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VARIABLE ANNUITY AND LIFE INSURANCE DISTRIBUTION AND ADMINISTRATIVE
SERVICES AGREEMENT
This Variable Annuity and Life Insurance Distribution Agreement ("Agreement")
entered into by and between American Centurion Life Assurance Company ("ACL"), a
New York corporation, and American Express Service Corporation ("AESC"), a
Delaware corporation, is effective as of April 10, 1997.
ACL desires AESC to act as principal underwriter and distributor (as those terms
are defined by the Investment Company Act of 1940 ("1940 Act")) with respect to
the distribution and sale of variable annuity and life insurance contracts
issued by ACL ("Variable Contracts", specifically those variable annuity
contracts and life insurance policies identified in Exhibit 1 attached hereto,
and as may be hereafter amended), in order to satisfy the requirements of the
Securities Exchange Act of 1934 ("1934 Act"). The solicitation and sale of the
Variable Contracts will be conducted through persons who are licensed as life
insurance agents in appropriate jurisdictions and appointed with ACL and are
also registered representatives of AESC ("Representatives").
In consideration of the mutual promises contained herein the parties agree as
follows:
1. Representations of AESC
AESC represents and warrants that it is registered with the National Association
of Securities Dealers, Inc. ("NASD") and Securities Exchange Commission ("SEC")
as a broker-dealer under the 1934 Act and is qualified to do business in those
states where ACL is licensed and qualified to do business.
2. Appointment of AESC
On the effective date of the Agreement, ACL appoints AESC and AESC accepts the
appointment (1) as principal underwriter and distributor of the Variable
Contracts, and (2) to solicit sales of and to sell Variable Contracts pursuant
to the terms of this Agreement.
3. Duties of AESC
(a) Supervision of Representatives
(i) AESC will have full responsibility for the training and supervision of
all Representatives who are engaged directly or indirectly in the offer or sale
of the Variable Contracts, and all Representatives will be subject to the
control of AESC with respect to such Representative's securities regulated
activities with respect to the Variable Contracts. AESC will cause the
Representatives to:
(1) be trained in the sale of the Variable Contracts;
(2) be registered representatives of AESC with the NASD
before such Representatives engage in the
solicitation of applications for the Variable
Contracts;
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(3) be validly licensed with states and appointed with ACL as an
insurance agent in accordance with the requirements of the
insurance laws of the state of New York where the solicitations
and sales of Variable Contracts take place; and
(4) limit solicitation of applications for the Variable Contracts to
the state of New York where ACL has authorized such solicitation.
AESC will notify ACL if any Representative ceases to be a registered
representative of AESC or ceases to maintain the proper state insurance
licensing required for the sale of Variable Contracts. ACL will have sole
discretion to appoint, refuse to appoint, discontinue or terminate the
appointment of any Representative as an insurance agent of ACL.
(ii) AESC will fully comply with the requirements of the NASD, the SEC and
all other applicable federal and state laws. AESC will establish and maintain
such rules and procedures as may be necessary to cause diligent supervision of
the securities activities of Representatives. Upon request by ACL, AESC will
furnish such records as may be necessary to establish such diligent supervision.
(iii) In the event a Representative refuses or fails to submit to
supervision of AESC or otherwise fails to meet the rules and standards imposed
by AESC on its representatives, AESC will notify such Representative that he or
she is no longer authorized to sell the Variable Contracts and AESC will take
such additional action as is necessary to terminate the sales activities of such
Representative with respect to the Variable Contracts.
(b) Prospectuses, Sales Literature and Advertising.
(i) No sales literature or advertising relating to the Variable Contracts
will be printed, published, distributed or otherwise used by AESC unless the
specific item has been approved in writing by ACL and a principal of AESC prior
to use. It is expressly understood that all books and records relevant to this
Agreement and the services hereunder shall be and remain the property of ACL.
(ii) In accordance with the requirements of the laws of New York and New
York Insurance Department Regulation 152 specifically, and rules of the NASD and
SEC, AESC will maintain complete records indicating the manner and extent of
distribution of prospectuses, sales literature and advertising and will make
such records and files available to staff of ACL and personnel of state
insurance departments, the NASD, SEC or other regulatory agencies which have
regulatory authority over ACL or AESC.
(iii) AESC agrees to cause to be delivered to each person submitting an
application a prospectus to be furnished by ACL in the form required by the
applicable federal laws or by the acts or statutes of any applicable state,
province or country.
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(iv) AESC shall file all sales literature or advertising for review with
the NASD to ensure consistency with the applicable rules of the Securities Act
of 1933 ("1933 Act") and the Conduct Rules of the NASD.
