<PAGE>
As filed with the Securities and Exchange Commission on April 12, 1999
File No. 333-65507
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. __ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 1 [X]
SEPARATE ACCOUNT ONE
(formerly known as Alpine Life
Insurance Company
Separate Account One)
(Exact Name of Registrant)
ALPINE LIFE INSURANCE COMPANY
(Name of Depositor)
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6320
(Depositor's Telephone Number, Including Area Code)
THOMAS S. CLARK, ESQ.
ALPINE LIFE INSURANCE COMPANY
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.
<PAGE>
2
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
<TABLE>
<CAPTION>
N-4 ITEM NO. PROSPECTUS HEADING
------------ ------------------
<S> <C>
1. Cover Page Alpine Life Insurance Company -
Separate Account One
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Performance Related Information
Information
5. General Description of About Us
Registrant, Depositor,
and Portfolio Companies
6. Deductions Charges
7. General Description of Variable Your Annuity
Annuity Contracts
8. Annuity Period Settlement Provisions
9. Death Benefit Death Benefits
10. Purchases and Contract Payments; Contract Value
Value
11. Redemptions Withdrawals
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters & Experts
14. Table of Contents of the Table of Contents to Statement of Additional
Statement of Additional Information
Information
15. Cover Page Part B; Statement of Additional Information
</TABLE>
<PAGE>
3
<TABLE>
<S> <C>
16. Table of Contents Table of Contents
17. General Information and History Introduction
18. Services Independent Public Accountants
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments N/A
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Common Control with the Depositor
Depositor or Registrant or Registrant
27. Number of Contract Number of Contract
Owners Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Location of Accounts and Records
Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
<PAGE>
4
Part A
<PAGE>
5
ALPINE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT ONE
P. O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: 1-800-862-6668
This Prospectus describes information you should know before you purchase our
variable annuity. Please read it carefully.
The variable annuity is a contract between you and Alpine Life Insurance
Company where you agree to make payments to us and we agree to make a series
of payments to you at a later date. It is a flexible premium, tax-deferred,
variable annuity offered to both individuals and groups. It is:
- Flexible, because you may add payments at any time.
- Tax-deferred, which means you don't pay taxes until you take payments
out or until we start to make payments to you.
- Variable, because the value of your annuity will fluctuate with
the performance of the stock market.
After purchase, you allocate your payments to "Sub-Accounts" or subdivisions of
our Separate Account, an account that keeps your annuity assets separate from
our company assets. These Sub-Accounts then purchase shares of mutual funds set
up exclusively for variable annuity or variable life insurance products. These
funds are not the same mutual funds that you buy through your stockbroker or
through a retail mutual fund, but they may have similar investment strategies
and the same portfolio managers as retail mutual funds. This annuity offers you
funds with investment strategies ranging from conservative to aggressive and you
may pick those funds that meet your investment style. The Sub-Accounts and the
funds are listed below:
- - Bond Sub-Account which purchases shares of Class IA of Hartford Bond HLS Fund,
Inc.
- - High Yield Sub-Account which purchases shares of Class IA of Hartford High
Yield HLS Fund of Hartford Series Fund, Inc.
- - Index Sub-Account which purchases shares of Class IA of Hartford Index HLS
Fund, Inc.
<PAGE>
6
- - Money Market Sub-Account which purchases shares of Class IA of Hartford Money
Market HLS Fund, Inc.
- - Mortgage Securities Sub-Account which purchases shares of Class IA of Hartford
Mortgage Securities HLS Fund, Inc.
You may also allocate some or all of your payments to the "Fixed Account", which
pays an interest rate guaranteed for at least one year from the time the payment
is made. Payments put in the Fixed Account are not segregated from our assets
like the assets of separate account.
If you decide to buy this annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of
Additional Information, free of charge. The Statement of Additional
Information contains more information about this annuity and, like this
prospectus, is filed with the Securities and Exchange Commission. You should
read the Statement of Additional information because you are bound by the
terms contained in it. We have included the Table of Contents for the
Statement of Additional Information at the end of this Prospectus. Although
we file the Prospectus and the Statement of Additional information with the
Securities and Exchange Commission, the Commission doesn't approve or
disapprove these securities or determine if the information is truthful or
complete. Anyone who represents that the Securities and Exchange Commission
does these things may be guilty of a criminal offense.
This Prospectus and the Statement of Additional Information can also be obtained
from the Securities and Exchange Commissions' website (HTTP://WWW.SEC.GOV).
This annuity IS NOT:
- - a bank deposit or obligation
- - federally insured
- - endorsed by any bank or governmental agency
- - available for sale in all states
Prospectus Dated: May 3, 1999
Statement of Additional Information Dated: May 3, 1999
<PAGE>
7
Table Of Contents
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Glossary of Special Terms . . . . . . . . . . . . . . . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
About Us. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alpine Life Insurance Company. . . . . . . . . . . . . . . .
Separate Account . . . . . . . . . . . . . . . . . . . . . .
The Funds. . . . . . . . . . . . . . . . . . . . . . . . . .
The Fixed Account. . . . . . . . . . . . . . . . . . . . . .
Performance of the Funds . . . . . . . . . . . . . . . . . .
Your Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract Value . . . . . . . . . . . . . . . . . . . . . . .
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . .
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . .
Death Benefits . . . . . . . . . . . . . . . . . . . . . . .
Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . .
Settlement Provisions. . . . . . . . . . . . . . . . . . . .
Other Information. . . . . . . . . . . . . . . . . . . . . .
Federal Tax Considerations. . . . . . . . . . . . . . . . . . . .
General. . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of Alpine and the Separate Account. . . . . . . . .
Taxation of Annuities - General Provisions Affecting
Purchasers other than Qualified Retirement Plans. . . .
Federal Income Tax Withholding . . . . . . . . . . . . . . .
General Provisions Affecting Qualified Retirement Plans. . .
Annuity Purchases by Nonresident Aliens and Foreign
Corporations . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . .
How we Sell our Annuity. . . . . . . . . . . . . . . . . . . .
Legal Matters and Experts. . . . . . . . . . . . . . . . . . .
Additional Information . . . . . . . . . . . . . . . . . . . .
Appendix I Information Regarding Tax-Qualified Plans. . . . . . .
Table of Contents to Statement of Additional Information. . . . .
</TABLE>
<PAGE>
8
Glossary of Special Terms
Accumulation Unit: A unit of measure we use to calculate values before we begin
to make payments to you.
Administrative Office of Alpine: Located at 200 Hopmeadow Street, Simsbury, CT
06089.
Annual Maintenance Fee: An annual $30 charge for annuities having a value of
less than $50,000 on the most recent Contract Anniversary or when the annuity is
surrendered in full. The charge is deducted proportionately from the investment
options in use at the time.
Annual Withdrawal Amount: The amount that can be withdrawn in any Contract Year
before we charge you a surrender charge.
Annuitant: The person on whose life the Contract is issued. The Annuitant may
not be changed.
Annuity: A Contract issued by an insurance company that provides, in exchange
for premium payments, a series of income payments. This Prospectus describes a
deferred annuity where premium payments accumulate tax-deferred until a partial
or full surrender is taken or until we begin to make payments to you.
Annuity Commencement Date: The date we start to make payments to you.
Annuity Unit: A unit of measure we use to calculate the value of the payments we
make to you.
Beneficiary: The person entitled to receive the payment of the death benefit
upon the death of you or the Annuitant.
Code: The Internal Revenue Code of 1986, as amended.
Commission: The Securities and Exchange Commission.
Contingent Annuitant: The person you may designate who becomes the Annuitant if
the original Annuitant dies before we start making payments to you.
Contract: The contract is the individual Annuity and any endorsements or
riders. If you are enrolled under a group annuity, you receive a certificate
rather than a contract.
Contract Anniversary: The anniversary of the Contract Date.
Contract Owner or You: The owner of the annuity.
Contract Value: The total value of your Sub-Accounts plus any amounts you have
in the Fixed Account.
<PAGE>
9
Contract Year: A period of 12 months commencing with the Contract Date the first
year and the Contract Anniversary after the first year.
Death Benefit: The amount we pay when you or the Annuitant dies.
Due Proof of Death: A certified copy of a death certificate, an order of a court
of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to Alpine.
Fixed Account: This is an account which is part of our General Account and you
may allocate all or a portion of your payments or Contract Value to this
account.
Funds: The Funds described in this Prospectus and any supplements.
General Account: Our General Account that is all our assets other than the
assets in our separate accounts.
Maximum Anniversary Value: One of the values we use to determine your Death
Benefit. It is determined annually on your anniversary date and is equal to the
highest value your annuity reached on any annuity anniversary date. The maximum
anniversary value is calculated only up to age 80, and we use that value each
year after age 80 as your maximum anniversary value.
Premium Tax: A tax charged by a state or municipality on premium payments.
Alpine (or us): Alpine Life Insurance Company.
Separate Account: For this annuity, the separate account is the Alpine Life
Insurance Company Separate Account One.
Sub-Account: Divisions established within the Separate Account.
Termination Value: What we pay you if you terminate your annuity before we begin
to make payments to you.
Valuation Day: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined as of the close of the New York
Stock Exchange (generally 4:00 p.m. Eastern Time).
Valuation Period: The period between the close of business on successive
Valuation Days.
<PAGE>
10
Fee Table
Summary
<TABLE>
<S> <C>
Your Transaction Expenses
Sales Load Imposed on Purchases (as a percentage of premium payments). None
Deferred Sales Load (as a percentage of amounts surrendered)
First Year (1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Second Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Third Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fourth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fifth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Sixth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Seventh Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
Eighth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Annual Maintenance Fee (2) . . . . . . . . . . . . . . . . . . . . . . . $30
Separate Account Annual Expenses (as percentage of average contract value)
Mortality and Expense Risk. . . . . . . . . . . . . . . . . . . . . 1.250%
</TABLE>
- ---------
(1) Length of time from premium payment.
(2) The Annual Maintenance Fee is an annual $30 charge for annuities with a
contract value less than $50,000 on your Anniversary Date or when you
surrender your annuity.
The purpose of this table is to assist you in understanding various costs and
expenses that you will bear directly or indirectly. The table reflects
expenses of the Separate Account and underlying Funds. Premium taxes, if any,
have been taken into account.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
EXPENSES (AFTER EXPENSES (AFTER
MANAGEMENT FEE WAIVERS AND FEE WAIVERS
FEES (AFTER EXPENSE AND EXPENSE
FEE WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
------------ --------------- ---------------
<S> <C> <C> <C>
Hartford Bond HLS Fund. . . . . . . . . . . . . . . . . 0.482% 0.021% 0.503%
Hartford High Yield HLS Fund (1). . . . . . . . . . . . 0.487% 0.035% 0.522%
Hartford Money Market HLS Fund. . . . . . . . . . . . . 0.433% 0.015% 0.448%
Hartford Mortgage Securities HLS Fund . . . . . . . . . 0.432% 0.030% 0.462%
Hartford Index HLS Fund . . . . . . . . . . . . . . . . 0.382% 0.019% 0.401%
</TABLE>
- ---------
(1) Hartford High Yield HLS Fund is a new Fund. "Total Fund Operating
Expenses" are based on annualized estimates of such expenses to be
incurred in the current fiscal year. HL Investment Advisors, LLC has
agreed to waive its fee for these until the assets of the Fund
(excluding assets contributed by companies affiliated with HL Investment
Advisors, Inc.) reach $20 million. Before this waiver, the Management
Fee would be 0.775%, Other Expenses would be 0.035%, and Total Fund
Operating Expenses would be 0.810%.
<PAGE>
11
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period you would pay the time period you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 1 YEAR 3 YEARS 1 YEAR 3 YEARS
- ----------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Bond Fund . . . . . . . . . . . . $73 $103 $18 $57 $19 $58
High Yield. . . . . . . . . . . . 73 109 18 64 19 64
Money Market Fund . . . . . . . . 72 101 17 55 18 56
Mortgage Securities Fund. . . . . 72 101 18 56 18 56
Index Fund. . . . . . . . . . . . 72 99 17 54 18 54
</TABLE>
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
The Annual Maintenance Fee has been reflected in the Example using a method
intended to show the "average" impact of the Annual Maintenance Fee. In the
Example, the Annual Maintenance Fee is approximately a 0.08% annual charge.
<PAGE>
12
SUMMARY
How do I purchase the annuity?
You must complete our enrollment form and submit it to us for approval with
your first payment. Your first payment must be at least $1,000 and
subsequent payments must be at least $500. If you wish to make automatic
monthly payments into your annuity, you may enroll in our pre-authorized
checking program. Under this program, your subsequent monthly payments can
be as low as $50.
For a limited time, usually ten days after you receive your annuity, you may
cancel your annuity without paying a sales charge.
What type of sales charge will I pay?
You don't pay a sales charge when you purchase your annuity. We may charge
you deferred sales charge when you terminate or withdraw amounts invested in
your annuity. We assess a sales charge on amounts withdrawn that exceed 10%
of the total amounts you have paid into your annuity if these amounts have
been in your annuity for less than seven years. The sales charge is applied
to amounts withdrawn that exceed 10% of the total amounts paid in and will
depend on the length of time the payment you made has been in your annuity.
If the amount you paid has been in your annuity:
X For less than two years, the charge is 6%.
X For more than two years and less than four years, the charge is 5%.
X For more than four years and less than five years, the charge is 4%.
X For more than five years and less than six years, the charge is 3%
X For more than six years and less than seven years, the charge is 2%.
You won't be charged a sales charge on:
X Payments that have been in your annuity for more than seven years.
X distributions made due to death
X most payments we make to you as part of your annuity payments
See "Contingent Deferred Sales Charge" for a complete description of how
sales charges are assessed.
Is there an Annual Maintenance Fee?
Yes. We deduct a $30.00 fee each year on the anniversary of your purchase or
when you terminate your annuity, if the value of your annuity is less than
$50,000.
What charges will I pay on an annual basis?
You pay two different types of charges each year. The first type of charge is
the fee you pay for insurance. This charge is:
<PAGE>
13
- - A mortality and expense risk charge that is subtracted daily and is equal to
an annual payment of 1.25% of your money invested in the funds.
The second type of charge is the fee you pay for the funds.
- - Currently, the total fund charges range from 0.40% to 0.52% of the average
daily value of the amount you have invested in the funds.
The current annual insurance charges and the total fund charges are set forth
in the table below:
<TABLE>
<CAPTION>
THE SUB-ACCOUNTS ANNUAL ANNUAL
INSURANCE MAINTENANCE ANNUAL TOTAL TOTAL CHARGES
CHARGE FEE(1) FUND CHARGES(2) YOU PAY
<S> <C> <C> <C> <C>
Bond 1.25% .08% 0.50% 1.83%
Index 1.25% .08% 0.40% 1.73%
High Yield 1.25% .08% 0.52% 1.85%
Money Market 1.25% .08% 0.45% 1.78%
Mortgage Securities 1.25% .08% 0.46% 1.79%
</TABLE>
(1) The actual Annual Maintenance Fee is a $30.00 fee. The Annual Maintenance
Fee has been reflected using a method intended to show the "average"
impact of the Annual Maintenance Fee. In the table, the Annual Maintenance
Fee is approximately a 0.08% annual charge.
(2) The figure that appears in the "Annual Total Fund Charges" column
illustrates the sum of the management fees and other expenses that the
funds charge. The figures reflect any fees that may have been waived by
the funds' investment advisers. For more information, see the funds'
prospectuses in the back of this book.
<PAGE>
14
Can I take out any of my money?
/ / You may withdraw all or part of the amounts you have invested at any time
before we start making payments to you.
/ / Each year you may withdraw up to 10% of your payments without having to
pay a sales charge.
You may have to pay tax on the money you take out and, if you take money out
before you are 59 1/2 you may have to pay a tax penalty.
Will we pay a death benefit?
There is a death benefit if you, your joint owner or your annuitant (the person
on whose life this annuity is based), dies before we begin to make payments to
you. The death benefit will be determined as of the date we receive acceptable
proof of death and will be the greater of:
- - The total payments you have made to us minus any amounts you have taken out,
or
- - The total value of your annuity, or
- - Your maximum anniversary value, which is the highest value your annuity
reached on any annuity anniversary date up to age 80, reduced by any
subsequent withdrawals and increased by any subsequent payments.
What payment options are available?
When it comes time for us to pay you, you may choose on of the following
annuity payment options, or receive a lump sum:
- Life Annuity where we make scheduled payments to you for the rest of
your life.
Payments under this option stop upon the death of the annuitant, even if the
annuitant dies after one payment.
- Life Annuity with 120, 180 or 240 Monthly Payments Certain where we
make payments to you for your life but you are at least guaranteed
payments for 120, 180 or 240 months, which ever you select. If the
annuitant dies before the end of the period selected, we will continue
to make payments to your beneficiary until the end of the period
selected.
- Joint and Last Survivor Annuity where we make payments during the
lifetime of you and another designated individual and then throughout
the remaining lifetime of the survivor.
- Payments for a Designated Period where we make payments for a specified
time between 5 and 30 years. If the annuitant dies before the end of
the specified time, we pay the beneficiary the present value of the
annuity in one lump sum or continue making the
<PAGE>
15
payments to the beneficiary. You may terminate this option after
payments have started.
You must begin to take payments before the annuitiant's 90th birthday or earlier
in some states. If you do not tell us what payment option you want before that
time, we will pay you under the Payment of a Designated Period option for 5
years from the annuitiant's 90th birthday.
ABOUT US
ALPINE LIFE INSURANCE COMPANY
Alpine Life Insurance Company ("Alpine") is a stock life insurance company
engaged in the business of writing life insurance in all states of the United
States and the District of Columbia. Alpine was originally incorporated under
the laws New Jersey on July 9, 1965. Alpine is currently in the process of
Redomesticating to Connecticut. Once the Redomestication is effective its
offices will be located in Simsbury, Connecticut; however, its mailing address
is P.O. Box 5085, Hartford, CT 06104-5085. Alpine is ultimately controlled by
Hartford Financial Services Group, Inc., one of the largest financial service
providers in the United States.
SEPARATE ACCOUNT
The Separate Account was established on September 1, 1998. It is the
Separate Account in which Alpine sets aside and invests the assets attributable
to variable annuity Contracts, including the Contracts sold under this
Prospectus. Separate Account assets are held by Alpine under a safekeeping
arrangement. Although the Separate Account is an integral part of Alpine, it is
registered as a unit investment trust under the Investment Company Act of 1940.
This registration does not, however, involve Commission supervision of the
management or the investment practices or policies of the Separate Account or
Alpine. The Separate Account meets the definition of "separate account" under
federal securities law.
Under Connecticut law, the assets of the Separate Account attributable to
the Contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts. Income,
gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Contracts, credited to or charged
against the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business Alpine may
conduct. Contract Values allocated to the Separate Account is not affected by
the rate of return of Alpine's General Account, nor by the investment
performance of any of Alpine's other separate accounts. The Separate Account may
be subject to liabilities arising from a Sub-Account of the Separate Account
whose assets are attributable to other variable annuity Contracts or variable
life insurance policies offered by the Separate Account which are not described
in this Prospectus. However, all obligations arising under the Contracts are
general corporate obligations of Alpine.
Alpine does not guarantee the investment results of the Separate
Accounts or any of the
<PAGE>
16
underlying investment options. There is no assurance that the value of a
Contract during the years prior to retirement or the aggregate amount of the
Variable Annuity payments will equal the total of Premium Payments made under
the Contract. Since each underlying Fund has different investment objectives,
each is subject to different risks. These risks are more fully described in
the accompanying Funds' prospectus.
THE FUNDS
All of the Funds are sponsored and administered by Alpine. HL Investment
Advisors, LLC ("HL Advisors") serves as the investment adviser to each of the
Funds. The Hartford Investment Management Company ("HIMCO") serves as
sub-investment advisors and provides day to day investment services.
Each Fund, except the Hartford High Yield HLS Fund, is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. The Hartford High Yield HLS Fund is a
diversified series of Hartford Series Fund, Inc., a Maryland corporation,
also registered with the Securities and Exchange Commission as an open-end
management investment company. The shares of each Fund have been divided into
Class IA and Class IB. Only Class IA shares are available in this Annuity.
We do not guarantee the investment results of any of the underlying Funds.
Since each underlying Fund has different investment objectives, each is
subject to different risks. These risks and the Funds' expenses are more
fully described in the accompanying Funds' prospectus and Statement of
Additional Information, which may be ordered from us. The Funds' prospectus
should be read in conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
Hartford Bond HLS Fund
Seeks maximum current income consistent with preservation of capital by
investing primarily in investment grade fixed-income securities. Up to 20% of
the total assets of this Fund may be invested in debt securities rated in the
highest category below investment grade ("Ba" by Moody's Investor Services,
Inc. or "BB" by Standard & Poor's) or, if unrated, are determined to be of
comparable quality by the Fund's investment adviser. Securities rated below
investment grade are commonly referred to as "high yield-high risk
securities" or "junk bonds." For more information concerning the risks
associated with investing in such securities, please refer to the section in
the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc. - Investment Policies."
Hartford High Yield HLS Fund
Seeks high current income by investing in non-investment grade
fixed-income securities. Growth of capital is a secondary objective.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning
the risks associated with investing in such securities, please refer to the
section in the accompanying prospectus for the Funds entitled "Hartford High
Yield HLS Fund."
<PAGE>
17
Hartford Index HLS Fund
Seeks to provide investment results which approximate the price and
yield performance of publicly-traded common stocks in the aggregate, as
represented by the Standard & Poor's 500 Composite Stock Price Index.*
Hartford Mortgage Securities HLS Fund
Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related
securities, including securities issued by the Government National Mortgage
Association.
Hartford Money Market HLS Fund
Seeks maximum current income consistent with liquidity and preservation
of capital.
* "Standard & Poor's-Registered Trademark-," "S&P-Registered Trademark-,"
"S&P 500-Registered Trademark-," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for
use by Hartford. The Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the Index Fund.
Voting Rights - We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Fund's shareholder meetings. To
the extent required by federal securities laws or regulations, we will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted.
- - Send proxy materials and a form of instructions that you can use tell us
how to vote the Fund shares held for your Contract.
- - arrange for the handling and tallying of proxies received from Contract
Owners
- - Vote all Fund shares attributable to your Contract according to instructions
received from you, and
- - Vote all Fund shares for which no voting instructions are received in the
same proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your Contract may be
voted. After we begin to make payments to you, the number of votes you have
will decrease,
Substitutions, Additions, or Deletions of Investments - We reserve the right,
subject to any applicable law, to make certain changes to the investment options
offered under Your Contract. We may, in our sole discretion, establish new
Funds. New Funds will be will be made available
<PAGE>
18
to existing Contract Owners as we determined appropriate. We may also close
one or more Funds to additional Payments or transfers from existing
Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the 1940 Act, substitutions of shares
attributable to your interest in a Fund will not be made until we have the
approval of the Commission and we have notified you of the change.
In the event of any substitution or change, We may, by appropriate endorsement,
make such changes in the Contract as may be necessary or appropriate to reflect
such substitution or change. If we decide that it is in the best interest
Contracts Owners, the Separate Account may be operated as a management company
under the 1940 Act or any other form permitted by law, may be de-registered
under the 1940 Act in the event such registration is no longer required, or may
be combined with one or more other separate accounts.
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT
IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE
1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED
BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE
ABOUT THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND
COMPLETENESS OF DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become
a part of the general assets of Alpine. Alpine invests the assets of the General
Account in accordance with applicable law governing the investments of Insurance
Company General Accounts.
