall be
given in advance of the effective date of
termination as required by those provisions; and
<PAGE>
PAGE 22
(b) in the event that any termination is based upon
the provisions of Section 10.1(c) or 10.1(d) of
this Agreement, the prior written notice shall be
given at least ninety (90) days before the
effective date of termination.
10.4. Effect of Termination. Notwithstanding any termination of
this Agreement, the Company and INVESCO shall at the option of the
Insurance Company, continue to make available additional shares of
the Company pursuant to the terms and conditions of this Agreement,
for all Contracts in effect on the effective date of termination of
this Agreement ("Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted
to reallocate investments in the Company, redeem investments in the
Company and/or invest in the Company upon the making of additional
purchase payments under the Existing Contracts. The parties agree
that this Section 10.4 shall not apply to any terminations under
Article VII and the effect of Article VII terminations shall be
governed by Article VII of this Agreement. In addition, with
respect to Existing Contracts, all provisions of this Agreement
will survive and not be affected by any termination of this
Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of that other
party set forth below or at such other address as the other party
may from time to time specify in writing.
If to the Company:
P.O. Box 173706
Denver, Colorado 80217-3706
Attention: General Counsel
If to the Insurance Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440
Attention: Jim Mortensen
Manager - Product Development
with a simultaneous copy to:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440
Attention: Mary Ellyn Minenko
Counsel
If to INVESCO:
P.O. Box 173706
Denver, Colorado 80217-3706
Attention: General Counsel
<PAGE>
PAGE 23
ARTICLE XII. Miscellaneous
12.1. The Company and INVESCO acknowledge that the identities
of the customers of the Insurance Company or any of its affiliates
(collectively, the "Insurance Company Protected Parties" for
purposes of this Section 12.1), information maintained regarding
those customers, and all computer programs and procedures or other
information developed or used by the Insurance Company Protected
Parties or any of their employees or agents in connection with the
Insurance Company's performance of its duties under this Agreement
are the valuable property of the Insurance Company Protected
Parties. The Company and INVESCO agree that if they come into
possession of any list or compilation of the identities of or other
information about the Insurance Company Protected Parties'
customers, or any other information or property of the Insurance
Company Protected Parties, other than such information as may be
independently developed or compiled by the Company or INVESCO from
information supplied to them by the Insurance Company Protected
Parties' customers who also maintain accounts directly with the
Company, INVESCO or other mutual funds advised by INVESCO, the
Company and INVESCO shall hold such information or property in
confidence and refrain from using, disclosing or distributing any
of such information or other property except: (i) with the
Insurance Company's prior written consent; or (ii) as required by
law or judicial process. The Insurance Company acknowledges that
all computer programs, procedures and other information developed
or used by the Company or INVESCO (collectively, the "INVESCO
Protected Parties" for purposes of this Section 12.1) or any of
their employees or agents in connection with the Company's or
INVESCO's performance of their respective duties under this
Agreement are the valuable property of the INVESCO Protected
Parties. The Insurance Company agrees that if it comes into
possession of any information or property of the INVESCO Protected
Parties, other than such information as may be independently
developed or compiled by the Insurance Company, the Insurance
Company shall hold such information or property in confidence and
refrain from using, disclosing or distributing any of such
information or other property except: (i) with the prior written
consent of INVESCO and the Company; or (ii) as required by law or
judicial process. Each party acknowledges that any breach of the
agreements in this Section 12.1 would result in immediate and
irreparable harm to the other parties for which there would be no
adequate remedy at law and agree that in the event of such a
breach, the other parties shall be entitled to equitable relief by
way of temporary and permanent injunctions, as well as such other
relief as any court of competent jurisdiction deems appropriate.
12.2. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any
of the provisions hereof or otherwise affect their construction or
effect.
12.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute
one and the same instrument.
<PAGE>
PAGE 24
12.4. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without
limitation the Commission, the NASD and state insurance regulators)
and shall permit those authorities reasonable access to its books
and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
12.6. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
12.7. No party may assign this Agreement without the prior
written consent of the others.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed
hereto as of the date specified below.
Insurance Company:
AMERICAN CENTURION LIFE ASSURANCE COMPANY
By its authorized officer,
By:
Title:
Date:
ATTEST:
By:
Title:
Date:
Company:
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By its authorized officer,
By:
Title:
Date:
INVESCO:
INVESCO FUNDS GROUP, INC.
By its authorized officer,
By:
Title:
Date:
<PAGE>
PAGE 25
Schedule A
Accounts
Name of Account Date of Resolution of Insurance
Company's Board which Established
the Account
ACL Variable Annuity Account 1 October 12, 1995
<PAGE>
PAGE 26
Schedule B
Contracts
American Centurion Life Assurance Company Deferred Annuity Contract
1. Contract Form 38501
2. Certificate Form 38502-NY
3. Certificate Form 38503-IRA-NY
<PAGE>
PAGE 27
Schedule C
Funds
INVESCO VIF - Industrial Income Portfolio
<PAGE>
PAGE 28
Schedule D
Persons Authorized to Give Instructions to the Company and INVESCO
NAME ADDRESS AND PHONE NUMBER
(1) Hope Jaccks T11/125
Print or Type Name
/s/ Hope Jaccks (612) 671-1175
Signature Phone
(2) Dean Reznecheck T11/125
Print or Type Name
/s/ Dean Reznecheck (612) 671-3182
Signature Phone
(3) Richard Taliaferro T11/125
Print or Type Name
/s/ Richard Taliaferro (612) 671-2748
Signature Phone
(4) Mary Berger T11/125
Print or Type Name
/s/ Mary Berger (612) 671-5003
Signature Phone
(5) Joe Lardy T11/125
Print or Type Name
/s/ Joe Lardy (612) 671-6165
Signature Phone
(6) Patrick Jacobson T11/125
Print or Type Name
/s/ Patrick Jacobson (612) 671-1978
Signature Phone
(7) Chad Callahan T11/125
Print or Type Name
/s/ Chad Callahan (612) 671-2037
Signature Phone
(8) Kathy Rothstein T11/125
Print or Type Name
/s/ Kathy Rothstein (612) 671-3843
Signature Phone
(9) Sheila Ranum T11/1438
Print or Type Name
/s/ Sheila Ranum (612) 671-1148
Signature Phone
All addresses are IDS Tower 10, Minneapolis, MN 55440.