(c) Applications for Variable Contracts
(i) All applications for Variable Contracts will be made on application
forms supplied and/or approved by ACL. AESC will ensure that applications for
Variable Contracts and all payments collected by AESC or any Representative are
remitted promptly, together with such other documentation as ACL may require,
directly to ACL at the address indicated on the application or to such other
address as ACL may from time to time designate in writing. AESC will review all
such applications for accuracy and completeness, and to determine the
suitability of the sale. Checks or money orders for payment of the Variable
Contracts will be drawn to the order of "American Centurion Life Assurance
Company". All applications are subject to acceptance or rejection by ACL at its
sole discretion. All applications or information obtained hereunder by AESC will
be used only as expressly authorized herein. AESC will keep such records and
information confidential, to be disclosed only as authorized by ACL or the owner
of a Variable Contract or if expressly required by federal or state regulatory
authorities, or by order of a court.
(ii) Upon ACL's acceptance of any payment for a Variable Contract AESC
will deliver to each contract owner a statement confirming the transaction in
accordance with Rule 10b-10 under the 1934 Act.
(d) Purchase Payments
AESC agrees that all money or other consideration tendered with or in respect of
any application for a Variable Contract and the Variable Contract when issued is
the property of ACL. Purchase or premium payments will be promptly remitted in
full to ACL without deduction or offset for any reason.
(e) Delivery of Variable Contracts
AESC will assure itself that ACL has proper procedures in place to ensure
delivery of all Variable Contracts.
(f) Books, Records and Reports
AESC will comply with all applicable requirements of the 1934 Act and the NASD
including the requirements to maintain and preserve books and records pursuant
to Section 17(a) of the 1934 Act and the rules thereunder. Any commissions and
fees relating to the Variable Contracts will be reflected in the quarterly FOCUS
reports and the fee assessment reports filed by AESC with the NASD in accordance
with the NASD Conduct Rules.
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(g) Fidelity Bond
AESC represents that all directors, officers, employees and Representatives of
AESC who are licensed pursuant to this Agreement as ACL's agents for state
insurance law purposes or who have access to funds of ACL, including but not
limited to funds submitted with applications for the Variable Contracts are and
will be covered by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond will be
maintained by AESC at AESC's expense. Such bond will be, at the least, of the
form and type and amount required under the NASD Conduct Rules. ACL may require
evidence, satisfactory to it, that such coverage is in force and AESC will give
prompt written notice to ACL of any notice of cancellation or change of
coverage. AESC assigns any proceeds received from the fidelity bonding company
to ACL to the extent ACL's loss is due to activities covered by the bond. If
there is any deficiency amount, whether due to a deductible or otherwise, AESC
will promptly pay ACL such amount on demand.
(h) Indemnification
AESC hereby agrees to hold harmless and indemnify ACL against any and all
claims, liabilities and expenses which ACL may incur from liabilities arising
out of or based upon (1) any alleged or untrue statement other than statements
contained in the registration statement, prospectus or approved sales literature
or advertisement of any Variable Contract and (2) AESC's failure to perform the
undertakings described in Section 2, Duties of AESC, of this Agreement.
4. Representations of ACL
(a) ACL represents and warrants that it is domiciled and licensed in the
State of New York by its Insurance Department ("New York Insurance Department").
(b) ACL has registered the Variable Contracts with the Securities and
Exchange Commission as securities under the 1933 Act and has registered the
variable contract separate accounts as a unit investment trusts under the
Investment Company Act of 1940.
(c) ACL will meet any requirements of the New York Insurance Department
regarding filing of advertising and sales literature.
5. Duties of ACL
(a) Prospectuses, Sales Literature and Advertising
(i) ACL will provide AESC, without any expense to AESC, prospectuses
relating to the Variable Contracts and such other sales literature and
advertising as ACL determines is necessary or desirable for use in connection
with sales of the Variable Contracts.
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(ii) ACL represents and warrants that the prospectus(es) and registration
statement(s) relating to the Variable Contracts contain no untrue statements of
material fact or omission to state a material fact, the omission of which makes
any statement contained in the prospectus(es) and registration statement(s)
misleading.
(b) Variable Contract Delivery
ACL will transmit Variable Contracts directly to contract owners in accordance
with administrative procedures acceptable to AESC and ACL.
(c) Retention of Rights by ACL
ACL reserves the right to reject any and all applications and payments
submitted, discontinue writing any form of contract, take possession of and
cancel any contract and return the payment or any part of it, and make any
compromise or settlement in respect of a contract. ACL may in its sole
discretion and without notice to AESC, suspend sales of any Variable Contracts
or amend any policies or contracts evidencing such Variable Contracts if, in
ACL's opinion, such suspension or amendment is (1) necessary for compliance with
federal, state or local laws, regulations or administrative order(s); or, (2)
necessary to prevent administrative or financial hardship to ACL. In all other
situations, ACL will provide 30 days notice to AESC prior to suspending sales of
any Variable Contracts or amending any policies or contracts evidencing such
Variable Contracts.