Currently, Alpine guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the Contracts. However, Alpine reserves the right to change the
rate according to state insurance law. Alpine may credit interest at a rate in
excess of 3% per year. There is no specific formula for the determination of
excess interest credits. Some of the factors that Alpine may consider in
determining whether to credit excess interest to amounts allocated to the Fixed
Account and the amount thereof, are general economic trends, rates of return
currently available and anticipated on Alpine's investments, regulatory and tax
requirements and competitive factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED
TO THE FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED IN THE SOLE
DISCRETION OF ALPINE. THE OWNER ASSUMES THE
<PAGE>
19
RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
From time to time, Alpine may credit increased interest rates to you under
certain programs established at the discretion of Alpine.
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
All of the Sub-Accounts may include total return in advertisements or other
sales material.
When a Sub-Account advertises its standardized total return, it will be
calculated to a date not earlier than the effective date of the Separate
Account. This figure will usually be calculated for one year, five years, and
ten years or some other relevant period if the Separate Account has not been in
existence for one, five or ten years. Total return is measured by comparing the
value of an investment in the Sub-Account at the beginning of the relevant
period to the value of the investment at the end of the period.
In addition to the standardized total return, the Sub-Account may advertise
non-standardized total returns that pre-date the inception of the Separate
Account. This figure will usually be calculated for one year, five years,
and ten years or other relevant period if the Separate Account has not been
in existence for one, five or ten years. This non-standardized total return
is measured in the same manner as the standardized total return described
above, except that the Annual Maintenance Fee is not deducted. Therefore,
this non-standardized total return for a Sub-Account is higher than
standardized total return for a Sub-Account. These non-standardized returns
must be accompanied by standardized total returns.
Certain Sub-Accounts, if applicable, may advertise yield in addition to total
return. The yield will be computed in the following manner: The net investment
income per unit earned during a recent one month period is divided by the unit
value on the last day of the period. This figure reflects the recurring charges
at the Separate Account level including the Annual Maintenance Fee.
The Money Market Fund Sub-Account may advertise yield and effective yield. The
yield of the Money Market Fund Sub-Account is based upon the income earned by
the Sub-Account over a 7-day period and then annualized, i.e. the income earned
in the period is assumed to be earned every 7 days over a 52-week period and
stated as a percentage of the investment. Effective yield
<PAGE>
20
is calculated similarly but when annualized, the income earned by the
investment is assumed to be reinvested in Sub-Account units and thus
compounded in the course of a 52-week period. Yield and effective yield
reflect the recurring charges at the Separate Account level including the
Annual Maintenance Fee.
Alpine may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other
materials. These topics may include the relationship between sectors of the
economy and the economy as a whole and its effect on various securities
markets, investment strategies and techniques (such as value investing,
dollar cost averaging and asset allocation), the advantages and disadvantages
of investing in tax-advantaged and taxable instruments, customer profiles and
hypothetical purchase scenarios, financial management and tax and retirement
planning, and other investment alternatives, including comparisons between
the Contracts and the characteristics of and market for such alternatives.
YOUR ANNUITY
The Contracts are individual tax-deferred Variable Annuity Contracts
designed for retirement planning purposes and may be purchased by any
individual, including any trustee or custodian for a retirement plan qualified
under Sections 401(a) or 403(a) of the Code; annuity purchase plans adopted by
public school systems and certain tax-exempt organizations according to Section
403(b) of the Code; Individual Retirement Annuities adopted according to Section
408 of the Code; employee pension plans established for employees by a state, a
political subdivision of a state, or an agency or instrumentality of either a
state or a political subdivision of a state, and certain eligible deferred
compensation plans as defined in Section 457 of the Code ("Qualified
Contracts"). The maximum issue age for the Contract is 85 years old.
PAYMENTS
Generally, the minimum initial Premium Payment is $1,000; the minimum
subsequent payment is $500, if you are in the InvestEase program the minimum
subsequent payment is $50. Certain plans may make smaller periodic payments.
Each Premium Payment may be split among the various Sub-Accounts and/or the
Fixed Account subject to minimum amounts then in effect.
Refund Rights - If you are not satisfied with your purchase you may cancel
the Contract by returning it within ten days (or longer in some states) after
you receive it. A written request for
<PAGE>
21
cancellation must accompany the Contract. In such event, Alpine will, without
deduction for any charges normally assessed thereunder, pay you an amount
equal to the Contract Value on the date of receipt of the request for
cancellation. You bear the investment risk during the period prior to
Alpine's receipt of request for cancellation Alpine will refund the premium
paid only for individual retirement annuities (if returned within seven days
of receipt) and in those states where required by law.
Crediting and Valuation - The balance of the initial Premium Payment
remaining after the deduction of any applicable Premium Tax is credited to your
Contract within two business days of receipt of a properly completed application
or an order to purchase a Contract and the initial Premium Payment by Alpine at
its Administrative Office. It will be credited to the Sub-Account(s) and/or the
Fixed Account in accordance with your election. If the application or other
information is incomplete when received, the balance of the initial Premium
Payment, after deduction of any applicable Premium Tax, will be credited to the
Sub-Account(s) or the Fixed Account within five business days of receipt. If the
initial Premium Payment is not credited within five business days, the Premium
Payment will be immediately returned unless you have been informed of the delay
and request that the Premium Payment not be returned.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
Subsequent Premium Payments are priced on the Valuation Day received by
Alpine in its Administrative Office.
CONTRACT VALUE
The value of the Sub-Account investments under your Contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Accumulation Units credited to your Contract in each
Sub-Account by the then current Accumulation Unit values for the applicable
Sub-Account. The value of the Fixed Account under your Contract will be the
amount allocated to the Fixed Account plus interest credited.
You will be advised at least semiannually of the number of Accumulation
Units credited to each Sub-Account, the current Accumulation Unit values, the
Fixed Account value, and the total value of your Contract.
Accumulation Unit Values - The Accumulation Unit value for each Sub-Account
will vary to reflect the investment experience of the applicable Fund and will
be determined on each Valuation Day by multiplying the Accumulation Unit value
of the particular Sub-Account on the preceding Valuation Day by a "Net
Investment Factor" for that Sub-Account for the Valuation Period then ended. The
"Net Investment Factor" for each of the Sub-Accounts is equal to (a) the net
asset value per share of the corresponding Fund at the end of the Valuation
Period (plus the per share amount of any dividends or capital gains distributed
by that Fund if the ex-dividend date occurs in the Valuation Period then ended)
divided by the net asset value per share of the
<PAGE>
22
corresponding Fund at the beginning of the Valuation Period, (b) minus the
mortality and expense risk charge and the administration charge described
below. You should refer to the prospectus for each of the Funds which
accompanies this Prospectus for a description of how the assets of each Fund
are valued since each determination has a direct bearing on the Accumulation
Unit value of the Sub-Account and therefore the value of a Contract. The
Accumulation Unit Value is affected by the performance of the underlying
Fund(s), expenses and deduction of the charges described in this Prospectus.
Valuation of Fund Shares - The shares of the Fund are valued at net asset
value on each Valuation Day. A complete description of the valuation method used
in valuing Fund shares may be found in the accompanying Funds' prospectus.
Valuation of the Fixed Account - Alpine will determine the value of the
Fixed Account by crediting interest to amounts allocated to the Fixed Account.
TRANSFERS
You may transfer the values of your Sub-Account allocations from one or
more Sub-Accounts to another free of charge. However, Alpine reserves the right
to limit the number of transfers to twelve (12) per Contract Year, with no two
(2) transfers occurring on consecutive Valuation Days. Transfers by telephone
may be made by You or by the attorney-in-fact pursuant to a power of attorney.
Telephone transfers may not be permitted by some states.
The policy of Alpine and its agents and affiliates is that they will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. Alpine will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The procedures Alpine
follows for transactions initiated by telephone include requirements that
callers provide certain information for identification purposes. All transfer
instructions by telephone are tape recorded.
Alpine may permit the Contract Owner to pre-authorize transfers among
Sub-Accounts and between Sub-Accounts and the Fixed Account under certain
circumstances. Transfers between the Sub-Accounts may be made both before and
after Annuity payments commence (limited to once a quarter) provided that the
minimum allocation to any Sub-Account may not be less than $500. No minimum
balance is required in any Sub-Account.
It is the responsibility of the Contract Owner to verify the accuracy of
all confirmations of transfers and to promptly advise Alpine of any inaccuracies
within 30 days of receipt of the confirmation. Alpine will send the Contract
Owner a confirmation of the transfer within five days from the date of any
instruction.
Transfers from the Fixed Account into a Sub-Account may be made at any time
during the Contract Year. The maximum amount which may be transferred from the
Fixed Account during any Contract Year is the greater of 30% of the Fixed
Account balance as of the last Contract Anniversary or the greatest amount of
any prior transfer from the Fixed Account. If Alpine permits
<PAGE>
23
pre-authorized transfers from the Fixed Account to the Sub-Accounts, this
restriction is inapplicable. Also, if any interest rate is renewed at a rate
of at least one percentage point less than the previous rate, the Contract
Owner may elect to transfer up to 100% of the funds receiving the reduced
rate within 60 days of notification of the interest rate decrease. Generally,
transfers may not be made from any Sub-Account into the Fixed Account for the
six-month period following any transfer from the Fixed Account into one or
more of the Sub-Accounts. Alpine reserves the right to modify the limitations
on transfers from the Fixed Account and to defer transfers from the Fixed
Account for up to six months from the date of request.
Subject to the exceptions set forth in the following two paragraphs, the
right to reallocate Contract Values is subject to modification if Alpine
determines, in its sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other Contract Owners.
Any modification could be applied to transfers to or from some or all of the
Sub-Accounts and the Fixed Account and could include, but not be limited to, the
requirement of a minimum time period between each transfer, not accepting
transfer requests of an agent acting under a power of attorney on behalf of more
than one Contract Owner, or limiting the dollar amount that may be transferred
between the Sub-Accounts and the Fixed Account by Contract Owners at any one
time. Such restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by Alpine to be to the
disadvantage of other Contract Owners.
For Contracts issued in the State of New York, the reservation of rights
set forth in the preceding paragraph is limited to (i) requiring up to a maximum
of 10 Valuation Days between each transfer: (ii) limiting the amount to be
transferred on any one Valuation Day to no more than $2 million; and (iii) upon
30 days prior written notice, to only accepting transfer instructions from You
and not from Your representative, agent or person acting under a power of
attorney for You.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that Alpine will not accept instructions from agents
acting under a power of attorney of multiple Contract Owners whose accounts
aggregate more than $2 million, unless the agent has entered into a third party
transfer services agreement with Alpine.
CHARGES
Contingent Deferred Sales Charges ("Sales Charges")
Purpose of Sales Charges - Sales Charges cover expenses relating to the
sale and distribution of the Contracts, including commissions paid to
distributing organizations and its sales personnel, the cost of preparing sales
literature and other promotional activities. If these charges are not sufficient
to cover sales and distribution expenses, Alpine will pay them from its general
assets, including surplus. Surplus might include profits resulting from unused
mortality and expense risk charges.
Assessment of Sales Charges - There is no deduction for sales expenses from
Premium Payments when made, however, a Sales Charge may be assessed against
Premium Payments when surrendered. The length of time from receipt of a Premium
Payment to the time of surrender
<PAGE>
24
determines the percentage of the Sales Charge. Premium payments are deemed to
be surrendered in the order in which they were received.
During the first seven years from each Premium Payment, a Sales Charge will
be assessed against the surrender of Premium Payments. During this time, all
surrenders in excess of the Annual Withdrawal Amount will be first from Premium
Payments and then from earnings. The Annual Withdrawal Amount is first from
earnings and then from Premium Payments. After the seventh Contract Year, all
surrenders will first be taken from earnings and then from Premium Payments and
a Sales Charge will not be assessed against the surrender of earnings. If an
amount equal to all earnings has been surrendered, a Sales Charge will not be
assessed against Premium Payments received more than seven years prior to
surrender, but will be assessed against Premium Payments received less than
seven years prior to surrender. For additional information, see Federal Tax
Considerations.
Upon receipt of a request for a full surrender, Alpine will assess any
applicable Sales Charge against the surrender proceeds representing the lesser
of: (1) aggregate Premium Payments not previously withdrawn or (2) the Contract
Value, less the Annual Withdrawal Amount available at the time of the full
surrender, less the Annual Maintenance Fee, if applicable. Taking the Annual
Withdrawal Amount prior to the full surrender may, depending upon the amount of
investment gain experienced, reduce the amount of any Sales Charge paid.
The Sales Charge is a percentage of the amount surrendered (not to exceed
the aggregate amount of the Premium Payments made) and equals:
<TABLE>
<CAPTION>
Charge Length of time from
Premium Payment
(Number of Years)
<S> <C>
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
</TABLE>
Payments Not Subject to Sales Charges
Annual Withdrawal Amount - During the first seven years from each Premium
Payment, on a non-cumulative basis, You may make a partial surrender of Contract
Values of up to 10% of the aggregate Premium Payments, as determined on the date
of the requested surrender, without the application of the Sales Charge. After
the seventh year from each Premium Payment, also on a non-cumulative basis, You
may make a partial surrender of 10% of Premium Payments made during the seven
years prior to the surrender and 100% of the Contract Value less the Premium
Payments made during the seven years prior to the surrender.
<PAGE>
25
Extended Withdrawal Privilege - This privilege allows Annuitants who attain
age 70 1/2 with a Contract held under an Individual Retirement Account or 403(b)
plan to surrender an amount equal to the required minimum distribution for the
stated Contract without incurring a Sales Charge or not subject to a Sales
Charge.
Waivers of Sales Charges
Death of the Annuitant or Contract Owner or Payments Under an Annuity
Option - No Sales Charge otherwise applicable will be assessed in the event of
death of the Annuitant, death of the Contract Owner or if payments are made
under an Annuity option (other than a surrender out of Annuity Option 4)
provided for under the Contract.
Other Plans or Programs - Certain plans or programs established by Alpine
from time to time may have different surrender privileges.
Mortality and Expense Risk Charge
For assuming these risks under the Contracts, Alpine will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract (estimated at .90% for mortality
and .35% for expense). Although Variable Annuity payments made under the
Contracts will vary in accordance with the investment performance of the
underlying Fund shares held in the Sub-Account(s), the payments will not be
affected by (a) Alpine's actual mortality experience among Annuitants before or
after the Annuity Commencement Date or (b) Alpine's actual expenses, if greater
than the deductions provided for in the Contracts because of the expense and
mortality undertakings by Alpine.
There are two types of mortality undertakings: those made during the
accumulation or deferral phase and those made during the annuity payout phase.
The mortality undertaking made by Alpine in the accumulation phase is that
Alpine may experience a loss resulting from the assumption of the mortality risk
relative to the guaranteed death benefit in event of the death of an Annuitant
or Contract Owner before commencement of Annuity payments, in periods of
declining value or in periods where the contingent deferred sales charges would
have been applicable. The mortality undertakings provided by Alpine during the
annuity payout phase are to make monthly Annuity payments (determined in
accordance with the 1983a Individual Annuity Mortality Table and other
provisions contained in the Contract) to Annuitants regardless of how long an
Annuitant may live, and regardless of how long all Annuitants as a group may
live. Alpine also assumes the liability for payment of a minimum death benefit
under the Contract. These mortality undertakings are based on Alpine's
determination of expected mortality rates among all Annuitants. If actual
experience among Annuitants during the Annuity payment period deviates from
Alpine's actuarial determination of expected mortality rates among Annuitants
because, as a group, their longevity is longer than anticipated, Alpine must
provide amounts from its general funds to fulfill its contractual obligations.
Alpine will bear the loss in such a situation.
During the accumulation phase, Alpine also provides an expense
undertaking. Alpine
<PAGE>
26
assumes the risk that the contingent deferred sales charges and the Annual
Maintenance Fee for maintaining the Contracts prior to the Annuity Commencement
Date may be insufficient to cover the actual cost of providing such items.
Annual Maintenance Fee
Each year, on each Contract Anniversary on or before the Annuity
Commencement Date, Alpine will deduct an Annual Maintenance Fee, if applicable,
from Contract Values to reimburse it for expenses relating to the maintenance of
the Contract, the Fixed Account, and the Sub-Account(s) thereunder. If during a
Contract Year the Contract is surrendered for its full value, Alpine will deduct
the Annual Maintenance Fee at the time of such surrender. The fee is a flat fee
that will be due in the full amount regardless of the time of the Contract Year
that Contract Values are surrendered. The Annual Maintenance Fee is $30.00 per
Contract Year for Contracts with less than $50,000 Contract Value on the
Contract Anniversary. Fees will be deducted on a pro rata basis according to
the value in each Sub-Account and the Fixed Account under a Contract.
Premium Taxes
Charges are also deducted for premium tax, if applicable, imposed by state
or other governmental entity. Certain states impose a premium tax, currently
ranging up to 3.5%. Some states assess the tax at the time purchase payments are
made; others assess the tax at the time of annuitization. Alpine will pay
Premium Taxes at the time imposed under applicable law. At its sole discretion,
Alpine may deduct Premium Taxes at the time Alpine pays such taxes to the
applicable taxing authorities, at the time the Contract is surrendered, at the
time a death benefit is paid, or at the time the Contract annuitizes.
Fund Charges
The Separate Account purchases shares of the Funds at net asset value.
The net asset value of the Fund shares reflects investment advisory fees and
administrative expenses already deducted from the assets of the Funds. These
changes are described in the Funds' prospectuses accompanying this Prospectus.
Exceptions to Charges Under the Contract
Alpine may offer, at its discretion, reduced fees and charges including,
but not limited to, the contingent deferred sales charges, the mortality and
expense risk charge and the maintenance fee for certain sales (including
employer sponsored savings plans) under circumstances which may result in
savings of certain costs and expenses. Reductions in these fees and charges
will not be unfairly discriminatory against any Contract Owner.
DEATH BENEFITS
The Contract provides that, in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become the
Annuitant. If (1) the Annuitant dies before the Annuity Commencement Date and
either (a) there is no designated Contingent Annuitant or (b) the Contingent
Annuitant predeceases the Annuitant, or (2) if any Contract Owner dies before
the Annuity Commencement Date, the Beneficiary as determined under the Contract
Control Provisions, will receive the Death Benefit as determined on the date of
receipt of Due Proof of Death by Alpine in its Administrative Office. With
regard to Joint Contract Owners, at the first death of a joint Contract Owner
prior to the Annuity Commencement Date, the Beneficiary will be
<PAGE>
27
the surviving Contract Owner notwithstanding that the beneficiary designation
may be different.
Guaranteed Death Benefit - If the Annuitant dies before the Annuity
Commencement Date and there is no designated Contingent Annuitant surviving, or
if the Contract Owner dies before the Annuity Commencement Date, the Beneficiary
will receive the greatest of (a) the Contract Value determined as of the day
written proof of death of such person is received by Alpine, or (b) 100% of the
total Premium Payments made to such Contract, reduced by the dollar amount of
any partial surrenders since the issue date, or (c) the Maximum Anniversary
Value immediately preceding the date of death. The Maximum Anniversary Value is
equal to the greatest Anniversary Value attained from the following:
As of the date of receipt of Due Proof of Death, Alpine will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's attained
age 81. The Anniversary Value is equal to the Contract Value on a Contract
Anniversary, increased by the dollar amount of any premium payments made since
that anniversary and reduced by the dollar amount of any partial surrenders
since that anniversary.
If the Annuitant or You, as applicable, die after the Annuity Commencement Date,
then the Death Benefit will equal the present value of any remaining payments
under the elected Annuity Option. In computing such present value for the
portion of such remaining payments attributable to the Separate Account, Alpine
will assume a net investment rate of 5.0% per year.
Payment of Death Benefit - The calculated Death Benefit will remain
invested in the Separate Account in accordance with the allocation instructions
given by the Contract Owner until the proceeds are paid or Alpine receives new
instructions from the Beneficiary. During the time period between Alpine's
receipt of written notification of Due Proof of Death and Alpine's receipt of
the completed settlement instructions, the calculated Death Benefit will remain
invested in the Sub-Account(s) previously elected by the Contract Owner and will
be subject to market fluctuations. The Death Benefit may be taken in one sum,
payable within seven days after the date Due Proof of Death is received, or
under any of the settlement options then being offered by Alpine provided,
however, that: (a) in the event of the death of any Contract Owner prior to the
Annuity Commencement Date, the entire interest in the Contract will be
distributed within five years after the death of the Contract Owner and (b) in
the event of the death of any Contract Owner or Annuitant which occurs on or
after the Annuity Commencement Date, any remaining interest in the Contract will
be paid at least as rapidly as under the method of distribution in effect at the
time of death, or, if the benefit is payable over a period not extending beyond
the life expectancy of the Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of death. The proceeds
due on the death may be applied to provide variable payments, fixed payments, or
a combination of variable and fixed payments. However, in the event of the
Contract Owner's death where the sole Beneficiary is the spouse of the Contract
Owner and the Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the death benefit, to be treated as the Contract
Owner. The Contract Value and the Maximum Anniversary Value of the Contract will
be unaffected by treating the spouse as the Contract Owner.
If the Contract is owned by a corporation or other non-individual, the
Death Benefit payable
<PAGE>
28
upon the death of the Annuitant prior to the Annuity Commencement Date will be
payable only as one sum or under the same settlement options and in the same
manner as if an individual Contract Owner died on the date of the Annuitant's
death.
There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, except for holidays or weekends, or trading
on the New York Stock Exchange is restricted as determined by the Commission;
(b) the Commission permits postponement and so orders; or (c) the Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
Annuity Proceeds Settlement Option
Proceeds from the Death Benefit may be left with Alpine for a period not
to exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the Sub-Account(s)
to which they were allocated at the time of death unless the Beneficiary
elects to reallocate them. Full or partial withdrawals may be made at any
time without a contingent deferred sales charge. In the event of withdrawals,
the remaining value will equal the Contract Value of the proceeds left with
Alpine, minus any withdrawals.
WITHDRAWALS
Full Surrenders - At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Annuity
Option 4 or the Annuity Proceeds Settlement Option), the Contract Owner has the
right to terminate the Contract. In such event, the Termination Value of the
Contract may be taken in the form of a lump sum cash settlement.
Under any of the Annuity options excluding Annuity Option 4 and the
Annuity Proceeds Settlement Option, no surrenders are permitted after Annuity
payments commence. Partial surrenders are permitted out of Annuity Option 4
(subject to any contingent deferred sales charges), but check with your tax
advisor because there may be adverse tax consequences. Full or partial
withdrawals may be made from the Annuity Proceeds Settlement Option at any
time and contingent deferred sales charges will not be applied.
The Termination Value of the Contract is equal to the Contract Value less
any applicable Premium Taxes, the Annual Maintenance Fee if applicable and any
applicable contingent deferred sales charges. The Termination Value may be more
or less than the amount of the Premium Payments made to a Contract.
Partial Surrenders - You may make a partial surrender of Contract Values
at any time prior to the Annuity Commencement Date so long as the amount
surrendered is at least equal to the minimum amount rules then in effect.
Additionally, if the remaining Contract Value following a surrender is less than
$500 ($1,000 in New York), Alpine will terminate the Contract and pay the
Termination Value. For Contracts issued in Texas, there is an additional
requirement that the Contract will not be terminated when the remaining Contract
Value after a surrender is less than $500 unless there were no Premium Payments
made during the previous two Contract Years.
In requesting a partial withdrawal you should specify the Sub-Account(s)
and/or the Fixed Account from which the partial withdrawal is to be taken.
Otherwise, such withdrawal and any applicable contingent deferred sales charges
will be effected on a pro rata basis according to the value in the Fixed Account
and each Sub-Account under a Contract.
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Alpine may permit You to pre-authorize partial surrenders subject to
certain limitations then in effect.
