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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
--
Pre-Effective Amendment No. 3 (File No. 333-00519)
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 X
Amendment No. 4 (File No. 811-07511)
ACL VARIABLE ANNUITY ACCOUNT 2
- -------------------------------------------------------------------
(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)
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective October 28, 1997 (check
appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
on (date) pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(1) of Rule 485
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.
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24-f of the Investment Company Act
of 1940.
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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) NA
(b) Performance information 18(a) NA
(c) Financial statements (b) NA
(c) Independent auditors
5(a) Cover page; About (d) NA
American Centurion Life (e) NA
(b) The variable account (f) NA
(c) The funds
(d) Cover page; The funds 19(a) Distribution of the contracts*
(e) Voting rights About American Centurion Life*
(f) NA (b) NA
(g) NA
20(a) Principal underwriter
6(a) Charges (b) Principal underwriter
(b) Charges (c) NA
(c) Charges (d) NA
(d) NA
(e) The funds 21(a) Performance information
(f) NA (b) Performance information
7(a) Buying your annuity; 22 Calculating Annuity Payouts
Benefits in case of
death; 23(a) NA
The annuity payout (b) NA
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) Withdrawals from your contract
(b) NA
(c) Withdrawals from your contract
(d) Buying your annuity
(e) The annuity in brief
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12(a) Taxes
(b) Key terms
(c) NA
13 NA
14 Table of contents of the
Statement of Additional Information
*Designates page number in the prospectus, which is hereby incorporated by
reference in this Statement of Additional Information.
</TABLE>
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ACL Personal PortfolioSM
______________________, 1997
Variable Annuity Prospectus
The ACL Personal PortfolioSM is a flexible premium variable annuity contract
offered by American Centurion Life Assurance Company (American Centurion Life),
a subsidiary of IDS Life Insurance Company (IDS Life), which is a subsidiary of
American Express Financial Corporation (AEFC). Purchase payments may be
allocated among different accounts, providing variable and/or fixed returns and
payouts. The annuity is available for individual retirement annuities (IRAs),
simplified employee pension plans (SEPs), and nonqualified retirement plans.
ACL Variable Annuity Account 2
Sold by: American Centurion Life Assurance Company.
Home Office: 20 Madison Avenue Extension, P.O. Box 5555, Albany,
NY 12205-0555. Telephone: 800-504-0469.
This prospectus contains information about the variable account that you should
know before investing. Refer to "The variable account" in this prospectus.
The prospectus is accompanied or preceded by the following prospectuses: The
Retirement Annuity Mutual Funds (describing IDS Life Aggressive Growth Fund, IDS
Life International Equity Fund, IDS Life Capital Resource Fund, IDS Life Managed
Fund, IDS Life Special Income Fund, and IDS Life Moneyshare Fund); The OCC
Accumulation Trust, formerly known as Quest for Value Accumulation Trust
(describing OCC Accumulation Trust Managed Portfolio and OCC Accumulation Trust
U.S. Government Income Portfolio); Putnam Variable Trust, formerly known as
Putnam Capital Manager Trust (describing Putnam VT Diversified Income Fund,
Putnam VT Growth and Income Fund, Putnam VT High Yield Fund and Putnam VT New
Opportunities Fund); and GT Global Variable Investment Funds (describing GT
Global Variable Latin America Fund and GT Global Variable New Pacific Fund).
Please read these documents carefully and keep them 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 bank or financial institution, and the
securities it offers are not deposits or obligations of, or guaranteed or
endorsed by any bank or financial institution nor are they insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
agency. Investments in the annuity involve investment risk including the
possible loss of the principle.
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A Statement of Additional Information (SAI) dated ________________, 1997
(incorporated by reference into this prospectus) and filed with the Securities
and Exchange Commission (SEC), 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.
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Table of contents
Key terms.....................................................
The ACL Personal PortfolioSM 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.................................
OCC Accumulation Trust Managed Portfolio.................
OCC Accumulation Trust U.S. Government Income Portfolio..
Putnam VT Diversified Income Fund........................
Putnam VT Growth and Income Fund.........................
Putnam VT High Yield Fund................................
Putnam VT New Opportunities Fund.........................
GT Global Variable Latin America Fund....................
GT Global Variable New Pacific Fund......................
The fixed account.............................................
Buying your annuity...........................................
The retirement date......................................
Beneficiary..............................................
How to make payments.....................................
Charges.......................................................
Contract administrative charge...........................
Variable account administrative charge...................
Mortality and expense risk fee...........................
Withdrawal charge........................................
Waiver of withdrawal 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 subaccounts...................
Transfer policies........................................
Two ways to request a transfer or a withdrawal...........
Withdrawals from your contract................................
Withdrawal policies......................................
Receiving payment when you request a withdrawal..........
Changing ownership............................................
Benefits in case of death.....................................
The annuity payout period.....................................
Annuity payout plans.....................................
Death after annuity payouts begin........................
Taxes.........................................................
Voting rights.................................................
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Substitution of investments...................................
Distribution of the contracts.................................
About American Centurion Life................................
Regular and special reports...................................
Services................................................
Table of contents of the Statement of Additional
Information.............................................
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Key terms
These terms can help you understand details about your annuity.
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 annuity payouts are
based.
Annuity - A 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.
Annuity payouts - An amount paid at regular intervals under one of several plans
available to the owner and/or any other payee. This amount may be paid on a
variable or fixed basis.
Annuity unit - A measure of the value of each variable subaccount used to
calculate the annuity payouts you receive.
Beneficiary - The person designated to receive annuity benefits in case of the
owner's or annuitant's death.
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.
Contract value - The total value of your annuity before any applicable
withdrawal charge and any contract administrative charge have been deducted.
Contract year - A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
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
allocations, transfers, payout options, etc.). Usually, but not always, the
owner is also the annuitant. The owner is responsible for taxes, regardless of
whether he or she receives the annuity's benefits.
Purchase payments - Payments made to American Centurion Life for an annuity.
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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)
o Simplified Employee Pension Plans (SEPs)
All other annuities are considered nonqualified annuities.
Retirement date - The date when annuity payouts are scheduled to begin. This
date is first established when you start your contract. You can change it in the
future.
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 - Consists 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.
Withdrawal charge - A deferred sales charge that may be applied if you make a
withdrawal from your annuity before the retirement date.
Withdrawal value - The amount you are entitled to receive if you fully withdraw
your annuity. It is the contract value minus any applicable withdrawal charge
and contract administrative charge.
The ACL Personal PortfolioSM in brief
Purpose: The ACL Personal PortfolioSM 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 retirement date), the annuity provides
lifetime or other forms of payouts to you or to anyone you designate.
Ten-day free look: You may return your annuity to your agent or to our Albany
home office within 10 days after it is delivered to you and receive a full
refund of all your purchase payments.
Accounts: You may allocate your purchase payments among any or all
of:
o fourteen variable subaccounts of the variable account, 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. We cannot guarantee that the value at the retirement date will equal
or exceed the total of purchase payments allocated to the variable
subaccounts. (p. )
o one fixed account, which earns interest at rates that are
adjusted periodically by American Centurion Life. (p. )
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Buying the annuity: Your agent will help you complete and submit an application.
Applications are subject to acceptance at our Albany home office. You may buy a
nonqualified annuity or a qualified annuity including an IRA. Payment must be
made in a lump sum with the option of additional payments in the future.
o Minimum initial payment - $2,000
o Minimum additional payment - $50
o Maximum total payment(s) (without prior approval) - $1,000,000
Transfers: Subject to certain restrictions you may redistribute
your money among accounts without charge at any time until annuity
payouts begin, and once per contract year among the variable
subaccounts thereafter. You may establish automated transfers
among the fixed account and variable subaccount(s). (p. )
Withdrawals: You may withdraw all or part of your contract value
at any time before the retirement date. You also may establish
automated partial withdrawals. Withdrawals may be subject to
charges and tax penalties (including a 10% IRS penalty if
withdrawals are made prior to your reaching age 59 1/2) and may
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 an amount at
least equal to the contract value. (p. )
Annuity payouts: The contract value of your investment can be applied to an
annuity payout plan that begins on the retirement 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 may be made on a fixed or variable basis, or
both. Total monthly payouts include amounts from each variable subaccount and
the fixed account. (p. )
Taxes: Generally, your annuity grows tax-deferred until you fully
withdraw it or begin to receive payouts. (Under certain
circumstances, IRS penalty taxes may apply.) Even if you direct
payouts to someone else, you will be taxed on the income if you are
the owner. (p. )
Charges: Your ACL Personal PortfolioSM is subject to a $30 annual contract
administrative charge, a 0.15% variable account administrative charge, a 1.25%
mortality and expense risk fee and a withdrawal charge.
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Expense summary
The purpose of this table is to help you understand the various costs and
expenses associated with the ACL Personal PortfolioSM.
You pay no sales charge when you purchase the ACL Personal PortfolioSM. 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 "Contract charges."
Contract Owner Expenses
Withdrawal charge (contingent deferred sales charge as percent
of payments)
Contract Years From Withdrawal Charge
Payment Receipt Percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
Annual Contract Administrative Charge: $30
Variable Account Annual Expenses
Variable Account Administrative Charge
(as a percentage of average daily net assets
of the underlying fund)...................................0.15%
Mortality and Expense Risk Fee
(as percentage of average daily net assets
of the underlying fund)...................................1.25%
Total Variable Account Annual Expenses.....................1.40%
Annual Operating Expenses of Underlying Mutual Funds management fees and other
expenses deducted as a percentage of average net assets as follows:
<TABLE>
<CAPTION>
OCC**
IDS Life IDS Life IDS Life IDS Life Accumulation
Aggressive International Capital IDS Life Special IDS Life Trust Managed
Growth Equity Resource Managed Income Moneyshare (after expense
limitations)
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 0.60% 0.82% 0.60% 0.59% 0.59% 0.50% 0.80%
Other expenses 0.09 0.16 0.08 0.07 0.10 0.06 0.10
Total 0.69%* 0.98%* 0.68%* 0.66%* 0.69%* 0.56%* 0.90%
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OCC**
Accumulation
Trust U.S. Gov- Putnam VT Putnam VT GT Global GT Global
ernment Income Diversified Growth and Putnam VT Putnam VT New Variable Variable
(after expense Income Income High Yield Opportunities Latin America New Pacific
limitations) (after expense (after expense
reimbursements) reimbursements)
Management fees 0.60% 0.70% 0.49% 0.68% 0.63% 1.00% 1.00%
Other expenses 0.42 0.13 0.05 0.08 0.09 0.17 0.12
Total 1.02% 0.83%+ 0.54%+ 0.76%+ 0.72%+ 1.17%++ 1.12%++
</TABLE>
*Annualized operating expenses of underlying mutual funds at Dec. 31, 1996.
**The annual expenses of the OCC Accumulation Trust Portfolios (the
"Portfolios") as of Dec. 31, 1996 have been restated to reflect new
management fee and expense limitation agreements in effect as of May 1, 1996.
Additionally, Other Expenses are shown gross of certain expense offsets
afforded the Portfolios which effectively lowered overall custody expenses.
Effective May 1, 1996, the expenses of the Portfolios were contractually
limited by OpCap Advisors so that their respective annualized operating
expenses (net of any expense offsets) do not exceed 1.25% of their respective
average daily net assets. Furthermore, through Dec. 31, 1997, the annualized
operating expenses of the Managed and U.S. Government Income Portfolios will
be voluntarily limited by OpCap Advisors so that annualized operating
expenses (net of any expense offsets) of these Portfolios do not exceed 1.00%
of their respective average daily net assets. Without such contractual and
voluntary expense limitations, and without giving effect to any expense
offsets the Management Fees, Other Expenses and Total Portfolio Annual
Expenses incurred for the fiscal year ended Dec. 31, 1996 would have been
.60%, 1.74% and 2.34%, respectively, for the U.S. Government Income
Portfolio; and 80%, .10% and .90%, respectively, for the Managed Portfolio.
+Operating expenses of the underlying mutual funds at Dec. 31, 1996.
++Figures in the "Other Expenses" and "Total" columns are restated from the
amounts you would have incurred in 1996 to reflect fee and reimbursement or
waiver arrangements. If there had been no reimbursement of expenses by
Chancellor LGT Asset Management and no expense reductions, the actual
expenses of each fund, expressed as a percentage of net assets, with
"Management fees" stated first, then "Other expenses," followed by "Total,"
would have been as follows: GT Global Variable Latin America Fund, 1.00%,
0.42%, 1.42%; and GT Global Variable New Pacific Fund, 1.00%, 0.40%, 1.40%.
Example:*
<TABLE>
<CAPTION>
OCC
IDS Life IDS Life IDS Life IDS Life Accumulation
Aggressive International Capital IDS Life Special IDS Life Trust Managed
Growth Equity Resource Managed Income Moneyshare
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C>
1 year $ 92.71 $ 95.55 $ 92.61 $ 92.42 $ 92.71 $ 91.44 $ 94.77
3 years 119.98 128.48 119.68 119.09 119.98 116.13 126.14
5 years 149.80 163.96 149.31 148.32 149.80 143.37 160.08
10 years 256.49 284.67 255.50 253.52 256.49 243.54 276.99
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 22.71 $ 25.55 $ 22.61 $ 22.42 $ 22.71 $ 21.44 $ 24.77
3 years 69.98 78.48 69.68 69.09 69.98 66.13 76.14
5 years 119.80 133.96 119.31 118.32 119.80 113.37 130.08
10 years 256.49 284.67 255.50 253.52 256.49 243.54 276.99
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OCC
Accumulation
Trust U.S. Putnam VT Putnam VT GT Global GT Global
Government Diversified Growth and Putnam VT Putnam VT New Variable Variable
Income Income Income High Yield Opportunities Latin America New Pacific
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and full withdrawal at the end of each time period:
1 year $ 95.94 $ 94.08 $ 91.24 $ 93.40 $ 93.01 $ 97.39 $ 96.91
3 years 129.64 124.09 115.54 122.04 120.86 134.00 132.55
5 years 165.90 156.67 142.37 153.24 151.28 173.11 170.72
10 years 288.48 270.21 241.53 263.38 259.45 302.62 297.93
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
1 year $ 25.94 $ 24.08 $ 21.24 $ 23.40 $ 23.01 $ 27.39 $ 26.91
3 years 79.64 74.09 65.54 72.04 70.86 84.00 82.55
5 years 135.90 126.67 112.37 123.24 121.28 143.11 140.72
10 years 288.48 270.21 241.53 263.38 259.45 302.62 297.93
</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 contract administrative charge is approximated
as a .177% charge based on the estimated average contract size.
Financial statements
The SAI dated _____, 1997 contains:
the audited financial statements of American Centurion Life
including:
- balance sheets as of Dec. 31, 1996 and Dec. 31, 1995
- related statements of income and cash flows for the years
ended Dec. 31, 1996 and 1995
The SAI does not include financial statements of the variable account because
this is a new account that did not have any activity in 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.
Performance figures are calculated on the basis of historical performance of the
funds. The performance figures relating to these funds assume that the contract
was offered prior to ____________, 1997, which it was not. 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.
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PAGE 14
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.
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and 10 years (or
up to the life of the account if it is less than 10 years old). This figure
reflects deduction of all applicable charges, including the contract
administrative charge, variable account administrative charge, mortality and
expense risk fee, and withdrawal charge, assuming a full withdrawal at the end
of the illustrated period. Optional average annual total return quotations may
be made that do not reflect a withdrawal charge deduction (assuming no
withdrawal).
Aggregate total return: Represents the cumulative change in the value of an
investment over 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
contract administrative charge, mortality and expense risk fee, variable account
administrative charge and withdrawal charge, assuming a withdrawal at the end of
the illustrated period. Optional aggregate total return quotations may be made
that do not reflect a withdrawal charge deduction (assuming no withdrawal).
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 the address or telephone number on the cover.
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:
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PAGE 15
Subaccount
IDS Life Aggressive Growth Fund IAG
IDS Life International Equity Fund IIE
IDS Life Capital Resource Fund ICR
IDS Life Managed Fund IMG
IDS Life Special Income Fund ISI
IDS Life Moneyshare Fund IMS
OCC Accumulation Trust Managed Portfolio IMD
OCC Accumulation Trust U.S. Government
Income Portfolio IUS
Putnam VT New Opportunities Fund IDI
Putnam VT Growth and Income Fund IGI
Putnam VT High Yield Fund IHY
Putnam VT Diversified Income Fund INO
GT Global Variable Latin America Fund ILA
GT Global Variable New Pacific Fund IPA
Each variable subaccount 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 subaccount alone. No variable
subaccount will be charged with liabilities of any other variable account or of
our general business.
The variable account was established under New York law on October 12, 1995, and
the subaccounts are registered together as a single 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. All obligations arising under the contracts are general obligations
of American Centurion Life.
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.
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PAGE 16
IDS Life Special Income Fund
Objective: 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.
OCC Accumulation Trust Managed Portfolio
Objective: growth of capital over time. Invests primarily in
common stocks, bonds and money market and cash equivalent
securities, the percentages of which will vary based on
management's assessment of relative investment values.
OCC Accumulation Trust U.S. Government Income Portfolio
Objective: high level of current income together with protection of
capital. Invests exclusively in debt obligations, including
mortgage-backed securities, issued or guaranteed by the United
States government, its agencies or instrumentalities.
Putnam VT Diversified Income Fund
Objective: high current income consistent with capital preservation by investing
in the following three sectors of the fixed income securities markets: a U.S.
Government Sector, a High Yield Sector which invests primarly in securities
known as "junk bonds" and an International Sector. Consult the Putnam Variable
Trust prospectus for further information on the risks associated with this
fund's investments in higher-yield, higher-risk fixed income securites.
Putnam VT Growth and Income Fund
Objective: capital growth and current income by investing primarily
in common stocks that offer potential for capital growth, current
income or both.
Putnam VT High Yield Fund
Objective: high current income and, when consistent with this objective, a
secondary objective of capital growth by investing primarily in high-yielding,
lower-rated fixed income securities constituting a portfolio which Putnam
Investment Management, Inc. ("Putnam Management") believes does not involve
undue risk to income or principal.
Putnam VT New Opportunities Fund
Objective: long-term capital appreciation by investing principally
in common stocks of companies in sectors of the economy which
Putnam Management believes possess above average long-term growth
potential.
<PAGE>
PAGE 17
GT Global Variable Latin America Fund
Objective: capital appreciation. Invests primarily in a broad range of
securities including common and preferred stock, rights, warrants and securities
convertible into common stock, as well as bonds, notes, debentures or other
forms of indebtedness of Latin American issuers.
GT Global Variable New Pacific Fund
Objective: long-term growth of capital. Invests under normal
circumstances, at least 65% of its assets in equity securities of
issuers domiciled in Australia, Hong Kong, Indonesia, Malaysia, New
Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan
and Thailand.
More comprehensive information regarding each fund is contained in that fund's
prospectus. You should read the fund prospectus and consider carefully, and on a
continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the contract value
will equal or exceed the total purchase payments made. Some funds may involve
more risk than others. Please monitor your investment accordingly.
All funds are available to serve as the underlying investment for variable
annuities, and some funds also are available to serve as the underlying
investment for variable life insurance contracts. It is conceivable that in the
future it may be disadvantageous for variable annuity separate accounts and
variable life insurance separate accounts to invest in the available funds
simultaneously.
Although American Centurion Life and the funds do not currently foresee any such
disadvantages either to variable annuity contract owners or to variable life
insurance policy owners, the boards of directors or trustees of the appropriate
funds will monitor events in order to identify any material conflicts between
such contract owners and policy owners and 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 and variable
annuity separate accounts, the variable annuity contract 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 that 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
<PAGE>
PAGE 18
right to modify the contract, 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 contract
continues to qualify as an annuity for federal income tax purposes. We reserve
the right to modify the contract as necessary to comply with any new tax laws.
IDS Life is the investment manager and AEFC is the investment advisor for each
of the IDS Life funds. IDS International, Inc., a wholly-owned subsidiary of
AEFC, is the sub-investment advisor for IDS Life International Equity Fund.
OpCap Advisors is the investment manager for the OCC Accumulation Trust
portfolios. Putnam Management, is the investment manager for the Putnam VT
funds. Chancellor LGT Asset Management is the investment manager for the GT
Global Funds.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the funds' prospectuses for complete
information on investment risks, deductions, expenses and other facts you should
know before investing. These prospectuses are available by contacting American
Centurion Life at the home office address or telephone number on the front of
this prospectus.
The fixed account
Purchase payments also may be allocated to the fixed account. The 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 and compounded daily to produce an effective annual
interest rate. We may change the interest rates 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 your annuity
Your agent will help you prepare and submit your application, and send it along
with your initial purchase payment to our Albany home office. As the owner, you
have all rights and may receive all benefits under the contract. You cannot buy
an annuity or become an annuitant if you are 81 or older (age 76 or older for
qualified annuities).
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PAGE 19
When you apply, you can select:
o the subaccount(s) and/or fixed account 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
retirement date); and
o a beneficiary.
If your application is complete, we will process it and apply your purchase
payment to your subaccount(s) and fixed account within two business days after
we receive it at our Albany home office. If your application is accepted, we
will send you a contract. If we cannot accept your application within five
business days, we will decline it and return your payment. We will credit
additional purchase payments to your account(s) at the next close of business
after we receive and accept your payments at our Albany home office. Additional
purchase payments may be made to nonqualified and qualified annuities until the
retirement date.
The retirement date
Annuity payouts will be scheduled to begin on the retirement 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.
For nonqualified annuities, the retirement date must be:
o no earlier than the 60th day after the contract's effective
date; and
o no later than the annuitant's 90th birthday.
For qualified annuities, to avoid IRS penalty taxes, the retirement 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 withdrawals from
this annuity, annuity payouts can start as late as the annuitant's 90th
birthday.
