Filed with the Securities and Exchange Commission on March 2, 1998
Registration No. 33-87010 Investment Company Act No. 811-5438
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
Registration Statement under The Securities Act of 1933
Post-effective Amendment No. 6
and/or
Registration Statement under The Investment Company Act of 1940
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION VARIABLE ACCOUNT B
(CLASS 1 SUB-ACCOUNTS)
(Exact Name of Registrant)
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(Name of Depositor)
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
(Address of Depositor's Principal Executive Offices)
(203) 926-1888
(Depositor's Telephone Number)
M. PRISCILLA PANNELL, CORPORATE SECRETARY
One Corporate Drive, Shelton, Connecticut 06484
(Name and Address of Agent for Service of Process)
Copy To:
JOHN T. BUCKLEY, ESQ.
WERNER & KENNEDY
1633 Broadway, New York, New York 10019 (212) 408-6900
Approximate Date of Proposed Sale to the Public:
MAY 1, 1998 OR AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE DATE OF
THIS REGISTRATION STATEMENT.
It is proposed that this filing become effective: (check appropriate space)
immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1998 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a) (i) of Rule 485
on __________pursuant to paragraph (a) (i) of Rule 485
75 days after filing pursuant to paragraph (a) (ii) of Rule 485
on ______________pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities to be Price Offering Registration
to be Registered Registered Per Unit Price Fee
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American Skandia Life Assurance
Corporation Annuity Contracts Indefinite* Indefinite* $
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*Pursuant to Rule 24f-2 of the Investment Company Act of 1940
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Registrant has registered an indefinite number or amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 of the Investment Company Act of
1940. The Rule 24f-2 Notice for Registrant's fiscal year 1997 will be filed
within 90 days of the close of the fiscal year.
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a2n4 cr
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
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N-4 Item No. Prospectus Heading
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1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis or Highlights Highlights
4. Condensed Financial Information Condensed Financial Information, Advertising
5. General Description of Registrant, Depositor Investment Options, Operations of the
and Portfolio Companies Separate Accounts, The Company
6. Deductions Charges Assessed or Assessable Against the Annuity, Charges Assessed
Against Assets, Charges of the Underlying Mutual Funds
7. General Description of Variable Annuity Contracts Purchasing Annuities, Rights, Benefits and
Services, Modification
8. Annuity Period Annuity Payments
9. Death Benefit Death Benefit
10. Purchases and Contract Value Purchasing Annuities, Account Value and Surrender Value
11. Redemptions Distributions, Pricing of Transfers and Distributions, Deferral of Transactions
12. Taxes Certain Tax Considerations
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Statement of Additional Information Contents of the Statement of
Additional Information
SAI Heading
15. Cover Page Statement of Additional Information
16. Table of Contents Table of Contents
17. General Information and History General Information Regarding American
Skandia Life Assurance Corporation
18. Services Independent Auditors
19. Purchase of Securities Being Offered Noted in Prospectus under Exchange Contracts,
Skandia's Systematic Investment Plan and
Sale of the Annuities
20. Underwriters Principal Underwriter
(Continued)
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
N-4 Item No. SAI Headings
21. Calculation of Performance Data Calculation of Performance Data
22. Annuity Payments Noted in Prospectus under Annuity Payments
23. Financial Statements Financial Statements for Separate
Account B (Class 1 Sub-accounts)
Part C Heading
24. Financial Statements and Exhibits Financial Statements
and Exhibits
25. Directors and Officers of the Depositor Noted in Prospectus under Executive
Officers and Directors
26. Persons Controlled by or Under Persons Controlled By or
Common Control with the Under Common Control with the
Depositor or Registrant Depositor or Registrant
27. Number of Contractowners Number of Contractowners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts
and Records
31. Management Services Management Services
32. Undertakings Undertakings
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ASAP2 PROS
This Prospectus describes a type of annuity (the "Annuity") being offered by
American Skandia Life Assurance Corporation ("we", "our" or "us"), One Corporate
Drive, Shelton, Connecticut, 06484. This flexible premium Annuity may be offered
as individual annuity contracts or as interests in a group annuity. The Table of
Contents is on Page [ ]. Definitions applicable to this Prospectus are on page
6. The highlights of this offering are described beginning on Page [ ]. This
Prospectus contains a detailed discussion of matters you should consider before
purchasing this Annuity. A Statement of Additional Information has been filed
with the Securities and Exchange Commission and is available from us without
charge upon request. The contents of the Statement of Additional Information are
described on page [ ]. The Annuity or certain of its investment options may not
be available in all jurisdictions. Various rights and benefits may differ
between jurisdictions to meet applicable laws and/or regulations.