Payment of Surrender Benefits - Payment on any request for a full or
partial surrender from the Sub-Accounts will be made as soon as possible and in
any event no later than seven days after the written request is received by
Alpine at its Administrative Office. Alpine may defer payment of any amounts
from the Fixed Account for up to six months from the date of the request for
surrender. If Alpine defers payment for more than 30 days (10 working days in
New York), Alpine will pay interest of at least 3% per annum on the amount
deferred.
There may be postponement in the payment of Surrender Benefits whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation of the amounts
or disposal of securities not reasonably practicable.
CERTAIN QUALIFIED CONTRACT SURRENDERS - THERE ARE CERTAIN RESTRICTIONS ON
SECTION 403(b) TAX SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION
403(b) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO
THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER
DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/EMPLOYEE HAS
A) ATTAINED AGE 59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D) BECOME DISABLED
OR E) EXPERIENCED FINANCIAL HARDSHIP. (CASH VALUE INCREASES MAY NOT BE
DISTRIBUTED PRIOR TO AGE 59 1/2 FOR HARDSHIPS.)
DISTRIBUTIONS PRIOR TO AGE 59 1/2 DUE TO FINANCIAL HARDSHIP OR SEPARATION
FROM SERVICE MAY STILL BE SUBJECT TO A PENALTY TAX OF 10%.
ALPINE WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1,
1989 ACCOUNT VALUES.
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY AFFECT THE
CONTINUING TAX QUALIFIED STATUS OF SOME CONTRACTS OR PLANS AND MAY RESULT IN
ADVERSE TAX CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRAACT OWNER, THEREFORE,
SHOULD CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS.")
SETTLEMENT PROVISIONS
You select an Annuity Commencement Date and an Annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be
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30
deferred beyond the Annuitant's 90th birthday. The Annuity Commencement Date
and/or the Annuity option may be changed from time to time, but any change must
be at least 30 days prior to the date on which Annuity payments are scheduled
to begin. The Contract allows You to change the Sub-Accounts on which variable
payments are based after payments have commenced once every three months. Any
Fixed Annuity allocation may not be changed.
The Contract contains the four Annuity payment options. Annuity Options
2, 4, and the Annuity Proceeds Settlement Option are available to Qualified
Contracts only if the guaranteed payment period is less than the life
expectancy of the Annuitant at the time the option becomes effective. Such
life expectancy shall be computed on the basis of the mortality table
prescribed by the IRS, or if none is prescribed, the mortality table then in
use by Alpine. With respect to Non-Qualified Contracts, if you do not elect
otherwise, payments in most states will automatically begin at the
Annuitant's age 90 (with the exception of states that do not allow deferral
past age 85) under Annuity Option 2 with 120 monthly payments certain. For
Qualified Contracts and Contracts issued in Texas, if you do not elect
otherwise, payments will begin automatically at the Annuitant's age 90 under
Annuity Option 1 to provide a life Annuity. After the Annuity Commencement
Date, the Annuity option elected may not be changed.
Under any of the Annuity options excluding Annuity Option 4, no
surrenders are permitted after Annuity payments commence. Partial surrenders
are permitted out of Annuity Option 4 (subject to any contingent deferred
sales charges), but check with your tax advisor because there may be adverse
tax consequences.
Option 1 - Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last payment due preceding the death of the Annuitant.
This option offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a Death Benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
Option 2 - Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by Alpine.
Option 3 - Joint and Last Survivor Annuity
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31
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Alpine, the Annuitant may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second payment
and so on.
Option 4 - Payments for a Designated Period
An amount payable monthly for the number of years selected which may be
from 5 to 30 years. Partial surrenders are permitted out of Annuity Option 4
(subject to any contingent deferred sales charges), but check with your tax
advisor because there may be adverse tax consequences.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved by
Alpine.
Annuity Option 4 is an option that does not involve life contingencies and
thus no mortality guarantee. Charges made for the mortality undertaking under
the Contracts thus provide no real benefit to You.
Alpine may offer other annuity or settlement options from time to time.
Variable and Fixed Annuity Payments - When an Annuity is effected under a
Contract, unless otherwise specified, Contract Values (less applicable Premium
Taxes) held in the Sub-Accounts will be applied to provide a Variable Annuity
based on the pro rata amount in the various Sub-Accounts. Fixed Account Contract
Values will be applied to provide a Fixed Annuity. YOU SHOULD CONSIDER THE
QUESTION OF ALLOCATION OF CONTRACT VALUES (LESS APPLICABLE PREMIUM TAXES) AMONG
SUB-ACCOUNTS OF THE SEPARATE ACCOUNT AND THE GENERAL ACCOUNT OF ALPINE TO MAKE
CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT ALTERNATIVE BEST
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32
SUITED TO YOUR NEEDS FOR RETIREMENT.
The minimum monthly Annuity payment is $50.00. No election may be made
which results in a first payment of less than $50.00. If at any time Annuity
payments are or become less than $50.00, Alpine has the right to change the
frequency of payment to intervals that will result in payments of at least
$50.00. For New York Contracts, the minimum monthly Annuity payment is $20.00.
When Annuity payments are to commence, the value of the Contract is
determined as the sum of (1) the value of the Fixed Account no earlier than the
close of business on the fifth Valuation Day preceding the date the first
Annuity payment is due plus (2) the product of (a) the value of the Accumulation
Unit of each Sub-Account on that same day and (b) the number of Accumulation
Units credited to each Sub-Account as of the date the Annuity is to commence.
All annuity payments under any option will occur the same day of the month
as the Annuity Commencement Date, based on the payment frequency selected by
You. Available payment frequencies include monthly, quarterly, semi-annual and
annual. The payment frequency may not be changed after payout has begun.
Variable Annuity - The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable forms of
Annuity for each $1,000 of value of a Sub-Account under a Contract. The first
monthly payment varies according to the form and type of Variable Payment
Annuity selected. The Contract contains Variable Payment Annuity tables derived
from the 1983a Individual Annuity Mortality Table with ages set back one year
and with an assumed investment rate ("A.I.R.") of 5% per annum. The total first
monthly Variable Annuity payment is determined by multiplying the value
(expressed in thousands of dollars) of a Sub-Account (less any applicable
Premium Taxes) by the amount of the first monthly payment per $1,000 of value
obtained from the tables in the Contracts.
The amount of the first monthly Variable Annuity payment is divided by the
value of an Annuity Unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due in order to determine the number of Annuity Units represented by
the first payment. This number of Annuity Units remains fixed during the Annuity
payment period, and in each subsequent month the dollar amount of the Variable
Annuity payment is determined by multiplying this fixed number of Annuity Units
by the then current Annuity Unit value.
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor for the day for which the Annuity Unit
value is being calculated, and (2) a factor to neutralize the assumed investment
rate of 5% per annum. The Annuity Unit value used in calculating the amount of
the Variable Annuity payments will be based on an Annuity Unit value determined
as of the close of business on a day no earlier than the fifth Valuation Day
preceding the date of the Annuity payment.
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33
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
Fixed Annuity - Fixed Annuity payments are determined at annuitization by
multiplying the Contract Value (less applicable Premium Taxes) by a rate to be
determined by Alpine which is no less than the rate specified in the Fixed
Payment Annuity tables in the Contract. The Annuity payment will remain level
for the duration of the Annuity.
OTHER INFORMATION
Assignment - Ownership of a Contract described herein is generally
assignable. However, if the Contracts are issued pursuant to some form of
Qualified Plan, it is possible that the ownership of the Contracts may not be
transferred or assigned depending on the type of tax-qualified retirement plan
involved. An assignment of a Non-Qualified Contract may subject the Contract
values or assignment proceeds to income taxes and certain penalty taxes.
Contract Modification - The Annuitant may not be changed; however, the
Contingent Annuitant may be changed at any time prior to the Annuity
Commencement Date by written notice to Alpine.
Alpine reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which
Alpine is subject; or (ii) is necessary to assure continued qualification of the
Contract under the Code or other federal or state laws relating to retirement
annuities or annuity Contracts; or (iii) is necessary to reflect a change in the
operation of the Separate Account or the Sub-Account(s) or (iv) provides
additional Separate Account options or (v) withdraws Separate Account options.
In the event of any such modification Alpine will provide notice to You or to
the payee(s) during the Annuity period. Alpine may also make appropriate
endorsement in the Contract to reflect such modification.
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34
FEDERAL TAX CONSIDERATIONS
What are some of the federal tax consequences which affect these Contracts?
A. GENERAL
Since federal tax law is complex, the tax consequences of purchasing this
contract will vary depending on your situation. You may need tax or legal
advice to help you determine whether purchasing this contract is right for
you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted.
A detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract.
For detailed information, you should consult with a qualified tax adviser
familiar with your situation.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as
a "regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the
Separate Account are reinvested and are taken into account in determining the
value of the Accumulation and Annuity Units (See "Value of Accumulation
Units"). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or
Non-Qualified Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER
THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Code Section 72 contains
provisions for contract owners which are not natural persons.
Non-natural persons include corporations, trusts, limited liability
companies, partnerships and other types of legal entities. The tax
rules for contracts owned by non-natural persons are different from the
rules for contracts owned by individuals. For example, the annual net
increase in the value of the contract is currently includible in the
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35
gross income of a non-natural person, unless the non-natural person
holds the contract as an agent for a natural person. There are
additional exceptions from current inclusion for:
- certain annuities held by structured settlement companies,
- certain annuities held by an employer with respect to a terminated
qualified retirement plan and
- certain immediate annuities.
A non-natural person which is a tax-exempt entity for federal tax purposes
will not be subject to income tax as a result of this provision.
If the contract owner is a non-natural person, the primary annuitant is
treated as the contract owner in applying mandatory distribution rules.
These rules require that certain distributions be made upon the death of the
contract owner. A change in the primary annuitant is also treated as the
death of the contract owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed on
increases in the value of the Contract until an amount is received or
deemed received, e.g., in the form of a lump sum payment (full or partial
value of a Contract) or as Annuity payments under the settlement option
elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased prior
to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not
includable in gross income equal the "investment in the contract"
under Section 72 of the Code.
ii. To the extent that the value of the Contract (ignoring any
surrender charges except on a full surrender) exceeds the
"investment in the contract," such excess constitutes the "income
on the contract."
iii. Any amount received or deemed received prior to the Annuity
Commencement Date (e.g., upon a partial surrender) is deemed to
come first from any such "income on the contract" and then from
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36
"investment in the contract," and for these purposes such
"income on the contract" shall be computed by reference to any
aggregation rule in subparagraph 2.c. below. As a result, any
such amount received or deemed received (1) shall be includable
in gross income to the extent that such amount does not exceed
any such "income on the contract," and (2) shall not be
includable in gross income to the extent that such amount does
exceed any such "income on the contract." If at the time that
any amount is received or deemed received there is no "income on
the contract" (e.g., because the gross value of the Contract
does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed
received will not be includable in gross income, and will simply
reduce the "investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the
assignment or pledge of any portion of the value of the Contract
shall be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount received
for purposes of this subparagraph a. and the next subparagraph b.
This transfer rule does not apply, however, to certain transfers
of property between spouses or incident to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments made
periodically after the Annuity Commencement Date are includable in
gross income to the extent the payments exceed the amount determined
by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity
Commencement Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of
the exclusion ratio is equal to the investment in the contract
as of the Annuity Commencement Date, any additional payments
(including surrenders) will be entirely includable in gross
income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the date of death, the amount of annuity
payments excluded from gross income by the exclusion ratio does
not exceed the investment in the contract as of the Annuity
Commencement Date, then the remaining portion of unrecovered
investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after
the Annuity Commencement Date are not entitled to any exclusion
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37
ratio and shall be fully includable in gross income. However,
upon a full surrender after such date, only the excess of the
amount received (after any surrender charge) over the remaining
"investment in the contract" shall be includable in gross income
(except to the extent that the aggregation rule referred to in
the next subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued after
October 21, 1988 by the same insurer (or affiliated insurer) to the
same Contract Owner within the same calendar year (other than certain
contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose
of determining the taxation of distributions prior to the Annuity
Commencement Date. An annuity contract received in a tax-free
exchange for another annuity contract or life insurance contract may
be treated as a new Contract for this purpose. Hartford believes
that for any annuity subject to such aggregation, the values under the
Contracts and the investment in the contracts will be added together
to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date.
Withdrawals will first be treated as withdrawals of income until all
of the income from all such Contracts is withdrawn. As of the date of
this Prospectus, there are no regulations interpreting this provision.
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code applies
a penalty tax equal to ten percent of the portion of the amount
includable in gross income, unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has
attained the age of 59 1/2.
2. Distributions made on or after the death of the holder or
where the holder is not an individual, the death of the
primary annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments (not less frequently
than annually) for the life (or life expectancy) of the
recipient (or the joint lives or life expectancies of the
recipient and the recipient's designated Beneficiary).
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5. Distributions of amounts which are allocable to the
"investment in the contract" prior to August 14, 1982 (see
next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR
TO AUGUST 14, 1982. If the Contract was obtained by a tax-free
exchange of a life insurance or annuity Contract purchased prior to
August 14, 1982, then any amount received or deemed received prior to
the Annuity Commencement Date shall be deemed to come (1) first from
the amount of the "investment in the contract" prior to August 14,
1982 ("pre-8/14/82 investment") carried over from the prior Contract,
(2) then from the portion of the "income on the contract" (carried
over to, as well as accumulating in, the successor Contract) that is
attributable to such pre-8/14/82 investment, (3) then from the
remaining "income on the contract" and (4) last from the remaining
"investment in the contract." As a result, to the extent that such
amount received or deemed received does not exceed such pre-8/14/82
investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed received
does not exceed the sum of (a) such pre-8/14/82 investment and (b) the
"income on the contract" attributable thereto, such amount is not
subject to the 10% penalty tax. In all other respects, amounts
received or deemed received from such post-exchange Contracts are
generally subject to the rules described in this subparagraph 3.
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary
provisions in ii or iii below:
1. If any Contract Owner dies on or after the Annuity
Commencement Date and before the entire interest in the
Contract has been distributed, the remaining portion of such
interest shall be distributed at least as rapidly as under
the method of distribution being used as of the date of such
death;
2. If any Contract Owner dies before the Annuity Commencement
Date, the entire interest in the Contract will be
distributed within 5 years after such death; and
3. If the Contract Owner is not an individual, then for
purposes of 1. or 2. above, the primary annuitant under the
Contract shall be treated as the Contract Owner, and any
change in the primary annuitant shall be treated as the
death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary
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39
importance in affecting the timing or amount of the payout
under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in
i. above is payable to or for the benefit of a designated
beneficiary, such beneficiary may elect to have the portion
distributed over a period that does not extend beyond the life or
life expectancy of the beneficiary. The election must be made
and payments must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to
or for the benefit of his or her spouse, and the Annuitant or
Contingent Annuitant is living, such spouse shall be treated as
the Contract Owner of such portion for purposes of section i.
above. This spousal continuation shall apply only once for this
contract.
3. DIVERSIFICATION REQUIREMENTS. The Code requires that investments supporting
your contract be adequately diversified. Code Section 817 provides that a
variable annuity contract will not be treated as an annuity contract for
any period during which the investments made by the separate account or
underlying fund are not adequately diversified. If a contract is not
treated as an annuity contract, the contract owner will be subject to
income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- no more than 55% of the value of the total assets of the segregated
asset account underlying a variable contract is represented by any one
investment,
- no more than 70% is represented by any two investments,
- no more than 80% is represented by any three investments and
- no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all
securities of the same issuer, all interests in the same real property
project, and all interests in the same commodity are each treated as a
single investment. In the case of government securities, each government
agency or instrumentality is treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the
quarter ends. If an insurance company inadvertently fails to meet the
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diversification requirements, the company may still comply within a
reasonable period and avoid the taxation of contract income on an ongoing
basis. However, either the company or the contract owner must agree to pay
the tax due for the period during which the diversification requirements
were not met.
We monitor the diversification of investments in the separate accounts and
test for diversification as required by the Code. We intend to administer
all contracts subject to the diversification requirements in a manner that
will maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a variable
annuity contract to qualify for tax deferral, assets in the separate
accounts supporting the contract must be considered to be owned by the
insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for
tax purposes.
The IRS has issued several rulings discussing investor control. These
rulings say that certain incidents of ownership by the contract owner, such
as the ability to select and control investments in a separate account,
will cause the contract owner to be treated as the owner of the assets for
tax purposes.
In its explanation of the diversification regulations, the Treasury
Department recognized that the temporary regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders
may direct their investments to particular sub-accounts without being
treated as the owners of the underlying assets. Guidance on this and other
issues will be provided in regulations or revenue rulings under Section
817(d), relating to the definition of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance
has yet to be issued. We do not know if additional guidance will be
issued. If guidance is issued, we do not know if it will have a
retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the
assets for tax purposes. We reserve the right to modify the contract, as
necessary, to prevent you from being considered the owner of assets in the
separate account.
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D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of
the Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS. The portion of a non-periodic
distribution which constitutes taxable income will be subject to
federal income tax withholding unless the recipient elects not to have
taxes withheld. If there is no election to waive withholding, 10% of
the taxable distribution will be withheld as federal income tax.
Election forms will be provided at the time distributions are
requested. If the necessary election forms are not submitted to
Hartford, Hartford will automatically withhold 10% of the taxable
distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER
THAN ONE YEAR). The portion of a periodic distribution which
constitutes taxable income will be subject to federal income tax
withholding as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld
or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If
the Contract is being purchased with respect to some form of qualified
retirement plan, please refer to Appendix I for information relative to the
types of plans for which it may be used and the general explanation of the
tax features of such plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will
generally be subject to U.S. federal income tax and withholding on annuity
distributions at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state premium tax, other state
and/or municipal taxes, and taxes that may be imposed by the purchaser's
country of citizenship or residence. Prospective purchasers are advised to
consult with a qualified tax adviser regarding U.S., state, and foreign
taxation with respect to an annuity purchase.
MISCELLANEOUS
How We Sell Our Annuity
Hartford Securities Distribution Company, Inc. ("HSD") serves as
Principal Underwriter for the securities issued with respect to the Separate
Account. HSD is a wholly owned subsidiary of Hartford Financial Services
Group Inc. The principal business address of HSD is the same as that of the
Hartford.
<PAGE>
42
The securities will be sold by salesperson of HSD who represent Alpine as
insurance and variable annuity agents and who are registered representatives.
HSD is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Alpine and will not be more than 6% of Premium
Payments. From time to time, Alpine may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments
made by policyholders or contract owners. This compensation is usually paid
from the sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Alpine may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance
products. These payments, which may be different for different broker-dealers
or financial institutions, will be made by HSD, its affiliates or Alpine out of
their own assets and will not effect the amounts paid by the policyholders or
contract owners to purchase, hold or surrender variable insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Alpine will credit the Contract with an
additional 5.0% of the premium payment. This additional percentage of premium
payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of Alpine;
and (2) employees and registered representatives (and their families) of
registered broker-dealers (or financial institutions affiliated therewith) that
have a sales agreement with Alpine and its principal underwriter to sell the
Contracts.
Legal Matters and Experts
There are no material legal proceedings pending to which the Separate
Account is a party.
Counsel with respect to federal laws and regulations applicable to the
issue and sale of the Contracts and with respect to Connecticut law is Lynda
Godkin, Senior Vice President, General Counsel and Corporate Secretary, Alpine
Life Insurance Company, P.O. Box 2999, Hartford, Connecticut 06104-2999.
<PAGE>
43
The audited statutory financial statements included in this registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said report. Reference is made to the report on the statutory
financial statements of Alpine Life Insurance Company which states the
statutory financial statements are presented in accordance with statutory
accounting practices prescribed or permitted by the National Association of
Insurance Commissioners and the State of Connecticut Insurance Department,
and are not presented in accordance with generally accepted accounting
principles. The principal business address of Arthur Andersen LLP is One
Financial Plaza, Hartford, Connecticut 06103.
YEAR 2000
IN GENERAL The Year 2000 issue relates to the ability or inability of
computer hardware, software and other information technology (IT) systems, as
well as non-IT systems, such as equipment and machinery with imbedded chips
and microprocessors, to properly process information and data containing or
related to dates beginning with the year 2000 and beyond. The Year 2000
issue exists because, historically, many IT and non-IT systems that are in
use today were developed years ago when a year was identified using a
two-digit date field rather than a four-digit date field. As information and
data containing or related to the century date are introduced to date
sensitive systems, these systems may recognize the year 2000 as "1900", or
not at all, which may result in systems processing information incorrectly.
This, in turn, may significantly and adversely affect the integrity and
reliability of information databases of IT systems, may cause the
malfunctioning of certain non-IT systems, and may result in a wide variety of
adverse consequences to a company. In addition, Year 2000 problems that
occur with third parties with which a company does business, such as
suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Alpine's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Alpine's business.
Alpine issues insurance policies and annuities to individual and business
customers, nearly all of which contain date sensitive data, such as policy
expiration dates, birth dates and premium payment dates. Alpine also has
business relationships with numerous third parties that affect virtually all
aspects of Alpine's business, including, without limitation, suppliers,
computer hardware and software vendors, insurance agents and brokers,
securities broker-dealers and other distributors of financial products, many
of which provide date sensitive data to Alpine, and whose operations are
important to Alpine's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE Beginning in 1990, Hartford
Financial Services Group, Inc., ("Hartford") Alpine's ultimate controlling
parent,
<PAGE>
44
began working on making its IT systems Year 2000 ready, either through
installing new programs or replacing systems. Since January 1998, Alpine's
Year 2000 efforts have focused on the remaining Year 2000 issues related to
IT and non-IT systems. These Year 2000 efforts include the following five
main initiatives: (1) identifying and assessing Year 2000 issues; (2) taking
actions to remediate IT and non-IT systems so that they are Year 2000 ready;
(3) testing IT and non-IT systems for Year 2000 readiness; (4) deploying such
remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. As of December 31, 1998, Alpine substantially completed
initiatives (1) through (4) of its internal Year 2000 efforts. Alpine has
begun initiative (5) and management currently anticipates that such activity
will continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE Alpine's Year 2000 efforts
include assessing the potential impact on Alpine of third parties' Year 2000
readiness. Alpine's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant
business relationships with Alpine, including, without limitation, insurance
agents, brokers, third party administrators, banks and other distributors and
servicers of financial products, and inquiring of such third parties
regarding their Year 2000 readiness; (2) evaluating such third parties'
responses to Alpine's inquiries; and (3) based on the evaluation of third
party responses (or a third party's failure to respond) and the significance
of the business relationship, conducting additional activities with respect
to third parties as determined to be necessary in each case. These activities
may include conducting additional inquiries, more in-depth evaluations of
Year 2000 readiness and plans, and integrated IT systems testing. Alpine has
completed the first third party initiative and, as of early 1999, had
substantially completed evaluating third party responses received. Alpine has
begun conducting the additional activities described in initiative (3) and
management currently anticipates that it will continue to do so through the
end of 1999. However, notwithstanding these third party Year 2000 efforts,
Alpine does not have control over these third parties and, as a result,
Alpine cannot currently determine to what extent future operating results may
be adversely affected by the failure of these third parties to adequately
address their Year 2000 issues.
YEAR 2000 COSTS The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of
Hartford's Year 2000 efforts for the year ended December 31, 1998 were
approximately $3 million. Management currently estimates that after-tax costs
related to the Year 2000 program to be incurred in 1999 will be less than $10
million. These costs are being expensed as incurred.