Beneficiary
If death benefits become payable before the retirement date, your named
beneficiary will receive all or part of the contract value. If there is no named
beneficiary, then you or your estate will be the beneficiary. (See "Payment in
case of death" for more about beneficiaries.)
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Minimum payment
If single payment:
Nonqualified: $2,000
Qualified: $2,000
Minimum additional purchase payment(s): $50
Maximum payment(s): $1,000,000 of cumulative payments without
prior approval
How to make payments
By letter
Send your check along with your name and contract number to:
Regular mail:
American Centurion Life Assurance Company
P.O. Box 5555
Albany, NY 12205-0555
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12205
Charges
Contract administrative charge
This fee is for establishing and maintaining your records. We deduct $30 from
the contract value on your contract anniversary at the end of each contract
year. We will waive this charge when the contract value is $50,000 or more on
the current contract anniversary.
If you take a full withdrawal from your contract, the $30 annual charge will be
deducted at the time of withdrawal regardless of contract value. The annual
charge cannot be increased and does not apply after annuity payouts begin.
Variable account administrative charge
This charge is applied daily to the variable subaccounts and reflected in the
unit values of the subaccounts. Annually, it totals 0.15% of their average daily
net assets. It covers certain administrative and operating expenses of the
subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. The
variable account administrative charge cannot be increased.
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PAGE 21
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 accumulation unit values of the
subaccounts. The subaccounts pay this fee at the time dividends are distributed
from the funds in which they invest. Annually, the fee totals 1.25% of the
subaccounts 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 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, 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 contract administrative charge and variable account
administrative charge cannot be increased and may not cover our expenses. Any
deficit would have to be made up from our general assets.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses. We do not expect that the withdrawal charge, discussed in
the following paragraphs, will cover sales and distribution expenses.
Withdrawal charge
If you withdraw part or all of your contract, you may be subject to a withdrawal
charge. The withdrawal amount you request is determined by drawing from your
total contract value in the following order:
1. First, we withdraw up to 10% of your prior anniversary contract value not yet
withdrawn this contract year. There is no withdrawal charge on withdrawals
totaling up to 10% of your prior anniversary contract value each contract year.
2. Next, we withdraw any contract earnings (contract value minus all purchase
payments received and not previously withdrawn) in excess of the annual 10% free
withdrawal amount. There is no withdrawal charge on contract earnings.
3. Next, if necessary, we withdraw purchase payments received eight or more
contract years before the withdrawal and not previously withdrawn. There is no
withdrawal charge on purchase payments received eight or more contract years
before withdrawal.
4. Finally, if necessary, we withdraw purchase payments received in the seven
contract years before the withdrawal. There is a withdrawal charge on these
payments. We determine your withdrawal charges by multiplying each of these
payments by the applicable withdrawal charge percentage, and then totaling the
withdrawal charges.
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PAGE 22
There is a withdrawal charge on payments received seven or less contract years
before withdrawal. We determine your withdrawal charge by multiplying each of
these payments by the applicable withdrawal charge percentage, and then totaling
the withdrawal charges.
The withdrawal charge percentage depends on the number of contract years since
you made the payment(s).
Contract Years From Withdrawal Charge
Payment Receipt Percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
Withdrawal charge calculation example
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
o The contract date is July 1, 1998 with a contract year of July 1 through
June 30 and with an anniversary date of July 1 each year; and
o We received these payments - $10,000 July 1, 1998, $8,000 Dec.
31, 2004 and $6,000 Feb. 20, 2006; and
o The owner withdraws the contract for its total withdrawal
value of $38,101 on Aug. 5, 2008 and had not made any other
withdrawals during that contract year; and
o The prior anniversary July 1, 2008 contract value was $38,488.
Withdrawal Charge Explanation
$ 0 $3,848.80 is 10% of the prior anniversary
contract value withdrawn without withdrawal
charge; and
0 $10,252.20 is contract earnings in excess of
the 10% free withdrawal amount withdrawn
without withdrawal charge; and
0 $10,000 July 1, 1998 payment was received eight
or more contract years before withdrawal and is
withdrawn without withdrawal charge; and
240 $8,000 Dec. 31, 2004 is in its fifth contract
year from receipt, withdrawn with a 3%
withdrawal charge; and
<PAGE>
PAGE 23
240 $6,000 Feb. 20, 2006 is in its fourth contract
year from receipt, withdrawn with a 4%
withdrawal charge.
- ----------
$480
The withdrawal charge is calculated so that the total amount minus any
withdrawal charge equals the amount you request. If you take a full withdrawal
from your contract, the $30 contract charge also will be deducted.
Waiver of withdrawal charges There are no withdrawal charges for:
o withdrawals during the year totaling up to 10% of your prior
contract anniversary contract value;
o contract earnings - if any - in excess of the annual 10% free
withdrawal amount; and
o required minimum distributions from a qualified annuity after you reach
age 70 1/2 (for those amounts required to be distributed from this annuity
only);
o contracts settled using an annuity payout plan; and
o death benefits.
Possible group reductions: In some cases lower sales and administrative expenses
may be incurred due to the size of the group, the average contribution and the
use of group enrollment procedures. In such cases, we may be able to reduce or
eliminate the contract administrative and withdrawal charges. However, we expect
this to occur infrequently.
Valuing your investment
Here is how your fixed account and variable subaccounts are valued:
Fixed account: The amounts allocated to the fixed account are valued directly in
dollars and equal the sum of your purchase payments and transfer amounts plus
interest earned, less any amounts withdrawn or transferred and any contract
administrative charge.
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 contract for that subaccount.
Conversely, each time you take a partial withdrawal, transfer amounts out of a
variable subaccount, or are assessed a contract administrative charge, a certain
number of accumulation units are subtracted from your contract.
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.
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PAGE 24
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, after deduction of any premium taxes, 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 Determined each business day by:
o 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 and the variable account administrative
charge 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
subaccount(s);
o transfers into or out of the variable subaccount(s);
o partial withdrawals;
o withdrawal charges; and/or
o contract administrative charges.
Accumulation unit values may fluctuate due to:
o changes in net asset value of underlying mutual fund(s);
o dividends distributed to the variable subaccount(s);
o capital gains or losses of underlying mutual fund(s);
o mutual fund operating expenses;
o mortality and expense risk fees; and/or
o variable account administrative charges.
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PAGE 25
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.
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. For specific features
contact your agent.
How dollar-cost averaging works
<TABLE>
<CAPTION>
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 18 5.56
Mar 100 17 5.88
you automatically Apr 100 15 6.67
buy more units
when the per unit May 100 16 6.25
market price is low....
Jun 100 18 5.56
Jul 100 17 5.88
Aug 100 19 5.26
and fewer units Sep 100 21 4.76
when the per unit
market price is Oct 100 20 5.00
high.
</TABLE>
You have paid an average price of only $17.91 per unit over the 10 months, while
the average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any variable subaccount will gain
in value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
* Some restrictions may apply.
Transferring money between subaccounts
You may transfer money from any one subaccount, or the fixed account, to another
before annuity payouts begin. Certain restrictions apply to transfers involving
the fixed account. If we receive your request before the close of business, we
will process
<PAGE>
PAGE 26
it that day. Requests received after the close of business will be processed the
next business day. There is no charge for transfers. Before making a transfer,
you should consider the risks involved in switching investments.
We may suspend or modify the transfer privileges at any time as follows:
o Limit the number of transfers to 12 per contract year; and/or
o Require up to 10 valuation dates between each transfer; and/or
o Limit the maximum transfer amount on any valuation date to
$2,000,000; and/or
o Upon 30 days written notice, only accept transfer instructions from you
and not from your representative, agent or any person acting under a power
of attorney from you.
We may make these transfer privilege modifications on a uniform basis for all
contractholders in a class, if we determine, in our sole discretion, that the
exercise of transfer rights by one or more contract owners is, or would be, to
the disadvantage of other contract owners.
(For information on transfers after annuity payouts begin, see
"Transfer policies.")
Transfer policies
o You may transfer contract values between the variable subaccounts or from
the subaccount(s) to the fixed account at any time. However, if you have
made a transfer from the fixed account to the subaccount(s), you may not
make a transfer from any subaccount back to the fixed account for six
months following that transfer.
o You may transfer contract values from the fixed account to the variable
subaccount(s) on or within 30 days before or after the contract
anniversary (except for automated transfers, which can be set up for
transfer periods of your choosing subject to certain minimums).
o If we receive your request on or within 30 days before or after the
contract anniversary date, the transfer from the fixed account to the
variable subaccount(s) will be effective on the day we receive it.
o We will not accept requests for transfers from the fixed
account at any other time.
o Once annuity payouts begin no transfers may be made to or from the fixed
account, but transfers may be made once per contract year among the
variable subaccounts.
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PAGE 27
Two ways to request a transfer or a withdrawal
1 By letter
Send your name, contract number, Social Security number or taxpayer
identification number and signed request for a transfer or withdrawal to:
Regular mail:
American Centurion Life Assurance Company
P.O. Box 5555
Albany, NY 12205-0555
Express mail:
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12203
Minimum amount
Mail transfers: $500 or entire variable subaccount or fixed
account balance
Mail withdrawals: $500 or entire variable subaccount or fixed
account balance
Maximum amount
Mail transfers: Contract value
Mail withdrawals: Contract value
2 By automated transfers and automated partial withdrawals
Your agent can help you set up automated transfers among your subaccount(s) or
fixed account or partial withdrawals 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 may not exceed an amount that, if continued, would
deplete the fixed account or subaccount(s) from which you are transferring
within 12 months.
o Automated transfers and automated partial withdrawals are subject to all
of the contract provisions and terms, including transfer of contract
values between accounts. Automated withdrawals may be restricted by
applicable law under some contracts.
o Automated partial withdrawals may result in IRS taxes and
penalties on all or part of the amount withdrawn.
Minimum amount
Automated transfers or withdrawals: $100 monthly/$250 quarterly
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PAGE 28
Maximum amount
Automated transfers or withdrawals: Contract value (except for
automated transfers from
the fixed account)
Withdrawals from your contract
As owner, you may withdraw all or part of your contract at any time before
annuity payouts begin by sending a written request to American Centurion Life.
For total withdrawals we will compute the value of your contract at the close of
business after we receive your request. We may ask you to return the contract.
You may have to pay withdrawal charges (see "Withdrawal charge") and IRS taxes
and penalties (see "Taxes"). No withdrawals may be made after annuity payouts
begin.
Withdrawal policies
If you have a balance in more than one account and request a partial withdrawal,
we will withdraw money from all your subaccounts and/or the fixed account in the
same proportion as your value in each correlates to your total contract value,
unless you request otherwise.
Receiving payment when you request a withdrawal
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 withdrawal 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.
NOTE: You will be charged a fee if you request express mail
delivery.
Changing ownership
You may change ownership of your nonqualified annuity at any time by filing a
change of ownership on a form approved by us and sent to our Albany home 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 authenticity. If these procedures are followed,
we take no responsibility for the validity of the change.
<PAGE>
PAGE 29
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 contract 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 a contract may be transferred to the annuitant.
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 as follows:
For contracts where both the owner and annuitant were 75 or younger on the date
the contract was issued and if all withdrawals you have made from this contract
have been without withdrawal charges, the beneficiary receives the greater of:
1. the contract value; or
2. the total purchase payments paid less any amounts withdrawn;
or
3. on or after the fifth contract anniversary, the death benefit as of the
most recent fifth contract anniversary adjusted by adding any purchase
payments made since that most recent fifth contract anniversary and by
subtracting any amounts withdrawn since that most recent fifth contract
anniversary.
For contracts where both the owner and annuitant were 75 or younger on the date
the contract was issued and you have made withdrawals subject to withdrawal
charges, the beneficiary receives the contract value.
For contracts where either the owner or annuitant were 76 or older on the date
the contract was issued, the beneficiary receives the contract value.
If your spouse is sole beneficiary under a nonqualified annuity and you die
before the retirement 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 contract in force.
Under a qualified annuity, if the annuitant dies before annuity payouts begin,
and the spouse is the only beneficiary, the spouse may keep the annuity as owner
until the date on which the spouse reaches 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.
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PAGE 30
Payments: 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 contract 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, or other date
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life
or life expectancy.
When paying the beneficiary, we will determine the contract'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 of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement 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
contract value on your retirement date. No withdrawal charges are deducted under
the payout plans listed below.
You also decide whether annuity payouts are to be made on a fixed
or variable basis, or a combination of fixed and variable. Amounts
of fixed and variable payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex;
o the annuity table in the contract; and
o the amounts you allocated to the account(s) at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccount(s) you select. These payouts will vary from month
to month because the performance of the underlying mutual funds will fluctuate.
(In the case of fixed annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Transfer policies."
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract 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.
<PAGE>
PAGE 31
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 you elect. 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 retirement 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 while both the annuitant and a joint annuitant 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 (available as a fixed
payout only): Monthly payouts are made for a specific payout
period of 10 to 30 years that you elect. 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 annuitant's retirement 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 contract 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 contract value to the owner in a lump sum or to change
the frequency of the payouts.
<PAGE>
PAGE 32
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 contract value is taxable to
you only when you receive a payout or withdrawal. (However, see detailed
discussion below.) Any portion of the annuity payouts and any withdrawals 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
according to our records.
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 annuity contracts issued by the
same company to the same owner during a calendar year are to be taxed as a
single, unified contract when distributions are taken from any one of such
contracts.
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 or
your employer invested in your contract with pre-tax dollars as part of a
qualified retirement plan, such amounts are not considered to be part of your
investment in the contract and will be taxed when paid to you.
Withdrawals: If you withdraw part or all of your contract before your annuity
payouts begin, your withdrawal payment will be taxed to the extent that the
value of your contract immediately before the withdrawal exceeds your
investment. You also may have to pay a 10% IRS penalty for withdrawals made
prior to age 59 1/2. For qualified annuities, other penalties may apply if you
make withdrawals from 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 contract is taxable as ordinary income to the
beneficiary in the year(s) he or she receives the payments.
Annuities owned by corporations, partnerships or trusts: For nonqualified
annuities 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 income
will remain tax-deferred.
<PAGE>
PAGE 33
Penalties: If you receive amounts from your contract 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 make
withdrawals from your annuity before your plan specifies that payouts can be
made.
Withholding, generally: If you receive all or part of the contract 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 your annual tax return.
If the payment is part of an annuity payout plan, the amount of withholding
generally is computed using payroll tables. You may 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 may elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
withdrawal) 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 may elect not to have this withholding
occur.
The state also imposes withholding requirements similar to the federal
withholding described above. Therefore, 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 withdrawal for federal income tax purposes. If the gift
is a currently taxable event for income tax purposes, 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 value of the annuity at the
time of the transfer.
<PAGE>
PAGE 34
Collateral assignment of a nonqualified annuity: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a withdrawal.
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 advisor if you have
any questions about taxation of your contract.
Tax qualification
The contract is intended to qualify as an annuity for federal income tax
purposes. To that end, the provisions of the contract are to be interpreted to
ensure or maintain such tax qualification, notwithstanding any other provisions
of the contract. We reserve the right to amend the contract to reflect any
clarifications that may be needed or are appropriate to maintain such
qualification or to conform the contract to any applicable changes in the tax
qualification requirements. We will send you a copy of any such amendments.
Voting rights
As a contract owner with investments in the variable subaccount(s), you may vote
on important mutual fund policies until annuity payouts begin. Once they begin,
the person receiving them has voting rights. We will vote fund shares according
to the instructions of the person with voting rights.
Before annuity payouts begin, 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.
After annuity payouts begin, the number of votes you have is equal to:
o the reserve held in each subaccount for your contract.
o divided by the net asset value of one share of the applicable
underlying mutual fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each account. 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.
<PAGE>
PAGE 35
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, investment in the subaccount may be
discontinued or another registered open-end management investment company may be
substituted for fund shares held in the subaccount(s) if American Centurion Life
believes it would be in the best interest of persons having voting rights under
the contract. 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
contract 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 department. American Centurion Life will notify owners of
any substitution or change.
Distribution of the contracts
The contracts will be distributed by banks and financial institutions either
directly or through a network of third-party marketers. American Express
Financial Advisors Inc., the principal underwriter for the variable account,
will pay commissions for the distribution of the contracts to the broker-dealers
of the banks or financial institutions or the broker-dealers of the third-party
marketers who have entered into distribution agreements with American Express
Financial Advisors. These commissions will not be more than 7% of purchase
payments received on the contracts.
From time to time, American Centurion Life may pay or permit other promotional
incentives, in cash or credit or other compensation.
About American Centurion Life
ACL Personal PortfolioSM is issued by American Centurion Life. American
Centurion Life is a wholly-owned subsidiary of IDS Life, which is a wholly-owned
subsidiary of AEFC. AEFC is a wholly-owned subsidiary of American Express
Company. American Express Company is a financial services company principally
engaged through subsidiaries (in addition to AEFC) 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 home office is located at 20
Madison Avenue Extension, P.O. Box 5555, Albany, NY 12205-0555. American
Centurion Life is licensed in the states of Alabama, Delaware, and New York and
conducts a conventional life insurance business in New York.
American Express Financial Advisors Inc. is the principal
underwriter for the variable account. Its home office is IDS Tower
10, Minneapolis, MN 55440-0010. American Express Financial
Advisors is registered with the SEC under the Securities Exchange
<PAGE>
PAGE 36
Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. American Express Financial
Advisors is a wholly-owned subsidiary of AEFC.
The AEFC family of companies offers not only insurance and annuities, but also
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.
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 annuity and its underlying
investments.
Table of contents of the Statement of Additional Information
Performance information...............................
Calculating annuity payouts...........................
Rating agencies.......................................
Principal underwriter.................................
Independent auditors..................................
Saving for retirement.................................
Prospectus............................................
Financial statements -
American Centurion Life Assurance
Company
- -------------------------------------------------------------------
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
____ ACL Personal PortfolioSM
____ IDS Life Retirement Annuity Mutual Funds
____ The OCC Accumulation Trust
____ Putnam Variable Trust
____ GT Global Variable Investment Funds
Mail your request to:
American Centurion Life Assurance Company
P.O. Box 5555
Albany, NY 12205-0555
<PAGE>
PAGE 37
American Centurion Life will mail your request to:
Your name _____________________________________________________
Address _______________________________________________________
City __________________________ State ____________ Zip ________
<PAGE>
PAGE 38
STATEMENT OF ADDITIONAL INFORMATION
for
ACL PERSONAL PORTFOLIO
SM
ACL VARIABLE ANNUITY ACCOUNT 2
____________________, 1997
ACL Variable Annuity Account 2 is a separate account established and maintained
by American Centurion Life Assurance Company
(American Centurion Life).
This Statement of Additional Information (SAI), dated ____________, 1997 is not
a prospectus. It should be read together with the prospectus dated
_______________, 1997 which may be obtained from your agent, or by writing or
calling American Centurion Life at the address or telephone number below.
American Centurion Life Assurance Company
20 Madison Avenue Extension
P.O. Box 5555
Albany, NY 12205-0555
800-504-0469
<PAGE>
PAGE 39
TABLE OF CONTENTS
Performance Information.......................................p.
Calculating Annuity Payouts...................................p.
Rating Agencies...............................................p.
Principal Underwriter.........................................p.
Independent Auditors..........................................p.
Saving for Retirement.........................................p.
Prospectus....................................................p.
Financial Statements
- American Centurion Life Assurance Company
<PAGE>
PAGE 40
PERFORMANCE INFORMATION
The following performance figures are calculated on the basis of historical
performance of the funds. The performance figures relating to these funds assume
that the contract was offered prior to _____, 1997, which it was not. 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 the IDS Life Moneyshare Fund Subaccount
Simple yield for the subaccount investing in the IDS Life Moneyshare Fund 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).
The value of the hypothetical subaccount includes the amount of any declared
dividends, the value of any shares purchased with any dividend paid during the
period and any dividends declared for such shares. The variable subaccount's
yield does not include any realized or unrealized gains or losses, nor does it
include the effect of any applicable surrender charge.
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:
365/7
Compound Yield =[(Base Period Return + 1) ]-1
Annualized Yields based on Seven-Day Period ended
Dec. 31, 1996
Subaccount investing in: Simple Yield Compound Yield
IDS Life Moneyshare Fund 3.26% 3.32%
Calculation of Yield for the IDS Life Special Income Fund
Subaccount
For the subaccount investing in the IDS Life Special Income Fund 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:
<PAGE>
PAGE 41
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)
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.
Annualized yield based on 30-Day Period ended Dec. 31, 1996
Subaccount investing in: Yield
IDS Life Special Income 7.22%
Calculation of Average Annual Total Return
Quotations of average annual total return for any subaccount will be expressed
in terms of the average annual annuity compounded rate of return of a
hypothetical investment in the contract over a period of one, five and 10 years
(or, if less, up to the life of the account), 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 10-year (or other) period
at the end of the one-, five- or 10-year (or other) period (or
fractional portion thereof)
<PAGE>
PAGE 42
Average Annual Total Return For Period Ended Dec. 31, 1996
Average Annual Total Return with Withdrawal
<TABLE>
<CAPTION>
Since
Subaccount investing in: 1 Year 5 Year 10 Year Inception
- -----------------------
IDS LIFE
<S> <C> <C> <C> <C>
Aggressive Growth Fund (1/92)* 7.49% -% -% 10.23%
Capital Resource Fund (10/81) -0.39 6.50 12.10 -
International Equity Fund (1/92) 1.07 - - 7.53
Managed Fund (4/86) 8.24 8.80 10.74 -
Moneyshare Fund (10/81) -3.06 2.08 3.84 -
Special Income Fund (10/81) -1.31 7.73 7.20 -
OCC ACCUMULATION TRUST
Managed Portfolio (8/88) 13.94 17.05 - 18.45
GT GLOBAL
Variable Latin America Fund (2/93) 13.64 - - 7.99
Variable New Pacific Fund (2/93) 22.05 - - 7.44
Putnam VT
Diversified Income Fund (7/93) 0.38 - - 4.62
Growth and Income Fund (12/87) 13.10 14.02 - 13.94
High Yield Fund (12/87) 4.12 11.54 - 10.92
New Opportunities Fund (5/94) 1.62 - - 20.60
Average Annual Total Return without Withdrawal
Since
Subaccount Investing in: 1 Year 5 Year 10 Year Inception
- -----------------------
IDS Life
Aggressive Growth Fund (1/92) 14.49% -% -% 10.64%
Capital Resource Fund (10/81) 6.36 6.81 12.10 -
International Equity Fund (1/92) 7.93 - - 7.99
Managed Fund (4/86) 15.24 9.08 10.74 -
Moneyshare Fund (10/81) 3.48 2.45 3.84 -
Special Income Fund (10/81) 5.37 8.03 7.20 -
OCC ACCUMULATION TRUST
Managed Portfolio (8/88) 20.94 17.26 - 18.45
GT GLOBAL
Variable Latin America (2/93) 20.64 - - 8.82
Variable New Pacific Fund (2/93) 29.05 - - 8.28
Putnam VT
Diversified Income Fund (7/93) 7.18 - - 5.66
Growth and Income Fund (12/87) 20.10 14.26 - 13.94
High Yield Fund (12/87) 11.12 11.80 - 10.92
New Opportunities Fund (5/94) 8.52 - - 22.02
</TABLE>
*inception dates of the funds are shown in parentheses.