(d) Compensation
ACL will pay AESC for its services under this Agreement, in accordance with the
form of Exhibit 2 hereto, which is in effect when such services are performed.
Upon termination of this Agreement, all compensation payable hereunder will
cease. ACL will pay all such Compensation to and in the name of AESC, and will
have no responsibility for payment of any compensation to Representatives for
sales hereunder.
(e)Indemnification
ACL hereby agrees to hold harmless and indemnify AESC against any and all
claims, liabilities and expenses which AESC may incur from liabilities arising
out of or based upon ACL's breach of any of the undertakings set forth in
Section 5, Duties of ACL, of this Agreement, including claims, liabilities and
expenses which may be incurred under the Securities Act of 1933, the 1940 Act,
common law or otherwise.
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6.Termination
This Agreement may be terminated, without cause, by either party upon thirty
(30) days prior written notice; and may be terminated immediately, by either
party for failure to perform satisfactorily or other cause; and will be
terminated immediately if AESC ceases to be registered as a broker dealer under
the 1934 Act and a member of the NASD.
7.General Provisions
(a)Amendment and Entirety
This is the entire Agreement between ACL and AESC with respect to the subject
matter of this Agreement. No additions, amendments or modifications of this
Agreement or any waiver of any provision will be valid unless approved, in
writing, by authorized representatives of ACL and AESC. In addition, no waiver
of any default or failure of performance by either party will affect the other
party's rights with respect to a subsequent default or failure.
(b) Independent Contractor Relationship
This Agreement does not create the relationship of employer and employee between
the parties to this Agreement. ACL and AESC are independent contractors with
respect to each other, and their respective employees and agents.
(c) Assignment
Neither ACL nor AESC will assign or transfer, in whole or in part, this
Agreement or any of the benefits accrued or to accrue hereunder, without prior
written consent of an authorized representative of each party.
(d) Arbitration
In the event of any dispute arising between ACL and AESC with reference to any
provision of this Agreement, the matter shall be referred to a Board of
Arbitration appointed in the following manner:
Within 30 days following notification by one party to this Agreement to the
other of its decision to arbitrate a dispute arising hereunder, ACL shall
appoint an Arbiter, and AESC shall appoint an Arbiter. In the event one of the
parties fails to appoint an Arbiter within said 30 days, the other party shall
appoint both Arbiters. Within 15 days following their appointment, and before
entering into arbitration, the Arbiters shall select an Umpire. In the event the
Arbiters are not able to decide upon an Umpire within said 15 days, the Umpire
shall be appointed by the President of the American Arbitration Association. The
Arbiters and the Umpire shall be executive officers of insurance or
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reinsurance companies. Within 60 days following the notification of the decision
to arbitrate, the Arbiters shall begin arbitration in the City of New York, New
York, unless some other place is agreed upon by ACL and AESC, at which time the
parties hereto may submit their cases in writing to the Board of Arbitration.
Within 60 days after beginning the arbitration, the Arbiters shall file their
written decision on the matter under arbitration with ACL and with AESC. The
expenses of the arbitration shall be paid by the party or parties in the
proportion established by the Board of Arbitration.
(e) Governing Law
It is agreed by the parties that this Agreement will be governed by the laws of
the State of New York.
(f) Severability
It is understood and agreed by the parties that if any part, term or provision
of this Agreement is held to be invalid or in conflict with any law or
regulation, the validity of the remaining part, terms or provisions will not be
affected and the parties' rights and obligations will be construed and enforced
as if this Agreement did not contain the part, term or provision held to be
invalid.
American Centurion Life Assurance Company
Attest:
By:_/s/ Xxxxxx X. Sedlacek__________ By: Xxxx X. Xxxxxxx
Title:__Chairman and President______ Title: General Counsel
and Secretary
American Express Service Corporation
Attest:
By:____/s/ Xxxxxxx X. Kling_________ By: Xxxxxxx X. Xxxxxx
Title:__Vice President______________ Title: Secreatary
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EXHIBIT 1
AESC is the broker-dealer authorized to distribute the following ACL variable
annuity (or annuities):
Privileged Assets Select Annuity flexible premium group deferred fixed/variable
annuity (ACL Variable Annuity Account 1)
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EXHIBIT 2
For the services provided by AESC pursuant to this Agreement, ACL will reimburse
AESC for its expenses. It is agreed, with respect to those services which are to
be provided to ACL upon an allocated cost basis, that any method of allocation
or classification of expenses incurred or services rendered shall be in
conformance with the laws of the State of New York and regulations of the New
York Insurance Department, particularly in conformance with Regulation 33. If at
any time ACL or AESC can reasonably demonstrate that any method of allocation is
more equitable and in accordance with such laws and regulations, the current
method of allocation shall then be subject to renegotiation. In any event,
review of all expenses for the year will be made annually, to make all necessary
adjustments in the amounts billed hereunder in order to conform them with the
amount of such expenses actually incurred.