RISKS AND CONTINGENCY PLANS If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT
systems
<PAGE>
45
could occur, which in turn could result in substantial interruptions in
Alpine's business. In addition, Alpine's investing activities are an
important aspect of its business and Alpine may be exposed to the risk that
issuers of investments held by it will be adversely impacted by Year 2000
issues. Given the uncertain nature of Year 2000 problems that may arise,
especially those related to the readiness of third parties discussed above,
management cannot determine at this time whether the consequences of Year
2000 related problems that could arise will have a material impact on
Alpine's financial condition or results of operations.
Alpine is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the
impact of such problems may be avoided or minimized. These contingency plans
are being developed based on, among other things, known or reasonably
anticipated circumstances and potential vulnerabilities. The contingency
planning also includes assessing the dependency of Alpine's business on third
parties and their Year 2000 readiness. Alpine currently anticipates that
internal and external contingency plans will be substantially complete by the
end of the second quarter of 1999. However, in many contexts, Year 2000
issues are dynamic, and ongoing assessments of business functions,
vulnerabilities and risks must be made. As such, new contingency plans may
be needed in the future and/or existing plans may need to be modified as
circumstances warrant.
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
Alpine Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: (800) 862-6668
<PAGE>
46
APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about
the federal income tax rules associated with use of a Contract by a
tax-qualified retirement plan. Because of the complexity of the federal tax
rules, owners, participants and beneficiaries are encouraged to consult their
own tax advisors as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not
bound by the terms and conditions of such plans to the extent such terms
conflict with a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions comply
with applicable law. Tax penalties may apply to transactions with respect to
tax-qualified retirement plans if applicable federal income tax rules and
restrictions are not carefully observed.
We do not currently offer the Contracts in connection with all of the types
of tax-qualified retirement plans discussed below and may not offer the
Contracts for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under
section 401 of the Code. Rules under section 401(k) of the Code govern
certain "cash or deferred arrangements" under such plans. Rules under
section 408(k) govern "simplified employee pensions". Tax-qualified
pension and profit-sharing plans are subject to limitations on the amount
that may be contributed, the persons who may be eligible to participate and
the time when distributions must commence. Employers intending to use the
Contracts in connection with tax-qualified pension or profit-sharing plans
should seek competent tax and other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) Public schools and certain
types of charitable, educational and scientific organizations, as specified
in section 501(c)(3) of the Code, can purchase tax-sheltered annuity
contracts for their employees. Tax-deferred contributions can be made to
tax-sheltered annuity contracts under section 403(b) of the Code, subject
to certain limitations. Generally, such contributions may not exceed the
lesser of $10,000 (indexed) or 20% of the employee's "includable
compensation" for such employee's most recent full year of employment,
subject to other adjustments. Special provisions under the Code may allow
some employees to elect a different overall limitation.
<PAGE>
47
Tax-sheltered annuity programs under section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such
distribution is made:
- after the participating employee attains age 59 1/2;
- upon separation from service;
- upon death or disability; or
- in the case of hardship (and in the case of hardship, any income
attributable to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions
attributable to cash values or other amounts held under a section 403(b)
contract as of December 31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 A governmental employer or
a tax-exempt employer other than a governmental unit can establish a
Deferred Compensation Plan under section 457 of the Code. For these
purposes, a "governmental employer" is a State, a political subdivision of
a State, or an agency or an instrumentality of a State or political
subdivision of a State. Employees and independent contractors performing
services for a governmental or tax-exempt employer can elect to have
contributions made to a Deferred Compensation Plan of their employer in
accordance with the employer's plan and section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b)
of the Code are called "eligible" Deferred Compensation Plans. Section
457(b) limits the amount of contributions that can be made to an
eligible Deferred Compensation Plan on behalf of a participant.
Generally, the limitation on contributions is 33 1/3% of a participant's
includable compensation (typically 25% of gross compensation) or, for
1999, $8,000 (indexed), whichever is less. The plan may provide for
additional "catch-up" contributions during the three taxable years
ending before the year in which the participant attains normal
retirement age.
All of the assets and income of an eligible Deferred Compensation Plan
established by a governmental employer after August 20, 1996, must be
held in trust for the exclusive benefit of participants and their
beneficiaries. For this purpose, custodial accounts and certain annuity
contracts are treated as trusts. Eligible Deferred Compensation Plans
that were in existence on August 20, 1996 may be amended to satisfy the
trust and exclusive benefit requirements any time prior to January 1,
1999, and must be amended not later than that date to continue to
receive favorable tax treatment. The requirement of a trust does not
apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust
does not apply to amounts under a Deferred Compensation Plan of a
governmental employer if the Deferred Compensation Plan is not an
eligible plan within the meaning of section 457(b) of the Code. In the
<PAGE>
48
absence of such a trust, amounts under the plan will be subject to the
claims of the employer's general creditors.
In general, distributions from an eligible Deferred Compensation Plan
are prohibited under section 457 of the Code unless made after the
participating employee:
- attains age 70 1/2,
- separates from service,
- dies, or
- suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred
Compensation Plan under section 457 of the Code cannot be transferred or
rolled over on a tax-deferred basis except for certain transfers to
other Deferred Compensation Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAs") UNDER SECTION 408
TRADITIONAL IRAs. Eligible individuals can establish individual
retirement programs under section 408 of the Code through the purchase
of an IRA. Section 408 imposes limits with respect to IRAs, including
limits on the amount that may be contributed to an IRA, the amount of
such contributions that may be deducted from taxable income, the persons
who may be eligible to contribute to an IRA, and the time when
distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a
tax-deferred basis.
SIMPLE IRAs. Eligible employees may establish SIMPLE IRAs in connection
with a SIMPLE IRA plan of an employer under section 408(p) of the Code.
Special rollover rules apply to SIMPLE IRAs. Amounts can be rolled over
from one SIMPLE IRA to another SIMPLE IRA. However, amounts can be
rolled over from a SIMPLE IRA to a Traditional IRA only after two years
have expired since the employee first commenced participation in the
employer's SIMPLE IRA plan. Amounts cannot be rolled over to a SIMPLE
IRA from a qualified plan or a Traditional IRA. Hartford is a
non-designated financial institution for purposes of the SIMPLE IRA
rules.
ROTH IRAs. Eligible individuals may establish Roth IRAs under section
408A of the Code. Contributions to a Roth IRA are not deductible.
Subject to special limitations, a Traditional IRA may be converted into
a Roth IRA or a distribution from a Traditional IRA may be rolled over
to a Roth IRA. However, a conversion or a rollover from a Traditional
IRA to a Roth IRA is not excludable from gross income. If certain
conditions are met, qualified distributions from a Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING Distributions from tax-qualified
retirement plans are generally taxed as ordinary income under section 72
<PAGE>
49
of the Code. Under these rules, a portion of each distribution may be
excludable from income. The excludable amount is the portion of the
distribution that bears the same ratio as the after-tax contributions
bear to the expected return.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes
an additional penalty tax equal to 10% of the taxable portion of a
distribution from certain tax-qualified retirement plans. However,
the 10% penalty tax does not apply to a distributions that is:
- Made on or after the date on which the employee reaches age 59 1/2;
- Made to a beneficiary (or to the estate of the employee) on or
after the death of the employee;
- Attributable to the employee's becoming disabled (as defined in
the Code);
- Part of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life
expectancy) of the employee or the joint lives (or joint life
expectancies) of the employee and his or her designated
beneficiary;
- Except in the case of an IRA, made to an employee after separation
from service after reaching age 55; or
- Not greater than the amount allowable as a deduction to the
employee for eligible medical expenses during the taxable year.
In addition, the 10% penalty tax does not apply to a distribution
from an IRA that is:
- Made after separation from employment to an unemployed IRA owner
for health insurance premiums, if certain conditions are met;
- Not in excess of the amount of certain qualifying higher education
expenses, as defined by section 72(t)(7) of the Code; or
- A qualified first-time homebuyer distribution meeting the
requirements specified at section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware
that the 10% penalty tax is increased to 25% with respect to
non-exempt early distributions made from your SIMPLE IRA during the
first two years following the date you first commenced
participation in any SIMPLE IRA plan of your employer.
<PAGE>
50
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less
than the minimum required distribution for the year, the Participant
is subject to a 50% penalty tax on the amount that was not properly
distributed.
An individual's interest in a tax-qualified retirement plan
generally must be distributed, or begin to be distributed, not
later than the Required Beginning Date. Generally, the Required
Beginning Date is April 1 of the calendar year following the later
of:
- the calendar year in which the individual attains age 70 1/2; or
- the calendar year in which the individual retires from service
with the employer sponsoring the plan.
The Required Beginning Date for an individual who is a five (5)
percent owner (as defined in the Code), or who is the owner of an
IRA, is April 1 of the calendar year following the calendar year in
which the individual attains age 70 1/2.
The entire interest of the Participant must be distributed
beginning no later than the Required Beginning Date over:
- the life of the Participant or the lives of the Participant and
the Participant's designated beneficiary, or
- over a period not extending beyond the life expectancy of the
Participant or the joint life expectancy of the Participant and
the Participant's designated beneficiary.
Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by dividing the account
balance by the applicable life expectancy. This account balance is
generally based upon the account value as of the close of business
on the last day of the previous calendar year. In addition,
minimum distribution incidental benefit rules may require a larger
annual distribution.
If an individual dies before reaching his or her Required Beginning
Date, the individual's entire interest must generally be
distributed within five years of the individual's death. However,
this rule will be deemed satisfied, if distributions begin before
the close of the calendar year following the individual's death to
a designated beneficiary and distribution is over the life of such
designated beneficiary (or over a period not extending beyond the
life expectancy of the beneficiary). If the beneficiary is the
individual's surviving spouse, distributions may be delayed until
the individual would have attained age 70 1/2.
If an individual dies after reaching his or her Required Beginning
Date or after distributions have commenced, the individual's
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51
interest must generally be distributed at least as rapidly as under
the method of distribution in effect at the time of the
individual's death.
(c) WITHHOLDING In general, regular wage withholding rules apply to
distributions from IRAs and plans described in section 457 of the
Code. Periodic distributions from other tax-qualified retirement
plans that are made for a specified period of 10 or more years or
for the life or life expectancy of the participant (or the joint
lives or life expectancies of the participant and beneficiary) are
generally subject to federal income tax withholding as if the
recipient were married claiming three exemptions. The recipient of
periodic distributions may generally elect not to have withholding
apply or to have income taxes withheld at a different rate by
providing a completed election form.
Mandatory federal income tax withholding at a flat rate of 20% will
generally apply to other distributions from such other
tax-qualified retirement plans unless such distributions are:
- the non-taxable portion of the distribution;
- required minimum distributions; or
- direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to
another eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal
income tax is withheld.
<PAGE>
52
TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
SECTION PAGE
Description of Alpine Life Insurance Company
Safekeeping of Assets
Independent Public Accountants
Distribution of Contracts
Calculation of Yield and Return
Performance Comparisons
Financial Statements
<PAGE>
53
This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Alpine Variable Annuity Contract that you have recently purchased is subject
to certain restrictions imposed by the Tax Reform Act of 1986. Contributions to
the Contract after December 31, 1988 and any increases in cash value after
December 31, 1988 may not be distributed to you unless you have:
a. Attained age 59 1/2,
b. Separated from service,
c. Died, or
d. Become disabled.
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Alpine Variable Annuity. Please refer to your Plan.
Please complete the following and return to:
Alpine Life Insurance Company
Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Name of You/Participant
Address
City or Plan/School District
Date:
Contract No:
Signature:
<PAGE>
54
- - - - - - - - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
Alpine Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for (Marketing Name) to me at
the following address:
- -----------------------------------------------
Name
- -----------------------------------------------
Address
- -----------------------------------------------
City/State Zip Code
- - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ALPINE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT ONE
This Statement of Additional Information is not a prospectus. The
information contained herein should be read in conjunction with the
Prospectus.
To obtain a Prospectus, send a written request to Alpine Life Insurance Company
Attn: Individual Annuity Services, P.O. Box 5085, Hartford, CT
06102-5085.
Date of Prospectus: May 3, 1999
Date of Statement of Additional Information: May 3, 1999
<PAGE>
-2-
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
DESCRIPTION OF ALPINE LIFE INSURANCE COMPANY . . . . . . . . . . . . .
SAFEKEEPING OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-3-
DESCRIPTION OF ALPINE LIFE INSURANCE COMPANY
Alpine Life Insurance Company ("Alpine") is a stock life insurance company
engaged in the business of writing life insurance in all states of the United
States and the District of Columbia. Its offices are located in Simsbury,
Connecticut; however, its mailing address is P.O. Box 2999, Hartford, CT
06104-2999. Alpine is ultimately controlled by Hartford Financial Services
Group, Inc., one of the largest financial service providers in the United
States.
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Alpine. The assets
are kept physically segregated and are held separate and apart from Alpine's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited statutory financial statements included in this registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said report. Reference is made to the report on the statutory
financial statements of Alpine Life Insurance Company which states the
statutory financial statements are presented in accordance with statutory
accounting practices prescribed or permitted by the National Association of
Insurance Commissioners and the State of Connecticut Insurance Department,
and are not presented in accordance with generally accepted accounting
principles. The principal business address of Arthur Andersen LLP is One
Financial Plaza, Hartford, Connecticut 06103.
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as principal
underwriter for the securities issued with respect to the Separate Account
and will offer the Contracts on a continuous basis.
HSD is a wholly-owned subsidiary of Hartford Financial Services Group Inc.
The principal business address of HSD is the same as Alpine.
The securities will be sold by salespersons of HSD, who represent Alpine as
insurance and Variable Annuity agents and who are registered representatives
of Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Securities and Exchange Commission under the
Securities and Exchange Act of 1934 as a Broker-Dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD").
<PAGE>
-4-
CALCULATION OF YIELD AND RETURN
YIELD AND EFFECTIVE YIELD OF THE MONEY MARKET FUND SUB-ACCOUNT. As
summarized in the Prospectus under the heading "Performance Related
Information," the yield of the Money Market Fund Sub-Account for a seven day
period (the "base period") will be computed by determining the "net change in
value" (calculated as set forth below) of a hypothetical account having a
balance of one accumulation unit of the Sub-Account at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Contract
Owner accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by 365/7 with the resulting yield figure
carried to the nearest hundredth of one percent. Net changes in value of a
hypothetical account will include net investment income of the account
(accrued daily dividends as declared by the underlying funds, less daily
expense charges of the account) for the period, but will not include realized
gains or losses or unrealized appreciation or depreciation on the underlying
fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from
the result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
THE MONEY MARKET FUND SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN
RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE
SUB-ACCOUNT. THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES
ON THE SEPARATE ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
The yield and effective yield for the seven day period ending December 31,
1998 is as follows:
<TABLE>
<CAPTION>
Sub-Account Yield Effective Yield
- ----------- ----- ---------------
<S> <C> <C>
Money Market 3.52% 3.59%
</TABLE>
CALCULATION OF YIELD. As summarized in the Prospectus under the heading
"Performance Related Information," certain Sub-Accounts may advertise yield
in addition to total return. Yield will be computed by annualizing a recent
month's net investment income, divided by a Fund share's net asset value on
the last trading day of that month. Net changes in the value of a
hypothetical account will assume the change in the underlying mutual fund's
"net asset value per share" for the same period in addition to the daily
expense charge assessed, at the sub-account level for the respective period.
The Sub-Accounts' yields will vary from time to time depending upon market
conditions and, the composition of the underlying funds' portfolios. Yield
should also be considered relative to changes in the value of the
Sub-Accounts' shares and to the relative risks associated with the investment
objectives and policies of the underlying Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
<PAGE>
-5-
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract Owner's account over the base period. Yield quotations based
on a 30 day period were computed by dividing the dividends and interests earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period that
were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
Yield quotations based on a 30 day period ended December 31, 1998 is as
follows: Bond Sub-Account, 4.61%; High Yield Sub-Account, 7.56%; Mortgage
Securities Sub-Account, 4.84%.
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the
heading "Performance Related Information," total return is a measure of the
change in value of an investment in a Sub-Account over the period covered.
The formula for total return used herein includes three steps: (1)
calculating the value of the hypothetical initial investment of $1,000 as of
the end of the period by multiplying the total number of units owned at the
end of the period by the unit value per unit on the last trading day of the
period; (2) assuming redemption at the end of the period and deducting any
applicable contingent deferred sales charge and (3) dividing this account
value for the hypothetical investor by the initial $1,000 investment and
annualizing the result for periods of less than one year. Total return will
be calculated for one year, five years and ten years or some other relevant
periods if a Sub-Account has not been in existence for at least ten years.
As the Sub-Accounts have not been in existence for more than one year, no
standardized returns are shown here.
In addition to the standardized total return, the Sub-Accounts may advertise
a non-standardized total return. This figure will usually be calculated for
one year, five years, and ten years or other periods. Non-standardized total
return is measured in the same manner as the standardized total return
described above, except that the contingent deferred sales charge and the
Annual Maintenance Fee are not deducted. Therefore, non-standardized total
return for a Sub-Account is higher than standardized total return for a
Sub-Account.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SUB-ACCOUNT INCEPTION 1 YEAR 5 YEAR 10 YEAR SINCE
DATE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bond 9/1/98 N/A N/A N/A -6.45%
- --------------------------------------------------------------------------------
High Yield 10/1/98 N/A N/A N/A -5.51%
- --------------------------------------------------------------------------------
Index 9/1/98 N/A N/A N/A 14.57%
- --------------------------------------------------------------------------------
Money Market 9/1/98 N/A N/A N/A -7.76%
- --------------------------------------------------------------------------------
Mortgage Securities 9/1/98 N/A N/A N/A -7.74%
- --------------------------------------------------------------------------------
</TABLE>
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE INCEPTION DATE OF
THE SEPARATE ACCOUNT FOR YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SUB-ACCOUNT INCEPTION 1 YEAR 5 YEAR 10 YEAR SINCE
DATE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bond 8/31/77 6.80% 5.92% 7.51% N/A
- --------------------------------------------------------------------------------
High Yield 10/1/98 N/A N/A N/A 3.49%
- --------------------------------------------------------------------------------
Index 5/1/87 26.47% 21.84% 16.89% N/A
- --------------------------------------------------------------------------------
Money Market 6/30/80 3.96% 3.79% 4.21% N/A
- --------------------------------------------------------------------------------
Mortgage Securities 1/1/85 5.39% 5.59% 6.93% N/A
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
-6-
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its
total return in advertisements or in information furnished to present or
prospective shareholders. Each Sub-Account may from time to time include its
yield and total return in advertisements or information furnished to present
or prospective shareholders. Each Sub-Account may from time to time include
in advertisements its total return (and yield in the case of certain
Sub-Accounts) the ranking of those performance figures relative to such
figures for groups of other annuities analyzed by Lipper Analytical Services
and Morningstar, Inc. as having the same investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index
of 500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to
the base period 1941-43. The S&P 500 is composed almost entirely of common
stocks of companies listed on the New York Stock Exchange, although the
common stocks of a few companies listed on the American Stock Exchange or
traded over-the-counter are included. The 500 companies represented include
400 industrial, 60 transportation and 40 financial services concerns. The
S&P 500 represents about 80% of the market value of all issues traded on the
New York Stock Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate
market value of approximately 3,500 stocks relative to the base measure of
100.00 on February 5, 1971. The NASDAQ Index is composed entirely of common
stocks of companies traded over-the-counter and often through the National
Association of Securities Dealers Automated Quotations ("NASDAQ") system.
Only those over-the-counter stocks having only one market maker or traded on
exchanges are excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index
is weighted by market capitalization, and therefore, it has a heavy
representation in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
<PAGE>
-7-
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1.3
trillion. To be included in the SL Government/Corporate Index, an issue must
have amounts outstanding in excess of $1 million, have at least one year to
maturity and be rated "Baa" or higher ("investment grade") by a nationally
recognized rating agency.
The Composite Index for Hartford Advisers Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned
above, and 90 Day U.S. Treasury Bills (10%).
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Alpine Life Insurance Company:
We have audited the accompanying statutory balance sheets of Alpine Life
Insurance Company (a Connecticut Corporation and wholly owned subsidiary of
Hartford Life and Accident Insurance Company) (the Company) as of December 31,
1998 and 1997, and the related statutory statements of operations, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of the Company as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with statutory accounting practices as described in Note 1.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 26, 1999
F-1
<PAGE>
ALPINE LIFE INSURANCE COMPANY
BALANCE SHEETS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------
1998 1997
------- ------
<S> <C> <C>
ASSETS
Bonds $ 8,265 $8,355
Cash and Short-Term Investments 1,791 1,309
------- ------
TOTAL CASH AND INVESTED ASSETS 10,056 9,664
Investment Income Due and Accrued 199 201
Other Assets 134 133
------- ------
TOTAL ASSETS $10,389 $9,998
------- ------
------- ------
LIABILITIES
Aggregate Reserves for Future Benefits - -
Payable to Affiliates 65 139
Federal Income Taxes Accrued 132 74
Other Liabilities 141 140
------- ------
TOTAL LIABILITIES 338 353
------- ------
CAPITAL AND SURPLUS
Common Stock 2,500 2,500
Gross Paid-In and Contributed Surplus 6,203 6,203
Unassigned Funds 1,348 942
------- ------
TOTAL CAPITAL AND SURPLUS 10,051 9,645
------- ------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $10,389 $9,998
------- ------
------- ------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-2
<PAGE>
ALPINE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
REVENUES
Net Investment Income $559 $528 $450
Amortization of Interest Maintenance Reserve (25) (50) (32)
Other Revenues - 2 -
---- ---- ----
TOTAL REVENUES 534 480 418
---- ---- ----
BENEFITS AND EXPENSES
General Insurance Expenses, Taxes and Fees $ 61 $137 $ 53
---- ---- ----
TOTAL BENEFITS AND EXPENSES 61 137 53
---- ---- ----
NET GAIN FROM OPERATIONS
BEFORE FEDERAL INCOME TAXES 473 343 365
Federal Income Tax Expense 92 135 101
---- ---- ----
NET GAIN FROM OPERATIONS 381 208 264
Net Realized Capital Gains, after tax - - 4
---- ---- ----
NET INCOME $381 $208 $268
---- ---- ----
---- ---- ----
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-3
<PAGE>
ALPINE LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
COMMON STOCK,
Beginning and End of Year $ 2,500 $2,500 $2,500
------- ------ ------
GROSS PAID-IN AND CONTRIBUTED SURPLUS,
Beginning and End of Year $ 6,203 $6,203 $6,203
------- ------ ------
UNASSIGNED FUNDS
Balance, Beginning of Year $ 942 $ 685 $ 373
Net Income 381 208 268
Change in Asset Valuation Reserve - - 5
Change in Non-Admitted Assets 25 49 39
------- ------ ------
Balance, End of Year $ 1,348 $ 942 $ 685
------- ------ ------
CAPITAL AND SURPLUS,
End of Year $10,051 $9,645 $9,388
------- ------ ------
------- ------ ------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-4
<PAGE>
ALPINE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
OPERATIONS
Investment Income $658 $558 $496
Amortization of Interest Maintenance Reserve (25) (50) (32)
Other Revenues - 2 (7)
------ ------ ------
Total Income 633 510 457
------ ------ ------
Benefits Received - (621) (1,639)
Federal Income Taxes Paid 34 84 282
General Insurance Expenses, Taxes and Fees 59 132 50
------ ------ ------
Total Benefits and Expenses 93 (405) (1,307)
------ ------ ------
NET CASH FROM OPERATIONS 540 915 1,764
------ ------ ------
PROCEEDS FROM INVESTMENTS
Bonds 150 1,345 2,830
------ ------ ------
NET INVESTMENT PROCEEDS 150 1,345 2,830
------ ------ ------
TOTAL PROCEEDS 690 2,260 4,594
------ ------ ------
COST OF INVESTMENTS ACQUIRED
BONDS 153 2,581 6,983
MISCELLANEOUS APPLICATIONS - - 500
------ ------ ------
TOTAL INVESTMENTS ACQUIRED 153 2,581 7,483
------ ------ ------
OTHER CASH APPLIED
Other 55 (63) 1,543
------ ------ ------
TOTAL OTHER CASH APPLIED 55 (63) 1,543
------ ------ ------
TOTAL APPLICATIONS 208 2,518 9,026
------ ------ ------
NET CHANGE IN CASH AND SHORT-TERM INVESTMENTS 482 (258) (4,432)
CASH AND SHORT-TERM INVESTMENTS, BEGINNING OF YEAR 1,309 1,567 5,999
------ ------ ------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $1,791 $1,309 $1,567
------ ------ ------
------ ------ ------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
F-5
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Alpine Life Insurance Company ("Alpine" or "the Company"), is a wholly
owned subsidiary of Hartford Life and Accident Insurance Company
("HLA"), which is an indirect subsidiary of Hartford Life, Inc. ("HLI"),
which is majority owned by The Hartford Financial Services Group, Inc.