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
<PAGE>
PAGE 43
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 10 year (or
other) period at the end of the one, five, or 10 year (or other)
period (or fractional portion thereof)
The Securities and Exchange Commission (SEC) requires that an assumption be made
that the contract owner withdraws the entire contract at the end of the one,
five and 10 year periods (or, if less, up to the life of the subaccount) for
which performance is required to be calculated. In addition, performance figures
may be shown without the deduction of a withdrawal charge.
Total return figures reflect the deduction of all applicable charges including
the contract administrative charge, variable account administrative charge, and
mortality and expense risk fee.
Performance of the subaccount 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, CDA Technologies, 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, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News & World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
The following calculations are done separately for each of the subaccounts of
the variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your annuity as of the valuation date seven days
before the retirement date; then o apply the result to the annuity table
contained in the contract or another table at least as favorable. The annuity
table shows the amount of the first monthly payment for each $1,000 of value
which depends on factors built into the table, as described below.
Annuity Units: The value of your subaccount is then converted to annuity units.
To compute the number credited to you, we divide the first monthly payment by
the annuity unit value (see below) on the valuation date on (or next day
preceding) the seventh calendar day before the retirement date. The number of
units in your subaccount is fixed. The value of the units fluctuates with the
performance of the underlying mutual fund.
<PAGE>
PAGE 44
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date on or immediately
preceding the seventh calendar day before the payout is due; by
o the fixed number of annuity units credited to you.
Annuity Table: The table shows the amount of the first monthly payment for each
$1,000 of contract value according to the age and, when applicable, the sex of
the annuitant. (Where required by law, we will use a unisex table of settlement
rates.) The table assumes that the contract value is invested at the beginning
of the annuity payout period and earns a 5% rate of return, which is reinvested
and helps to support future payouts.
Annuity Unit Values: This value was originally set at $1 for each subaccount. To
calculate later value we multiply the last annuity value by the product of:
o the net investment factor; and
o the neutralizing factor. The purpose of the neutralizing factor is to offset
the effect of the assumed investment rate built into the annuity table. With an
assumed investment rate of 5%, the neutralizing factor is 0.999866 for a one
day valuation period.
Net Investment Factor:
This value is determined each business day by:
o 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 net
investment factor may be greater or less than one, and the accumulation unit
value may increase or decrease. You bear this investment risk in a variable
subaccount.
The Fixed Account
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 value of your fixed account at the retirement 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; and
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 your contract.
<PAGE>
PAGE 45
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 ACL Personal Portfolio SM. 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 variable accounts is American Express
Financial Advisors Inc. which offers the variable contracts on a continuous
basis.
INDEPENDENT AUDITORS
The financial statements of American Centurion Life Assurance Company (a wholly
owned subsidiary of IDS Life Insurance Company) as of December 31, 1996 and
1995, and for the years then ended, have been audited by Ernst and Young LLP,
independent auditors as stated in their report appearing herein.
SAVING FOR RETIREMENT
You may have to save more for retirement because the average person lives 17
years in retirement. Social Security and pensions will not cover your expenses
in retirement. Sixty cents of every retirement dollar must come from your
personal savings.
Sources: Social Security Administration, U.S. Department of Health
and Human Services.
PROSPECTUS
The prospectus dated ______________, 1997, is hereby incorporated in this SAI by
reference.
<PAGE>
American Centurion Life Financial Information
The financial statements shown below are those of the insurance company and not
those of any other entity. They are included for the purpose of informing the
investor 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
Dec. 31, Dec. 31,
ASSETS 1996 1995
------ ---------- -------
(thousands)
Investments in fixed maturities:
Held to maturity, at amortized cost (Fair value:
1996, $19,958; 1995, $24,191) $ 19,579 $ 23,222
Available for sale, at fair value (Amortized cost:
1996, $134,631; 1995, $83,589) 136,091 86,980
-------- --------
155,670 110,202
Cash and cash equivalents 13,856 2,531
Amounts recoverable from reinsurance 2,728 3,402
Other accounts receivable 14 86
Accrued investment income 2,104 1,500
Deferred policy acquisition costs 4,364 1,318
Deferred income taxes -- 144
Other assets 41 44
---------- ------------
Total assets $178,777 $119,227
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Future policy benefits:
Fixed annuities $139,362 $ 92,789
Traditional life insurance 1,883 3,579
Disability income insurance 225 225
Policy claims and other policyholders' funds 691 263
Amounts due to broker 4,916 --
Deferred income taxes 592 --
Other liabilities 34 1,121
-------- ---------
Total liabilities 147,703 97,977
Stockholder's equity:
Capital stock, $10 par value per share;
100,000 shares authorized,
issued and outstanding 1,000 1,000
Additional paid-in capital 16,600 6,600
Net unrealized gain on investments 863 2,204
Retained earnings 12,611 11,446
---------- ----------
Total stockholder's equity 31,074 21,250
---------- ----------
Total liabilities and stockholder's equity $178,777 $119,227
======= =======
Commitments and contingencies (note 6)
See accompanying notes.
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF INCOME
Years ended Dec. 31,
1996 1995
------ -----
(thousands)
Revenues:
Contractholder charges $ 306 $ 299
Net investment income 8,851 7,734
Net realized gain (loss) on investments (57) 112
------- ------
Total revenues 9,100 8,145
------ ------
Benefits and expenses:
Interest credited on investment contracts 5,849 4,670
Amortization of deferred policy
acquisition costs 21 294
Other operating expenses 1,387 710
------ ------
Total expenses 7,257 5,674
------ ------
Income before income taxes 1,843 2,471
Income taxes 678 885
------- -------
Net income $ 1,165 $ 1,586
===== =====
See accompanying notes.
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
STATEMENTS OF CASH FLOWS
Years ended Dec. 31,
1996 1995
(thousands)
Cash flows from operating activities:
Net income $ 1,165 $ 1,586
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Change in reinsurance receivable 674 166
Change in accounts receivable 72 1,059
Change in accrued investment income (604) (270)
Change in deferred policy acquisition
costs, net (3,177) 252
Change in liabilities for future policy
benefits for traditional life and
disability income insurance (1,696) --
Change in other assets 3 (44)
Change in policy claims and other
policyholders' funds 428 (97)
Change in deferred income taxes 1,457 (640)
Change in other liabilities (1,087) 386
Amortization of premium
(accretion of discount), net 56 101
Net realized (gain) loss on investments 57 (112)
Other, net -- (75)
---------- -----------
Net cash (used in) provided by
operating activities (2,652) 2,312
------- ---------
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases -- (1,980)
Maturities 2,603 3,443
Sales 477 --
Fixed maturities available for sale:
Purchases (59,425) (22,290)
Maturities 7,261 4,819
Sales 1,572 496
Change in due to broker 4,916 (1,446)
--------- -----------
Net cash used in
investing activities (42,596) (16,958)
-------- ----------
Cash flows from financing activities:
Activity related to investment contracts:
Considerations received 55,594 20,876
Surrenders and other benefits (14,870) (12,691)
Interest credited to account balances 5,849 4,670
Capital contribution from parent 10,000 -
------- -------------
Net cash provided by
financing activities 56,573 12,855
-------- ---------
Net increase (decrease) in cash and
cash equivalents 11,325 (1,791)
Cash and cash equivalents at beginning of year 2,531 4,322
--------- --------
Cash and cash equivalents at end of year $ 13,856 $ 2,531
======= =======
See accompanying notes.
<PAGE>
AMERICAN CENTURION LIFE ASSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
($ thousands)
1. Summary of significant accounting policies
Nature of business
American Centurion Life Assurance Company (the Company) issues business
consisting primarily of single and installment premium annuity contracts
sold to New York residents. The Company is licensed to transact insurance
business in New York, Alabama and Delaware.
Basis of presentation
The Company is 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 in conformity with generally accepted
accounting principles which vary in certain respects from reporting
practices prescribed or permitted by the New York Department of Insurance
(see Note 8).
The preparation of financial statements in conformity with generally
accepted accounting principles 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
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and carried
at amortized cost. All other fixed maturities and all marketable equity
securities are classified as available for sale and carried at fair value.
Unrealized gains and losses on securities classified as available for sale
are carried as a separate component of stockholder's equity, net of
deferred taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to recognize
interest income. Prepayment estimates are based on information received
from brokers who deal in mortgage-backed 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 the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost which approximates
fair value.
Supplementary information to the statements of cash flows is summarized as
follows:
1996 1995
------- -----
Cash paid during the year for:
Income taxes $257 $531
<PAGE>
Recognition of profits on fixed annuity contracts
Profits on fixed deferred annuities are recognized by the Company over the
lives of the contracts, using primarily the retrospective deposit method.
This method recognizes profits over the lives of the policies in proportion
to the estimated gross profits expected to be realized.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation, policy
issue costs, and certain sales expenses, have been deferred on annuity
contracts. These costs are amortized as a percentage of the estimated gross
profits expected to be realized on the policies.
Liabilities for future policy benefits
Liabilities for single premium deferred annuities and installment annuities
are accumulation values. Liabilities for fixed annuities in a benefit
status are based on the 1983a Table with interest at 6.25%.
Federal income taxes
The Company's taxable income 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 on the
consolidated tax return. It is the policy of American Express Financial
Corporation and its subsidiaries that American Express Financial
Corporation will reimburse subsidiaries for all tax benefits.
Included in other liabilities at Dec. 31, 1996 and 1995 are ($185) and
$758, respectively, (receivable from) payable to IDS Life for federal
income taxes.
Accounting changes
The Financial Accounting Standards Board's (FASB) Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," was effective Jan. 1,
1996. The new rule did not have a material impact on the Company's results
of operations or financial condition.
2. Investments
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available. Estimated
values are determined by established procedures involving, among other
things, review of market indices, price levels of current offerings of
comparable issues, price estimates and market data from independent brokers
and financial files.
Net realized (loss) gain on investments was ($57) and $112 for the years
ended Dec. 31, 1996 and 1995, respectively, and was entirely due to sales
of fixed maturities.
Changes in net unrealized appreciation (depreciation) of investments
for the years ended Dec. 31 are summarized as follows:
1996 1995
Investments in fixed maturities:
Held to maturity $ (590) $6,587
Available for sale (1,931) 2,283
<PAGE>
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at Dec. 31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- --------- -------- --------
<S> <C> <C> <C> <C>
Corporate bonds and obligations $ 17,995 $ 421 $ 154 $ 18,262
Mortgage-backed securities 1,584 112 -- 1,696
---------- -------- --------- ----------
$ 19,579 $ 533 $ 154 $ 19,958
========= ======== ======== =========
Available for sale
U.S. Government agency obligations $ 2,095 $ -- $ 32 $ 2,063
State and municipal obligations 1,000 21 -- 1,021
Corporate bonds and obligations 74,327 1,808 369 75,766
Mortgage-backed securities 57,209 638 606 57,241
----------- -------- ------ -----------
$134,631 $ 2,467 $ 1,007 $136,091
======== ======= ======= ========
</TABLE>
The change in net unrealized gain on available for sale securities included
as a separate component of stockholder's equity, net of deferred taxes, was
$1,341 in 1996.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at Dec. 31, 1995 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- --------- -------- --------
<S> <C> <C> <C> <C>
Corporate bonds and obligations $ 21,199 $ 848 $ 29 $ 22,018
Mortgage-backed securities 2,023 150 -- 2,173
----------- --------- --------- ------------
$ 23,222 $ 998 $ 29 $ 24,191
========= ======== ======= ==========
Available for sale
U.S. Government agency obligations $ 2,104 $ 31 $ 2 $ 2,133
Corporate bonds and obligations 42,174 2,623 5 44,792
Mortgage-backed securities 39,311 944 200 40,055
----------- -------- ------ -----------
$ 83,589 $ 3,598 $ 207 $ 86,980
========= ======= ====== ==========
</TABLE>
The change in net unrealized gain on available for sale securities included
as a separate component of stockholder's equity, net of deferred taxes, was
$3,934 in 1995.
<PAGE>
The amortized cost and fair value of investments in fixed maturities at
Dec. 31, 1996 by contractual maturity are shown below. Actual maturities
will differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 1,502 $ 1,505
Due from one to five years 12,840 13,101
Due from five to ten years 2,019 2,094
Due in more than ten years 1,634 1,562
Mortgage-backed securities 1,584 1,696
---------- ----------
$ 19,579 $ 19,958
========= =========
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 1,249 $ 1,261
Due from one to five years 22,708 23,569
Due from five to ten years 43,626 44,152
Due in more than ten years 9,839 9,868
Mortgage-backed securities 57,209 57,241
------------ -----------
$ 134,631 $ 136,091
=========== ==========
During the year ended Dec. 31, 1996, fixed maturities classified as held to
maturity were sold with amortized cost of $500. Net gains and losses on
these sales were not significant. The sale of these fixed maturities was
due to significant deterioration in the issuers' creditworthiness. There
were no sales of fixed maturities classified as held to maturity in 1995.
In addition, fixed maturities available for sale were sold during 1996 with
proceeds of $1,572 and gross realized gains and losses of $36 and $71,
respectively. In 1995, fixed maturities available for sale were sold with
proceeds of $496 and gross realized gains and losses of $nil and $4,
respectively.
At Dec. 31, 1996, bonds carried at $1,094 were on deposit with various
states as required by law.
Net investment income for the years ended Dec. 31 is summarized as follows:
1996 1995
-------- -----
Interest on fixed maturities $ 9,170 $ 7,561
Interest on cash equivalents 308 157
Other 16 21
---------- --
9,494 7,739
Less investment expenses 643 5
---------- ----
$ 8,851 $ 7,734
========= ========
<PAGE>
Securities are rated by Moody's and Standard & Poor's (S&P), except for
approximately $17.1 million of securities which are rated by American
Express Financial Corporation's internal analysts using criteria similar to
Moody's and S&P. A summary of investments in fixed maturities, at amortized
cost, by rating on Dec. 31 is as follows:
Rating 1996 1995
---------------------- --------- ------
Aaa/AAA $ 60,374 $ 42,939
Aa/AA 4,648 4,762
Aa/A 1,469 1,551
A/A 26,768 22,003
A/BBB 4,988 5,473
Baa/BBB 35,071 23,747
Baa/BB 6,977 3,250
Below investment grade 13,915 3,086
--------- -----------
$154,210 $106,811
======== ========
At Dec. 31, 1996, approximately 87 percent of the securities rated Aaa/AAA
are GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any
other issuer are greater than 10% of stockholder's equity.
3. 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.
The income tax expense consists of the following:
1996 1995
-------- -----
Federal income taxes:
Current $ (819) $1,495
Deferred 1,457 (640)
----- ------
638 855
State income taxes-current 40 30
---- ---
Income tax expense $ 678 $ 885
===== ======
Increases (decreases) to the federal income tax provision applicable to
pretax income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1996 1995
------------ --------
Provision Rate Provision Rate
<S> <C> <C> <C> <C>
Federal income taxes based
on the statutory rate $645 35.0% $865 35.0%
Increases (decreases) are attributable to :
Other, net (7) (0.4) (10) (0.3)
-- ----- --- ----
Federal income taxes $638 34.6% $855 34.7%
==== ==== ==== ====
</TABLE>
<PAGE>
Significant components of the Company's deferred tax assets and
liabilities as of Dec. 31 are as follows:
Deferred tax assets: 1996 1995
----- -----
Policy reserves $ 738 $1,073
Deferred policy acquisition costs -- 116
Other -- 142
------ -------
Total deferred tax assets 738 1,331
----- ------
Deferred tax liabilities:
Deferred policy acquisition costs 802 --
Investments 478 1,187
Other 50 --
------ -----
Total deferred tax liabilities 1,330 1,187
------ ------
Net deferred tax assets (liabilities) $ (592) $ 144
====== ======
The Company is required to establish a valuation allowance for any portion
of the deferred tax assets that management believes will not be realized.
In the opinion of management, it is more likely than not that the Company
will realize the benefit of the deferred tax assets and, therefore, no such
valuation allowance has been established.
4. Stockholder's equity
Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with
accounting practices prescribed by the New York Department of Insurance.
All dividend distributions must be approved by the New York Department of
Insurance. Statutory unassigned surplus aggregated $7,220 and $7,671 as of
Dec. 31, 1996 and 1995, respectively (see note 8 for a reconciliation of
net income and stockholder's equity per the accompanying financial
statements to statutory net income and surplus).
5. Related party transactions
Until July 1, 1995, the Company participated in the IDS Retirement Plan of
American Express Financial Corporation which covered all permanent
employees age 21 and over who had met certain employment requirements.
Effective July 1, 1995, the IDS Retirement Plan was merged with American
Express Company's American Express Retirement Plan, which simultaneously
was amended to include a cash balance formula and a lump sum distribution
option. 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 1996 and 1995.
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.
Costs of these plans charged to operations in 1996 and 1995 were $19 and
$13, respectively.
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 its 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.
<PAGE>
Charges by IDS Life for use of joint facilities and other services
aggregated $3,142 and $105 for 1996 and 1995, respectively. Certain of
these costs are included in deferred policy acquisition costs.
6. Commitments and contingencies
At Dec. 31, 1996 and 1995, traditional life insurance in force aggregated
$242,209 and $265,799, respectively, of which $241,974 and $265,564 were
reinsured at the respective year ends. Under all reinsurance agreements,
premiums ceded to reinsurers amounted to $1,351 and $1,384 and reinsurance
recovered from reinsurers amounted to $2,027 and $929 for the years ended
Dec. 31, 1996 and 1995.
The economy and other factors have caused an increase in the number of
insurance companies that are under regulatory supervision. This
circumstance has resulted in substantial assessments by state guaranty
associations to cover losses to policyholders of insolvent or rehabilitated
companies. The Company expects additional future assessments related to
past insolvencies and rehabilitations. Management has estimated the impact
of future assessments on the Company's financial position and recorded a
reserve for such future assessments.
Reinsurance contracts do not relieve the Company from its primary
obligations to policyholders.
7. Fair values of financial instruments
The Company discloses fair value information for most on- and off-balance
sheet financial instruments for which it is practicable 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>
1996 1995
------- -------
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
---------------- ------- -------- ------- ------
<S> <C> <C> <C> <C>
Investments in fixed maturities (Note 2)
Held to maturity $ 19,579 $ 19,958 $ 23,222 $ 24,191
Available for sale 136,091 136,091 86,980 86,980
Cash and cash equivalents (Note 1) 13,856 13,856 2,531 2,531
Financial Liabilities
Future policy benefits for fixed
annuities 139,352 136,332 92,704 90,975
</TABLE>
At Dec. 31, 1996 and 1995, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related
contracts carried at $10 and $85, respectively. The fair value of these
benefits is based on the status of the annuities at Dec. 31, 1996 and 1995.
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 1996 and
1995.
<PAGE>
8. Statutory insurance accounting practices
Reconciliations of net income for 1996 and 1995 and stockholder's equity at
Dec. 31, 1996 and 1995, as shown in the accompanying financial statements,
to that determined using statutory accounting practices are as follows:
1996 1995
-------- ------
Net income, per accompanying
financial statements $ 1,165 $ 1,586
Deferred policy acquisition costs (3,177) 252
Adjustments of future policy
benefit liabilities (57) (356)
Deferred federal income taxes 1,457 (640)
Provision for losses on investments -- (12)
IMR gain/loss transfer and amortization 47 (46)
Provision for other losses -- (837)
Prior period adjustment (313) 328
Other, net 16 (27)
-------- --------
Net income (loss), on basis of
statutory accounting practices $ (862) $ 248
======= =======
Stockholder's equity, per accompanying
financial statements $31,074 $21,250
Deferred policy acquisition costs (4,364) (1,318)
Adjustments of future policy benefit liabilities 3,145 474
Adjustments of reinsurance ceded reserves (2,728) --
Deferred federal income taxes 592 (100)
Asset valuation reserve (1,287) (869)
Net unrealized gain on investments (1,460) (3,390)
Interest maintenance reserve (62) (110)
Provision for other losses -- (837)
Other, net (90) 171
--------- ---------
Stockholder's equity on basis of statutory
accounting practices $24,820 $15,271
======= =======
<PAGE>
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the accompanying balance sheets of American Centurion Life
Assurance Company (a wholly owned subsidiary of IDS Life Insurance Company) as
of December 31, 1996 and 1995, and the related statements of income 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Centurion Life
Assurance Company at December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Ernst & Young, LLP
February 7, 1997
Minneapolis, Minnesota
<PAGE>
PAGE 46
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, 1996 and 1995;
Statements of Income as of Dec. 31, 1996 and 1995;
Statements of Cash Flows as of Dec. 31, 1996 and 1995;
Notes to Financial Statements
Report of Independent Auditors dated February 7, 1997.