<PAGE>
PAGE 1
August 22, 1996
Board of Directors
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
Gentlemen:
As General Counsel of American Centurion Life Assurance Company
(the Company), I am familiar with its legal affairs and with ACL
Variable Annuity Account 1 (the Account), which is a separate
account of the Company established by the Company's Board of
Directors in accordance with Section 4240, New York Insurance Law.
I am familiar with the Registration Statement on Form N-4 and Pre-
effective Amendment No. 1 thereto (File No. 333-00041/811-07475)
(the Registration Statement), filed by the Company on behalf of the
Account with the Securities and Exchange Commission with respect to
the Account pursuant to the Deferred Annuity Contract (the
Contract).
I have made such examination of law and examined such documents and
records as in my judgment are necessary and appropriate to enable
me to express the following opinions. I am of the opinion that:
1. The Company is duly incorporated, validly existing and in
good standing under the laws of the State of New York, and is
duly licensed or qualified to do business in New York wherein
the business transacted by it requires such licensing or
qualification. The Company has all corporate power required
to carry on its buisness as now conducted and to issue the
Contracts.
2. The Account is a separate account of the Company, duly
established and validly existing pursuant to New York law.
3. The Contracts, when issued, offered and sold in accordance
with the prospectus contained in the aforesaid Registration
Statement and, upon reliance of local law, will be legal and
binding obligations of the Company in accordance with their
terms.
4. There is no limitation as to the interests in the Account
that may be issued.
<PAGE>
PAGE 2
August 22, 1996
Page 2
5. There is no pending or threatened litigation, claims or
assessments (including any unasserted claims or assessments)
against the Company.
Please be advised you are correct in your understanding that I will
advise and consult with you concerning questions of disclosure and
the applicable requirements of Statements of Financial Accounting
Standards No. 5 if, and when, in the course of performing legal
services for the Company or the Accounts with respect to a matter
recognized by me to involve an unasserted claim or assessment that
may require financial statement disclosure or consider disclosure
of any such possible claim or assessment in your financial
statements. You may furnish a copy of this letter to your
independent accountants.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ Eric L. Marhoun
Eric L. Marhoun
General Counsel and Secretary
ELM/KB/dm
<PAGE>
PAGE 1
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated May 3,
1996 on the statutory basis financial statements of American
Centurion Life Assurance Company in Pre-Effective Amendment No. 1
to the Registration Statement (Form N-4 File No. 333-00041) for the
registration of the Privileged Assets Select Annuity to be offered
by American Centurion Life Assurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
August 27, 1996
[ARTICLE] 7
[CIK] 0040937690
[NAME] American Centurion Life Assurance Company
[MULTIPLIER] 1000
[CURRENCY] U.S. DOLLAR
[FISCAL-YEAR-END] DEC-31-1995 DEC-31-1996
[PERIOD-START] JAN-01-1995 JAN-01-1996
[PERIOD-END] DEC-31-1995 JUN-30-1996
[PERIOD-TYPE] YEAR 6 MONTH
[EXCHANGE-RATE] 1 1
[DEBT-HELD-FOR-SALE] 0 0
[DEBT-CARRYING-VALUE] 106810 118981
[DEBT-MARKET-VALUE] 109181 118963
[EQUITIES] 0 0
[REAL-ESTATE] 0 0
[TOTAL-INVEST] 106810 118981
[CASH] 4840 6145
[RECOVER-REINSURE] 0 0
[DEFERRED-ACQUISITION] 0 0
[TOTAL-ASSETS] 113235 126848
[POLICY-LOSSES] 92491 108529
[UNEARNED-PREMIUMS] 0 0
[POLICY-OTHER] 0 0
[POLICY-HOLDER-FUNDS] 225 225
[NOTES-PAYABLE] 0 0
[COMMON] 1000 1000
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 0
[OTHER-SE] 14271 14181
[TOTAL-LIABILITY-AND-EQUITY] 113235 126848
[PREMIUMS] 20799 20734
[INVESTMENT-INCOME] 7694 4263
[INVESTMENT-GAINS] 0 (46)
[OTHER-INCOME] 19 17
[BENEFITS] 25695 23146
[UNDERWRITING-AMORTIZATION] 0 0
[UNDERWRITING-OTHER] 1402 1702
[INCOME-PRETAX] 1415 166
[INCOME-TAX] 1167 (26)
[INCOME-CONTINUING] 248 146
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 248 146
[EPS-PRIMARY] 0 0
[EPS-DILUTED] 0 0
[RESERVE-OPEN] 0 0
[PROVISION-CURRENT] 0 0
[PROVISION-PRIOR] 0 0
[PAYMENTS-CURRENT] 0 0
[PAYMENTS-PRIOR] 0 0
[RESERVE-CLOSE] 0 0
[CUMULATIVE-DEFICIENCY] 0 0