("The Hartford"), formerly a wholly owned subsidiary of ITT Corporation
("ITT"). On February 10, 1997, HLI filed a registration statement, as
amended, with the Securities and Exchange Commission relating to the
initial public offering of HLI Class A Common Stock (the "Offering").
Pursuant to the Offering on May 22, 1997, HLI sold to the public 26
million shares, representing 18.6% of the equity ownership of HLI. On
December 19, 1995, ITT Corporation distributed all the outstanding
shares of The Hartford to ITT shareholders of record in an action known
herein as the "Distribution". As a result of the Distribution, The
Hartford became an independent, publicly traded company. Alpine is
licensed to sell life and annuity products in several states. Sales are
planned to commence in 1999. During 1998, Alpine re-domesticated from
the State of New Jersey to the State of Connecticut.
BASIS OF PRESENTATION
The accompanying Alpine statutory financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted
by the National Association of Insurance Commissioners ("NAIC") and the
State of Connecticut Department of Insurance for 1998 and the New Jersey
Department of Insurance for 1997 and 1996, respectively.
Current prescribed statutory accounting practices include accounting
publications of the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations and general administrative
rules. Permitted statutory accounting practices encompass accounting
practices approved by State Insurance Departments. The Company does not
follow any permitted statutory accounting practices that have a material
effect on statutory surplus, statutory net income or risk-based capital.
Final approval of the NAIC's proposed "Comprehensive Guide" or statutory
accounting principles was distributed in 1998. The requirements are
effective January 1, 2001, and are not expected to have a material
impact on statutory surplus of the Company.
The preparation of financial statements in conformity with statutory
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 reported period. Actual results could differ from those
estimates. The most significant estimates include those used in
determining the liability for aggregate reserves for future benefits and
the liability for premium and other deposit funds. Although some
variability is inherent in these estimates, management believes the
amounts provided are adequate.
Statutory accounting practices and generally accepted accounting
principles ("GAAP") differ in certain significant respects. These
differences principally involve:
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.) which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policy for GAAP purposes;
(2) recognition of premium revenues, which for statutory purposes are
generally recorded as collected or when due during the premium paying
period of the contract and which for GAAP purposes, for universal life
policies and investment products, generally, are only recorded for
policy charges for the cost of
F-7
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
insurance, policy administration and surrender charges assessed to policy
account balances. Also, for GAAP purposes, premiums for traditional
life insurance policies are recognized as revenues when they are due
from policyholders and the retrospective deposit method is used in
accounting for universal life and other types of contracts where the
payment pattern is irregular or surrender charges are a significant
source of profit. The prospective deposit method is used for GAAP
purposes where investment margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for
statutory purposes predominantly use interest rate and mortality
assumptions prescribed by the NAIC which may vary considerably from
interest and mortality assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return)
only for statutory purposes, rather than establishing additional assets
or liabilities for deferred Federal income taxes to recognize the tax
effect related to reporting revenues and expenses in different periods
for financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
negative Interest Maintenance Reserve, past due agents' balances and
furniture and equipment) from the balance sheet for statutory purposes
by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health
care benefits currently, or using a twenty year phase-in approach,
whereas GAAP liabilities are recorded upon adoption of the applicable
standard;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the
period the asset is held, into income over the remaining life to
maturity of the asset sold (Interest Maintenance Reserve); whereas on a
GAAP basis, no such formula reserve is required and realized gains and
losses are recognized in the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where
risk transfer has taken place; whereas on a GAAP basis, reserves are
reported gross of reinsurance with reserve credits presented as
recoverable assets, as well as, the accounting for retroactive
reinsurance which is immediately charged to surplus for statutory
accounting purposes whereas GAAP precludes immediate gain recognition
unless the ceding enterprise's liability to its policyholders is
extinguished;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP
requires that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions
with respect to the ultimate disposition of the security and its ability
to affect those intentions. The Company's bonds were classified on a
GAAP basis as "available-for-sale" and accordingly, those investments
and common stocks were reflected at fair value with the corresponding
impact included as a component of Stockholder's Equity designated as
"Net unrealized capital gains (losses) on securities net of tax". For
statutory reporting purposes, Change in Net Unrealized Capital Gains
(Losses) on Common Stocks and Other Invested Assets includes the change
in unrealized gains (losses) on common stock reported at fair value; and
F-8
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded
as a liability to the general account (and a contra liability on the
balance sheet of the general account), whereas GAAP liabilities are
valued at account value.
As of and for the years ended December 31, the significant differences
between statutory and GAAP basis net income and capital and surplus for
the Company are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
GAAP Net Income $ 281 $ 212 $ 188
Amortization of excess purchase price over book value
of net assets acquired 67 61 15
Deferred taxes 59 (21) -
Other, net (26) (44) 65
------- ------- -------
Statutory Net Income $ 381 $ 208 $ 268
------- ------- -------
------- ------- -------
GAAP Capital and Surplus $12,320 $11,970 $11,743
Excess purchase price over book value
of net assets acquired (2,211) (2,278) (2,339)
Deferred taxes 89 (7) (6)
Unrealized gains on bonds (141) (40) 56
Other, net (6) - (66)
------- ------- -------
Statutory Capital and Surplus $10,051 $ 9,645 $ 9,388
------- ------- -------
------- ------- -------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS
Aggregate reserves for payment of future life, health and annuity
benefits were computed in accordance with actuarial standards.
Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 4.5% to 10% and
using CARVM.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that are
deemed ineligible to be held at amortized cost by the NAIC Securities
Valuation Office ("SVO") are carried at the appropriate SVO published
value. When a permanent reduction in the value of publicly traded
securities occurs, the decrease is reported as a realized loss and the
carrying value is adjusted accordingly. Short-term investments consist
of money market funds and are stated at cost, which approximates fair
value. Common stocks are carried at fair value with the current year
change in the difference from cost reflected in surplus. Other invested
assets are generally recorded at fair value.
The Asset Valuation Reserve ("AVR") is designed to provide a
standardized reserving process for realized and unrealized losses due to
default and equity risks associated with invested assets. The reserve
increased slightly in both 1998 and 1997. Additionally, the Interest
Maintenance Reserve ("IMR") captures net realized capital gains and
losses, net of applicable income taxes, resulting from changes in
interest rates and amortizes these gains or losses into income over the
life of the mortgage loan or bond sold. The IMR balance as of December
31, 1998 and December 31, 1997 was $(10) and $(36), respectively, and is
reflected as a non-admitted asset in Unassigned Funds. Realized capital
gains and losses, net of taxes not included in IMR are reported in the
statutory basis statements of operations. Realized investment gains and
losses are determined on a specific identification basis.
F-9
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
2. INVESTMENTS:
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Interest income from bonds and short-term investments $ 561 $ 529 $ 522
Interest and dividends from other investments 3 1 (40)
------- ------- -------
Gross investment income 564 530 482
Investment expenses (5) (2) (32)
------- ------- -------
Net investment income $ 559 $ 528 $ 450
------- ------- -------
------- ------- -------
</TABLE>
(b) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Gross unrealized capital gains $ 142 $ 52 $ 17
Gross unrealized capital losses (1) (12) (73)
------- ------- -------
Net unrealized capital gains/(losses) 141 40 (56)
Balance at beginning of year 40 (56) 31
------- ------- -------
Change in net unrealized capital gains (losses) on
bonds and short-term investments $ 101 $ 96 $ (87)
------- ------- -------
------- ------- -------
</TABLE>
(c) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Bonds and short-term investments $ - $ (1) $ 11
------- ------- -------
Realized capital (losses) gains - (1) 11
Capital gains (benefit) tax - - -
------- ------- -------
Net realized capital gains (losses) - (1) 11
Amount transferred to IMR - (1) 7
------- ------- -------
Net realized capital gains $ - $ - $ 4
------- ------- -------
------- ------- -------
</TABLE>
(d) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance
sheet risk as of December 31, 1998.
(e) CONCENTRATION OF CREDIT RISK
The Company's investments consist entirely of U.S. government and
government agency investments. The Company is not exposed to any other
significant concentrations of credit risk as of December 31, 1998.
(f) BONDS AND SHORT-TERM INVESTMENTS BY CLASSIFICATION
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1998 COST GAINS LOSSES VALUE
- ---------------------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
-Guaranteed and sponsored $ 8,265 $ 142 $ (1) $ 8,406
Short-term investments 1,287 - - 1,287
Certificates of deposit 500 - - 500
-----------------------------------------------------------
Total bonds and short-term investments $ 10,052 $ 142 $ (1) $ 10,193
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>
F-10
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1998 COST GAINS LOSSES VALUE
- ---------------------------------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
-Guaranteed and sponsored $ 8,355 $ 52 $ (12) $ 8,395
Short-term investments 798 - - 798
Certificates of deposit 500 500
---------------------------------------------------------
Total bonds and short-term investments $ 9,653 $ 52 $ (12) $ 9,693
---------------------------------------------------------
---------------------------------------------------------
</TABLE>
(g) BONDS AND SHORT-TERM INVESTMENTS BY MATURITY
The amortized cost and estimated fair value of bonds and short-term
investments as of December 31, 1998 by estimated maturity year are shown
below. Expected maturities differ from contractual maturities due to call
or repayment provisions.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
MATURITY ----------- -----------
--------
<S> <C> <C>
One year or less $ 3,637 $ 3,688
Over one year through five years 6,415 6,505
----------- -----------
Total $ 10,052 $ 10,193
----------- -----------
----------- -----------
</TABLE>
Proceeds from sales and maturities of investments in bonds and
short-term investments during 1998, 1997 and 1996 were $11,904, $19,775
and $25,931, respectively, resulting in immaterial gross realized gains
and losses in 1998 and 1997, respectively and gross realized gains of
$11 in 1996, before transfers to IMR.
(h) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS
<TABLE>
<CAPTION>
1998 1997
---- ----
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Bonds and short-term
investments $ 10,052 $ 10,193 $ 9,653 $ 9,693
</TABLE>
The estimated fair value of bonds and short-term investments was
determined by the Company primarily using NAIC market values.
3. AGGREGATE RESERVES FOR FUTURE BENEFITS
The Company's existing life reserves consist of deferred fixed annuities
and supplementary contracts. The Company cedes 100% of its insurance to
Met Life Security Insurance Company of Louisiana in order to limit its
maximum loss. Such transfer does not relieve Alpine of its primary
liability.
F-11
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
There were no material reinsurance premiums assumed or ceded or reinsurance
recoverables from reinsurers outstanding as of, and for the years ended,
December 31, 1998 and 1997.
Reserves for Future Benefits as of December 31, were:
<TABLE>
<CAPTION>
1998 1997
--------- -----------
<S> <C> <C>
Annuities $ 29,059 $ 30,260
Supplemental contracts 1,355 388
--------- -----------
30,414 30,648
Reinsurance ceded (30,414) (30,648)
--------- -----------
Reserves for Future Benefits, net $ - $ -
--------- -----------
--------- -----------
</TABLE>
Analysis of Annuity Actuarial Reserves and Deposit Liabilities by
Withdrawal Characteristics as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
% OF
Subject to discretionary withdrawal: AMOUNT TOTAL
------------------------------------ --------- ------
<S> <C> <C>
At book value without adjustment (minimal or no charge or adjustment) $ 7,788 25.6%
Not subject to discretionary withdrawal 22,626 74.4%
--------- ------
30,414 100.0%
Reinsurance ceded (30,414)
---------
Total, net $ -
---------
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates, within The
Hartford, relate principally to tax settlements, rental and service
fees, capital contributions and payments of dividends.
5. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement
under which each member in the consolidated U.S. Federal income tax
return will make payments between them such that, with respect to any
period, the amount of taxes to be paid by the Company, subject to
certain adjustments, generally will be determined as though the Company
were filing separate Federal, state and local income tax returns.
As long as The Hartford continues to own at least 80% of the combined
voting power and 80% of the value of the outstanding capital stock of
HLI, the Company will be included for Federal income tax purposes in the
consolidated group of which The Hartford is the common parent. It is
the intention of The Hartford and its non-life subsidiaries to file a
single consolidated Federal income tax return. The life insurance
companies will file a separate consolidated Federal income tax return.
Federal income taxes paid by the Company were $34, $84 and $282 in 1998,
1997 and 1996, respectively. The effective tax rate was 20%, 39%
and 28% in 1998, 1997 and 1996, respectively.
F-12
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
The following schedule provides a reconciliation of the tax provision
at the U.S. Federal Statutory rate to Federal income tax expense (in
millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory rate $ 166 $ 120 $ 128
Investments and other (74) 15 (27)
----- ----- -----
Federal income tax expense $ 92 $ 135 $ 101
----- ----- -----
----- ----- -----
</TABLE>
6. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior
approval, by State of Connecticut insurance companies to shareholders is
generally restricted to the greater of 10% of surplus as of the
preceding December 31st or the net gain from operations for the previous
year. Dividends are paid as determined by the Board of Directors and
are not cumulative. No dividends were paid in 1998, 1997 and 1996. The
amount available for dividend in 1999 is $755.
7. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
HLI's employees are included in The Hartford's noncontributory defined
benefit pension plans. These plans provide pension benefits that are based
on years of service and the employee's compensation during the last ten
years of employment. HLI's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, as amended, and the maximum amount
that can be deducted for U.S. Federal income tax purposes. Generally,
pension costs are funded through the purchase of affiliated group pension
contracts. The cost to HLI was approximately $9,000 in 1998 and $7,000 in
both 1997 and 1996.
HLI also provides, through The Hartford, certain health care and life
insurance benefits for eligible retired employees. A substantial
portion of HLI's employees may become eligible for these benefits upon
retirement. HLI's contribution for health care benefits will depend on
the retiree's date of retirement and years of service. In addition, the
plan has a defined dollar cap which limits average company
contributions. HLI has prefunded a portion of the health care and life
insurance obligations through trust funds where such prefunding can be
accomplished on a tax effective basis. Postretirement health care and
life insurance benefits expense, allocated by The Hartford, was
immaterial to the results of operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year
2003. Increasing the health care trend rates by one percent per year
would have an immaterial impact on the accumulated postretirement
benefit obligation and the annual expense. To the extent that the
actual experience differs from the inherent assumptions, the effect will
be amortized over the average future service of covered employees.
8. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1998, the Company had no material contingent
liabilities, nor had the Company committed any surplus funds for any
contingent liabilities or arrangements. The Company is involved in
various legal actions which have arisen in the normal course of its
business. In the opinion of management, the ultimate liability with
respect to such lawsuits as well as other contingencies is not
considered to be material in relation to capital and surplus, operations
and liquidity of the Company.
F-13
<PAGE>
ALPINE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
Under insurance guaranty fund laws in each state, insurers licensed to
do business can be assessed up to prescribed limits for policy holder
losses incurred by insolvent companies. As Alpine does not currently
write business, guaranty fund assessments are immaterial. The amount of
any future assessments on Alpine under these laws cannot be reasonably
estimated. Most of the laws do provide, however, that an assessment may
be excused or deferred if it would threaten an insurer's own financial
strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the Company in certain states.
F-14
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) Resolution of the Board of Directors of Alpine Life Insurance
("Alpine") authorizing the establishment of the Separate
Account.
(2) Not applicable.
(3) (a) Principal Underwriter Agreement.
(3) (b) Form of Dealer Agreement.
(4) Form of Individual Flexible Premium Variable Annuity
Contract.(1)
(5) Form of Application.(1)
(6) (a) Certificate of Incorporation of Alpine.(1)
(6) (b) Bylaws of Alpine.(1)
(7) Not applicable.
(8) Fund Participation Agreement.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public
Accountants.
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
- --------------------
(1) Incorporated by reference to the initial filing of Registration Statement
No. 333-65507 filed on October 9, 1998.
<PAGE>
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME POSITION WITH ALPINE
- --------------------------------------------------------------------------------
<S> <C>
Gregory A. Boyko Senior Vice President and Director*
- --------------------------------------------------------------------------------
Mary Jane Fortin Chief Accounting Officer and Vice President
- --------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary, Director*
- --------------------------------------------------------------------------------
Thomas M. Marra Director*
- --------------------------------------------------------------------------------
Criag R. Raymond Senior Vice President and Chief Actuary
- --------------------------------------------------------------------------------
Charles F. Shabunia Vice President and Controller
- --------------------------------------------------------------------------------
Lowndes A. Smith President, Chief Executive Office and Director*
- --------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Chief Investment Officer
and Director*
- --------------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
Not Applicable
Item 28. Indemnification
Under Section 33-772 of the Connecticut General Statutes, unless
limited by its certificate of incorporation, the Registrant must
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party
because he is or was a director of the corporation against reasonable
expenses incurred by him in connection with the proceeding.
<PAGE>
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Registrant, and, with respect to any criminal
proceeding, had no reason to believe his conduct was unlawful.
Conn. Gen. Stat. 33-771(a). Additionally, pursuant to Conn. Gen.
Stat. 33-776, the Registrant may indemnify officers and employees
or agents for liability incurred and for any expenses to which they
becomes subject by reason of being or having been an employees or
officers of the Registrant. Connecticut law does not prescribe
standards for the indemnification of officers, employees and agents
and expressly states that their indemnification may be broader than
the right of indemnification granted to directors.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the Registrant
to indemnify only a director that was successful on the merits in a
suit, the Registrant's bylaws state:
"Section 7.01. INDEMNIFICATION OF DIRECTORS AND OFFICERS. To the
fullest extent permitted by applicable law now or hereafter in effect,
any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was at any time since the inception of
the Corporation a Director or officer of the Corporation, or such
person is or was a Director or officer of the Corporation and is or
was at any time since the inception of the Corporation serving another
corporation, partnership, joint venture, trust or other enterprise in
any capacity at the request of the Corporation shall be indemnified by
the Corporation against judgements, fines, amounts paid in settlement
and reasonable expenses (including attorney's fees) actually and
necessarily incurred in connection with or as a result of such action,
suit or proceeding. Indemnification under this Section shall continue
as to a person who has ceased to be a Director or officer of the
Corporation and shall inure to the benefit of the heirs, executors and
administrators of such person."
Additionally, the directors and officers of Alpine and Hartford
Securities Distribution Company, Inc. ("HSD") are covered under a
directors and officers liability insurance policy issued to The
Hartford Financial Services Group, Inc. and its subsidiaries. Such
policy will reimburse the Registrant for any payments that it shall
make to directors and officers pursuant to law and will, subject to
certain exclusions contained in the policy, further pay any other
costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in
his past or present capacity as such, and for which he may be liable,
except as to any liabilities arising from acts that are deemed to be
uninsurable.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, 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>
Item 29. Principal Underwriters
<TABLE>
<S> <C>
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable Account)
Hartford Life Insurance Company - Separate Account Two (Variable Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust Separate
Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
American Maturity Life Insurance Company - Separate Account AMLVA
</TABLE>
<PAGE>
(b) Directors and Officers of HSD
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
Lowndes A. Smith President and Chief Executive
Officer, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General
Counsel and Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of
each the above individuals is P.O. Box 2999, Hartford, CT
06104-2999.
Item 30. Location of Accounts and Records
All of the accounts, books, records or other documents required to be
kept by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder, are maintained by Alpine at 200 Hopmeadow Street,
Simsbury, Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
Item 32. Undertakings
(a) The Registrant hereby undertakes to 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 so
long as payments under the variable annuity Contracts may be
accepted.
(b) The Registrant hereby undertakes to 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 in the
Prospectus that the applicant can remove to send for a
Statement of Additional Information.
(c) The Registrant hereby 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.
<PAGE>
(d) Alpine hereby represents that the aggregate fees and charges
under the Contract are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by Alpine.
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Counsel of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant has
complied with conditions one through four of the no-action letter.
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Hartford, and State of Connecticut on this 12th day
of April, 1999.
SEPARATE ACCOUNT ONE
(Registrant)
By: Lynda Godkin *By: /s/ Thomas S. Clark
------------------------------- ------------------------------------
Lynda Godkin, Senior Vice Thomas S. Clark
President, General Counsel and Attorney-in-Fact
Corporate Secretary*
ALPINE LIFE INSURANCE COMPANY
(Depositor)
By: Lynda Godkin
-------------------------------
Lynda Godkin, Senior Vice
President, General Counsel and
Corporate Secretary*
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.
Gregory A. Boyko, Senior Vice President & Director*
Lynda Godkin, Senior Vice President,
General Counsel & Corporate Secretary, Director*
Thomas M. Marra, Director* *By: /s/ Thomas S. Clark
Lowndes A. Smith, President, CEO & Director --------------------------
David M. Znamierowski, Director* Thomas S. Clark
Attorney-In-Fact
Dated: April 12, 1999
<PAGE>
EXHIBIT INDEX
(b)(1) Resolution of the Board of Directors of Alpine Life Insurance Company
("Alpine ") authorizing the establishment of the Separate Account.
(3) (a) Principal Underwriter Agreement.
(3) (b) Form of Dealer Agreement.
(8) Form of Fund Participation Agreement.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
<PAGE>
ALPINE LIFE INSURANCE COMPANY
CONSENT OF DIRECTORS
The undersigned, being all of the Directors of Alpine Life Insurance Company
(the "Company"), hereby consent to and ratify the following action, such
action to have the same force and effect as if taken at a meeting of the
Board of Directors duly called and held for such purpose.
ESTABLISHMENT OF SEPARATE ACCOUNT ONE - VARIABLE ANNUITY
- --------------------------------------------------------
WHEREAS, Section 38a-433 of Connecticut General Statutes permits a domestic
life insurance company to establish one or more separate accounts; and
WHEREAS, the Company desires to establish a separate account pursuant to the
aforementioned Section 38a-433 in connection with the offer and sale of
certain flexible premium variable annuity insurance contracts (the
"Contracts").
NOW, THEREFORE, BE IT
RESOLVED, that the Company hereby establishes a separate account, to be
initially designated "Separate Account One" (hereinafter, the "Separate
Account"), to which the Company will allocate such amounts as may be required
in connection with the Contracts in accordance with Section 38a-433 and such
other law and regulations as may be applicable; and be it further
RESOLVED, that consistent with the provisions of Section 38a-433, the income,
gains and losses, realized or unrealized, from assets allocated to the
Separate Account shall be credited to or charged against the Separate
Account, without regard to income, gains or losses of the Company; and be it
further
RESOLVED, that each Contract issued by the Company shall provide, in effect,
that the portion of the assets of the Separate Account equal to the reserves
and other Contract liabilities with respect to such account shall not be
chargeable with liabilities arising out of any other business the Company may
conduct; and be it further
RESOLVED, that the appropriate officers of the Company, and each of them,
with full power to act without the others, be and hereby are severally
authorized and directed to take all actions that, in their sole discretion,
may be necessary or desirable from time to time (i) to establish and
designate one or more investment divisions of the Separate Account, (ii) to
redesignate or eliminate any such investment division, (iii) to change or
modify the designation of the Separate Account to any other desirable and
appropriate designation, (iv) to establish, amend, modify or change in
accordance with applicable law and regulation the terms and conditions
pursuant to which interests in the Separate Account will be sold to contract
owners, (v) to establish, amend, modify or change such procedures, standards
and other arrangements as may be necessary or appropriate for the operation
of the Separate Account, and (vi) with advice of counsel, to comply with the
requirements of such laws and regulations as may be applicable to the
establishment and operation of the Separate Account; and be it further
RESOLVED, that the appropriate officers of the Company, and each of them,
with full power to act without the others, be and hereby are severally
authorized and directed to execute and deliver such papers,
1
<PAGE>
documents and instruments and to take such further action as they may deem
necessary or desirable to carry out the purposes and intent of the foregoing
resolutions.