(b) Exhibits:
1. Certificate establishing the ACL Variable Annuity Account 2
dated December 1, 1995, filed electronically as Exhibit 1 to
Pre-Effective Amendment No. 1 to Registration Statement No.
333-00519, filed on or about February 5, 1997 is incorporated
herein by reference.
2. Not applicable.
3. Form of Variable Annuity Distribution Agreement filed
electronically as Exhibit 3 to Pre-Effective No. 2 to
Registration Statement No. 333-00519, filed on or about April
30, 1997 is incorporated herein by reference.
4.1 Form of Flexible Payment Deferred Annuity Contract (form
45054), filed electronically as Exhibit 4.1 to Pre-Effective
No. 2 to Registration Statement No. 333-00519, filed on or
about April 30, 1997 is incorporated herein by reference.
5.1 Application for American Centurion Life Variable Annuity (form
45055), filed electronically as Exhibit 5.1 to Pre-Effective
No. 2 to Registration Statement No. 333-00519, filed on or
about April 30, 1997 is incorporated herein by reference.
6.1 Amended and Restated By-Laws of American Centurion Life, filed
electronically as Exhibit 6.1 to Pre-Effective No. 1 to
Registration Statement No. 333-00519, filed on or about
February 5, 1997 is incorporated herein by reference.
6.2 Amended and Restated Articles of Incorporation of American
Centurion Life, filed electronically as Exhibit 6.2 to Pre-
Effective No. 1 to Registration Statement No. 333-00519, filed
on or about February 5, 1997 is incorporated herein by
reference.
6.3 Emergency By-Laws of American Centurion Life, filed
electronically as Exhibit 6.3 to Pre-Effective No. 1 to
Registration Statement No. 333-00519, filed on or about
February 5, 1997 is incorporated herein by reference.
7. Not applicable.
<PAGE>
PAGE 47
8.1 Copy of Participation Agreement among Putnam Variable Trust,
Putnam Mutual Funds Corp. and American Centurion Life
Assurance Company, dated April 30, 1997, filed electronically
herewith.
8.2 Copy of Participation Agreement by and among OCC Accumulation Trust and
(Insurance Company) and OCC Distributors, dated April 30, 1997, filed
electronically herewith.
8.3 Copy of Participation Agreement among (company and GT Global Variable
Investment Trust and GT Global Variable Investment Series and GT Global,
Inc., dated May 30, 1997, filed electronically herewith.
9. Opinion of counsel, dated April 28, 1997, filed electronically
as Exhibit 9 to Pre-Effective No. 2 to Registration Statement
No. 333-00519, filed on or about April 30, 1997 is
incorporated herein by reference.
10. Consent of Independent Auditors, filed electronically
herewith.
11. Financial Statement Schedules and Report of Independent
Auditors, filed electronically herewith.
Financial Statement Schedules:
Schedule I Summary of Investments Other Than Investments
In Related Parties
Schedule IV Reinsurance
Report of Independent Auditors dated February 7, 1997.
All other schedules to the Financial Statements required by Article 7 of
Regulation S-X are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
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 Pre-Effective No. 1 to
Registration Statement No. 333-00519, filed on or about
February 5, 1997 is incorporated herein by reference.
14.1 Financial Data Schedule, filed electronically herewith.
14.2 Power of Attorney to sign this Registration Statement dated
March 25, 1997, filed electronically as Exhibit 14.2 to Pre-
Effective No. 2 to Registration Statement No. 333-00519, filed
on or about April 30, 1997 is incorporated herein by
reference.
<PAGE>
PAGE 48
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 Technical Consultants Ltd. Director
Bayview Tower
Apt. 8G
80 Bay Street Landing
Staten Island, NY 10301
Maureen A. Buckley IDS Tower 10 Chief Administrative Officer
Minneapolis, MN 55440 and Consumer Affairs Officer
Douglas L. Forsberg 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
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. Janney Montgomery Scott, Inc. Director
26 Broadway
New York, NY 10004
Eric L. Marhoun IDS Tower 10 General Counsel and
Minneapolis, MN 55440 Secretary
<PAGE>
PAGE 49
Item 25. Directors and Officers of the Depositor (American Centurion
Life Assurance Company (cont'd)
Sarah A. Mealey IDS Tower 10 Vice President - Variable
Minneapolis, MN 55440 Product Development
Kenneth W. Nelson Tech Products, Inc. Director
15 Beach Street
Suite 304
Staten Island, NY 10304
Doretta Rinaldi IDS Tower 10 Vice President - Marketing
Minneapolis, MN 55440
Stuart A. Sedlacek IDS Tower 10 Director, Chairman and
Minneapolis, MN 55440 President
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 Guerdon D. Smith & Company Director
P.O. Box 91739
Santa Barbara, CA 93190-1739
</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 Financial Services
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
<PAGE>
PAGE 50
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant (Continued)
Jurisdiction
Name of Subsidiary of Incorporation
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Client Services Corporation Minnesota
American Express Financial Advisors Inc. Delaware
American Express Financial Corporation Delaware
American Express Insurance Agency of Arizona Inc.Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance
Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance
Agency of Mississippi Inc. Mississippi
American Express Property Casualty Insurance
Agency of Pennsylvania Inc. Pennsylvania
American Express Service Corporation Delaware
American Express Tax and Business Services Inc. Minnesota
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
AMEX Assurance Company Illinois
IDS Advisory Group Inc. Minnesota
IDS Aircraft Services Corporation Minnesota
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Deposit Corp. Utah
IDS Fund Management Limited U.K.
IDS Futures 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 Ltd. 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
<PAGE>
PAGE 51
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 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.
<PAGE>
PAGE 52
Item 29. Principal Underwriters.
(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS Discovery
Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra Income Fund, Inc.;
IDS Federal Income Fund, Inc.; IDS Global Series, Inc.; IDS Growth Fund,
Inc.; IDS High Yield Tax- Exempt Fund, Inc.; IDS International Fund,
Inc.; IDS Investment Series, Inc.; IDS Managed Retirement Fund, Inc.;
IDS Market Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS
New Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special Tax-Exempt
Series Trust; IDS Stock Fund, Inc.; IDS Strategy Fund, Inc.; IDS
Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money Fund, Inc.; IDS Utilities
Income Fund, Inc., Growth Trust; Growth and Income Trust; Income Trust,
Tax-Free Income Trust, World Trust and IDS Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering
Douglas A. Alger Vice President-Field None
IDS Tower 10 Compensation and
Minneapolis, MN 55440 Administration
Peter J. Anderson Senior Vice President- Vice
IDS Tower 10 Investments President
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 American Express,
Minneapolis, MN 55440 Institutional Services
John M. Baker Vice President- None
Plan Sponsor Services
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
Timothy V. Bechtold Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440
<PAGE>
PAGE 53
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
John D. Begley Group Vice President- None
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235
Jack A. Benjamin Group Vice President- None
Suite 200 Greater Pennsylvania
3500 Market Street
Camp Hill, PA 17011
Alan F. Bignall Vice President- None
IDS Tower 10 Technology and
Minneapolis, MN 55440 Development
Brent L. Bisson Group Vice President- None
Suite 900 Los Angeles Metro
E. Westside Twr
11835 West Olympic Blvd.
Los Angeles, CA 90064
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Walter K. Booker Group Vice President- None
Suite 200 New Jersey
3500 Market Street
Camp Hill, NJ 17011
Bruce J. Bordelon Group Vice President- None
Galleria One Suite 1900 Gulf States
Galleria Blvd.
Metairie, LA 70001
Charles R. Branch Group Vice President- None
Suite 200 Northwest
West 111 North River Dr
Spokane, WA 99201
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services
<PAGE>
PAGE 54
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James E. Choat Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Group Vice President- None
290 Woodcliff Drive Upstate New York
Fairport, NY 14450
Henry J. Cormier Group Vice President- None
Commerce Center One Connecticut
333 East River Drive
East Hartford, CT 06108
John M. Crawford Group Vice President- None
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211
Kevin F. Crowe Group Vice President- None
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226
Colleen Curran Vice President and None
IDS Tower 10 Assistant General Counsel
Minneapolis, MN 55440
Regenia David Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
Luz Maria Davis Vice President- None
IDS Tower 10 Communications
Minneapolis, MN 55440
Scott M. DiGiammarino Group Vice President- None
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
<PAGE>
PAGE 55
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Bradford L. Drew Group Vice President- None
Two Datran Center Eastern Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
Joseph Evanovich Jr. Group Vice President- None
One Old Mill Nebraska/Iowa/Dakotas
101 South 108th Avenue
Omaha, NE 68154
Louise P. Evenson Group Vice President- None
Suite 200 San Francisco Bay Area
1333 N. California Blvd.
Walnut Creek, CA 94596
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Douglas L. Forsberg Vice President- None
IDS Tower 10 Institutional Products
Minneapolis, MN 55440 Group
Jeffrey P. Fox Vice President and None
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440
William P. Fritz Group Vice President- None
Suite 160 Northern Missouri
12855 Flushing Meadows Dr
St. Louis, MO 63131
<PAGE>
PAGE 56
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Carl W. Gans Group Vice President- None
8500 Tower Suite 1770 Twin City Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
John J. Golden Vice President- None
IDS Tower 10 Human Resources Planning
Minneapolis, MN 55440 and Field Support
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Bruce M. Guarino Group Vice President- None
Suite 1736 Hawaii
1585 Kapiolani Blvd.
Honolulu, HI 96814
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Teresa A. Hanratty Group Vice President- None
Suites 6&7 Northern New England
169 South River Road
Bedford, NH 03110
John R. Hantz Group Vice President- None
Suite 107 Detroit Metro
17177 N. Laurel Park
Livonia, MI 48154
Robert L. Harden Group Vice President- None
Two Constitution Plaza Boston Metro
Boston, MA 02129
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management
Brian M. Heath Group Vice President- None
Suite 150 North Texas
801 E. Campbell Road
Richardson, TX 75081
<PAGE>
PAGE 57
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Janis K. Heaney Vice President- None
IDS Tower 10 Incentive Compensation
Minneapolis, MN 55440
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
David J. Hockenberry Group Vice President- None
30 Burton Hills Blvd. Eastern Tennessee
Suite 175
Nashville, TN 37215
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations and
Chief Compliance Officer
David R. Hubers Chairman, Chief Board member
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
James M. Jensen Vice President- None
IDS Tower 10 Life Products
Minneapolis, MN 55440
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Promotions
Minneapolis, MN 55440
Matthew N. Karstetter Vice President- None
IDS Tower 10 Investment Accounting
Minneapolis, MN 55440
Linda B. Keene Vice President- None
IDS Tower 10 Market Development
Minneapolis, MN 55440
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
<PAGE>
PAGE 58
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Richard W. Kling Senior Vice President- None
IDS Tower 10 Products
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Group Vice President- None
Suite 108 Greater Michigan
Trestle Bridge V
5136 Lovers Lane
Kalamazoo, MI 49002
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Group Vice President- None
Suite 680 Chicago Metro
8585 Broadway
Merrillville, IN 48410
Edward Labenski Jr. Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
<PAGE>
PAGE 59
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Peter A. Lefferts Senior Vice President- None
IDS Tower 10 Corporate Strategy and
Minneapolis, MN 55440 Development
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
Daniel E. Martin Group Vice President- None
Suite 650 Pittsburgh Metro
5700 Corporate Drive
Pittsburgh, PA 15237
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
William Miller Vice President and None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
John P. Moraites Group Vice President- None
Union Plaza Suite 900 Kansas/Oklahoma
3030 Northwest Expressway
Oklahoma City, OK 73112
Pamela J. Moret Vice President-Retail None
IDS Tower 10 Services
Minneapolis, MN 55440
<PAGE>
PAGE 60
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Alan D. Morgenstern Group Vice President- None
Suite 200 Central California/
3500 Market Street Western Nevada
Camp Hill, NJ 17011
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Mary Owens Neal Vice President- None
IDS Tower 10 Mature Market Segment
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Technology Services
Minneapolis, MN 55440
Thomas V. Nicolosi Group Vice President- None
Suite 220 New York Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528
James R. Palmer Vice President- None
IDS Tower 10 Taxes
Minneapolis, MN 55440
Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business
Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support
Larry M. Post Group Vice President- None
One Tower Bridge Philadelphia Metro
100 Front Street 8th Fl
West Conshohocken, PA 19428
Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James M. Punch Vice President- None
IDS Tower 10 Geographical Service
Minneapolis, MN 55440 Teams
<PAGE>
PAGE 61
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
Debra J. Rabe Vice President-Financial None
IDS Tower 10 Planning
Minneapolis, MN 55440
R. Daniel Richardson Group Vice President- None
Suite 800 Southern Texas
Arboretum Plaza One
9442 Capital of Texas Hwy N.
Austin, TX 78759
Roger B. Rogos Group Vice President- None
One Sarasota Tower Western Florida
Suite 700
Two N. Tamiami Trail
Sarasota, FL 34236
ReBecca K. Roloff Vice President-Private None
IDS Tower 10 Client Group
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Max G. Roth Group Vice President- None
Suite 201 S IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
Erven Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Suite 402
Braintree, MA 02184
Russell L. Scalfano Group Vice President- None
Suite 201 Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715
William G. Scholz Group Vice President- None
Suite 205 Arizona/Las Vegas
7333 E Doubletree Ranch Rd
Scottsdale, AZ 85258
<PAGE>
PAGE 62
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development
Julian W. Sloter Group Vice President- None
Suite 1700 Orlando/Jacksonville
Orlando FinCtr
800 North Magnolia Ave.
Orlando, FL 32803
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Group Vice President- None
466 Westdale Mall Eastern Iowa Area
Cedar Rapids, IA 52404
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
Paul J. Stanislaw Group Vice President- None
Suite 1100 Southern California
Two Park Plaza
Irvine, CA 92714
Lois A. Stilwell Group Vice President- None
Suite 433 Outstate Minnesota Area/
9900 East Bren Road North Dakota/Western Wisconsin
Minnetonka, MN 55343
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
<PAGE>
PAGE 63
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Barbara Stroup Stewart Vice President-Corporate None
IDS Tower 10 Reengineering
Minneapolis, MN 55440
Neil G. Taylor Group Vice President- None
Suite 425 Seattle/Tacoma
101 Elliott Avenue West
Seattle, WA 98119
John R. Thomas Senior Vice President- Board member
IDS Tower 10 Information and
Minneapolis, MN 55440 Technology
Melinda S. Urion Senior Vice President Treasurer
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
Peter S. Velardi Group Vice President- None
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338
Charles F. Wachendorfer Group Vice President- None
Suite 100 Denver/Salt Lake City/
Stanford Plaza II Albuquerque
7979 East Tufts Ave Pkwy
Denver, CO 80237
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Norman Weaver Jr. Senior Vice President- None
1010 Main St Suite 2B Field Management
Huntington Beach, CA 92648
Michael L. Weiner Vice President- None
IDS Tower 10 Tax Research and Audit
Minneapolis, MN 55440
Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
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)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading
William N. Westhoff Senior Vice President- None
IDS Tower 10 Global Investments
Minneapolis, MN 55440
Thomas L. White Group Vice President- None
Suite 200 Cleveland Metro
28601 Chagrin Blvd.
Woodmere, OH 44122
Eric S. Williams Group Vice President- None
Suite 250 Virginia
3951 Westerre Parkway
Richmond, VA 23233
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
32 Ellicott St Field Management
Suite 100
Batavia, NY 14020
Item 29(c).
<TABLE>
<CAPTION>
Net Underwriting
Name of Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C>
American Express None None None None
Financial Advisors
Inc.
</TABLE>
Item 30. Location of Accounts and Records
American Centurion Life Assurance Company
20 Madison Avenue Extension
Albany, NY 12205-0555
Item 31. Management Services
Not applicable.
<PAGE>
PAGE 65
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for so long as payments under the variable annuity contracts
may be accepted.
(b) Registrant undertakes that it will include either
(1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of
Additional Information, or (2) a post card or
similar written communication affixed to or included
the prospectus that the applicant can remove to send
for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form promptly upon written or oral
request to IDS Life Contract Owner Service at the address or
phone number listed in the prospectus.
(d) The sponsoring insurance company represents that the fees and
charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the
insurance company.
<PAGE>
PAGE 66
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
certifies that it meets requirements of Securities Act Rule 485 for all
effectiveness to this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf, in the City of Minneapolis,
and State of Minnesota, on the 3rd day of October, 1997.
ACL VARIABLE ANNUITY ACCOUNT 2
(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 3rd day of
October, 1997.
Signature Title
/s/ Norman J. Arnold* Director
Norman J. Arnold
/s/ Robert C. Auriema* Director
Robert C. Auriema
/s/ Douglas L. Forsberg* Director
Douglas L. Forsberg
/s/ Clarence E. Galston* Director
Clarence E. Galston
/s/ Jay C. Hatlestad* Vice President and
Jay C. Hatlestad Controller
/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
<PAGE>
PAGE 67
Signature Title
/s/ Herbert W. Marache Jr.* Director
Herbert W. Marache Jr.
/s/ Kenneth W. Nelson* Director
Kenneth W. Nelson
/s/ Stuart A. Sedlacek* Director, Chairman and
Stuart A. Sedlacek President
/s/ Anne L. Segal* Director
Anne L. Segal
/s/ Guerdon D. Smith* Director
Guerdon D. Smith
*Signed pursuant to Power of Attorney, dated March 25, 1997, filed
electronically as Exhibit 14.2 to Pre-Effective Amendment No. 2, to
Registration Statement No. 333-00519, is incorporated herein by
reference.
- ------------------------------
Mary Ellyn Minenko
<PAGE>
PAGE 68
CONTENTS OF PRE-EFFECTIVE AMENDMENT NO. 3
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 2
File No. 333-00519/811-07511
EXHIBIT INDEX
8.1 Copy of Participation Agreement among Putnam Variable Trust,
Putnam Mutual Funds Corp. and American Centurion Life
Assurance Company, dated April 30, 1997.
8.2 Copy of Participation Agreement by and among OCC Accumulation Trust and
(Insurance Company) and OCC Distributors, dated April 30, 1997.
8.3 Copy of Participation Agreement among (company and GT Global Variable
Investment Trust and GT Global Variable Investment Series and GT Global,
Inc., dated May 30, 1997.
10. Consent of Independent Auditors.
11. Financial Statement Schedules and Report of Independent
Auditors.
14.1 Financial Data Schedule.
<PAGE>
PAGE 1
PARTICIPATION AGREEMENT
Among
PUTNAM VARIABLE TRUST
PUTNAM MUTUAL FUNDS CORP.
and
AMERICAN CENTURION LIFE ASSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 30th day of April, 1997,
among American Centurion Life Assurance Company (the "Company"), a New York
corporation, on its own behalf and on behalf of each separate account of the
Company set forth on Schedule A hereto, as such Schedule may be amended from
time to time (each such account hereinafter referred to as the "Account"),
PUTNAM VARIABLE TRUST (the "Trust"), a Massachusetts business trust, and PUTNAM
MUTUAL FUNDS CORP. (the"Underwriter), a Massachusetts corporation.
WHEREAS, the Trust is an open-end diversified management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into Participation Agreements with the Trust and
the Underwriter (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust 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 Trust has obtained an order from the Securities and Exchange
Commission, dated December 29, 1993 (File No. 812- 8612), granting the variable
annuity and variable life insurance separate accounts participating in the Trust
exemptions 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 Trust to be sold to and held by variable annuity and variable life
insurance separate accounts of the Participating Insurance Companies (the
"Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and the sale of its shares is registered under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has registered or will register certain variable life
and/or variable annuity contracts under the 1933 Act and any applicable state
securities and insurance law; and
<PAGE>
PAGE 2
WHEREAS, each Account is a duly organized, validly existing separate
account, established by resolution of the Board of Directors of the Company, on
the date shown for such Account on Schedule A hereto, to set aside and invest
assets attributable to the one or more variable insurance contracts (the
"Contracts"); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission 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 in certain Funds
("Authorized Funds") on behalf of each Account to fund certain of the Contracts
and the Underwriter is authorized to sell such shares to unit investment trusts
such as each Account at net asset value;
NOW, THEREFORE, in consideration of the promises herein, the Company, the
Trust and the Underwriter agree as follows:
ARTICLE I. Sale of Trust Shares
1.1 The Underwriter agrees, subject to the Trust's rights under Section
1.2 and otherwise under this Agreement, to sell to the Company those Trust
shares representing interests in Authorized Funds which each Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the order for the shares of the
Trust. For purposes of this Section 1.1, the Company shall be the designee of
the Trust for receipt of such orders from each Account and receipt by such
designee shall constitute receipt by the Trust; provided that the Trust receives
notice of such order by 9:00 a.m. Boston time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Trust calculates its net asset value pursuant
to the rules of the Securities and Exchange Commission. The initial Authorized
Funds shall be Putnam VT Diversified Income Fund, Putnam VT Growth and Income
Fund, Putnam VT High Yield Fund and Putnam VT New Opportunities Fund.
1.2 The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Trust shall
use reasonable efforts to calculate such net asset value on each day on which
the New York Stock Exchange is open for trading. Notwithstanding the foregoing,
the Trustees of the Trust (the "Trustees") may refuse to sell shares of any Fund
to the Company and any other person, or suspend or terminate the offering of
<PAGE>
PAGE 3
shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction over the Trust or if the Trustees determine, in
the exercise of their fiduciary responsibilities, that to do so would be in the
best interests of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust 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 Trust shall redeem its shares in accordance with the terms of its
then current prospectus. For purposes of this Section 1.4, the Company shall be
the designee of the Trust for receipt of requests for redemption from each
Account and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such request for redemption by 9:00
a.m., Boston time, on the next following Business Day.
1.5 The Company shall purchase and redeem the shares of Authorized Funds
offered by the then current prospectus of the Trust in accordance with the
provisions of such prospectus.