A Purchase Payment for this Annuity is assessed any applicable tax charge (see
"Tax Charges"). It is then allocated to the investment options you select,
except in certain jurisdictions, where allocations of Purchase Payments we
receive during the "free-look" period that you direct to any Sub-accounts are
temporarily allocated to the AST Money Market Sub-account (see "Allocation of
Net Purchase Payments"). You may transfer Account Value between investment
options (see "Investment Options" and "Transfers"). Account Value may be
distributed as periodic annuity payments in a "payout phase". Such annuity
payments can be guaranteed for life (see "Annuity Payments"). During the
"accumulation phase" (the period before any payout phase), you may surrender the
Annuity for its Surrender Value or make withdrawals (see "Distributions"). Such
distributions may be subject to tax, including a tax penalty, and any applicable
contingent deferred sales charges (see "Contingent Deferred Sales Charge"). A
death benefit may be payable during the accumulation phase (see "Death
Benefit").
Account Value in the variable investment options increases or decreases daily to
reflect investment performance and the deduction of charges. No minimum amount
is guaranteed (see "Account Value in the Sub-accounts"). The variable investment
options are Class 1 Sub-accounts of American Skandia Life Assurance Corporation
Variable Account B ("Separate Account B")(see "Separate Accounts" and "Separate
Account B"). Each Sub-account invests exclusively in one portfolio of an
underlying mutual fund or in an underlying mutual fund. As of the date of this
Prospectus, the underlying mutual funds (and the portfolios of such underlying
mutual funds in which Sub-accounts offered pursuant to this Prospectus invest)
are: (a) American Skandia Trust (portfolios - JanCap Growth, AST Janus Overseas
Growth, Lord Abbett Growth and Income, Lord Abbett Small Cap Value,
Neuberger&Berman MidCap Value, Federated High Yield, AST Money Market, T. Rowe
Price Asset Allocation, T. Rowe Price International Equity, T. Rowe Price
Natural Resources, T. Rowe Price International Bond, T. Rowe Price Small Company
Value, Founders Capital Appreciation, Founders Passport, INVESCO Equity Income,
PIMCO Total Return Bond, PIMCO Limited Maturity Bond, Neuberger&Berman MidCap
Growth, Robertson Stephens Value + Growth, AST Putnam Value Growth & Income, AST
Putnam International Equity, AST Putnam Balanced, Twentieth Century Strategic
Balanced, Twentieth Century International Growth, Cohen & Steers Realty, Stein
Roe Venture, Bankers Trust Enhanced 500, Marsico Capital Growth); (b) The Alger
American Fund (portfolios - Growth, Small Capitalization, MidCap Growth); (c)
Neuberger&Berman Advisers Management Trust (portfolio - Partners); (d)
Montgomery Variable Series (portfolio - Emerging Markets); and (e) Life and
Annuity Trust (portfolio - Equity Value).
The Partners Portfolio of the Neuberger&Berman Advisor Management Trust is not
available as an investment option on Annuities issued on or after May 1, 1998.
Owners of Annuities with Account Value allocated to the NB Partners Sub-account
on May 1, 1998 may remain in the Sub-Account. However, no new allocations may be
made to the NB Partners Sub-Account on or after May 1, 1998. The Partners
portfolio of the Neuberger&Berman Advisors Management Trust and the NB Partners
Sub-Account of Separate Account B are the subject of an application with the
Securities and Exchange Commission to substitute shares of such portfolio for
shares of the Neuberger&Berman MidCap Value portfolio of American Skandia Trust.
Upon approval of the application for exemptive relief allowing the substitution,
Annuity Owners will be granted certain rights to transfer Account Value without
penalty.
The following changes to the American Skandia Trust ("AST") were approved by a
vote of shareholders on [DATE]. The respective shareholders of the Federated
Utility Income and Berger Capital Growth portfolios of AST have reappointed
American Skandia Investment Services, Incorporated (the "Manager") as investment
manager; appointed Neuberger&Berman Management Incorporated as new portfolio
sub-advisor, changed the respective portfolios' investment objectives and
certain fundamental investment restrictions, and changed the portfolios' names
to the "Neuberger&Berman MidCap Value Portfolio" and "Neuberger&Berman MidCap
Growth Portfolio", respectively.
(continued on Page 2)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE
READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
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FOR FURTHER INFORMATION CALL 1-800-752-6342.
Prospectus Dated: May 1, 1998
Statement of Additional Information Dated: May 1, 1998
ASAP2 PROS-(05/98)
In most jurisdictions, Account Value may be allocated to a fixed investment
option during the accumulation phase. Account Value so allocated earns a fixed
rate of interest for a specified period of time referred to as a Guarantee
Period. Guarantee Periods of different durations may be offered (see "Fixed
Investment Options"). Such an allocation and the interest earned is guaranteed
by us only if held to its Maturity Date, and, where required by law, the 30 days
prior to the Maturity Date. You are cautioned that with respect to the Fixed
Investment Options during the accumulation phase, we do not guarantee any
minimum amount, because the value may be increased or decreased by a market
value adjustment (see "Account Value of the Fixed Allocations"). Assets
supporting such allocations in the accumulation phase are held in American
Skandia Life Assurance Corporation Separate Account D ("Separate Account D")
(see "Separate Accounts" and "Separate Account D").