/s/ Gregory A Boyko /s/ Lowndes A. Smith
- -------------------------------------- ------------------------------------
Gregory A. Boyko Lowndes A. Smith
/s/ Lynda Godkin /s/ David M. Znamierowski
- -------------------------------------- ------------------------------------
Lynda Godkin David M. Znamierowski
/s/ Thomas M. Marra
- --------------------------------------
Thomas M. Marra
Dated as of: September 1, 1998
2
<PAGE>
PRINCIPAL UNDERWRITER AGREEMENT
-------------------------------
THIS AGREEMENT, dated as of December 15, 1998, made by and between ALPINE
LIFE INSURANCE COMPANY ("ALPINE" or the "Sponsor"), a corporation organized
and existing under the laws of the State of Connecticut, and HARTFORD
SECURITIES DISTRIBUTION COMPANY, INC. ("HSD"), a corporation organized and
existing under the laws of the State of Connecticut,
WITNESSETH:
WHEREAS, the Board of Directors of ALPINE has made provision for the
establishment of a separate account within ALPINE in accordance with the laws
of the State of Connecticut, which separate account was organized and is
established and registered as a unit investment trust type investment company
with the Securities and Exchange Commission under the Investment Company Act
of 1940 ("1940 Act"), as amended, and which is designated Separate Account
One of ALPINE LIFE INSURANCE COMPANY (referred to as the "UIT"); and
WHEREAS, HSD offers to the public a certain Flexible Premium Variable Annuity
Contract (the "Contract") issued by ALPINE with respect to the UIT units of
interest thereunder which are registered under the Securities Act of 1933
("1933 Act"), as amended; and
WHEREAS, HSD is agreeing to act as distributor in connection with offers and
sales of the Contract under the terms and conditions set forth in this
Principal Underwriter Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, ALPINE
and HSD agree as follows:
I.
HSD'S DUTIES
------------
1. HSD, will use its best efforts to effect offers and sales of the Contract
through registered representatives that are members of the National
Association of Securities Dealers, Inc. and who are duly licensed as
insurance agents of ALPINE. HSD is responsible for compliance with all
applicable requirements of the 1933 Act, as amended, the Securities
Exchange Act of 1934 ("1934 Act"), as amended, and the 1940 Act, as
amended, and the rules and regulations relating to the sales and
distribution of the Contract, the need for which arises out of its duties
as principal underwriter of said Contract and relating to the creation of
the UIT.
2. HSD agrees that it will not use any prospectus, sales literature, or any
other printed matter or material or offer for sale or sell the Contract if
any of the foregoing in any way
1
<PAGE>
represent the duties, obligations, or liabilities of ALPINE as being
greater than, or different from, such duties, obligations and
liabilities as are set forth in this Agreement, as it may be amended
from time to time.
3. HSD agrees that it will utilize the then currently effective prospectus
relating to the UIT's Contracts in connection with its selling efforts.
As to the other types of sales materials, HSD agrees that it will use only
sales materials which conform to the requirements of federal and state
insurance laws and regulations and which have been filed, where necessary,
with the appropriate regulatory authorities.
4. HSD agrees that it or its duly designated agent shall maintain records of
the name and address of, and the securities issued by the UIT and held by,
every holder of any security issued pursuant to this Agreement, as required
by the Section 26(a)(4) of the 1940 Act, as amended.
5. HSD's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of
their shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part of
HSD, HSD shall not be subject to liability under a Contract for any act or
omission in the course, or connected with, rendering services hereunder.
II.
1. The UIT reserves the right at any time to suspend or limit the public
offering of the Contracts upon 30 days' written notice to HSD, except where
the notice period may be shortened because of legal action taken by any
regulatory agency.
2. The UIT agrees to advice HSD immediately:
(a) Of any request by the Securities and Exchange Commission for amendment
of its 1933 Act registration statement or for additional information;
(b) Of the issuance by the Securities and Exchange Commission of any stop
order suspending the effectiveness of the 1933 Act registration
statement relating to units of interest issued with respect to the UIT
or of the initiation of any proceedings for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said 1933 Act registration statement or which
requires a change therein in order to make any statement therein not
misleading.
2
<PAGE>
ALPINE will furnish to HSD such information with respect to the UIT and the
Contracts in such form and signed by such of its officers and directors and
HSD may reasonably request and will warrant that the statements therein
contained when so signed will be true and correct. ALPINE will also
furnish, from time to time, such additional information regarding the UIT's
financial condition as HSD may reasonably request.
III.
COMPENSATION
------------
ALPINE is obligated to reimburse HSD for all operating expenses associated
with the services provided on behalf of the UIT under this Principal
Underwriter Agreement.
IV.
RESIGNATION AND REMOVAL OF PRINCIPAL UNDERWRITER
------------------------------------------------
HSD may resign as a Principal Underwriter hereunder, upon 120 days' prior
written notice to ALPINE. However, such resignation shall not become
effective until either the UIT has been completely liquidated and the
proceeds of the liquidation distributed through ALPINE to the Contract owners
or a successor Principal Underwriter has been designated and has accepted its
duties.
V.
MISCELLANEOUS
-------------
1. This Agreement may not be assigned by any of the parties hereto without
the written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
(a) If to ALPINE - Alpine Life Insurance Company P.O. Box 2999,
Hartford, Connecticut 06104.
(b) If to HSD - Hartford Securities Distribution Company, Inc.,
P.O. Box 2999, Hartford, Connecticut 06104.
or to such other address as HSD or ALPINE shall designate by written
notice to the other.
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3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one
instrument, and an executed copy of this Agreement and all amendments
hereto shall be kept on file by the Sponsor and shall be open to
inspection any time during the business hours of the Sponsor.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the
laws of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement
and consent of the parties hereto.
7. (a) This Agreement shall become effective December 15, 1998 and shall
continue in effect for a period of two years from that date and,
unless sooner terminated in accordance with 7(b) below, shall
continue in effect from year to year thereafter provided that its
continuance is specifically approved at least annually by a majority
of the members of the Board of Directors of ALPINE.
(b) This Agreement (1) may be terminated at any time, without the
payment of any penalty, either by a vote of a majority of the
members of the Board of Directors of ALPINE on 60 days' prior
written notice to HSD; (2) shall immediately terminate in the event
of its assignment and (3) may be terminated by HSD on 60 days'
prior written notice to ALPINE, but such termination will not be
effective until ALPINE shall have an agreement with one or more
persons to act as successor principal underwriter of the Contracts.
HSD hereby agrees that it will continue to act as successor
principal underwriter until its successor or successors assume such
undertaking.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ALPINE LIFE INSURANCE COMPANY
BY: /s/ Craig R. Raymond
----------------------------------
Craig R. Raymond
Senior Vice President and
Chief Actuary
HARTFORD SECURITIES DISTRIBUTION
COMPANY, INC.
BY: /s/ George Jay
----------------------------------
George Jay
Controller
(SEAL)
Attest:
/s/ Jeanette Toce
- -----------------------------------
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Exhibit 3(b)
BROKER-DEALER SALES AND
SUPERVISION AGREEMENT
This Broker-Dealer Sales and Supervision Agreement ("Agreement") is made by and
between [DISTRIBUTORS] ("Distributors"), each a broker-dealer registered with
the Securities and Exchange Commission ("SEC") under the Securities and Exchange
Act of 1934 ("1934 Act") and a member of the National Association of Securities
Dealers, Inc. ("NASD"), [INSURANCE COMPANIES] (referred to collectively as
"Companies"), and ___________________________ [BROKER-DEALER], an independent
broker-dealer registered with the SEC under the 1934 Act and a member of the
NASD ("Broker-Dealer"), or a bank as defined by Section 3(a)(6) of the 1934 Act
and Article I(b) of the NASD By-Laws, and any and all undersigned insurance
agency affiliates ("Affiliates") of Broker-Dealer. Distributors and Companies
are sometimes collectively referred to as "Hartford Life".
WHEREAS, Companies offer certain variable life insurance policies and variable
and modified guaranteed annuity contracts which are deemed to be securities
under the Securities Act of 1933 (the "Registered Products") and other
nonregistered life policies and annuity contracts ("Nonregistered Products, and
with the "Registered Products, collectively the "Products"); and
WHEREAS, Companies wish to appoint the Broker-Dealer and Affiliates as agents of
the Companies for the solicitation and procurement of applications for those
specific Products listed on the lines of business page(s) hereto, as the same
may be amended from time to time; and
WHEREAS, Distributors are the principal underwriters of the Products; and
WHEREAS, Distributors anticipate having representatives who are associated with
Broker-Dealer, who are NASD registered and are duly licensed under applicable
state insurance law and who are, where required, appointed as insurance agents
of Companies to solicit and sell the Registered and Nonregistered Products
("Registered Representatives"); and
WHEREAS, Distributors and the Companies acknowledge that Broker-Dealer will
provide certain supervisory and administrative services to Registered
Representatives who are associated with the Broker-Dealer in connection with the
solicitation, service and sale of the Registered and Nonregistered Products; and
WHEREAS, Broker-Dealer agrees to provide the aforementioned supervisory and
administrative services to its Registered Representatives who have been
appointed by the Companies to sell the Registered and Nonregistered Products.
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree to the following:
1. APPOINTMENT OF THE BROKER-DEALER
Companies hereby appoint, effective upon compliance with individual state
requirements, Broker-Dealer and Affiliates, if any, as an agent of the
Companies for the solicitation and procurement of applications for the
Products offered by the Companies, as outlined in the lines of business
page(s) attached herein, in all states in which the Companies are
authorized to do business and in which Broker-Dealer or any Affiliates
are properly insurance licensed. Broker-Dealer shall
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supervise Registered Representatives in the solicitation, servicing and
sale of the Products in accordance with all applicable securities laws.
The Companies hereby authorize Broker-Dealer under applicable state
insurance laws to supervise Registered Representatives in connection with
the solicitation, servicing and sale of the Companies Registered and
Nonregistered Products.
2. AUTHORITY OF THE BROKER-DEALER
Broker-Dealer has the authority to represent Distributors and Companies
only to the extent expressly granted in this Agreement. Broker-Dealer
and any associated Registered Representatives shall not hold themselves
out to be employees of Companies or Distributors in any dealings with the
public. Broker-Dealer and any Registered Representatives shall be
independent contractors as to Distributors or Companies. Nothing
contained herein is intended to create a relationship of employer and
employee between Broker-Dealer and Distributors or Companies or between
Registered Representatives and Distributors or Companies.
3. BROKER-DEALER REPRESENTATION
Broker-Dealer represents that it is either:_____ a registered
broker-dealer under the 1934 Act, a member in good standing of the NASD,
and a registered broker-dealer under applicable state law to the extent
necessary to perform the duties described in this Agreement or _____ a
bank as defined by Section 3(a)(6) of the 1934 Act. Broker-Dealer
represents that its Registered Representatives, who will be soliciting
applications for the Registered Products, will be duly registered
representatives associated with Broker-Dealer and that they will be
representatives in good standing with accreditation as required by the
NASD to sell the Registered Products. Broker-Dealer agrees to abide by
all rules and regulations of the NASD, including its Conduct Rules, and
to comply with all applicable state and federal laws and the rules and
regulations of authorized regulatory agencies affecting the sale of the
Products by Broker-Dealer or any of its associated Registered
Representatives.
4. BROKER-DEALER OBLIGATIONS
4.1 TRAINING AND SUPERVISION
Broker-Dealer has full responsibility for the training and
supervision of all Registered Representatives and any other
persons associated with Broker-Dealer and any other persons who
are engaged directly or indirectly in the offer or sale of the
Products. Broker-Dealer shall, during the term of this Agreement,
establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its Registered
Representatives including all applicable continuing education
requirements. Companies and Distributors reserve the right to
monitor the Broker-Dealer's Registered Representatives as to sales
supervision and continuing education.
If a Registered Representative ceases to be a Registered
Representative of Broker-Dealer, is disqualified for continued
NASD registration or has its registration suspended by the NASD or
otherwise fails to meet the rules and standards imposed by
Broker-Dealer, Broker-Dealer shall immediately notify such
Registered Representative that he or she is no longer authorized
to solicit applications for the sale of Products on behalf of the
Companies. Broker-Dealer shall immediately notify the Companies
of such termination or suspension or failure to abide by he rules
and standards of Broker-Dealer.
4.2 SOLICITATION
Broker-Dealer agrees to supervise its Registered Representatives
so that they will only solicit applications in states where the
Products are approved for sale and where the Registered
Representatives are properly licensed and appointed in accordance
with applicable state laws
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and Companies' rules, procedures and ethical standards then in
effect. Companies shall notify Broker-Dealer of the availability
of the Products in each state.
4.3 IMPROPER REPLACEMENT
Broker-Dealer and its Registered Representatives shall not make
any misrepresentation or in complete comparison of products for
the purpose of inducing a current or potential contract owner or
policyholder to lapse, forfeit or surrender his or her current
insurance contract in favor of purchasing Companies' or other
insurer's product. Communication with clients shall include
sufficient information regarding the appropriateness of the
transaction to allow the client to make an informed decision.
4.4 PROSPECTUS DELIVERY AND SUITABILITY REQUIREMENTS
Broker-Dealer shall ensure that its Registered Representatives
comply with the prospectus delivery requirements under the
Securities Act of 1933. In addition, Broker-Dealer shall ensure
that its Registered Representatives shall not make recommendations
to an applicant to purchase a Product in the absence of reasonable
grounds to believe that the purchase is suitable for such
applicant, as required by applicable state insurance laws, the
suitability requirements of the 1934 Act and the NASD Conduct
Rules. Broker-Dealer shall ensure that each application obtained
by its Registered Representatives shall bear evidence of approval
by one of its principals indicating that the application has been
reviewed for suitability.
4.5 PROMOTIONAL MATERIAL
Broker-Dealer and its Registered Representatives are not
authorized to provide any information or make any representation
in connection with this Agreement or the solicitation of the
Products other than those contained in the prospectus or in other
promotional material produced or authorized by Companies and
Distributors.
Broker-Dealer agrees that if it develops any promotional material
for sales, training, explanatory or other purposes in connection
with the solicitation of applications for Products, including
generic advertising, illustrations and/or training materials which
may be used in connection with the sale of Products, it will
obtain the prior written approval of Companies, such approval not
to be unreasonably withheld. Broker-Dealer agrees that it has
full responsibility for any training or other promotional material
it distributes to sales personnel unless the prior written
approval of Companies has been obtained.
4.6 RECORD KEEPING
Broker-Dealer is responsible for maintaining the records of its
Registered Representatives. Broker-Dealer shall maintain such
other records as are required of it by applicable laws and
regulations. The books, accounts and records maintained by
Broker-Dealer that relate to the sale of the Products, or dealings
with the Companies or Distributors shall be maintained so as to
clearly and accurately disclose the nature and details of each
transaction.
Broker-Dealer acknowledges that all the records maintained by
Broker-Dealer relating to the solicitation, service or sale of the
Products subject to this Agreement, including but not limited to
applications, authorization cards, complaint files, supervisory
and inspection procedures and suitability reviews, shall be
available to Companies and Distributors upon request during normal
business hours. Companies and Distributors may retain copies of
any such records which Companies and Distributors, in their
discretion, deem necessary or desirable to keep.
4.7 REFUND OF COMPENSATION
Broker-Dealer agrees to repay Companies the total amount of any
compensation which may have been paid to it within thirty (30)
business days of notice of the request for such refund should
Companies for any reason return any premium on a Product which was
solicited by a Registered Representative of Broker-Dealer.
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4.8 PREMIUM COLLECTION
Broker-Dealer and Registered Representatives only have the
authority to collect initial premiums except as specifically set
forth in the applicable commission schedule. Unless previously
authorized by Distributors, neither Broker-Dealer nor any of its
Registered Representatives shall have any right to withhold or
deduct any part of any premium it shall receive for purposes of
payment of commission or otherwise.
5. COMPANIES' AND/OR DISTRIBUTORS' OBLIGATIONS
5.1 PROSPECTUS/PROMOTIONAL MATERIAL
Companies will provide Broker-Dealer with reasonable quantities of
the currently effective prospectus for the Registered Products and
appropriate sales promotional material which has been filed with
the NASD, approved by Companies and filed as applicable with state
insurance departments.
5.2 COMPENSATION
Companies will pay Broker-Dealer as full compensation for all
services rendered by Broker-Dealer under this Agreement,
commissions and/or service fees in the amounts, in the manner and
for the period of time as set forth in the Commission Schedules
attached to this Agreement or subsequently made a part hereof, and
which are in effect at the time such Products are sold. The
manner of commission payments (I.E. including without limitation
fronted or trail) is not subject to change after the effective
date of a contract for which the compensation is payable.
Companies may change the Commission Schedules attached to this
Agreement at any time. Such change shall become effective only
when Distributors or Companies provide the Broker-Dealer with
written notice of the change. No such change shall affect
first-year commissions on any contracts issued as a result of
applications received by Companies at Companies' Home Office prior
to the effective date of such change.
Distributors agree to identify to Broker-Dealer, for each such
payment, the name of the Registered Representative of
Broker-Dealer who solicited each contract covered by the payment.
Distributors will not compensate Broker-Dealer for any Product
which is tendered for redemption after acceptance of the
application. Any chargebacks will be assessed against the
Broker-Dealer of record at the time of the redemption.
Distributors will only compensate Broker-Dealer or Affiliates, as
outlined below, for those applications accepted by Companies, and
only after receipt of the required premium by Companies at
Companies' Home Office or at such other location as Companies may
designate from time to time for its various lines of business, and
compliance by Broker-Dealer with any outstanding contract and
prospectus delivery requirements.
In the event that this Agreement terminates due to fraudulent
activities or a material breach of this Agreement by the
Broker-Dealer, Distributors will only pay to Broker-Dealer or
Affiliates commissions or other compensation earned prior to
discovery of events requiring termination. No further commissions
or other compensation shall thereafter be payable.
5.3 COMPENSATION PAYABLE TO AFFILIATES
If Broker-Dealer is unable to comply with state licensing
requirements because of a legal impediment which prohibits a
non-domiciliary corporation from becoming a licensed insurance
agency or prohibits non-resident ownership of a licensed insurance
agency, Distributors agree to pay compensation to Broker-Dealer's
contractually affiliated insurance
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agency, a wholly-owned agency affiliate of Broker-Dealer, or a
Registered Representative or principal of Broker-Dealer who is
properly state licensed and/or appointed. As appropriate, any
reference in this Agreement to Broker-Dealer shall apply equally
to such Affiliate. Distributors agree to pay compensation to an
Affiliate subject to Affiliate's agreement to comply with the
requirements of Exhibit A attached hereto. All other obligations
of Broker-Dealer continue to apply.
5.4 APPOINTMENT OF AGENT/REGISTERED REPRESENTATIVES
Companies, subject to internal standards for appointment of
agents/Registered Representatives, shall appoint all
agents/Registered Representatives designated by Broker-Dealer
prior to any solicitation of Products, unless specifically allowed
by state law. Such appointments shall be at the Companies
expense. The Companies shall not terminate any designated
agent/Registered Representative for non-production without prior
written notice to Broker-Dealer.
6. TERMINATION
6.1 This Agreement may be terminated by Distributors or Broker-Dealer
by giving sixty (60) days' notice in writing to the other parties.
6.2 Such notice of termination shall be sent by registered mail to the
last known address of Broker-Dealer appearing on Companies'
records, or in the event of termination by Broker-Dealer, to the
Home Office, Hartford Life, P.O. Box 5085, Hartford, Connecticut
06104-5085.
6.3 Such notice shall be an effective notice of termination of this
Agreement as of the time the notice is deposited in the United
States mail or the time of actual receipt of such notice if
delivered by means other than mail.
6.4 This Agreement shall automatically terminate without notice upon
the occurrence of any of the events set forth below:
6.4.1 Upon the bankruptcy or dissolution of Broker-Dealer.
6.4.2 When and if Broker-Dealer commits fraud or gross negligence
in the performance of any duties imposed upon Broker-Dealer
by this Agreement or wrongfully withholds or
misappropriates, for Broker-Dealer's own use, funds of
Companies, its policyholders or applicants.
6.4.3 When and if Broker-Dealer materially breaches this
Agreement or materially violates any applicable state or
federal law and/or administrative regulation in a
jurisdiction where Broker-Dealer transacts business.
6.4.4 When and if Broker-Dealer fails to obtain renewal of a
necessary license in any jurisdiction, but only as to that
jurisdiction and only until Broker-Dealer renews its
license in such jurisdiction.
6.5 The parties agree that on termination of this Agreement, any
outstanding indebtedness to Companies shall become immediately due
and payable.
7. GENERAL PROVISIONS
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7.1 COMPLAINTS AND INVESTIGATIONS
Broker-Dealer shall cooperate with Companies in the investigation
and settlement of all complaints or claims against Broker-Dealer
and/or Companies relating to the solicitation or sale of the
Products under this Agreement. Broker-Dealer, Distributors and
Companies each shall promptly forward to the others any complaint,
notice of claim or other relevant information which may come into
its possession. Broker-Dealer, Distributors and Companies agree
to cooperate fully in any investigation or proceeding in order to
attempt to achieve a prompt and equitable resolution to all
complaints or claims and to ensure that Broker-Dealer's,
Distributors' and Companies' procedures with respect to related
solicitation or servicing are consistent with any applicable law
or regulation.
In the event any legal process or notice is served on
Broker-Dealer in a suit or proceeding against Distributors or
Companies, Broker-Dealer shall forward forthwith such process or
notice to Hartford Life at its Home Office in Hartford,
Connecticut, by registered mail.
7.2 WAIVER
The failure of Distributors or Companies to enforce any provisions
of this Agreement shall not constitute a waiver of any such
provision. The past waiver of a provision by Distributors or
Companies shall not constitute a course of conduct or a waiver in
the future of that same provision.
7.3 INDEMNIFICATION
7.3.1 INDEMNITY DEFINITIONS. The following definitions shall
apply for purposes of this Article VII (c):
"Claim" means any civil, administrative and/or criminal
action, claim, suit, and/or legal proceeding of any kind
that is brought against an Indemnitee by a third party (the
"Claimant") unaffiliated with such Indemnitee.
"Costs" means any damages, settlements, judgments, losses,
expenses interest, penalties, reasonable legal fees and
disbursements (including without limitation fees and costs
for investigators, expert witnesses and other litigation
advisors) and other costs incurred by an Indemnitee to
investigate, defend or settle a Claim, except that no
settlement payments shall be included in Costs unless the
applicable Indemnitor has given its prior express written
consent to the settlement, which consent shall not be
unreasonably withheld. Costs shall not include any
expenses for any investigation or defense of a Claim
incurred by Indemnitee after the date on which Indemnitor
gives notice of its election to assume the defense of such
Claim.