1.6 The Company shall pay for Trust shares on the next Business Day after
an order to purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
1.7 Issuance and transfer of the Trust's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded as instructed by the Company to
the Underwriter in an appropriate title for each Account or the appropriate
sub-account of each Account.
1.8 The Underwriter shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Fund shares in additional shares of that
Fund. The Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. The Underwriter
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.9 The Underwriter shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the Trust calculates its net asset value per share and each of the Trust and the
Underwriter shall use its best efforts to make such net asset value per share
available by 6:10 p.m. Boston time.
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PAGE 4
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that
(a) at all times during the term of this Agreement 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 laws and the
sale of the Contracts shall comply in all material respects with state insurance
suitability requirements. The Company further represents and warrants that it is
an insurance company duly organized and in good standing under applicable law
and that it has legally and validly established each Account prior to any
issuance or sale thereof as a separate account under applicable law and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts; and
(b) the Contracts are currently treated as endowment, annuity or
life insurance contracts, under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code") and that it will make every effort to
maintain such treatment and that it will notify the Trust and the Underwriter
immediately upon having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.2 The Trust represents and warrants that
(a) at all times during the term of this Agreement Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold by the Trust to the Company in compliance with
all applicable laws, subject to the terms of Section 2.4 below, and the Trust is
and shall remain registered under the 1940 Act. The Trust 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 Trust 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 Trust or the Underwriter in connection with their sale by the Trust to
the Company and only as required by Section 2.4;
(b) it is currently qualified as a Regulated Investment Company
under Subchapter M of the Code, and that it will use its best efforts to
maintain such qualification (under Subchapter M or any successor 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; and
(c) it is lawfully organized and validly existing under the laws of
Massachusetts and that it does and will comply in all material respects with the
1940 Act.
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PAGE 5
2.3 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Trust shares
in accordance with all applicable securities laws applicable to it, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.4 Notwithstanding any other provision of this Agreement, the Trust shall
be responsible for the registration and qualification of its shares and of the
Trust itself under the laws of any jurisdiction only in connection with the
sales of shares directly to the Company through the Underwriter. The Trust shall
not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of Trust
shares or the Trust by the Trust may be required in connection with the sale of
the Contracts or the indirect interest of any Contract in any shares of the
Trust and advising the Trust thereof at such time and in such manner as is
necessary to permit the Trust to comply.
2.5 The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
ARTICLE III. Prospectuses and Proxy Statements: Voting
3.1 The Trust shall provide such documentation (including a camera ready
copy of its prospectus as set in type at the Trust's expense) and other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus for the Trust is amended) to have the
prospectus for the Contracts and the Trust's prospectus printed together in one
document (such printing to be at the Company's expense).
3.2 The Trust's prospectus shall state that the Statement of Additional
Information for the Trust is available from the Underwriter or its designee (or
in the Trust's discretion, the Prospectus shall state that such Statement is
available from the Trust), and the Underwriter (or the Trust), at its expense,
shall print and provide such Statement free of charge to the Company and to any
owner of a Contract or prospective owner who requests such Statement.
3.3 The Trust, at its expense, shall provide the Company with reports to
shareholders set in type, for printing and distribution by the Company (such
printing and distribution to be at the Company's expense).
3.4 The Trust, at its expense, shall provide the Company with proxy
material and other communications to stockholders in such quantity as the
Company shall reasonably require for distribution to the Contract owners, such
distribution to be at the expense of the Company.
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PAGE 6
3.5 The Company shall vote all Trust shares as required by law and the
Shared Funding Exemptive Order. The Company reserves the right to vote Trust
shares held in any separate account in its own right, to the extent permitted by
law and the Shared Funding Exemptive Order. The Company shall be responsible for
assuring that each of its separate accounts participating in the Trust
calculates voting privileges in a manner consistent with all legal requirements.
3.6 The Trust will comply with all applicable provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust 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 Trust will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE IV. Sales Material and Information
4.1 Without limiting the scope or effect of Section 4.2, the Company shall
furnish, or shall cause to be furnished, to the Underwriter each piece of sales
literature or other promotional material in which the Trust, its investment
adviser or the Underwriter is named at least 15 days prior to its use. No such
material shall be used if the Underwriter objects to such use within five
Business Days after receipt of such material.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Trust shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in annual or semi-annual reports or proxy statements for the
Trust, or in sales literature or other promotional material approved by the
Trust or its designee or by the Underwriter, except with the written permission
of the Trust or the Underwriter or the designee of either or as required by law.
4.3 The Underwriter or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material prepared by the Underwriter in which the Company
and/or its separate account(s) is named at least 15 days prior to its use. No
such material shall be used if the Company or its designee objects to such use
within five Business Days after receipt of such material. The Company
acknowledges that the Underwriter does not currently intend to prepare sales
literature naming the Company or its separate account.
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PAGE 7
4.4 Neither the Trust nor the Underwriter shall give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account or which are in the public
domain or approved by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved by the Company or its
designee, except with the written permission of the Company or as is required by
law.
4.5 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e. any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all registered representatives.
4.6 The Trust and the Underwriter hereby consent to the Company's use of
the names "Putnam," "Putnam Variable Trust" and "Putnam VT" in connection with
marketing the Contract, subject to the terms of Section 4.1 and 4.2. Such
consent shall terminate with the termination of this Agreement.
ARTICLE V. Fees and Expenses
5.1 The Trust and Underwriter shall pay no fee or other compensation to
the Company under this agreement.
5.2 All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall bear the expenses for the cost of
registration and qualification of the Trust's shares, preparation and filing of
the Trust's prospectus and registration statement, proxy materials and reports,
setting the prospectus and shareholder reports in type, setting in type and
printing the proxy materials, and the preparation of all statements and notices
required by any federal or state law, in each case as may be necessary for the
performance by it of its obligations under this Agreement.
5.3 The Company shall bear the expenses of (a) printing and distributing
the Trust's prospectus in connection with sales of the Contracts and (b)
printing and distributing the reports to Trust's shareholders and (c) of
distributing the Trust's proxy materials to owners of the Contracts.
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PAGE 8
ARTICLE VI. Diversification
6.1 The Trust shall use its best efforts to cause each
Authorized Fund to maintain a diversified pool of investments that
would, if such Fund were a segregated asset account, satisfy the
diversification provisions of Treas. Reg. 1.817-5(b)(1) or (2).
ARTICLE VII. Potential Conflicts
7.1 The Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Trust. An material irreconcilable 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 law or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (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 Trust shall promptly inform the Company if
the Trustees determine that material irreconcilable conflict exists and the
implications thereof
7.2 The Company will 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 Shared Funding Exemptive Order, by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Trustees whenever Contract owner voting
instructions are disregarded.
7.3 If it is determined by a majority of the Trustees, or a majority of
the disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall to the extent reasonably practicable (as determined by a majority
of the disinterested Trustees), take, at the Company's expense, whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, up to
and including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another Fund of the
Trust, or submitting the question whether such segregation should be implemented
to a vote of all affected contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account.
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PAGE 9
7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in one or more portfolios of the Trust and terminate this Agreement
with respect to such Account; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. No charge or penalty shall 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, and
until the end of that six month period the Underwriter and Trust shall, to the
extent permitted by law and any exemptive relief previously granted to the
Trust, continue to accept and implement orders by the Company for the purchase
(or redemption) of shares of the Trust.
7.5 If a material irreconcilable conflict arises because of a particular
state insurance regulator's decision applicable to the Company to disregard
Contract owner voting instructions and that decision represents a minority
position that would preclude a majority vote, then the Company may be required,
at the Trust's direction, to withdraw the affected Account's investment in one
or more Authorized Funds of the Trust; 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.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict. Neither the Trust nor
the Underwriter shall be required to establish a new funding medium for the
Contracts, nor shall the Company be required to do so, if an offer to do so has
been declined by vote of a majority of Contract owners materially adversely
affected by the material irreconcilable conflict. In the event that the Trustees
determine that any proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will withdraw the Account's investment
in one or more Authorized Funds of the Trust and terminate this Agreement within
six (6) months (or such shorter period as may be required by law or any
exemptive relief previously granted to the Trust) 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.
7.7 The responsibility to take remedial action in the event of the
Trustees' determination of a material irreconcilable conflict and to bear the
cost of such remedial action shall be the obligation of the Company, and the
obligation of the Company set forth in this Section 7 shall be carried out with
a view only to the interests of Contract owners.
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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 Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) 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;
and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
7.9 The Company has reviewed the Shared Funding Exemption Order and hereby
assumes all obligations referred to therein which are required be assumed or
undertaken by the Company.
ARTICLE VIII. Indemnification
8.1 Indemnification by the Company
8.1(a). The Company shall indemnify and hold harmless the Trust and the
Underwriter and each of the Trustees, and each person, if any, who controls the
Trust or the Underwriter within the meaning of Section 15 of the 1993 Act
(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 Company which consent may not be
unreasonably withheld) 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 Trust's shares or the Contracts or
the performance by the parties of their obligations hereunder 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 to the
Company by or on behalf of the Trust 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 Trust shares; or
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(ii) arise out of or as a result of written statements or
representations (other than statements or representations contained in the
Trust's Registration Statement or Prospectus, or in sales literature for Trust
shares 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 Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, Prospectus, or sales
literature of the Trust or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information furnished to
the Trust or the Underwriter by or on behalf of the Company; or
(iv) arise out of or result from any breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or result
from any other breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1 (b) and 8.1 (c) hereof
8.1(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party to the extent such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Trust, whichever is applicable.
8.1(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim but failure to notify the Company of any such claim shall
not relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Company to such Indemnified Party of
the Company's election to assume the defense thereof the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such Indemnified Party under this Agreement for
any legal
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PAGE 12
or other expenses subsequently incurred by such Indemnified Party independently
in connection with the defense thereof other than reasonable costs of
investigation.
8.1(d) The Underwriter shall promptly notify the Company of the
commencement of any litigation or proceedings against the Trust and the
Underwriter in connection with the issuance or sale of the Trust Shares or the
Contracts or the operation of the Trust.
8.1(e) The provisions of this Section 8.1 shall survive any
termination of this Agreement.
8.2 Indemnification by the Underwriter
8.2(a) The Underwriter shall 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 director, officer, empolyee 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 the Underwriter which consent may not
be unreasonably withheld) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Trust's shares or the Contracts or the performance by the
parties of their obligations hereunder and:
(i) 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
Trust prepared by or approved by the Trust or Underwriter (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to the
Underwriter or Trust by or on behalf of the Company for use in sales literature
(or any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations contained in the
Registration Statement, Prospectus, Statement of Additional Information or sales
literature for the Contracts not supplied by the Underwriter or persons under
its control) of the Underwriter or persons under its control, with respect to
the sale or distribution of the Contracts or Trust shares; 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
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thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Underwriter; or
(iv) arise out of or result from any breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out of or
result from any other breach of this Agreement by the Underwriter; as limited by
and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof; or
(v) arise out of or result from any failure to supply timely and
accurate net asset value information related to the Funds, as contemplated by
Section 2, which failure is the result of the gross negligence or willful
misconduct of the Underwriter or its affiliates (it being agreed that neither
the Underwriter nor such affiliates assume responsibility for the timing or
accuracy of prices supplied by independent third parties, such as pricing
services and market makers).
8.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Underwriter of any such claim
shall not relieve the Underwriter from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. The Underwriter also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such Indemnified Party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof other
than reasonable costs of investigation.
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8.2(d) The Company shall promptly notify the Underwriter of the Trust of
the commencement of any litigation or proceedings against it or any of its
officers or directors, in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.2(e) The provisions of this Section 8.2 shall survive any
termination of this Agreement.
8.3 Indemnification By the Trust
8.3(a) The Trust shall 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 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 Trust which consent may not be
unreasonably withheld) 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
operations of the Trust and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a Registration
Statement, Prospectus and Statement of Additional Information of the Trust
(or any amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter or Trust
by or on behalf of the Company for use in the Registration Statement,
Prospectus, or Statement of Additional Information for the Trust (or any
amendment or supplement) or otherwise for use in connection with the sale
of the Contracts or Trust shares; or
(ii) 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 other material breach of this Agreement by
the Trust, as limited by and in accordance with the provisions of Sections
8.3(b) and 8.3(c) hereof.
8.3(b). The Trust shall not be liable under the indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Trust, the Underwriter or each Account,
whichever is applicable.
<PAGE>
PAGE 15
8.3(c). The Trust shall not be liable under this indemnification provision
with respect to any claim made against any Indemnified Party unless such
Indemnified Party shall have notified the Trust in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent) on the basis of which the Indemnified Party should reasonably
know of the availability of indemnity hereunder in respect of such claim, but
failure to notify the Trust of any such claim shall not relieve the Trust 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 Trust
will be entitled to participate, at its own expense, in the defense thereof. The
Trust also shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnified Parties named in the action. After
notice from the Trust to such Indemnified Party of the Trust's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Trust will not be
liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its officers
or, directors, in connection with this Agreement, the issuance or sale of the
Contracts or the sale or acquisition of shares of the Trust.
8.3(e) The provisions of this Section 8.3 shall survive any
termination of this Agreement.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon 180 days advance
written notice to the other parties; or
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PAGE 16
(b) at the option of the Trust or the Underwriter in the event
that formal administrative proceedings are instituted against the Company by the
NASD, the Securities and Exchange Commission, the Superintendent of Insurance of
the State of New York or any other regulatory body regarding the Company's
duties under this Agreement or related to the sales of the Contracts, with
respect to the operation of any Account, or the purchase of the Trust shares,
provided, however, that the Trust or the Underwriter 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 to perform its
obligations under this Agreement; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or Underwriter by
the NASD, the Securities and Exchange Commission, or any state securities or
insurance department or any other regulatory body in respect of the sale of
shares of the Trust to the Company, provided, however, that the 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 Trust or Underwriter to perform its obligations under this Agreement; or
(d) with respect to any Account, upon requisite vote of the
Contract owners having an interest in such Account (or any subaccount) to
substitute the shares of another investment company for the corresponding Fund
shares of the Trust in accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the underlying investment media.
The Company will give 30 days' prior written notice to the Trust of the date of
any proposed vote to replace the Trust's shares; or
(e) with respect to any Authorized Fund, upon 60 days advance
written notice from the Underwriter to the Company, upon a decision by the
Underwriter or the Trust to cease offering shares of the Fund for sale.
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 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 such termination. Such prior written notice shall be given
in advance of the effective date of termination as required by this Article X.
10.4 Notwithstanding any termination of this Agreement, subject to Section
1.2 of this Agreement, the Trust and the Underwriter shall, at the option of the
Company, continue to make available additional shares of the Trust 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
<PAGE>
PAGE 17
limitation, subject to Section 1.2 of this Agreement, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Trust, redeem
investments in the Trust and/or invest in the Trust 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 such Article VII terminations shall be governed by Article VII of
this Agreement.
10.5 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in either Account) except (i) as necessary to implement Contract owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Trust and the Underwriter an opinion of counsel for the Company,
reasonably satisfactory to the Trust, to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, subject to Section 1.2
of this Agreement, the Company shall not prevent Contract owners from allocating
payments to a Fund that was otherwise available under the Contracts without
first giving the Trust or the Underwriter 90 days notice of its intention to do
so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by an Authorized
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:
One Post Office Square
Boston, MA 02109
Attention: John R. Verani
If to the Underwriter:
One Post Office Square
Boston, MA 02109
Attention: General Counsel
If to the Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
80 South Eighth Street
Minneapolis, MN 55402
Attention: President
<PAGE>
PAGE 18
ARTICLE XII. Miscellaneous
12.1 A copy of the Agreement and Declaration of Trust of the Fund is on
file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of or arising out of this instrument, including without limitations Article VII,
are not binding upon any of the Trustees or shareholders individually but
binding only upon the assets and property of the Trust.
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.
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
Securities and Exchange Commission the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
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 Notwithstanding any other provision of this Agreement, the
obligations of the Trust and the Underwriter are several and, without limiting
in any way the generality of the foregoing, neither such party shall have any
liability for any action or failure to act by the other party, or any person
acting on such other party's behalf.
[Remainder of page intentionally left blank.]
<PAGE>
PAGE 19
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.
ATTEST: AMERICAN CENTURION LIFE
/s/ Eric L. Marhoun ASSURANCE COMPANY
Name: Eric L. Marhoun By its authorized officer,
Title: Secretary
/s/ Ryan Larson
Name: Ryan Larson
Title: VP - Product Development
PUTNAM CAPITAL MANAGER TRUST
By its authorized officer,
/s/ John R. Verani
Name: John R. Verani
Title: Vice President
PUTNAM MUTUAL FUNDS CORP.
By its authorized officer,
/s/ Jeffrey M. Miller
Name: Jeffrey M. Miller
Title: Managing Director
<PAGE>
PAGE 20
Schedule A
Contracts
ACL Variable Annuity Account 2, established October 12, 1995.
ACL Personal PortfolioSM and ACL Personal Portfolio Plus offer the following
Authorized Funds as investment options:
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT New Opportunities Fund
Putnam VT High Yield Fund
Date: April 30, 1997
<PAGE>
PAGE 1
PARTICIPATION AGREEMENT
By and Among
OCC ACCUMULATION TRUST
And
AMERICAN CENTURION LIFE ASSURANCE COMPANY
And
OCC DISTRIBUTORS
THIS AGREEMENT, made and entered into this 17th day of September 1997 by
and among American Centurion Life Assurance Company, a New York Corporation
(hereinafter 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"), OCC ACCUMULATION
TRUST, an open-end diversified management investment company organized under the
laws of the State of Massachusetts (hereinafter the "Fund") and OCC
DISTRIBUTORS, a Delaware general partnership (hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open end diversified,
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 which have entered into participation agreements substantially
identical to this Agreement (hereinafter "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 filed an application with the Securities & Exchange
Commission (alternatively referred to as the "SEC" or the "Commission") to
request an order 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, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity separate accounts and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and qualified pension and retirement plans (hereinafter the
"application for a mixed and shared funding exemptive order"). The parties to
this Agreement agree that the conditions or undertakings specified in the
application for a mixed and shared funding exemptive order and that may be
imposed on the Company, the Fund and/or the Underwriter by
<PAGE>
PAGE 2
virtue of the receipt of such order by the SEC shall be incorporated herein by
reference, as of the date such order is granted and such parties agree to comply
with such conditions and undertakings to the extend 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 registered under the Securities
Act of 1933, as amended (hereinafter 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 subaccounts of the Account together
as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios named in
Schedule 2 on behalf of the Account to fund the Contracts and the Underwriter 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 and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
which the Company orders on behalf of the Account, executing such orders on a
daily basis at the net asset value next computed after receipt and acceptance by
the Fund or its agent of the order for the shares of the Fund. For purposes of
this Section 1.1, the Company shall be the designee of the Fund for receipt of
such orders from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such order by
10:00 a.m. Eastern Time on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the rules of the SEC.
<PAGE>
PAGE 3
1.2. The Company shall pay for Fund shares on the next Business Day after
it places an order to purchase Fund shares in accordance with Section 1.1
hereof. Payment shall be in federal funds transmitted by wire.
1.3. The Fund agrees to make its shares 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 net
asset value pursuant to rules of the SEC; provided, however, that the Board of
Trustees of the Fund (hereinafter the "Directors") 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 Directors, 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
any Portfolio.
1.4. The Fund and the Underwriter agree 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.
1.5. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, and VII of this Agreement are in
effect to govern such sales. The Fund shall make available upon written request
from the Company (i) a list of all other Participating Insurance Companies and
(ii) a copy of the Participation Agreement executed by any other Participating
Insurance Company.
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 shall be the designee of the Fund for receipt
of requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided the Fund receives notice of request for
redemption by 10:00 a.m. Eastern Time on the next following Business Day.
Payment shall 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 redemption order from the Company except
that 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. Neither the Fund nor the Underwriter shall bear
any responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds; the Company alone shall be responsible for
<PAGE>
PAGE 4
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 Portfolios
named in Schedule 2 offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available under the Contracts shall be invested in the Fund, or in
the Company's general account; provided that such amounts may also be invested
in an investment company other than the Fund if (a) such other investment
company, or series thereof, has investment objectives or policies that are
substantially different from the investment objectives and policies of the
Portfolios of the Fund named in Schedule 2; or (b) the Company gives the Fund
and the Underwriter 45 days written notice of its intention to make such other
investment company available as a funding vehicle for the Contracts; or (c) such
other investment company was available as a funding vehicle for the Contracts
prior to the date of this Agreement and the Company so informs the Fund and
Underwriter prior to their signing this Agreement; or (d) the Fund or
Underwriter consents in writing to the use of such other investment company.
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 shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such dividends and distributions as are payable on the Portfolio shares in
the form of additional shares of that Portfolio. The Company reserves the right
to revoke this election and to receive all such dividends and distributions in
cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 5:30 p.m., Eastern Standard
Time, each business day.
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. 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 subaccounts of each Account as a
<PAGE>
PAGE 5
unit investment trust in accordance with the provisions of the 1940 Act to serve
as segregated investment accounts for the Contracts, and that it will maintain
such registration for so long as any Contracts are outstanding. The Company
shall 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 shall register and
qualify the Contracts for sale in accordance with the securities laws of the
various states only if and to the extent deemed necessary by the Company.
2.2. The Company represents that it believes 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
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.3. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund is and shall remain
registered under the 1940 Act for as long as the Fund shares are sold. The Fund
shall amend the registration statement for its shares under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.4. 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.
2.5. The Fund represents that its investment objectives, policies and
restrictions comply with applicable state investment laws as they may apply to
the Fund. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws and regulations of any state. The
Company alone shall be responsible for informing the Fund of any insurance
restrictions imposed by state insurance laws which are applicable to the Fund.