7.3.2 PARTIES LIABILITY.
(i) Broker-Dealer shall indemnify and hold Distributors and
Companies, and each of their respective directors,
officers, and employees, harmless from any Costs sustained
by Companies and/or the Distributors (including reasonable
attorneys' fees) on account of any claim, arising out of,
based upon, or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of Broker-Dealer or any Affiliate contained in
this Agreement; (b) a violation of state and/or federal
laws, regulations or rules, or the rules and regulations of
any applicable self-regulatory organizations by
Broker-Dealer or any Affiliate; (c) negligent, fraudulent,
illegal or wrongful action or inaction by Broker-Dealer or
any Affiliate or by persons employed or appointed by
Broker-Dealer. In any of the foregoing cases Broker-Dealer
or any Affiliate shall be an "Indemnitor" as such term is
used in this Agreement and each of the Distributors and the
Companies, and each of their directors, officers and
employees, as applicable, shall be an "Indemnitee" as such
term is used in this Agreement.
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(ii) Each Affiliate shall indemnify and hold Distributors
and Companies, and each of their respective directors,
officers, and employees, harmless from any Costs sustained
by Companies or Distributors (including reasonable
attorneys' fees) on account of any claim, arising out of,
based upon, or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of the Affiliate contained in this Agreement;
(b) a violation of state and/or federal laws, regulations
or rules, or the rules and regulations of any applicable
self-regulatory organizations by Affiliate; (c) negligent,
fraudulent, illegal or wrongful action or inaction by the
Affiliate or by persons employed or appointed by the
Affiliate. In any of the foregoing cases the Affiliates
shall be an "indemnitor" as such term is used in this
Agreement and each of the Distributors and the Companies,
and each of their directors, officers and employees, as
applicable, shall be an "indemnitee" as such term is used
in this Agreement.
(iii) Distributors shall indemnify and hold Broker-Dealer,
and its directors, officers, and employees, harmless from
any Costs sustained by Broker-Dealer (including reasonable
attorneys' fees) on account of, arising out of, based upon,
or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of Distributors contained in this Agreement; (b)
a violation of state and/or federal laws, regulations or
rules, or the rules and regulations of any applicable
self-regulatory organizations by Distributors; (c)
negligent, fraudulent, illegal or wrongful action or
inaction by Distributors or by persons employed or
appointed by Distributors other than Broker-Dealer or its
employees or appointees. In any of the foregoing cases
Distributors shall be an "Indemnitor" as such term is used
in this Agreement and Broker-Dealer, and each of its
directors, officers and employees, as applicable, shall be
an "Indemnitee" as such term is used in this Agreement.
(iv) Companies shall indemnify and hold Broker-Dealer, and
its directors, officers, and employees, harmless from any
Costs sustained by Broker-Dealer (including reasonable
attorneys' fees) on account of, arising out of any claim,
based upon, or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of Companies contained in this Agreement; (b) a
violation of state and/or federal securities or insurance
laws, regulations or rules, or the rules and regulations of
any applicable self-regulatory organizations by
Companies(c) negligent, fraudulent, illegal or wrongful
action or inaction by Companies or by persons employed or
appointed by Companies other than Broker-Dealer or its
employees or appointees. In any of the foregoing cases
Companies shall be an "Indemnitor" as such term is used in
this Agreement and Broker-Dealer, and each of its
directors, officers and employees, as applicable, shall be
an "Indemnitee" as such term is used in this Agreement.
7.3.3 INDEMNIFICATION CLAIM NOTICE AND CASE MANAGEMENT.
Indemnitor shall not be liable under this indemnification
provision with respect to any Claim made against an Indemnitee
unless that Indemnitee shall have notified the Indemnitor in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the Claim shall
have been served upon that Indemnitee (or after the Indemnitee
shall have received notice of such service on any designated
agent). At any time after such notice, any Indemnitor may deliver
to the Indemnitee its written acknowledgment that Indemnitee is
entitled to indemnification under this Article VII (c) for all
Costs associated with the Claim. The Indemnitor shall thereafter
be entitled to assume the defense of the Claim and shall bear all
expenses associated therewith, including without limitation,
payment on a current basis of all previous Costs incurred by the
Indemnitee in relation to the Claim from the date the Claim was
brought. After notice from any Indemnitor to the Indemnitee of an
election to assume the defense of any Claim, the Indemnitee shall
not be liable to the Indemnitors for any Costs related to the
Claim. Until such time as Indemnitee receives notice of an
Indemnitor's election to assume the defense of any Claim,
Indemnitee may defend itself against the Claim and may
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hire counsel and other experts of its choice and Indemnitors,
jointly and severally, shall be liable for payment of counsel and
other expert fees on a current basis as the same are billed.
7.3.4 COOPERATION AND UPDATES. To the extent that an Indemnitee
makes a claim for indemnification against an Indemnitor,
Indemnitee and Indemnitor shall each give the other reasonable
access during normal business hours to its books, records and
employees and those books, records and employees within its
control in connection with the Claim for which indemnification is
sought hereunder and shall otherwise cooperate with one another in
the defense of any such Claim. Regardless of which party defends
a particular Claim, the defending party shall give the other
parties written notice of any significant development in the case
as soon as practicable, but in any event within five (5) business
days after such development. In no event shall either Indemnitor
or Indemnitee be required to divulge any privileged information.
7.3.5 SETTLEMENT. If an Indemnitee is defending a Claim and: (1)
a settlement proposal is made by the Claimant, or (2) the
Indemnitee desires to present a settlement proposal to the
Claimant, then the Indemnitee promptly shall notify the
Indemnitors of such settlement proposal together with its
counsel's recommendation and shall request the consent of
Indemnitor(s). Indemnitee, in making such request, shall make
available complete access, during normal business hours, to any
and all discovery up to the date of such request. If the
Indemnitee desires to enter into the settlement and less than all
of the Indemnitors consent within five (5) business days (unless
such period is extended, in writing, by mutual agreement of the
parties hereto), then Indemnitors, from the time they fail to
consent forward, shall defend the Claim and shall further
indemnify the Indemnitees for all Costs associated with the Claim
which are in excess of the proposed settlement amount even if the
same were not originally covered under this Article VII. If an
Indemnitor is defending a Claim and a settlement requires an
admission of liability by Indemnitee or would require Indemnitee
to either take action (other than purely ministerial action) or
refrain from taking action (due to an injunction or otherwise),
Indemnitor may agree to such settlement only after obtaining the
express, written consent of Indemnitee.
7.3.6 INDEMNIFICATION DISPUTES. In the event that there is a
dispute between an Indemnitee and an Indemnitor over whether the
Indemnitor is liable for a Claim, then:
(i) Indemnitee shall defend the Claim in accordance with
the provisions of Article VII(c)(3) hereof in the same
manner and under the same terms as though there were no
dispute and Indemnitor had failed to elect to defend the
Claim itself and Indemnitee shall have the right to settle
such Claim pursuant to Article VII(c)(5) hereof;
(ii) In addition, Indemnitor must advise Indemnitee of
such a dispute and the reasons therefor, in writing, within
thirty (30) days after the Claim is first tendered to
Indemnitor, unless the Indemnitee and Indemnitor mutually
agree, in writing, to extend the time; and
(iii) The Indemnitee and the Indemnitor shall use good
faith efforts to resolve any dispute as to Indemnitor's
indemnification obligation. Should those efforts fail to
resolve the dispute, the ultimate resolution shall be
determined in a DE NOVO proceeding, separate and apart from
the underlying Claim brought by the Claimant, before a
court of competent jurisdiction. No finding or judgment in
any litigation on the underlying Claim, except for Cost
amounts, shall be given any weight in the court proceedings
on the indemnification issue. Either party may initiate
such proceedings with a court of competent jurisdiction at
any time following the termination of the efforts by such
parties to resolve the dispute (termination of such efforts
shall be deemed to have occurred 30 days from the
commencement of the same unless such time period is
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extended by the written mutual agreement of the parties).
The prevailing party in such a proceeding shall be entitled
to recover reasonable attorneys' fees, costs and expenses.
From and after the date on which responsibility for a
disputed indemnity Claim is resolved: (I) Indemnitor shall
continue to pay all Costs that are determined by the
parties or the court, as the case may be, to be allocable
to any such Claim which is determined to be a Claim subject
to indemnity, and (II) Indemnitee shall (i) pay all future
Costs that are determined by the parties or the court, as
the case may be, to be allocable to any such Claim which is
determined to be a Claim not subject to indemnity and (ii)
reimburse Indemnitor for all Costs previously paid by
Indemnitor which are allocable to such Claim determined to
be a claim not subject to indemnity.
Broker-Dealer and Affiliates expressly authorize Companies
Distributors to charge against all compensation due or to become
due to Broker-Dealer or its Affiliates under this Agreement any
monies paid or liabilities incurred by Companies or Distributors
under this Indemnification provision.
7.4 ASSIGNMENT
No assignment of this Agreement, or commissions payable hereunder,
shall be valid unless authorized in writing by each of the
non-assigning parties. Every assignment shall be subject to any
indebtedness and obligation of the assigning parties that may be
due or become due to non-assigning parties and any applicable
state insurance regulations pertaining to such assignments.
7.5 OFFSET
Broker-Dealer expressly authorizes Companies to deduct, from any
monies due under this Agreement, every indebtedness or obligation
of Broker-Dealer to Companies or to any of its affiliates under
this agreement.
7.8 CONFIDENTIALITY
Companies, Distributors and Broker-Dealer agree that all facts or
information received by any party related to a contract owner
shall remain confidential, unless such facts or information is
required to be disclosed by any regulatory authority or court of
competent jurisdiction.
7.9 PRIOR AGREEMENTS
This Agreement terminates all previous agreements, if any, between
Companies, Distributors and Broker-Dealer with respect to the
Products set forth in the lines of business page(s). However, the
execution of this Agreement shall not affect any obligations which
have already accrued under any prior agreement.
7.10 CHOICE OF LAW
This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
By executing this Broker-Dealer Sales and Supervision Agreement, Broker-Dealer
acknowledges that it has read this Agreement in its entirety and is in agreement
with the terms and conditions outlining the rights of Distributors, Companies
and Broker-Dealer and Affiliates under this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement to be
effective as set forth above, upon the effective date below.
9
<PAGE>
EXHIBIT A
In accordance with Section V.(c) of the Broker-Dealer-Dealer Sales and
Supervision Agreement, no compensation is payable unless Broker-Dealer and
Registered Representative have first complied with all applicable state
insurance laws, rules and regulations. Distributors must ensure that any
Broker-Dealer with whom Distributors intend to enter into an Agreement and any
Registered Representatives meet the licensing and registration requirements of
the state(s) Broker-Dealer operates in and the NASD.
Companies are required by the Insurance Department in all 50 states to pay
compensation only to individuals and entities that are properly insurance
licensed and, in some states, appointed. For registered products, Distributors
must also comply with NASD regulations that require Distributors to pay
compensation to an NASD registered Broker-Dealer. Distributors must comply with
both state and NASD requirements.
Distributors require confirmation that Broker-Dealer holds current state
insurance licenses or markets insurance products through a contractual affiliate
or wholly-owned agency, which is properly insurance licensed and, if applicable,
appointed. If Broker-Dealer is properly state licensed then compensation must
be paid to Broker-Dealer in compliance with both state and NASD requirements.
If Broker-Dealer is not state insurance licensed and relies on the licensing of
a contractual affiliate or wholly-owned agency, the SEC has issued a number of
letters indicating that, under specific limited circumstances, it will take "no
action" against insurers (Distributors) paying compensation on registered
products to Broker-Dealer's contractual affiliate or wholly-owned agency. At
the request of Broker-Dealer, Distributors will provide copies of several of
these letters as well as a summary of their requirements.
If Broker-Dealer intends to rely on one of these "no-action" letters, legal
counsel for Broker-Dealer must confirm to Distributors in writing that all of
the circumstances of any one of the SEC no-action letters are applicable,
specifically including the jurisdictions for which Broker-Dealer does not hold
current state insurance licenses. Broker-Dealer's counsel must summarize each
point upon which the no-action relief was granted and represent that
Broker-Dealer's method of operation is identical or meets the same criteria.
Broker-Dealer's counsel must also confirm that, to the best of counsel's
knowledge, the SEC has not rescinded or modified its no-action position since
the letter was released.
The Broker-Dealer Sales and Supervision Agreement will not be finalized and no
new applications for products will be accepted or no new compensation will be
payable unless the appropriate proof of state licensing or no-action relief is
confirmed. In addition to a letter from Broker-Dealer's counsel, copies of the
following documentation is required:
insurance licenses for all states in which Broker-Dealer holds
these licenses and intends to operate and/or;
insurance licenses for any contractual affiliate or wholly-owned
agency; and
the SEC No-Action Letter that will be relied upon.
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<PAGE>
PARTICIPATION AGREEMENT
Among
______________________________,
______________________________,
______________________________,
and
HARTFORD LIFE INSURANCE COMPANY
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. Fund Shares 5
ARTICLE II. Representations and Warranties 7
ARTICLE III. Prospectuses, Reports to Shareholders and 8
Proxy Statements; Voting
ARTICLE IV. Sales Material and Information 11
ARTICLE V. Reserved 12
ARTICLE VI. Diversification 12
ARTICLE VII. Potential Conflicts 12
ARTICLE VIII. Indemnification 14
ARTICLE IX. Applicable Law 20
ARTICLE X. Termination 20
ARTICLE XI. Notices 23
ARTICLE XII. Foreign Tax Credits 23
ARTICLE XIII. Miscellaneous 23
SCHEDULE A Separate Accounts and Contracts 27
SCHEDULE B Participating Life Investment Trust 28
Portfolios
SCHEDULE C Proxy Voting Procedures 29
<PAGE>
PARTICIPATION AGREEMENT
Among
[FUND]
[UNDERWRITER]
[ADVISER]
and
HARTFORD LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the _______ day of__________,
1998 by and among HARTFORD LIFE INSURANCE COMPANY (hereinafter the "Company"); a
Connecticut corporation, on its 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
(each such account hereinafter referred to as the "Account") and
_______________________, a __________ corporation established under the laws of
the state of _________ ("state") (hereinafter the "Fund"); and
______________________, a ___________ corporation (hereinafter the
"Underwriter") and ____________________, a ___________ corporation (hereinafter
the "Adviser").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established by insurance companies for individual and group life insurance
policies and annuity contracts with variable accumulation and/or pay-out
provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products are required to enter into
participation agreements with the Fund and the Underwriter (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
for Variable Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B (each such series hereinafter referred to as a "Portfolio") as may be
amended from time to time by mutual agreement of the parties hereto, under this
Agreement to the Accounts of the Company; and
3
<PAGE>
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, granting Participating Insurance Companies and Variable Insurance
Product separate accounts exemptions 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 Product separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); 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 Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
WHEREAS, the Adviser is the investment adviser of the Portfolios of the
Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is a
member in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD") and serves as principal underwriter of the shares of the
Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority 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 aforesaid Variable
Insurance Products; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless exempt from such registration; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Variable Insurance Products and
the Underwriter is authorized to sell such shares to each such Account at net
asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Underwriter and the Adviser agree as follows:
4
<PAGE>
ARTICLE I. FUND SHARES
1.1. The Fund and the Underwriter agree to make available for purchase
by the Company shares of the Portfolios and shall execute orders placed for each
Account on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of such order. For purposes of this Section 1.1, the
Company shall be the designee of the Fund and Underwriter 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.
(local time where the Fund processes orders) on the next following Business Day.
Notwithstanding the foregoing, the Company shall use its best efforts to
provide the Fund with notice of such orders by 9:15 a.m. 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 Securities and Exchange Commission, as set
forth in the Fund's prospectus and statement of additional information.
Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter
the "Board") may refuse to permit the Fund 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 Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary
in the best interests of the shareholders of such Portfolio.
1.2. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies for their Variable Insurance
Products. No shares of any Portfolio will be sold to the general public.
1.3. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
which afford the Company substantially the same protections currently provided
by Sections 2.1, 2.4, 2.9, 3.4 and Article VII of this Agreement is in effect to
govern such sales.
1.4. The Fund and the Underwriter agree to redeem for cash, on 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 by the Fund or its designee of the request for
redemption. For purposes of this Section 1.4, 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 that the
Underwriter receives notice of such request for redemption on the next following
Business Day in accordance with the timing rules described in Section 1.1.
1.5. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Accounts of the Company,
under which amounts may be invested in the Fund are listed on Schedule A
attached hereto and incorporated herein by reference, as such
5
<PAGE>
Schedule A may be amended from time to time by mutual written agreement of
all of the parties hereto. The Company will give the Fund and the Underwriter
concurrent written notice of its intention to make available in the future,
as a funding vehicle under the Contracts, any other investment company.
1.6. The Company will place separate orders to purchase or redeem
shares of each Portfolio. Each order shall describe the net amount of shares and
dollar amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Company shall pay for Portfolio shares on the next Business Day
after an order to purchase Portfolio shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. In the event of net redemptions, the Portfolio shall pay the redemption
proceeds in federal funds transmitted by wire on the next Business Day after an
order to redeem Portfolio shares is made in accordance with the provisions of
Section 1.4 hereof. Notwithstanding the foregoing, if the payment of redemption
proceeds on the next Business Day would require the Portfolio to dispose of
Portfolio securities or otherwise incur substantial additional costs, and if the
Portfolio has determined to settle redemption transactions for all shareholders
on a delayed basis, proceeds shall be wired to the Company within seven (7) days
and the Portfolio shall notify in writing the person designated by the Company
as the recipient for such notice of such delay by 3:00 p.m. Eastern Time on the
same Business Day that the Company transmits the redemption order to the
Portfolio.
1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.8. The Underwriter shall use its best efforts to furnish same day
notice by 6:00 p.m. in its local time zone (by wire or telephone, followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such dividends and capital
gain distributions in cash. The Fund 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 of each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6:00 p.m.
Eastern Time. In the event that Underwriter is unable to meet the 6:00 p.m. time
stated immediately above, then Underwriter shall provide the Company with
additional time to notify Underwriter of purchase or redemption orders pursuant
to Sections 1.1 and 1.4, respectively, above. Such additional time shall be
equal to the additional time that Underwriter takes to make the net asset values
available to the Company; provided, however, that notification
6
<PAGE>
must be made by 11:00 a.m. Eastern Time on the Business Day such order is to
be executed, regardless of when net asset valuer is made available.
1.10. If Underwriter provides materially incorrect share net asset
value information through no fault of the Company, the Company shall be entitled
to an adjustment with respect to the Fund shares purchased or redeemed to
reflect the correct net asset value per share. The determination of the
materiality of any net asset value pricing error shall be based on the SEC's
recommended guidelines regarding such errors. The correction of any such errors
shall be made at the Company level pursuant to the SEC's recommended guidelines.
Any material error in the calculation or reporting of net asset value per share,
dividend or capital gain information shall be reported promptly upon discovery
to the Company.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the interests of the
Accounts which offer the Funds (the "Contracts") are or will be registered
unless exempt and that it will maintain such registration under the 1933 Act and
the regulations thereunder to the extent required by the 1933 Act; that the
Contracts will be issued and sold in compliance with all applicable federal and
state laws and regulations. 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 segregated asset account under the Connecticut
Insurance Code and the regulations thereunder and has registered or, prior to
any issuance or sale of the Contracts, will register and will maintain the
registration of each Account as a unit investment trust in accordance with and
to the extent required by the provisions of the 1940 Act and the regulations
thereunder, unless exempt therefrom, to serve as a segregated investment account
for the Contracts. The Company shall amend its registration statement for its
contracts under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its Contracts.
2.2. The Fund and the Underwriter represent and warrant that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act
and the regulations thereunder to the extent required by the 1933 Act, duly
authorized for issuance in accordance with the laws of State and sold in
compliance with all applicable federal and state securities laws and regulations
and that the Fund is and shall remain registered under the 1940 Act and the
regulations thereunder to the extent required by the 1940 Act. 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.
2.3. The Fund and the Adviser represent that the Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") and that each will make every
effort to maintain such qualification (under
7
<PAGE>
Subchapter M or any successor or similar provision) and that each will notify
the Company immediately upon having a reasonable basis for believing that the
Fund has ceased to so qualify or that the Fund might not so qualify in the
future.
2.4. The Company represents that each Account is and will continue to
be a "segregated account" under applicable provisions of the Code and that each
Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund immediately upon having a reasonable
basis for believing that the Account or Contract has ceased to be so treated or
that they might not be so treated in the future.
2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have a board of directors, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. 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 or regulations of the various
states.
2.7. The Fund and the Adviser represent that the Fund is duly
organized and validly existing under the laws of State and that the Fund does
and will comply in all material respects with the 1940 Act.
2.8. The Underwriter represents and warrants that it is and shall
remain duly registered under all applicable federal and state laws and
regulations and that it will perform its obligations for the Fund and the
Company in compliance with the laws and regulations of its state of domicile and
any applicable state and federal laws and regulations.
2.9. The Company represents and warrants that all of its trustees,
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, in an amount equal to the greater of $5 million or any
amount required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company.
ARTICLE III. PROSPECTUSES; REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1. The Fund shall provide the Company with as many printed copies of
the Fund's current prospectus and statement of additional information as the
Company may reasonably request. If requested by the Company in lieu of providing
printed copies the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and statement of additional information, and
such other assistance as is reasonably necessary in order for the
8
<PAGE>
Company once each year (or more frequently if the prospectus and/or statement
of additional information for the Fund is amended during the year) to have
the prospectus for the Contracts and the Fund's prospectus printed together
in one document or separately. The Company may elect to print the Fund's
prospectus and/or its statement of additional information in combination with
other fund companies' prospectuses and statements of additional information.
3.2(a). Except as otherwise provided in this Section 3.2, all expenses of
preparing, setting in type and printing and distributing Fund prospectuses and
statements of additional information shall be the expense of the Company. For
prospectuses and statements of additional information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of setting in type, printing and
distributing shall be borne by the Fund. If the Company chooses to receive
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Fund's prospectus and/or statement of additional information, the Fund shall
bear the cost of typesetting to provide the Fund's prospectus and/or statement
of additional information to the Company in the format in which the Fund is
accustomed to formatting prospectuses and statements of additional information,
respectively, and the Company shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses and/or statements of
additional information. In such event, the Fund will reimburse the Company in an
amount equal to the product of x and y where x is the number of such
prospectuses distributed to owners of the Contracts, and y is the Fund's per
unit cost of printing the Fund's prospectuses. The same procedures shall be
followed with respect to the Fund's statement of additional information. The
Fund shall not pay any costs of typesetting, printing and distributing the
Fund's prospectus and/or statement of additional information to prospective
Contract owners.
3.2(b). The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and statements of additional information, which are
covered in Section 3.2(a) above) to shareholders in such quantity as the Company
shall reasonably require for distributing to Contract owners. The Fund shall
not pay any costs of distributing such proxy-related material, reports to
shareholders, and other communications to prospective Contract owners.
3.2(c). The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of typesetting, printing or distributing any of
the foregoing documents other than those actually distributed to existing
Contract owners.
3.2(d) The Fund 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 to finance distribution expenses, then
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.
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<PAGE>
3.2(e) All expenses, including expenses to be borne by the Fund pursuant
to Section 3.2 hereof, incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares.
3.3. The Fund's statement of additional information shall be
obtainable from the Fund, the Underwriter, the Company or such other person as
the Fund may designate.
3.4. If and to the extent required by law the Company shall
distribute all proxy material furnished by the Fund to Contract Owners to whom
voting privileges are required to be extended and shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such Portfolio for
which instructions have been received, so long as and to the
extent that the Securities and Exchange Commission continues
to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law. The
Fund and the Company shall follow the procedures, and shall
have the corresponding responsibilities, for the handling of
proxy and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by
reference. Participating Insurance Companies shall be
responsible for ensuring that each of their separate
accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set
forth on Schedule C, which standards will also be provided to
the other Participating Insurance Companies.