To the extent feasible and consistent with market conditions, the Fund will
adjust its investments to comply with the aforementioned state insurance laws
upon written notice from the Company of such requirements and proposed
adjustments, it being agreed and understood that in any such case the Fund shall
be allowed a reasonable period of time under the circumstances after receipt of
such notice to make any such adjustment.
<PAGE>
PAGE 6
2.6. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such 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 Board of Trustees, a majority of whom are not interested persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the National Association of Securities Dealers, Inc., ("NASD") and
is registered as a broker-dealer with the SEC. The Underwriter further
represents that it will sell and distribute the Fund shares in accordance with
all applicable federal and state securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of Massachusetts and that it does and will comply with applicable
provisions of the 1940 Act.
2.9. The Underwriter represents and warrants that the Fund's Adviser, Op
Cap Advisors, is and shall remain duly registered under all applicable federal
and state securities laws and that the Adviser will perform its obligations to
the Fund in accordance with the laws of Massachusetts and any applicable state
and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities 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.
2.11. The 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 Fund are 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 Underwriter in the event
that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company, at the
Company's expense, with as many copies of the Fund's current
prospectus as the Company may reasonably request for use with
prospective contractowners and applicants. The Underwriter shall
<PAGE>
PAGE 7
print and distribute, at the Fund's or Underwriter's expense, as many copies of
said prospectus as necessary for distribution to existing contractowners or
participants. If requested by the Company in lieu thereof, the Fund shall
provide such documentation including a final copy of a current prospectus set in
type 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 new prospectus for the
Contracts and the Fund's new prospectus printed together in one document, in
such case the Fund shall bear its share of expenses as described above.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or alternatively from
the Company (or, in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund), and the Underwriter (or the Fund) shall
provide such Statement, at its expense, to the Company and to any owner of or
participant under a Contract who requests such Statement or, at the Company's
expense, to any prospective contractowner and applicant who requests such
statement.
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy material, if any, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require and shall
bear the costs of distributing them to existing contractowners or participants.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from contractowners or
participants;
(ii) vote the Fund shares held in the Account in
accordance with instructions received from
contractowners or participants; and
(iii) vote Fund shares held in the Account for which no timely
instructions have been received, in the same proportion as Fund
shares of such Portfolio for which instructions have been
received from the Company's contractowners or participants;
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
shall be responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a manner consistent
with other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular as required, the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with
<PAGE>
PAGE 8
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the SEC 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 Company shall furnish, or shall cause to be furnished, to the Fund
or the Underwriter, each piece of sales literature or other promotional material
in which the Fund or the Underwriter is named, at least fifteen business days
prior to its use. No such material shall be used if the Fund or the Underwriter
reasonably objects in writing to such use within fifteen business days after
receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or by the
Underwriter, except with the permission of the Fund or the Underwriter. The Fund
and the Underwriter agree to respond to any request for approval on a prompt and
timely basis.
4.3. The Fund or the Underwriter 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 or its separate account is
named, at least fifteen business days prior to its use. No such material shall
be used if the Company reasonably objects in writing to such use within fifteen
business days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to contractowners or participants,
or in sales literature or other promotional material approved by the Company,
except with the 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 or other regulatory authorities.
<PAGE>
PAGE 9
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under NASD
rules, the 1940 Act or the 1933 Act.
4.8. The Company agrees and acknowledges that Oppenheimer Capital is the
sole owner of the names and marks "OCC" and "OpCap" and that all use of any
designation comprised in whole or part of such names or marks under this
Agreement shall inure to the benefit of Oppenheimer Capital. Except as provided
in Section 4.1, the Company shall not use any such names or marks on its own
behalf or on behalf of each Account in connection with marketing the contracts
without prior written consent of Oppenheimer Capital. Oppenheimer Capital
consents to the use of the names and marks "OCC" and "OpCap" in connection with
each Account, subject to the terms of this agreement. Upon termination of this
Agreement for any reason, the Company shall cease all use of any such names or
marks.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b 1 under the 1940 Act to finance
distribution expenses, then, subject to obtaining any required exemptive orders
or other regulatory approvals, the Underwriter may make payments to the Company
or to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund of this Agreement
shall be paid by the Fund to the extent permitted by law. All Fund shares will
be duly authorized for issuance and registered in accordance with applicable
federal law and to the extent deemed
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PAGE 10
advisable by the Fund, in accordance with applicable state law, prior to sale.
The Fund shall bear the expenses for the cost of registration and qualification
of the Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, Fund proxy materials and reports, setting in type,
printing and distributing the prospectuses, the proxy materials and reports to
existing shareholders and contractowners, 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, and 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.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the 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, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations in accordance with guidelines provided by the Company prior to the
execution of this Agreement and as necessary thereafter. 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 with the grace period afforded by Treasury Regulation
1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board of Trustees of the Fund (the "Fund Board") will monitor the
Fund for the existence of any material irreconcilable 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 contract and variable
life insurance contractowners; or (f) a decision by an insurer to disregard the
voting instructions of contractowners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof. A majority of the Fund Board shall consist of persons who
are not "interested" persons of the Fund.
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 application for a mixed and
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PAGE 11
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 disregarded. The Fund Board
shall 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 shall, 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: (1)
withdrawing the assets allocable to some or all of the subaccounts of the
separate accounts from the Fund or any Portfolio and reinvesting such assets in
a different investment medium, including (but not limited to) another Portfolio
of the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected 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
(2) establishing a new registered management investment company or managed
separate account.
7.4. If the Company's disregard of voting instructions could conflict with
the majority of 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 of the Account. Any such withdrawal and termination must take
place within 60 days after the Fund gives written notice to the Company that
this provision is being implemented. Until the end of such 60 day period the
Underwriter and Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5. If a 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 of the
Account. Any such withdrawal and termination must take place within 60 days
after the Fund gives written notice to the Company that this provision is being
implemented. Until the end of such 60 day period the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this
Agreement, a majority of the disinterested members of the Fund
Board shall determine whether any proposed action adequately
<PAGE>
PAGE 12
remedies any irreconcilable material conflict, but in no event will the Fund be
required to establish a new funding medium for the Contracts. The Company shall
not be required by Section 7.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of
contractowners materially adversely affected by the irreconcilable material
conflict.
7.7 The Company shall at least annually submit to the Fund Board such
reports, material 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
application for a mixed and shared funding exemptive order, and said reports,
materials and data shall 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 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the application for a mixed and shared funding exemptive order) on
terms and conditions materially different from those contained in the
application for a mixed and shared funding exemptive order and/or a Mixed and
Shared Funding Exemptive Order, once issued, then (a) the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5,
7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such Sections
are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund, the
Underwriter, and each person, if any, who controls or is associated with the
Fund or the Underwriter within the meaning of such terms under the federal
securities laws and any 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 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:
(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 or other
<PAGE>
PAGE 13
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 therein or
necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided
that this agreement to indemnify shall not apply as to any
indemnified party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Fund for use in the registration statement,
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
(ii) 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, Fund prospectus,
Fund statement of additional information or sales
literature or other promotional material of the Fund
not supplied by the Company or persons under its
control) or wrongful conduct of the Company or
persons under its control, with respect to the sale
or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained
in the Fund registration statement, Fund
prospectus, statement of additional information
or sales literature or other promotional
material of the Fund or any amendment thereof
or supplement thereto or the omission or
alleged omission to state therein a material
fact required to be stated therein or necessary
to make the statements therein not misleading
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
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials or to make any payments
under the terms of this Agreement; or
(v) 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;
<PAGE>
PAGE 14
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b) No party shall be entitled to indemnification if such loss, claim,
damage, liability or litigation is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the party seeking
indemnification.
(c) The indemnified parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2. Indemnification By the Underwriter
(a) The Underwriter on its own behalf and on behalf of the Fund, 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, 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 the Underwriter) 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 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
therein or necessary to make the statements therein
not misleading in light of the circumstances in
which they were made; provided that this agreement
to indemnify shall not apply as to any indemnified
party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the registration statement, 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
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PAGE 15
(ii) 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 statement, the
Contract or Fund prospectus or statement of
additional information or sales literature or other
promotional material for the Contracts or of the
Fund not supplied by the Underwriter or the Fund or
persons under the control of the Underwriter or the
Fund respectively) or wrongful conduct of the
Underwriter or the Fund or persons under the control
of the Underwriter or Fund respectively, with
respect to the sale or distribution of the Contracts
or Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained
in a registration statement, prospectus,
statement of additional information or sales
literature or other promotional material
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 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 Underwriter or
the Fund or persons under the control of the
Underwriter or the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements and
procedures related thereto specified in Article VI
of this Agreement except if such failure is a result
of the Company's failure to comply with the
notification procedures specified in Article VI); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or the
Fund in this Agreement or arise out of or result from any
other material breach of this Agreement by the Underwriter or
the Fund;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Underwriter may
otherwise have.
(b) No party shall be entitled to indemnification if such loss, claim,
damage, liability or litigation is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the party seeking
indemnification.
<PAGE>
PAGE 16
(c) The indemnified parties will promptly notify the Underwriter and the
Fund of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Contracts or the operation of the
Account.
8.3. Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("indemnifying party" for the purpose of this Section 8.3) shall 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 8.3) unless such
indemnified party shall 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 shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under 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 shall 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 shall 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 (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) 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 shall not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there be 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 shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
<PAGE>
PAGE 17
8.4. Contribution
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this Section 8 is due in accordance
with its terms but for any reason is held to be unenforceable with respect to a
party entitled to indemnification ("indemnified parties" for purposes of this
Section 8.4) pursuant to the terms of this Section 8, then each party obligated
to indemnify pursuant to the terms of this Section 8 shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and litigations in such proportion as is
appropriate to reflect the relative benefits received by the parties to this
Agreement in connection with the offering of Fund shares to the Account and the
acquisition, holding or sale of Fund shares by the Account, or if such
allocation is not permitted by applicable law, in such proportions as is
appropriate to reflect the relative net benefits referred to above but also the
relative fault of the parties to this Agreement in connection with any actions
that lead to such losses, claims, damages, liabilities or litigations, as well
as any other relevant equitable considerations.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
grant (including, but not limited to, a Mixed and Shared Funding Exemptive Order
received pursuant to the application for a mixed and shared 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 one-year advance written notice to the
other parties unless otherwise agreed in a separate written agreement among the
parties; or
(b) at the option of the Company if shares of the Portfolios delineated in
Schedule 2 are not reasonably available to meet the requirements of the
Contracts as determined by the Company; or
(c) at the option of the Fund 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, which would
have a material adverse effect on the Company's ability to perform its
obligation under this Agreement; or
<PAGE>
PAGE 18
(d) at the option of the Company upon institution of formal proceedings
against the Fund by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, which would have a material adverse
effect on the Fund's ability to perform its obligation under this Agreement; or
(e) 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 Portfolio shares of the Fund in accordance with
the terms of the Contracts for which those Portfolio shares had been selected to
serve as the underlying investment media. The Company will give 30 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
(f) 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
(i) all contractowners of variable insurance products of all separate accounts
or (ii) the interests of the Participating Insurance Companies investing in the
Fund as delineated in Article VII of this Agreement; or
(g) at the option of the Company 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 believes
that the Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(j) the option of the Company, if the Company determines in its sole
judgment exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations 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; or
(k) at the option of the Fund or Underwriter, if the Fund or Underwriter
respectively, shall determine in its sole judgment exercised in good faith, that
the Company has suffered a material adverse change in its business, operations
or financial conditions 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 Underwriter; or
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PAGE 19
(l) 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 shall be effective immediately upon such occurrence without notice.
10.2. Notice Requirement
(a) In the event that any termination of this Agreement is based upon the
provisions of Article VII, such prior written notice shall be given in advance
of the effective date of termination as required by such provisions.
(b) In the event that any termination of this Agreement is based upon the
provisions of Sections 10.1(b)-(d) or 10.1(g)-(i), prompt written notice of the
election to terminate this Agreement for cause shall be furnished by the party
terminating the Agreement to the non-terminating parties with said termination
to be effective upon receipt of such notice by the non-terminating parties.
(c) In the event that any termination of this Agreement is based upon the
provisions of Sections 10.1(j) or 10.1(k), prior written notice of the election
to terminate this Agreement for cause shall be furnished by the party
terminating this Agreement to the non-terminating parties. Such prior written
notice shall be given by the party terminating this Agreement to the non-
terminating parties at least 30 days before the effective date of termination.
10.3. It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement, subject to section
1.3 of this Agreement, the Company may require the Fund and the Underwriter to
continue to make available additional shares of the Fund for so long after the
termination of this Agreement as the Company desires pursuant to the terms and
conditions of this Agreement as provided in paragraph (b) below, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.4 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
(b) If shares of the Fund continue to be made available after termination
of this Agreement pursuant to this Section 10.4, the provisions of this
Agreement shall remain in effect except for Section 10.1(a) and thereafter the
Fund, the Underwriter, or the Company may terminate the Agreement, as so
continued pursuant to
<PAGE>
PAGE 20
this Section 10.4, upon written notice to the other party, such notice to be for
a period that is reasonable under the circumstances but, if given by the Fund or
Underwriter, need not be for more than 90 days.
10.5. Except as necessary to implement contractowner initiated or approved
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Fund shares attributable to the Contracts (as opposed to Fund
shares attributable to the Company's assets held in the Account), and the
Company shall not prevent contractowners from allocating payments to a Portfolio
that was otherwise available under the Contracts, until 90 days after the
Company shall have notified the Fund or Underwriter of its intention to do so.
ARTICLE XI. Notices
Any notice shall be deemed duly given only if sent by hand, evidenced by
written receipt or by certified mail, return receipt requested, 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. All
notices shall be deemed given three business days after the date received or
rejected by the addressee.
If to the Fund:
Mr. Bernard H. Garil, President
OpCap Advisors
200 Liberty Street
New York, NY 10281
If to the Company:
American Centurion Life Assurance Company
c/o American Express Financial Advisors Inc.
80 South Eighth Street
Minneapolis, MN 55402
Attention: President
If to the Underwriter:
Mr. Thomas E. Duggan
Secretary
OCC Distributors
Two World Financial Center
New York, NY 10080
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, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
<PAGE>
PAGE 21
12.2. Subject to law and regulatory authority, each party hereto shall
treat as confidential all information reasonably identified as such in writing
by any other party hereto (including without limitation the names and addresses
of the owners of the Contracts) and, except as contemplated by this Agreement,
shall not disclose, disseminate or utilize such confidential information until
such time as it may come into the public domain without the express prior
written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
12.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit 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.
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 trust 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 Portfolios of the Fund.
<PAGE>
PAGE 22
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 above.
Attest: Company:
By:/s/ Eric L. Marhoun AMERICAN CENTURION LIFE ASSURANCE
Eric L. Marhoun COMPANY
Secretary
SEAL By:/s/ Ryan Larson
Fund:
OCC ACCUMULATION TRUST
SEAL By:/s/ Deborah Kaback
Underwriter:
OCC DISTRIBUTORS
SEAL By:/s/ Peter F. Muratore
<PAGE>
PAGE 23
Schedule 1
Participation Agreement
Among
OCC Accumulation Trust, American Certurion Life Assurance Company
and
OCC Distributors
The following separate accounts of American Centurion Life Assurance Company are
permitted in accordance with the provisions of this Agreement to invest in
Portfolios of the Fund shown in Schedule 2:
ACL Annuity Account 2, established October 12, 1995 as used to fund the ACL
Personal Portfoliosm, a flexible premium variable annuity contract. April 30,
1997
<PAGE>
PAGE 24
Schedule 2
Participation Agreement
Among
OCC Accumulation Trust, American Centurion Life Assurance Company
and
OCC Distributors
The Separate Account(s) shown on Schedule 1 may invest in the following
Portfolios of the OCC Accumulation Trust:
Managed Portfolio
U.S. Government Income Portfolio
Date: September 17, 1997
<PAGE>
PAGE 1
PARTICIPATION AGREEMENT Among
AMERICAN CENTURION LIFE ASSURANCE COMPANY And
G.T. GLOBAL VARIABLE INVESTMENT TRUST And
G.T. GLOBAL VARIABLE INVESTMENT SERIES And
GT GLOBAL, INC.
AGREEMENT dated as of May 30, 1997 by and among American Centurion Life
Assurance Company, a New York corporation ("Company"), on its own behalf and on
behalf of each separate account of the Company set forth on Schedule A hereto as
may be amended from time to time (such accounts referred to as "Accounts"); G.T.
GLOBAL VARIABLE INVESTMENT TRUST and G.T. GLOBAL VARIABLE INVESTMENT SERIES,
each a business trust organized under the laws of the Commonwealth of
Massachusetts ("Investment Companies"); and GT GLOBAL, INC., a California
corporation ("GT Global").
WHEREAS, the Accounts are separate accounts established and maintained by
Company pursuant to the laws of the State of New York for variable annuity
contracts to be issued by Company and herein defined (the "Contracts"), under
which income, gains and losses, whether or not realized, from assets allocated
to such Accounts are, in accordance with the Contracts, credited to or charged
against the Accounts without regard to other income, gains, or losses of Company
or any other separate accounts established by Company; and
WHEREAS, Company proposes to register interests in the Contracts by
registering the Accounts under the Investment Company Act of 1940, as amended,
and interests in the Accounts under the Securities Act of 1933, as amended; and
to that end has filed registration statements with the Securities and Exchange
Commission; and
WHEREAS, each Investment Company engages in business as an open-end,
multiple series, management investment company, and has established a number of
distinct mutual funds, each to be represented by a separate series of shares of
beneficial interest of such Investment Companies (each such mutual fund is
referred to as a "Fund", and all such funds in the aggregate are referred to as
the "Funds"); and
WHEREAS, the parties desire that the Funds act as the investment vehicles
for the Accounts for variable annuity contracts to be offered by insurance
companies which have entered into participation agreements with the Investment
Companies and GT Global ("Participating Insurance Companies"); and
WHEREAS, GT Global is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended, and is a member in good standing of
the National Association of Securities Dealers, Inc.; and
<PAGE>
PAGE 2
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Company intends to purchase shares of certain of the Funds on
behalf of the Accounts to fund the Contracts, and GT Global is authorized to
sell such shares to unit investment trusts such as the Accounts at net asset
value.
NOW, THEREFORE, in consideration of their mutual promises, Company, the
Investment Companies and GT Global agree as follows:
1. Additional Definitions
(a) Contracts -- The variable annuity contracts which Company proposes
to issue and the purchase payments for which will be deposited in
the Accounts and Company's general account, including any riders
and/or endorsements to such contracts and any other contracts
offered in connection therewith.
(b) 1933 Act -- The Securities Act of 1933, as amended.
--------
(c) 1934 Act -- The Securities Exchange Act of 1934, as
amended.
(d) 1940 Act -- The Investment Company Act of 1940, as
amended.
(e) SEC -- The Securities and Exchange Commission.
(f) NASD -- The National Association of Securities Dealers,
Inc.
(g) Regulations -- The rules and regulations promulgated by the SEC
under the 1933 Act, the 1934 Act and the 1940 Act as in effect at
the time this Agreement is executed or hereinafter promulgated.
2. Sale of Fund Shares
(a) GT Global agrees to sell to Company those shares of the Funds which
Company orders on behalf of the Accounts, executing such orders on a
daily basis in accordance with Section 2(d) of this Agreement.
(b) The Investment Companies agree to make the shares of the
Funds available for purchase at the then applicable net
asset value per share by Company on behalf of the
Accounts on Business Days as defined in Section 2(i) of
this Agreement, and the Investment Companies shall
calculate such net asset value on each such Business Day.
Notwithstanding any other provision in this Agreement to
the contrary, the Boards of Trustees of the Investment
Companies (the "Boards") may suspend or terminate the
offering of shares of the Funds, if such action is
required by law or by regulatory authority having
jurisdiction or if, in the sole discretion of the Boards
acting in good faith and in light of their fiduciary
duties under federal and any applicable state
<PAGE>
PAGE 3
laws, suspension or termination is necessary and in the best
interests of the shareholders of the Funds. At such time as the
Boards may so determine to terminate the offering of shares of the
Funds, the Investment Companies will promptly notify Company, in
writing, of such decision; however, the Investment Companies and GT
Global agree to continue to make shares of the Funds available for
purchase by the Accounts for a reasonable period of time, in view of
the circumstances surrounding the determination to terminate the
offering of shares of such Funds, but neither shall be required to
make shares of such Funds available for more than twelve months and
in no event for longer than the period of time provided by any
applicable federal or state laws or regulatory authority in
accordance with which the Boards determine to terminate such Funds.
(c) The Investment Companies agree to redeem, at Company's
request, any full or fractional shares of the Funds held
by each Account or Company, executing such requests at
the net asset value on a daily basis in accordance with
Section 2(d) of this Agreement. Notwithstanding the
foregoing, the Investment Companies may delay redemption
of shares of the Funds to the extent permitted by the
1940 Act.
(d) For purposes of Sections 2(a), 2(b) and 2(c), Company
shall be the agent of the Investment Companies for the
limited purpose of receiving redemption and purchase
requests each Business Day for shares of the Funds from
each Account (but not from the general account of
Company), and receipt by Company as such limited agent of
the Investment Companies shall constitute receipt by the
Investment Companies, with the effect that each such
redemption and purchase request for any Fund on any given
Business Day shall be effected at the applicable net
asset value for such Fund on such Business Day if for
each such purchase request and redemption the conditions
specified in clauses (i) and (ii) below, as applicable,
are satisfied:
(i) that, in the case of a redemption or purchase
request for the Funds, (a) Company has made all
reasonable efforts to transmit to the Investment
Companies notice of such redemption or purchase
request by 12:00 noon New York City Time on such
next following Business Day; and that (b) the
Investment Companies receive notice of such
redemption or purchase request by 4:00 p.m. New York
City Time on such next following Business Day; and
(ii) that for any purchase of shares of the Funds, (a) Company has
made all reasonable efforts to transmit to the Investment
Companies payment in Federal Funds by 1:30 p.m. New York City
time on the same Business Day as notice of the order is
<PAGE>
PAGE 4
received by the Investment Companies pursuant to clauses (i)
above; and that (b) the Investment Companies have received
payment in Federal Funds by 12:00 midnight New York City time
on the same Business Day as notice of the order is received by
the Investment Companies pursuant to clause (i) above as
applicable.