(iv) For unregistered separate accounts subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") to refrain
from voting shares for which no instructions are received if
such shares are held in an unregistered segregated asset
account subject to ERISA.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings (except insofar as the Securities and Exchange Commission
may interpret Section 16 not to require such meetings)
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<PAGE>
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 Sections
16(a) and, if and when applicable, 16(b). Further, the Fund 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
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, the Underwriter or their designee, each piece of sales literature or other
promotional material prepared by the Company or any person contracting with the
Company in which the Fund, the Adviser or the Underwriter is described, at least
ten Business Days prior to its use. No such material shall be used if the Fund,
the Adviser, the Underwriter or their designee reasonably objects to such use
within ten Business Days after receipt of such material.
4.2. Neither the Company nor any person contracting with the Company
shall 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 Fund prospectus, as such registration statement or Fund prospectus
may be amended or supplemented from time to time, or in reports to shareholders
or proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee, except with the permission of the
Fund or its designee.
4.3. The Fund 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 Fund in which the Company or its Accounts, are
described at least ten Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.4. Neither the Fund 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 or prospectus may be amended or supplemented from time to
time, or in published reports or solicitations for voting instruction for each
Account 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 permission of
the Company.
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 Securities and
Exchange Commission or other regulatory authorities.
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<PAGE>
4.6. The Company will provide to the Fund, upon the Fund's request, 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 investment in an Account or Contract, contemporaneously with the
filing of such document with the Securities and Exchange Commission 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, any of the
following: 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, and registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
ARTICLE V. [RESERVED]
ARTICLE VI. DIVERSIFICATION
6.1. The Fund and the Adviser represent and warrant that, at all
times, the Fund will comply with Section 817(h) of the 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 the event the Fund ceases to so
qualify, it will take all reasonable steps (a) to notify Company of such event
and (b) to adequately diversify the Fund so as to achieve compliance within the
grace period afforded by Regulation 817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners 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
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variable annuity contract owners and variable life insurance contract owners;
or (f) a decision by a Participating Insurance Company to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.
7.2. The Company will report any potential or existing material
irreconcilable conflict of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Board whenever contract
owner voting instructions are disregarded.
7.3. 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 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 Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance policy
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. No charge
or penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view only
to the interests of Contract owners.
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 Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account (at the Company's expense); 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. The Company agrees that it bears the responsibility
to take remedial action in the event of a Board determination of an
irreconcilable material conflict and the cost of such remedial action, and these
responsibilities will be carried out with a view only to the interests of
Contract owners.
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7.5. For purposes of Sections 7.3 through 7.4 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 Fund be required to establish a new funding medium
for the Contracts. The Company shall not be required by Section 7.3 through
7.4 to establish a new funding medium for the Contracts if an offer to do so
has been declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict.
7.6. 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 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.
7.7 Each of the Company and the Adviser shall at least annually
submit to the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon them
by the provisions hereof and in the Shared Funding Exemptive Order, and said
reports, materials and data shall be submitted more frequently if deemed
appropriate by the Board. All reports received by the Board of potential or
existing conflicts, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board or other
appropriate records, and such minutes or other records shall be made available
to the Securities and Exchange Commission upon request.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1 (a). The Company agrees to indemnify and hold harmless the Fund, the
Underwriter and each member of their respective Board and officers and each
person, if any, who controls the Fund within the meaning of Section 15 of the
1933 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) or litigation
(including 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
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or
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<PAGE>
prospectus 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 Fund for use in the registration
statement or prospectus 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
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its
control and other than statements or representations
authorized by the Fund or the Underwriter) or unlawful
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 or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature 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 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
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company.
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 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 or duties under this Agreement.
15
<PAGE>
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), 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 as own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses 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.
8.1(d). 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 UNDERWRITER
8.2(a). The Underwriter agrees, with respect to each Portfolio that it
distributes, to indemnify and hold harmless the Company and each of as directors
and officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (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 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 shares of the Portfolio that it distributes or the Contracts
and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature 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, 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 Fund or the Underwriter by or on
behalf of the Company for use in the registration statement
or prospectus for the
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<PAGE>
Fund or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Contracts not supplied by the Fund, the Underwriter or
persons under their respective control and other than
statements or representations authorized by the Company) or
unlawful conduct of the Fund or Underwriter or persons under
their control, with respect to the sale or distribution of
the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the Underwriter
to provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Section
8.2(b) and 8.2(c) hereof.
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.
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), 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
17
<PAGE>
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 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 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.
8.2(d). The Company agrees promptly to notify the Underwriter 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 in which the Funds are made available.
8.3. INDEMNIFICATION BY THE ADVISER
8.3(a). The Adviser agrees to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (hereinafter collectively, the
"Indemnified Parties" and individually, "Indemnified Party," 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 Adviser)
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 operations of the Adviser or
the Fund and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature 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, 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 Adviser, the Fund or the
Underwriter by or on behalf of the Company for use in the
registration statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Portfolio
shares; or
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<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Contracts not supplied by the Fund, the Adviser or
persons under its control and other than statements or
representations authorized by the Company) or unlawful
conduct of the Fund, the Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the Adviser; or
(iv) arise as a result of any failure by the Adviser to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Adviser in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund or the
Adviser, including without limitation any failure by the Fund
to comply with the conditions of Article VI hereof.
8.3(b). The Adviser 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 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.
8.3(c). The Adviser 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 Adviser 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), but failure to notify the Adviser of any
such claim shall not relieve the Adviser 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 Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the
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<PAGE>
fees and expenses of any additional counsel retained by it, and the Adviser
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 then reasonable costs of investigation.
8.3(d). The Company agrees to promptly notify the Adviser of the
commencement of any litigation or proceedings against it or any of as respective
officers or directors in connection with this Agreement, the issuance or sale of
the Contracts, with respect to the operation of each Account, or the sale or
acquisition of shares of the Adviser.
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 Connecticut.
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 continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason upon six-months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Portfolio
based upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said
termination to be effective ten (10) days after receipt of
notice unless the Fund makes available a sufficient number of
shares to reasonably meet the requirements of the Account
within said ten (10) day period; or
(c) termination by the Company upon written notice to the Fund, the
Adviser and the Underwriter with respect to any Portfolio in
the event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as
the underlying investment medium of the Contracts issued or
to be issued by the Company. The terminating party shall give
prompt notice to the other parties of its decision to terminate;
or
20
<PAGE>
(d) termination by the Company upon written notice to the Fund,
the Adviser and the Underwriter with respect to any Portfolio
in the event that such portfolio ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code
or under any successor or similar provision; or
(e) termination by the Company upon written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund, the Adviser or the Underwriter by
written notice to the Company, if either one or more of the
Fund, the Adviser or the Underwriter, shall determine, in its
or their sole judgment exercised in good faith, that the
Company and/or their affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity,
provided that the Fund, the Adviser or the Underwriter will
give the Company sixty (60) days' advance written notice of
such determination of as intent to terminate this Agreement,
and provided further that after consideration of the actions
taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the
Fund, the Adviser or the Underwriter shall continue to apply
on the 60th day since giving of such notice, then such 60th
day shall be the effective date of termination; or
(g) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter, if the Company shall determine,
in its sole judgment exercised in good faith, that either the
Fund, the Adviser or the Underwriter has suffered a material
adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse publicity, provided that the
Company will give the Fund, the Adviser and the Underwriter
sixty (60) days' advance written notice of such determination
of its intent to terminate this Agreement, and provided
further that after consideration of the actions taken by the
Fund, the Adviser or the Underwriter and any other changes in
circumstances since the giving of such notice, the
determination of the Company shall continue to apply on the
60th day since giving of such notice, then such 60th day
shall be the effective date of termination; or
(h) termination by the Fund, the Adviser or the Underwriter by
written notice to the Company, if the Company gives the Fund,
the Adviser and the
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Underwriter the written notice specified in Section 1.5
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision
of this Agreement; provided, however any termination under
this Section 10.1(h) shall be effective sixty (60) days after
the notice specified in Section 1.5 was given; or
(i) termination by any party upon the other party's breach of any
representation in Section 2 or any material provision of this
Agreement, which breach has not been cured to the
satisfaction of the terminating party within ten (10) days
after written notice of such breach is delivered to the Fund
or the Company, as the case may be; or
(j) termination by the Fund, Adviser or Underwriter by written notice
to the Company in the event an Account or Contract is not
registered (unless exempt from registration) or sold in
accordance with applicable federal or state law or
regulation, or the Company fails to provide pass-through
voting privileges as specified in Section 3.4.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund shall at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts") unless such
further sale of Fund shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the Fund
following termination of this Agreement is in the best interests of the Fund and
its shareholders. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to direct reallocation of investments in the Fund,
redemption of investments in the Fund and/or investment in the Fund upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 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.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved 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") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) 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, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Adviser 30 days notice of its intention to do so.
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<PAGE>
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
____________________________
____________________________
____________________________
If to the Underwriter:
If to the Adviser:
If to the Company: With a copy to:
Hartford Life Insurance Co. Hartford Life Insurance Co.
200 Hopmeadow Street 200 Hopmeadow Street
Simsbury, Connecticut 06070 Simsbury, Connecticut 06070
Attn: Tom Marra Attn: Lynda Godkin, General Counsel
ARTICLE XII. FOREIGN TAX CREDITS
12.1. The Fund and Adviser agree to consult in advance with the Company
concerning whether any series of the Fund qualifies to provide a foreign tax
credit pursuant to Section 853 of the Code.
ARTICLE XIII. MISCELLANEOUS
13.1. 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 Board, officers, agents or
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shareholders assume any personal liability for obligations entered into on
behalf of the Fund. Each of the Company, Adviser and Underwriter acknowledges
and agrees that, as provided by Article 8, Section 8.1, of the Fund's
Agreement and Declaration of Trust, the shareholders, trustees, officers,
employees and other agents of the Fund and as Portfolios shall not personally
be bound by or liable for matters set forth hereunder, nor shall resort be
had to their private property for the satisfaction of any obligation or claim
hereunder. A Certificate of Trust referring to the Fund's Agreement and
Declaration of Trust is on file with the Secretary of State of Connecticut.
13.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
13.3. 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.
13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
13.6. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
(and other parties hereto) reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations at law or in equity, which the parties hereto are entitled to under
state and federal laws.
13.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may, with advance written notice to
the other parties hereto, assign this Agreement or any rights or obligations
hereunder to any affiliate of or company under common control with the Adviser
if such assignee is duly licensed and registered to perform the obligations of
the Adviser under this Agreement.
24
<PAGE>
13.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee upon request, copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any),
as soon as practical and in any event within 90 days after
the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory), as soon
as practical and in any event within 45 days following such
period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as
practical after the filing thereof;
(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in as name and on its behalf by its duly authorized representative
as of the date specified above.
HARTFORD LIFE INSURANCE COMPANY
on behalf of Itself and each of its Accounts named in
Schedule A hereto, as amended from time to time
By:
---------------------------------------------------
Peter Cummins
Its Senior Vice President
25
<PAGE>
FUND
By:
---------------------------------------------
Its
UNDERWRITER
By:
---------------------------------------------
Its
ADVISER
By:
---------------------------------------------
Its
26
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
- --------------------------------------------------------------------------------
Name of Separate Account and Date Established Form Numbers
by Board of Directors Funded by Separate Account
- --------------------------------------------------------------------------------
Contract Form Nos.:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
27
<PAGE>
SCHEDULE B
PARTICIPATING LIFE INVESTMENT TRUST PORTFOLIOS
28
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early
as possible before the date set by the Fund for the shareholder
meeting to enable the Company to consider and prepare for the
solicitation of voting instructions from owners of the Contracts and
to facilitate the establishment of tabulation procedures. At this time
the Fund will inform the Company of the Record, Mailing and Meeting
dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape
run," or other activity, which will generate the names, address and
number of units which are attributed to each contract
owner/policyholder (the "Customer") as of the Record Date. Allowance
should be made for account adjustments made after this date that could
affect the status of the Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the
Company either before or together with the Customers' receipt of
voting instruction solicitation material. The Fund will provide the
last Annual Report to the Company pursuant to the terms of Section 3.3
of the Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. fund or account number
d. coding to state number of units (or equivalent shares)
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
29
<PAGE>
5. During this time, the Fund will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to
Company for insertion into envelopes (envelopes and return envelopes
are provided and paid for by the Company). Contents of envelope sent
to Customers by the Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buck slip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund.
6. The above contents should be received by the Company
approximately 3-5 business days before mail date. Individual in
charge at Company reviews and approves the contents of the mailing
package to ensure correctness and completeness. Copy of this approval
sent to the Fund.
7. Package mailed by the Company at the Fund's expense.
*The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including), the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending on
process used. An often used procedure is to sort Cards on arrival by
proposal into vote categories of all yes, no, or mixed replies, and to
begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
9. Signatures on Card checked against legal name on account
registration which was printed on the Card.
Note: For example, if the account registration is under "John A.
Smith, Trustee," then that is the exact legal name to be printed on
the Card and is the signature needed on the Card.
30
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to Customer with an
explanatory letter and a new Card and return envelope. The mutilated
or illegible Card is disregarded and considered to be not received for
purposes of vote tabulation. Any Cards that have been "kicked out"
(e.g., mutilated, illegible) of the procedure are "hand verified,"
(i.e., examined as to why they did not complete the system). Any
questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into categories
depending upon their vote; an estimate of how the vote is progressing
may then be calculated. If the initial estimates and the actual vote
do not coincide, then an internal audit of that vote should occur.
This may entail a recount.
12. The actual tabulation of votes is done in units (or equivalent
shares) which is then converted to shares. (It is very important that
the fund receives the tabulations stated in terms of a percentage and
the number of shares.) The Fund must review and approve tabulation
format.
13. Final tabulation in shares is verbally given by the Company to
the Fund on the morning of the meeting not later then 10:00 A.M.
Houston time. The Fund may request an earlier deadline if reasonable
and if required to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will
be required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged
or if otherwise necessary for legal, regulatory, or accounting
purposes, the Fund will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must
always be followed up in writing.
31
<PAGE>
EXHIBIT 9
[LOGO]
April 12, 1999 LYNDA GODKIN
Senior Vice President, General
Counsel Corporate Secretary
Board of Directors
Alpine Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT ONE ("Separate Account")
ALPINE LIFE INSURANCE COMPANY ("Company")
Dear Sir/Madam:
In my capacity as General Counsel of the Company, I have supervised the
establishment of the Separate Account by the Board of Directors of the
Company as a separate account for assets applicable to Contracts offered by
the Company pursuant to Connecticut Law. I have participated in the
preparation of the registration statement for the Separate Account on Form
N-4 under the Securities Act of 1933 and the Investment Company Act of 1940
with respect to the Contracts.
I am of the following opinion:
1. The Separate Account is a duly authorized and existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
2. To the extent so provided under the Contracts, that portion of the assets
of the Separate Account equal to the reserves and other contract
liabilities with respect to the Separate Account will not be chargeable
with liabilities arising out of any other business that the Company may
conduct.
3. The Contracts, when issued as contemplated by the Form N-4 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
registration statement for the Contracts and the Separate Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 10
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 333-65507 for Alpine Life Insurance
Company Separate Account One on Form N-4.
Hartford, Connecticut /s/ Arthur Andersen LLP
April 12, 1999
<PAGE>
ALPINE LIFE INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
Mary Jane B. Fortin
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Brian Lord to sign as their agent,
any Registration Statement, pre-effective amendment, post-effective amendment
and any application for exemptive relief of the Alpine Life Insurance
Company under the Securities Act of 1933 and/or the Investment Company Act of
1940, and do hereby ratify any such signatures heretofore made by such
persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of January 15, 1999
- ------------------------------
Gregory A. Boyko
/s/ Mary Jane B. Fortin Dated as of January 15, 1999
- ------------------------------
Mary Jane B. Fortin
/s/ Lynda Godkin Dated as of January 15, 1999
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of January 15, 1999
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of January 15, 1999
- ------------------------------
Lowndes A. Smith
/s/ David M. Znamierowski Dated as of January 15, 1999
- ------------------------------
David M. Znamierowski
<PAGE>
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
---------------------------------------------
NUTMEG INSURANCE COMPANY |
(CONNECTICUT) THE HARTFORD INVESTMENT
| MANAGEMENT COMPANY
HARTFORD FIRE INSURANCE COMPANY (DELAWARE)
(CONNECTICUT) |
| |
HARTFORD ACCIDENT AND INDEMNITY COMPANY HARTFORD INVESTMENT
(CONNECTICUT) SERVICES, INC.
| (CONNECTICUT)
HARTFORD LIFE, INC.
(DELAWARE)
|
HARTFORD LIFE & ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
ITT HARTFORD LIFE | | | | | | HLIC PLANCO
INTERNATIONAL LTD. | | | | | | CANADA FINANCIAL
(CONNECTICUT) | | | | | | HOLDINGS, INC. SERVICES,
| | | | | | | (CANADA) INCORPORATED
| | | | | | | | (PENNSYLVANIA)
| | | | | | | | |
| | ALPINE LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN | |
| | INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE | |
| | COMPANY INSURANCE CO. (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY | |
| | (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT) | PLANCO, INC.
| | | | | | (PENNSYLVANIA)
| | ------------------------------------- | AML FINANCIAL, INC. |
HARTFORD CALMA | | | | | (CONNECTICUT) |
COMPANY | ROYAL LIFE HARTFORD HARTFORD | HARTFORD
(FLORIDA) | INSURANCE INTERNATIONAL LIFE AND | LIFE INSURANCE
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE | COMPANY
| OF AMERICA CORP. COMPANY | OF CANADA
|(CONNECTICUT) (CONNECTICUT) (CONNECTICUT) | (CANADA)
| | |
| | |
| ITT HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| ---------------------------------------------------------------------------------------------
| | | | | |
INTERNATIONAL MS FUND HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD COMP. EMP.
CORPORATE AMERICA 1993-K ADVISORS, LLC EQUITY SALES DISTRIBUTION BENEFITS SERVICE
MARKETING GROUP, INC. SPE, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. COMPANY
(CONNECTICUT) (DELAWARE) | (CONNECTICUT) (CONNECTICUT) (CONNECTICUT)
| |
| |
THE EVERGREEN HARTFORD INVESTMENT
GROUP, INC. FINANCIAL SERVICES
(NEW YORK) COMPANY
(DELAWARE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | ITT HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |--------DE VIDA DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | ITT HARTFORD
| | HARTFORD | |-----SEGUROS DE VIDA
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) | |
| | | | |
| | | | | ITT HARTFORD
| | -- ----------| | |------SEGUROS DE
| | | | | | RETIRO S.A.
| | | | | | (ARGENTINA)
|-----------|----------------|---------------|---|--------------------------------------------------------------------------
| | | | | |
| | | ICATU HARTFORD | | CONSULTORA DE CAPITALES
| | | FUNDO DE PENSAO | | S.A. SOCIEDAD GERENTE
| | | (BRAZIL) | |----DE FONDOS COMUNES
| | | | | | DE ENVERSION
| | | | | | (ARGENTINA)
| | | ICATU HARTFORD | |
| | | CAPITALIZACAO S.A. | | CLARIDAD
| | | (BRAZIL) | | ADMINISTRADORA DE
| | | | | |---FONDOS DE JUBILACIONES
| | | BRAZILCAP | | Y PENSIONES S.A.
| | | CAPITALIZACAO S.A. | | (ARGENTINA)
| | | (BRAZIL) | |
| | | | |
| | -------------------------- | |
| |--------------- | | |
| | | | |
HARTFORD FIRE HARTFORD FIRE | | |------- SEGPOOL S.A.
INTERNATIONAL------------INTERNATIONAL, LTD. | | | (ARGENTINA)
(GERMANY) GMBH (CONNECTICUT) | | |
(WEST GERMANY) | | |
| | |
ICATU HARTFORD | | | THESIS S.A.
ADMINISTRACAO | | |-------- (ARGENTINA)
DE BENEFICIOS LTDA-- | | |
(BRAZIL) | |
| |
----------------- |
| |
CAB |--------- U.O.R., S.A.
CORPORATION (ARGENTINA)
(BRITISH VIRGIN ISLANDS)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
- --------------------------------------------------------------------------------------------------------------------------------|
| |
THE HARTFORD INTERNATIONAL |
|-----------------------------------------------------------------------FINANCIAL SERVICES GROUP, INC. |
| | | (DELAWARE) |
| | | ----------------------|----------------- |
| | | | | | | |
ZWOLSCHE | | ITT HARTFORD LONDON AND | HARTFORD |
ALGEMEENE N.V. | | INTERNATIONAL, LTD. EDINBURGH | EUROPE, INC. |
(NETHERLANDS) | | (U.K.) INSURANCE GROUP, LTD.| (DELAWARE) |
| | | (U.K.) | |
| | | | | |
| | | ------------- | |
| | | | | |
| ITT ASSURANCES HARTFORD INTERNATIONAL | LONDON AND --ITT ERCOS |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH DE SEGUROS Y |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. REASEGUROS S.A.|
|----SCHADEVERZEKERING | | (U.K.) (SPAIN) |
--------| N.V.----------------------------------- | | | |
| | (NETHERLANDS) | | | | |
Z.A. | | | | EXCESS INSURANCE |
- --VERZEKERINGEN | | | | COMPANY LTD. |
| N.V. | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| (BELGIUM) |------HERVERZEKERING B.V. | | | |
| | -----| (NETHERLANDS) | | | LONDON AND |
| | | | | | |--- EDINBURGH LIFE |
| Z.A. LUX S.A. | | | | ASSURANCE CO., LTD. |
| (LUXEMBURG) | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| |--LEVENS-VERZEKERING N.V.------------ | | | |
| | (NETHERLANDS) | | | | |
- ----------------|------------------------------------|------------|------|--------------|---------------------------------------|
| | | | | | |
| -------- | | | | |
| | | | | | | |
| ZWOLSCHE | ZWOLSCHE ALGEMEENE ZWOLSCHE ALGEMEENE | | | |
| ALGEMEENE |-----HYPOTHEKEN N.V. BELEGGINGEN III B.V. | | | |
| EUROPA B.V. | (NETHERLANDS) (NETHERLANDS) | | | |
| (NETHERLANDS) | ---------- | | |
- --------| | | | | |
| EXPLOITATIEMAAT- BELEGGINGSMAAT- | | |
|----- SCHAPPIJ SCHAPPIJ | | |
| BUIZERDLAAN B.V. BUIZERDLAAN B.V. | | |
| (NETHERLANDS) (NETHERLANDS) | | |
| | | |
| | | -----
| HOLLAND | |-------------------------- |
|---- BELEGGINGSGROEP B.V. | | | |
(NETHERLANDS) | |----------------- | |
| -------| | | |
| | | | | |
| | | | | |
F.A. KNIGHT | MACALISTER & LONDON AND | HARTFORD FIRE
& SON N.V. | DUNDAS, LTD. EDINBURGH | INTERNATIONAL
(BELGIUM) | (SCOTLAND) TRUSTEES, LTD. | SERVICIOS
| (U.K.) | (SPAIN)
------------------------- -----------
| | |
FENCOURT QUOTEL LONDON AND
PRINTERS, LTD. INSURANCE EDINBURGH
(U.K.) SYSTEMS, LTD. SERVICES, LTD.
(U.K.) (U.K.)
|
EUROSURE
INSURANCE
MARKETING, LTD.
(U.K.)
</TABLE>