(e) A redemption or purchase request for any Fund that does not satisfy
the conditions specified above, to the extent applicable, will be
effected at the net asset value computed for such Fund on the
Business Day immediately preceding the next following Business Day
upon which conditions specified above have been satisfied.
(f) In the event that payment in Federal Funds for any
purchase is received by the Investment Companies
subsequent to 1:30 p.m. New York City time of the
Business Day upon which the applicable purchase request
was received by the Investment Companies pursuant to
clause (ii) of subparagraph (d) above, and the Company is
without fault as to such late receipt by the Investment
Companies, Company shall, promptly upon the Investment
Companies' request, reimburse the Investment Companies
for fifty percent (50%) of any charges, costs, fees,
interest or other expenses incurred by the Investment
Companies in connection with any advances to, or
borrowings or overdrafts by, the Investment Companies (or
any similar activities) as a result of portfolio
transactions effected by the Investment Companies based
upon such purchase request. However, if a reclaim is
made against the Federal Reserve System due to the late
receipt of the Federal Funds wire, and such reclaim is
paid, the Company will reimburse the Investment Companies
for the costs, fees or expenses paid in connection with a
purchase request contemplated by this subparagraph 2(f).
If such late receipt by the Investment Companies is due
to an error by the Company, the Company will reimburse
the Investment Companies 100% of the costs, fees and
expenses paid as contemplated herein.
(g) Company shall transmit (1) notices of net redemption
requests; (2) notices of net purchase requests; and (3)
Federal Funds in an amount netting purchases of the
Funds. The Investment Companies, GT Global, Company or
any of their subsidiaries, officers, directors, employees
or agents will not be liable for any loss, expense or
cost for acting upon notices or instructions believed to
be genuine.
(h) Shares of the Funds requested to be redeemed by the Accounts or
Company in accordance with clause (i) of subparagraph (d) above,
will be redeemed, and payment therefor will be made in Federal Funds
and will be transmitted to Company by wire on the Business Day the
<PAGE>
PAGE 5
Investment Companies have received notice of the redemption request
(to the extent such payment can be transmitted by wire at the time
the redemption request is processed by the Investment Companies, it
being understood that, if such payment cannot be so transmitted,
such payment will be transmitted on the following Business Day) in
accordance with clause (i) of subparagraph (d) above (unless
redemption proceeds are applied to the purchase of shares of the
Funds), except that the Investment Companies reserve 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.
(i) For purposes of this Section 2, "Business Day" shall mean any day
for which the Investment Companies calculate net asset value per
share as described in the Investment Companies' then
currently-effective prospectus and on which Company is open for
business.
(j) Issuance and transfer of shares of the Funds will be by book entry
only. Stock certificates will not be issued to Company or the
Accounts. Purchase and redemption orders for shares of the Funds
will be recorded in an appropriate ledger for each Account or the
appropriate subaccount of each Account.
(k) The Investment Companies shall furnish notice to Company
of any income dividends or capital gain distributions
payable on the shares of the Funds. Company, on behalf of
each subaccount of each Account, hereby elects to receive
all such dividends and distributions as are payable on
any shares of the Funds in additional shares of that
Fund. The Investment Companies shall notify Company of
the number of shares so issued as payment of such
dividends and distributions.
(l) The Investment Companies shall inform Company of the net
asset value per share and distribution declarations, if
applicable, for each Fund before 7:00 p.m. New York City
Time each Business Day. The Investment Companies will
use their best efforts to provide this information to
Company before 7:00 p.m. New York City time. Net asset
value per share and distribution declarations, if
applicable, for each Fund will be calculated by the
Investment Companies in accordance with their currently-
effective prospectus. If the Investment Companies are
unable to calculate the net asset per share and
distribution declarations, if applicable, for any Fund by
7:00 p.m. New York City Time of any Business Day, the
Investment Companies and/or GT Global shall, promptly
upon Company's request, reimburse Company for any
charges, costs, fees, interest, or other expenses
incurred by Company in connection with charges,
corrections, or restatements of checks or confirmations
sent to
<PAGE>
PAGE 6
customers based upon incorrect or untimely net asset value
calculations supplied to Company by the Investment Companies or
either of them. Neither the Investment Companies nor GT Global shall
be liable for net asset values provided pursuant to this Agreement
which are based on incorrect information supplied by Company.
(m) Company agrees to purchase and redeem shares of the Funds offered by
the then currently-effective prospectus of the Investment Companies
in accordance with the provisions of such prospectus.
(n) Company also agrees that it will not take action to operate the
Accounts as management investment companies under the 1940 Act
without the Investment Companies' and GT Global's prior written
consent which will not be unreasonably withheld.
(o) The Investment Companies and GT Global agree that shares of the
Funds will be sold only to Participating Insurance Companies and
their separate accounts. No shares of the Funds will be sold to the
general public.
(p) The Investment Companies and GT Global will not sell Fund shares to
any insurance company or separate account unless an agreement
containing provisions substantially the same as Section 2, Section
4, Section 5, Section 7, and Paragraph (g) of Section 3 of this
Agreement is in effect to govern such sales.
3. Representations and Warranties
(a) Company represents and warrants that the Contracts are
registered under the 1933 Act or will be so registered
before the issuance thereof, and that the Contracts will
be issued and sold in compliance in all material respects
with all applicable federal and state laws. 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
authorized each Account as a separate account under
Section 4240 of the New York Insurance Code and has
registered or, prior to the issuance of any Contracts,
will register the subaccounts of each Account together as
a unit investment trust in accordance with the provisions
of the 1940 Act to serve as a segregated asset account
for the Contracts, and that it will maintain such
registration for so long as it is required and any
Contracts are outstanding. Company shall amend the
Accounts' registration statements under the 1933 Act and
under the 1940 Act 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. Company
shall register and qualify the Contracts for sale in
<PAGE>
PAGE 7
accordance with the securities laws of the various states only if
and to the extent deemed necessary by Company.
(b) GT Global and the Investment Companies represent and
warrant that shares of the Funds sold pursuant to this
Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law
and that the Investment Companies are and shall remain
registered under the 1940 Act for so long as the shares
of the Funds are sold. The Investment Companies further
represent and warrant that each is an unincorporated
business trust duly organized and in good standing under
the laws of the Commonwealth of Massachusetts. The
Investment Companies shall amend their registration
statements under the 1933 Act and the 1940 Act from time
to time as required in order to effect for so long as
shares of the Funds are sold the continuous offering of
shares of the Funds as described in the Investment
Companies' then currently-effective prospectus. The
Investment Companies shall register and qualify shares of
the Funds for sale in accordance with the securities laws
of the various states only if and to the extent deemed
necessary by the Investment Companies. GT Global further
represents and warrants that it has been duly organized
and is validly existing as a corporation in good standing
under the laws of the State of California, and is duly
qualified to transact the business of a broker-dealer in
California and each other state in the United States.
(c) The Investment Companies represent that each Fund is
currently qualified as a Regulated Investment Company
under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code") and will make every effort to
maintain such qualifications (under Subchapter M or any
successor or similar provision), and that they will
notify Company immediately upon having a reasonable basis
for believing that one or more Funds has ceased to so
qualify or might not so qualify in the future.
(d) The Investment Companies and GT Global warrant that they
have not received any notice from the SEC with respect to
the registration statements of the Investment Companies
pursuant to Section 8(e) of the 1940 Act and no stop
order under the 1933 Act has been issued and no
proceeding therefor has been instituted or threatened by
the SEC. The accountants who certified the financial
statements included in the registration statements and
prospectus of the Investment Companies are independent
public accountants as required by the 1933 Act and the
Regulations. The financial statements included in the
registration statements of the Investment Companies
present fairly the financial condition of the Investment
Companies at the date indicated. Such financial
statements have
<PAGE>
PAGE 8
been prepared in conformity with generally accepted accounting
principles in the United States applied on a consistent basis.
Subsequent to the respective dates as of which information is given
in the registration statements or prospectus of the Investment
Companies through the date of this Agreement, there has not been any
material adverse change in the condition, financial or otherwise, of
the Investment Companies which would cause information to be
materially misleading. The Investment Companies and the Funds
conform to the descriptions thereof in the registration statements
and prospectus of the Investment Companies; shares of the Funds,
when issued as contemplated in such registration statements and
prospectus, will be fully paid and nonassessable.
(e) The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms of this
Agreement, will not conflict with, result in any breach
of any of the terms and provisions of or constitute (with
or without notice or lapse of time) a default under the
charter or by-laws of the Investment Companies or GT
Global, or any indenture, agreement, mortgage, deed of
trust or other instrument to which the Investment
Companies or GT Global is party or by which they are
bound; or violate any law, or, to the best of the
Investment Companies' and GT Global's knowledge, any
order, rule or regulation applicable to the Investment
Companies or GT Global of any court or any federal or
state regulatory body, administrative agency or any other
governmental instrumentality having jurisdiction over the
Investment Companies or GT Global or any of their
properties.
(f) Company represents that the Contracts are currently and
at the time of issuance will be treated as annuity
contracts under applicable provisions of the Code, and
agrees that it will make every effort to maintain such
treatment and that it will notify the Investment
Companies and GT Global 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.
(g) The Investment Companies currently do not intend to make
any payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act or in contravention of such
rule, although they may make payments pursuant to Rule
12b-1 in the future. To the extent that they decide to
finance distribution
expenses pursuant to Rule 12b-1, the Investment Companies
will do so only after obtaining Company's prior written
consent, and will undertake to comply fully with Rule
12b-1.
<PAGE>
PAGE 9
(h) The Investment Companies make no representations as to
whether any aspect of their operations (including, but
not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations
of the various states except that the Investment
Companies represent that the Investment Companies'
investment policies, fees and expenses are and shall at
all times remain in material compliance with the laws of
the Commonwealth of Massachusetts and the Investment
Companies represent that their operations are and shall
at all times remain in material compliance with the laws
of the Commonwealth of Massachusetts to the extent
required to perform this Agreement. To the extent
feasible and consistent with market conditions, the
Investment Companies will adjust their investments to
comply with requirements of Company's domiciliary state
upon written notice from Company of such requirements and
proposed adjustment, it being agreed and understood that
in any such case the Investment Companies shall be
allowed a reasonable period of time under the
circumstances after receipt of such notice to make any
such adjustment.
(i) The Investment Companies and GT Global represent and
warrant that the operations of each Fund, including but
not limited to the declaration and payment of dividends,
will be conducted in a manner consistent with the
operations and practices of other SEC-registered mutual
funds that have comparable objectives and policies to the
Fund that are sold or managed by GT Global or its
affiliates.
4. Shareholder Reports, Proxy Solicitation and Voting
(a) The Investment Companies shall provide to the Accounts which are the
Investment Companies' shareholders, by means of delivery to Company,
copies of their proxy material, the Funds' shareholder reports and
other shareholder communications.
(b) Subject to applicable law, Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote shares of the Funds attributable to Contract
Owners in accordance with instructions or proxies
received from such Contract Owners;
(iii) vote shares of the Funds attributable to Contract Owners
for which no instructions have been received in the same
manner and proportion as shares of the Funds for which
instructions have been received are voted; and
(iv) vote any shares of the Funds held by Company on its own behalf
or on behalf of each Account that are not attributable to
Contract Owners in the same manner and proportion as shares of
the Funds for which instructions have been received are voted.
<PAGE>
PAGE 10
(v) Upon the prior written consent of GT Global and the Investment
Companies, Company may vote shares of the Funds in accordance
with its own discretion to the extent and under the
circumstances allowed by law.
Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in the Funds
exercise and calculate voting privileges in a manner consistent with
the provisions set forth above and the standards set forth in
Paragraph 8 herein. Such standards will also be provided to the
other Participating Insurance Companies.
(c) The Investment Companies will comply with all provisions
of the 1940 Act requiring voting by shareholders, and in
particular the Investment Companies will either provide
for meetings or comply with Section 16(c) of the 1940 Act
(although the Investment Companies are not one of the
trusts described in that provision) as well as with
Sections 16(a) and, if and when applicable, 16(b).
Further, the Investment Companies will act in accordance
with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of
Trustees of the Boards and with whatever rules the SEC
may promulgate with respect thereto.
(d) Company agrees that it shall not, without the prior written consent
of GT Global, solicit, induce or encourage Contract owners to (1)
change or supplement the Investment Companies' investment manager
and administrator or (2) change, modify, substitute, add or delete
the Investment Companies or other investment media, unless otherwise
required under applicable law.
5. Prospectuses, Sales Material and Other Materials
(a) Except with the prior written permission of GT Global,
Company shall not give any information or make any
representations or statements on behalf of the Investment
Companies or concerning the Investment Companies in
connection with the sale of the Contracts other than the
information or representations contained in the
Investment Companies' registration statements or
prospectuses for the shares of the Funds, as such
registration statements or prospectuses may be amended
from time to time, or in reports or proxy statements for
the Investment Companies, or in promotional, sales
literature or advertising materials approved by GT
Global.
(b) The Investment Companies and GT Global shall not give any
information or make any representations on behalf of Company or
concerning Company, the Accounts or the Contracts other than the
information or representations
<PAGE>
PAGE 11
contained in the Accounts' registration statements or prospectus, as
such registration statements and prospectus may be amended or
supplemented from time to time, or in published reports of the
Accounts which are in the public domain or approved in writing by
Company for distribution to Contract owners, or in promotional,
sales or advertising materials approved by Company, except with the
written permission of Company.
(c) The Investment Companies will provide to Company at least
one complete copy of registration statements,
prospectuses, statements of additional information,
annual and semi-annual reports and other reports, proxy
statements, promotional, sales or advertising materials,
applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the
above, that relate to the Investment Companies or shares
of the Funds, promptly after the filing of such document
with the SEC or other regulatory authorities.
(d) Company will provide to the Investment Companies at least
one complete copy of all Account registration statements,
prospectuses, statements of additional information,
reports, solicitations for voting instructions,
promotional, sales or advertising materials, applications
for exemptions, requests for no-action letters, and all
amendments or supplements to any of the above, that
relate to the Contracts or the Accounts, promptly after
the filing of such document with the SEC or other
regulatory authorities.
(e) Each party will make reasonable efforts under the
circumstances to provide to the other party copies of
draft versions of any registration statements,
prospectuses, statements of additional information,
reports, proxy statements, solicitations for voting
instructions, promotional, sales or advertising
materials, applications for exemptions, requests for no-
action letters, and all amendments or supplements to any
of the above, to the extent that the other party
reasonably needs such information for purposes of
preparing a report or other filing to be filed with or
submitted to a regulatory agency. If a party requests
any such information before it has been filed, the other
party will provide the requested information if then
available and in the version then available at the time
of such request.
(f) For purposes of this Section 5, the phrase "promotional,
sales or advertising materials" includes, but is not
limited to, advertisements (such as material published,
or designed for use, in a newspaper, magazine or other
periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion
pictures or other public media), sales literature (i.e.,
any written communication made
<PAGE>
PAGE 12
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, or 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 NASD rules, the 1940 Act or
the 1933 Act.
(g) Licensed Marks
(1) Chancellor LGT Asset Management, Inc. owns all
right, title and interest in and to the trademarks
and servicemarks used to identify the underlying
investment medium for the Annuity; and the name "GT"
in whatever manner used in connection with the
performance of this Agreement (the "Licensed
Marks"); and has licensed to GT Global the right to
the use and sublicense of the licensed marks.
(2) GT Global hereby grants to the Company, a non-exclusive
license to use the Licensed Marks in connection with its
performance of the services as set forth under this Agreement.
(i) Term. The grant of license as specified herein
----
shall terminate on the earlier of the following
events: (A) a change of name of the Fund to a
name that does not include the term "GT", in
accordance with the provisions of the Funds'
Investment Management Agreement; (B) whenever
the Annuity shall cease to be invested in the
Funds; or (C) solely at the option of GT Global
upon a termination of this Agreement pursuant
to Section 5 of this Agreement. Subject to the
preceding sentence, the grant of license as
specified herein shall survive the termination
of the Agreement. Upon termination of the
grant of license, the Company shall immediately
cease to issue new annuity contracts or service
existing Annuity contracts under any of the
Licensed Marks and shall likewise cease any
activity which suggests that it has any right
under any of the Licensed Marks or that it has
any association with GT Global in connection
with any such contracts or policies.
(ii) Pre-Release Approval of Trademark-Bearing
Materials. The Company shall obtain the prior
written approval of GT Global for
<PAGE>
PAGE 13
the public release of any materials bearing the Licensed
Marks. Such material shall include, but not be limited
to, samples of each proposed standard Annuity form and
application, form correspondence with Annuity owners,
standard reports to Annuity owners and any other
standard operating materials that bear any of the
Licensed Marks. During the term of this grant of
license, GT Global may request that the Company submit
samples of any materials bearing any of the Licensed
Marks which were previously approved by GT Global but,
due to changed circumstances, GT Global may wish to
reconsider, or which were not previously approved in the
manner set forth above. If, on reconsideration or on
initial review, respectively, any such samples fail to
meet with the written approval of GT Global, then the
Company shall cease distributing such disapproved
materials within a reasonable time as agreed by the
parties. The Company shall obtain the prior written
approval of GT Global for the use of any new materials
developed to replace the disapproved materials, in the
manner set forth above.
(iii) Acknowledgment of Ownership. The Company:
---------------------------
(1) acknowledges and stipulates that the
Licensed Marks are valid and enforceable
trademarks and servicemarks owned
exclusively by Chancellor LGT Asset
Management, Inc. and that, pursuant to
such ownership, Chancellor LGT Asset
Management, Inc. has the exclusive right
to use, and license others to use, the
Licensed Marks as indications of source,
origin, sponsorship, affiliation or
endorsement; (2) agrees never to contend
otherwise in legal proceedings or in other
circumstances; and (3) acknowledges and
agrees that the use of the Licensed Marks
pursuant to this grant of license shall
inure to the benefit of Chancellor LGT
Asset Management, Inc. and its affiliates
and shall not create any right of
ownership in the Licensed Marks for the
Company.
6. Fees and Expenses
(a) The Investment Companies and GT Global shall pay no fee or other
compensation to Company under this Agreement, except that if the
Investment Companies or any Fund adopts and implements a plan
pursuant to Rule 12b-1 under the 1940 Act to finance distribution
expenses,
<PAGE>
PAGE 14
then GT Global may make payments to Company in amounts agreed to by
Company and GT Global in writing. Currently, no such plan or
payments are contemplated.
(b) All expenses incident to the normal operations of the
Investment Companies and the performance by the
Investment Companies of their obligations under this
Agreement shall be paid by the Investment Companies to
the extent permitted by law. Each year the Company will
be responsible for the cost of distributing to
prospective Contract owners prospectuses and statements
of additional information of the Accounts and the
Investment Companies for the Contracts. Further, the
Company will be responsible for the cost of mailing proxy
statements to Contract owners. In addition, Company
shall be responsible for the costs of printing and
mailing of periodic reports and prospectus updates
required by law for the Investment Companies to existing
Contract owners. Further, each year the Company shall be
responsible for the costs associated with its tabulation
of the proxies for one meeting of shareholders of the
Investment Companies; the Investment Companies shall be
responsible for its costs related to a meeting of its
shareholders. Company shall not bear any of the expenses
for the: cost of registration and qualification of shares
of the Funds under federal and any state securities law;
design, preparation and filing of the Investment
Companies' registration statements, proxy materials and
reports; the cost of setting in type the Investment
Companies' proxy materials (except those proxy materials
which are required by insurance law or requested by the
Company to effect changes to an Investment Company's
objectives, policies or restrictions) 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 securities law; all taxes on the
issuance or transfer of shares of the Funds; and any
expenses permitted to be paid or assumed by the
Investment Companies pursuant to a plan, if any, under
Rule 12b-1 under the 1940 Act.
7. Diversification
The Investment Companies and GT Global shall use reasonable efforts to
comply with Section 817(h) of the Code and all regulations issued
thereunder concerning the diversification of each Fund's assets. Promptly
following the conclusion of each calendar quarter, the Investment
Companies shall certify in writing to Company that the Investment
Companies have complied with such requirements for the preceding quarter.
<PAGE>
PAGE 15
8. Potential Conflicts
(a) The Board will monitor each Fund for the existence of any
material irreconcilable conflict between the interests of
the contract owners of all separate accounts investing in
such 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 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 owners of the Participating Insurance
Companies; or (f) a decision by a Participating Insurance
Company to disregard the voting instructions of its
Contract Owners. The Board shall promptly inform the
Participating Insurance Companies 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 in the same manner which would be
applicable if a Shared Funding Exemptive Order was
granted to the Company, 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 it is determined by a majority of the Board, or a
majority of its disinterested trustees that a material
irreconcilable conflict exists, the Company and other
Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined
by a majority of the disinterested
trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and
including: (1), withdrawing the assets allocable to some
or all of the subaccounts of the Account from the Funds
and reinvesting such assets in a different investment
medium, including (but not limited to) another Fund, or
submitting the question whether such segregation should
be implemented to a vote of all affected Contract Owners
and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners of one
---
or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected
Contract
<PAGE>
PAGE 16
Owners the option of making such a change; and (2), establishing a
new registered management investment company or managed separate
account.
(d) If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract Owner
voting instructions and that decision represents a
minority position or would preclude a majority vote, the
Company may be required, at the Investment
Companies' election, to withdraw the affected subaccount
of the Account's investment in the affected Fund(s) 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 members of
the 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 affected Fund(s) gives written notice that this
provision is being implemented, and until the end of that
six month period GT Global and such Fund(s) shall
continue to accept and implement orders by the Company
for the purchase (and redemption) of shares of that Fund.
(e) 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 affected Funds and terminate this Agreement with
respect to such subaccount of the Account within six
months after the Board informs the Company in writing
that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that
such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested
members of the Board. No charge or penalty will be
imposed as a result of such withdrawal. Until the end of
the foregoing six month period, GT Global and such
Fund(s) shall continue to accept and implement orders by
the Company for the purchase (and redemption) of shares
of that Fund.
(f) For purposes of Section 8(c) through 8(f) of this
Agreement, a majority of the disinterested members of
the Board shall determine whether any proposed action
adequately remedies any irreconcilable material conflict,
but in no event will the Investment Companies be required
to establish a new funding medium for the Contracts. The
Company shall not be required by Section 8(c) 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
<PAGE>
PAGE 17
adversely affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not
adequately remedy any irreconcilable material conflict, then the
Company will withdraw the subaccount of the Account's investment in
the affected Fund(s) and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the
foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. No charge or penalty will be
imposed as a result of such withdrawal.
(g) 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 shared funding on
terms and conditions materially different from those
contained in Rule 6e-2 and Rule 6e-3(T), then (a) the
Investment Companies and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T) as
amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 4(b), 4(c), 8(a),
8(b), 8(c), 8(d) and 8(e) of this Agreement shall
continue in effect only to the extent that terms and
conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
9. Indemnification
(a) Indemnification by Company
Company agrees to indemnify and hold harmless the Investment
Companies, GT Global and each person who controls or is associated
with the Investment Companies or GT Global within the meaning of
such terms under the federal securities laws and any officer,
trustee, director, employee or agent of the foregoing, against any
and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they
or any of them may become subject under any statute or regulation,
at common law or otherwise, insofar as such losses, claims, damages
or liabilities:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Accounts' registration statements, prospectus, statement of
additional information and promotional, sales or
<PAGE>
PAGE 18
advertising materials developed by 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 in
light of the circumstances in which they were made; provided
that these provisions shall not apply if such statement or
omission or such alleged statement or alleged omission was
made in reliance upon and in conformity with information
furnished to Company by GT Global or the Investment Companies
for use in the Accounts' registration statement, prospectus or
statement of additional information or in promotional, sales
or advertising materials developed by Company; or
(ii) arise out of or as a result of statements or
representations by or on behalf of Company (other
than statements or representations contained in the
Investment Companies registration statements or
prospectus or sales literature not developed by
Company or persons under its control) or wrongful
conduct of Company or persons under its control with
respect to the sale or distribution of the Contracts
or shares of the Funds; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained
in the Investment Companies' registration
statements or prospectus or in promotional,
sales or advertising materials literature of
the Investment Companies, 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
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 in writing to GT Global
or the Investment Companies by or on behalf of
Company; or
(iv) arise as a result of any failure by Company to provide the
services and furnish the materials or to make any payments
under the terms of this Agreement; or
(v) arise out of any material breach by Company of this Agreement
including but not limited to any failure to transmit a request
for redemption or purchase of shares of the Funds on a timely
basis in accordance with the procedures set forth in Section
2.
<PAGE>
PAGE 19
(vi) Company shall not be liable under this
indemnification provision with respect to any
losses, claims, damages, liabilities or litigation
incurred or assessed against GT Global or the
Investment Companies to the extent such may arise
from their willful misfeasance, bad faith or gross
negligence in the performance of their duties or by
reason of GT Global's or the Investment Companies'
reckless disregard of obligations or duties under
this Agreement.
This indemnification will be in addition to any liability which
Company may otherwise have.
(b) Indemnification by GT Global
GT Global agrees to indemnify and hold harmless Company and each
person who controls or is associated with Company within the meaning
of such terms under the federal securities laws and any officer,
director, employee or agent of the foregoing, against any and all
losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of
them may become subject under any statute or regulation, at common
law or otherwise, insofar as such losses, claims, damages or
liabilities:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Investment Companies registration
statements, prospectuses, statements of additional
information or in any promotional, sales or
advertising materials for the Investment Companies
(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 in light of the circumstances in which
they were made; provided that this obligation to
indemnify shall apply only if such statement or
omission or alleged statement or alleged omission
was made in reliance upon and in conformity with
information furnished in writing by GT Global to the
Investment Companies for use in the Investment
Companies registration statements, prospectuses,
statements of additional information or such sales
materials; or
(ii) arise out of or as a result of statements or
representations contained in the registration
statements, prospectuses, statements of additional
information of the Accounts or the
<PAGE>
PAGE 20
Investment Companies or in promotional, sales or advertising
materials for the Contracts or the Investment Companies
supplied by GT Global or the Investment Companies or persons
under their control, or wrongful conduct of GT Global with
respect to the sale or distribution of the Contracts or shares
of the Funds; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Accounts'
or Investment Companies' registration statements,
prospectuses, statements of additional information or in
promotional, sales or advertising materials, 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 in light of the circumstances in which
they were made, if such statement or omission was made in
reliance upon information furnished in writing by GT Global;
or
(iv) arise out of any material breach by GT Global of this
Agreement, including but not limited to any failure to supply
timely and accurate net asset value information relating to
the Funds as specified in Section 2, or failure to maintain a
Fund's diversification as required in Section 7.
(v) GT Global shall not be liable under this
indemnification provision with respect to any
losses, claims, damages, liabilities or litigation
incurred or assessed against the Company or the
Investment Companies to the extent such may arise
from their willful misfeasance, bad faith or gross
negligence in the performance of their duties or by
reason of the Company's or the Investment Companies'
reckless disregard of obligations or duties under
this Agreement.
This indemnification will be in addition to any liability which GT
Global may otherwise have.
(c) Indemnification by the Investment Companies
The Investment Companies agree to indemnify and hold harmless
Company and each person who controls or is associated with Company
within the meaning of such terms under the federal securities laws
and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim
asserted), to which they or any of them may
<PAGE>
PAGE 21
become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Investment Companies registration
statements, prospectus, statement of additional
information or in promotional, sales or advertising
materials, (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 in light of the circumstances in which
they were made; provided that this obligation to
indemnify shall not apply if such statement or
omission or such alleged statement or alleged
omission was made in reliance upon and in conformity
with information furnished in writing by or on
behalf of the Company for use in its registration
statements, prospectuses or statements of additional
information or in sales literature or otherwise for
use in connection with the sale of the Contracts or
shares of the Funds; or
(ii) arise out of or as a result of statements or
representations contained in the registration
statements, prospectuses or statements of additional
information of the Accounts or Investment Companies
or in promotional, sales or advertising materials
supplied by the Investment Companies or persons
under their control, or wrongful conduct of the
Investment Companies or the Investment Companies'
investment adviser, with respect to the sale or
distribution of the Contracts or shares of the
Funds; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained
in the registration statements, prospectuses or
statements of additional information of the
Investment Companies or in promotional, sales
or advertising materials, 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
in
light of the circumstances in which they were made, if such
statement or omission was made in reliance upon information
furnished in writing by the Investment Companies; or
(iv) arise as a result of any failure by the Investment
Companies to provide the services and furnish the
materials under the terms of this
<PAGE>
PAGE 22
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements in accordance with the conditions specified in
Section 7 of this Agreement); or
(v) arise out of any material breach by the Investment
Companies of this Agreement, including but not
limited to any failure to supply timely and accurate
net asset value information relating to the Funds as
specified in Section 2, an error in security
accounting which would cause a previously calculated
net asset value to be incorrect; faulty transmittal
of a net asset value; failure to furnish the Company
with
correct and timely information on the declaration of
any dividend distribution payable; or failure to
maintain a Fund's diversification as required in
Section 7.
(vi) The Investment Company shall not be liable under
this indemnification provision with respect to any
losses, claims, damages, liabilities or litigation
incurred or assessed against the Company or GT
Global to the extent such may arise from their
willful misfeasance, bad faith or gross negligence
in the performance of their duties or by reason of
the Company's or GT Global's reckless disregard of
obligations or duties under this Agreement.
This indemnification will be in addition to any liability which the
Investment Companies may otherwise have.
(d) Indemnification Procedures
After receipt by a party entitled to indemnification ("indemnified
party") under this Section 9 of notice of the commencement of any
action, if a claim in respect thereof is to be made against any
person obligated to provide indemnification under this Section 9
("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission to so notify the
indemnifying party will not relieve it from any liability under this
Section 9, except to the extent that the omission results in a
failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to
give such notice. The indemnifying party, upon the request of the
indemnified party, shall retain counsel reasonably satisfactory to
the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel
<PAGE>
PAGE 23
related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such
indemnified party unless (1) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of
such counsel or (2) 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
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be 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 shall be entitled to the
benefits of the indemnification contained in this Section 9. The
indemnification provisions contained in this Section 9 shall survive
any termination of this Agreement.
10. Applicable Law
(a) This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the state of
California, without giving effect to the principles of conflicts of
laws.
(b) This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations
as the SEC may grant, and the terms hereof shall be limited,
interpreted and construed in accordance therewith.
11. Term
(a) Unless otherwise terminated pursuant to this Section 11
this Agreement shall remain in effect for a period of one
(1) year following its execution. This Agreement shall
remain in effect thereafter unless (i) terminated at the
option of any party, upon sixty days written notice to
the other parties, or (ii) terminated pursuant to any of
subparagraphs (b) through (n) of this Section 11.
Termination of the Agreement with respect to any one Fund
shall not affect its continued effectiveness with respect
to the other Funds.
(b) The Investment Companies may terminate this Agreement upon
institution of formal proceedings against Company by the NASD, the
SEC, the insurance commission of any state or any other regulatory
body regarding Company's
<PAGE>
PAGE 24
duties under this Agreement or related to the sale of the Contracts,
the operation of the Accounts, or the purchase of shares of the
Funds, or an expected or anticipated ruling, judgment or outcome
which would, in the Investment Companies' reasonable judgment,
materially impair Company's ability to meet and perform Company's
obligations and duties hereunder.
(c) GT Global at its option may terminate this Agreement in
the event (i) the A.M. Best & Co. rating of the Company
is not "A" or better or (ii) the Duff & Phelps' claims
paying ability rating of the Company is not "A" or
better.
(d) The Company may terminate this Agreement upon institution of formal
proceedings against the Investment Companies or GT Global by the
NASD, the SEC, or any state securities or insurance commission or
any other regulatory body.
(e) This Agreement will terminate with respect to any Fund upon receipt
of any required regulatory approvals and any requisite vote of the
Contract Owners having an interest in the affected Fund to
substitute the shares of another investment company for the affected
shares of the Fund in accordance with the terms of the Contracts.
(f) The Investment Companies may terminate this Agreement in the event
any of the Contracts are not registered, issued or sold in
accordance with applicable federal and/or state law.
(g) Either Company or the Investment Companies may terminate this
Agreement upon a determination by a majority of the Boards, or a
majority of disinterested board members, that an irreconcilable
material conflict exists among the interests of the Contract Owners.
(h) The Investment Companies may terminate this Agreement upon a
determination by the Board in good faith that it is no longer
advisable and in the best interests of shareholders for the
Investment Companies to continue with this Agreement.
(i) Company may terminate this Agreement with respect to any
Fund if it ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code, or under any
successor or similar provision, or if Company reasonably
believes based on an opinion of counsel satisfactory to
the relevant Investment Company that such Fund may fail
to so qualify. Termination of this Agreement with
respect to one Fund under this provision shall not affect
the continued effectiveness of this Agreement to the
remaining Funds.
<PAGE>
PAGE 25
(j) Company may terminate this Agreement with respect to any Fund if it
fails to meet the diversification requirements specified in Section
7 hereof. Termination of this Agreement with respect to one Fund
under this provision shall not affect the continued effectiveness of
this Agreement to the remaining Funds.
(k) The Investment Companies may terminate this Agreement
immediately if the Contracts cease to qualify as annuity
contracts under the Code, or on ten days notice if the
Investment Companies reasonably believe that the
Contracts may fail to so qualify; provided that such
event has not been caused by a Fund's failure to maintain
diversification in accordance with the provisions of
Section 7.
(l) The Investment Companies may terminate this Agreement immediately
upon written notice in the event either Company or GT Global files a
petition for reorganization or liquidation under the U.S. Bankruptcy
Code; becomes subject to the jurisdiction of the U.S. Bankruptcy
Court; has a liquidator or trustee appointed to oversee its affairs;
or is adjudged insolvent.
(m) This Agreement will terminate automatically if it is assigned;
provided that, to the extent permitted by relevant law and
regulation, no termination shall occur if a party hereto assigns
this Agreement to an affiliate.
(n) This Agreement may be terminated at the option of any party, upon
another party's material breach of any provision of this Agreement.
(o) Unless otherwise indicated above, no termination of this Agreement
shall be effective unless and until the party terminating this
Agreement gives sixty (60) days prior written notice to all other
parties to this Agreement. Any notice of termination shall set forth
the basis for such termination.
(p) The parties each agree to act in good faith with respect to
determining whether to exercise any right to terminate this
Agreement prior to its one (1) year term specified in Section 11(a).
(q) If this Agreement is terminated pursuant to this Section
11, at GT Global's option one of the following will occur
with respect to all Contracts in effect on the effective
date of termination ("Existing Contracts"), provided that
the Investment Companies have consented or approved such
action to the extent
and in the fashion required by applicable law and
regulation and all required regulatory approvals have
been obtained:
<PAGE>
PAGE 26
(i) The Investment Companies may continue to make
additional shares of the Funds available for the
Existing Contracts under the terms of this
Agreement, for so long as GT Global and the
Investment Companies may desire; provided that, if
shares of the Funds are so made available for the
Existing Contracts, GT Global and the Investment
Companies may elect to make shares of the Funds
available to insurance companies unaffiliated with
Company.
(ii) The Funds may be liquidated and the Investment Companies cease
to exist; provided that Company will be provided with twelve
months prior notice of such action to enable Company to
identify substitute variable investment options for the
Contracts.
(iii) GT Global and Company may negotiate an
agreement in good faith pursuant to which GT
Global will solicit the transfer of the
investments of holders of the Existing
Contracts to the variable annuity contracts of
an insurance company unaffiliated with Company,
and GT Global will pay such consideration to
Company as the parties then agree.
Notwithstanding the foregoing provisions, if this Agreement is
terminated pursuant to this Paragraph 11, solely with respect to
Existing Contracts that were sold through the Company distribution
system or the Company's affiliated broker-dealer, the Company at its
option may arrange to substitute other appropriate investment
options for the Funds.
(r) If following termination of this Agreement shares of the
Funds continue to be made available for Existing
Contracts pursuant to Section 11(q) of this Agreement,
the owners of the Existing Contracts shall be permitted
to reallocate investments among the Funds, redeem
investments in the Funds and invest in the Funds by
making additional purchase payments under the Existing
Contracts. Thereafter either the Investment Companies or
Company may terminate the Agreement, as so continued
pursuant to this Section 11(r), upon prior written
notice to the other party, such notice to be for a period
that is reasonable under the circumstances but, if given
by the Investment Companies, the Company will be provided
with twelve months prior notice to enable the Company to
identify substitute variable investment options for the
Contracts.
(s) Neither GT Global and its affiliates nor Company and its affiliates
knowingly shall induce or cause, or attempt to induce or cause,
directly or indirectly, any Contract owner to lapse, terminate,
surrender or cancel his or her Contract, or exchange his or her
Contract
<PAGE>
PAGE 27
for another variable annuity contract, or to cease or discontinue
making purchase payments thereunder, without the prior written
consent of the other party.
12. Applicability to New Accounts and New Contracts
The parties to this Agreement may amend Schedule A to this Agreement from
time to time to reflect changes in or relating to the Contracts and upon
GT Global's prior written consent, the parties may amend Schedule A to
this Agreement to add new classes of variable annuity contracts to be
issued by Company through a separate account investing in the Investment
Companies. The provisions of this Agreement shall be equally applicable to
each such class of contracts, unless the context otherwise requires.
13. 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 Company:
American Centurion Life Assurance Company
C/O American Express Financial Advisors Inc.
80 South Eighth Street
Minneapolis, MN 55402
Attn: President
If to the Investment Companies:
GT Global Variable Investment Trust
GT Global Variable Investment Series
50 California Street, 27th Floor
San Francisco, CA 94111
Attn: Michael Silver, Esq.
Assistant Secretary and Assistant General Counsel
With a simultaneous copy to:
Kirkpatrick & Lockhart
1800 M Street, N.W.
South Lobby, 9th Floor
Washington, DC 20036
Attn: Arthur J. Brown, Esq.
If to GT Global:
GT Global, Inc.
50 California Street, 27th floor
San Francisco, CA 94111
Attn: Michael Silver, Esq.
Vice President, Secretary and Assistant General
Counsel
<PAGE>
PAGE 28
With a simultaneous copy to:
Kirkpatrick & Lockhart
1800 M Street, N.W.
South Lobby, 9th Floor
Washington, DC 20036
Attn: Arthur J. Brown, Esq.
14. Miscellaneous
(a) This Agreement has been executed on behalf of the
Investment Companies by the undersigned officer of the
Investment Companies in his capacity as an officer of the
Investment Companies duly authorized to execute this
Agreement. The obligations of this Agreement shall only
be binding upon the assets and property of
the Investment Companies and shall not be binding upon
any trustee, officer or shareholder of the Investment
Companies individually.
(b) 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.
(c) This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the
same instrument.
(d) 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.
(e) Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
(f) Each party represents that the execution and delivery of
this Agreement and the consummation of the transaction
contemplated herein have been duly authorized by all
necessary corporate or trust 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.
<PAGE>
PAGE 29
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized officer on the date
specified below.
Attest: AMERICAN CENTURION
LIFE ASSURANCE COMPANY
By: /s/ Eric L. Marhoun By:/s/ Ryan Larson
Eric L. Marhoun Name: Ryan Larson
Secretary Title: V.P.
G.T. GLOBAL VARIABLE INVESTMENT
TRUST
Date: May 30, 1997 By:/s/ William J. Guilfoyle
------------------------
William J. Guilfoyle
President
G.T. GLOBAL VARIABLE INVESTMENT
SERIES
Date: May 30, 1997 By:/s/ William J. Guilfoyle
------------------------
William J. Guilfoyle
President
GT GLOBAL, INC.
Date: May 30, 1997 By:/s/ William J. Guilfoyle
------------------------
William J. Guilfoyle
President
<PAGE>
PAGE 30
SCHEDULE A
ACL Variable Annuity Account 2, established October 12, 1995 used to fund the
ACL Personal Portfolio SM and ACL Personal Portfolio Plus, flexible premium
variable annuity contracts.
<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 reports dated February 7, 1997 on the financial statements
and schedules of American Centurion Life Assurance Company in Pre-Effective
Amendment No. 3 to the Registration Statement (Form N-4, No. 333-00519) and
related Prospectus for the registration of the ACL Variable Annuity Account 2 to
be offered by American Centurion Life Assurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
September 30, 1997
<PAGE>
AMERICAN CENTURION LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 1,584 $ 1,696 $ 1,584
All other corporate bonds 17,995 18,262 17,995
------------- --------------- -----------------
Total held to maturity 19,579 19,958 19,579
Available for sale:
United States Government and
government agencies and
authorities (b) 50,788 50,710 50,710
States, municipalities and
political subdivisions 1,000 1,021 1,021
All other corporate bonds 82,843 84,360 84,360
------------- --------------- -----------------
Total available for sale 134,631 136,091 136,091
Total investments $ 154,210 $ XXXXXXXXX $ 155,670
============= =================
</TABLE>
(a) - Includes mortgage-backed securities with a cost and market value of
$1,584 and $1,696, respectively.
(b) - Includes mortgage-backed securities with a cost and market value of
$48,693 and $48,647, respectively.
<PAGE>
AMERICAN CENTURION LIFE INSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1996 and 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- --------------------------------------------------------------------------------------------------------------------
For the year ended
December 31, 1996
<S> <C> <C> <C> <C> <C>
Life insurance in force $ 242,209 $ 241,974 $ 0 $ 235 0.00%
====================================================================================================================
Premiums:
Life insurance $ 1,351 $ 1,351 $ -- $ 0 0.00%
====================================================================================================================
Total premiums $ 1,351 $ 1,351 $ -- $ 0 0.00%
====================================================================================================================
For the year ended
December 31, 1995
Life insurance in force $ 265,799 $ 265,564 $ -- $ 235 0.00%
====================================================================================================================
Premiums:
Life insurance $ 1,384 $ 1,384 $ -- $ 0 0.00%
====================================================================================================================
Total premiums $ 1,384 $ 1,384 $ -- $ 0 0.00%
====================================================================================================================
</TABLE>
<PAGE>
Report of Independent Auditors
The Board of Directors
American Centurion Life Assurance Company
We have audited the financial statements of American Centurion Life Assurance
Company (a wholly-owned subsidiary of IDS Life Insurance Company) as of December
31, 1996 and 1995, and for the years then ended, and have issued our report
thereon dated February 7, 1997 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedules listed in
Item 24(b) of this Registration Statement. These schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 7, 1997
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0001004875
<NAME> American Centurion Life Assurance Company
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 136091
<DEBT-CARRYING-VALUE> 19579
<DEBT-MARKET-VALUE> 19958
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 155670
<CASH> 13856
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 4364
<TOTAL-ASSETS> 178777
<POLICY-LOSSES> 141470
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 691
<NOTES-PAYABLE> 0
<COMMON> 1000
0
0
<OTHER-SE> 30074
<TOTAL-LIABILITY-AND-EQUITY> 178777
0
<INVESTMENT-INCOME> 8851
<INVESTMENT-GAINS> (57)
<OTHER-INCOME> 306
<BENEFITS> 5849
<UNDERWRITING-AMORTIZATION> 21
<UNDERWRITING-OTHER> 1387
<INCOME-PRETAX> 1843
<INCOME-TAX> 678
<INCOME-CONTINUING> 1165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1165
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