We guarantee fixed annuity payments. We also guarantee any adjustable annuity
payments we may make available (see "Annuity Payments").
Taxes on gains during the accumulation phase may be deferred until you begin to
take distributions from your Annuity. Distributions before age 59 1/2 may be
subject to a tax penalty. In the payout phase, a portion of each annuity payment
may be treated as a return of your "investment in the contract" until it is
completely recovered. Transfers between investment options are not subject to
taxation. The Annuity may also qualify for special tax treatment under certain
sections of the Code, including, but not limited to, Sections 401, 403 or 408
(see "Certain Tax Considerations").
Purchase Payments under these Annuities are not deposits or obligations of, or
guaranteed or endorsed by, any bank or bank subsidiary, are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency and are not insured by the Securities Investor Protection
Corporation ("SIPC") as to the loss of the principal amount invested. Purchase
Payments allocated to the investment options are subject to investment risks,
including possible loss of principal.
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TABLE OF CONTENTS
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DEFINITIONS........................................................................................................................6
HIGHLIGHTS.........................................................................................................................8
AVAILABLE INFORMATION.............................................................................................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................................................................10
CONTRACT EXPENSE SUMMARY..........................................................................................................10
EXPENSE EXAMPLES..................................................................................................................13
CONDENSED FINANCIAL INFORMATION...................................................................................................14
Unit Prices And Numbers Of Units...............................................................................................14
Yields On Money Market Sub-account.............................................................................................17
INVESTMENT OPTIONS................................................................................................................18
Variable Investment Options....................................................................................................18
Fixed Investment Options.......................................................................................................19
OPERATIONS OF THE SEPARATE ACCOUNTS...............................................................................................20
Separate Accounts..............................................................................................................21
Separate Account B.............................................................................................................21
Separate Account D.............................................................................................................21
INSURANCE ASPECTS OF THE ANNUITY..................................................................................................22
CHARGES ASSESSED OR ASSESSABLE AGAINST THE ANNUITY................................................................................22
Contingent Deferred Sales Charge...............................................................................................22
Maintenance Fee................................................................................................................23
Tax Charges....................................................................................................................23
Transfer Fee...................................................................................................................23
Allocation Of Annuity Charges..................................................................................................23
CHARGES ASSESSED AGAINST THE ASSETS...............................................................................................23
Administration Charge..........................................................................................................24
Mortality and Expense Risk Charges.............................................................................................24
CHARGES OF THE UNDERLYING MUTUAL FUNDS............................................................................................24
PURCHASING ANNUITIES..............................................................................................................24
Uses Of The Annuity............................................................................................................24
Application And Initial Payment................................................................................................24
Skandia's Systematic Investment Plan...........................................................................................25
Periodic Purchase Payments.....................................................................................................25
Right to Return the Annuity....................................................................................................25
Allocation of Net Purchase Payments............................................................................................25
Balanced Investment Program....................................................................................................25
Ownership, Annuitant and Beneficiary Designations..............................................................................26
ACCOUNT VALUE AND SURRENDER VALUE.................................................................................................26
Account Value in the Sub-accounts..............................................................................................26
Account Value of the Fixed Allocations.........................................................................................27
Additional Amounts in the Fixed Allocations....................................................................................27
RIGHTS, BENEFITS AND SERVICES.....................................................................................................28
Additional Purchase Payments...................................................................................................28
Changing Revocable Designations................................................................................................28
Allocation Rules...............................................................................................................28
Transfers......................................................................................................................29
Renewals.......................................................................................................................29
Dollar Cost Averaging..........................................................................................................30
Rebalancing....................................................................................................................30
Distributions..................................................................................................................31
Surrender......................................................................................................................31
Medically-Related Surrender....................................................................................................31
Free Withdrawals...............................................................................................................31
Partial Withdrawals............................................................................................................32
Systematic Withdrawals.........................................................................................................33
Minimum Distributions..........................................................................................................33
Death Benefit..................................................................................................................34
Annuity Payments...............................................................................................................35
Qualified Plan Withdrawal Limitations..........................................................................................36
Pricing of Transfers and Distributions.........................................................................................36
Voting Rights..................................................................................................................37
Transfers, Assignments or Pledges..............................................................................................37
Reports to You.................................................................................................................37
SALE OF THE ANNUITIES.............................................................................................................38
Distribution...................................................................................................................38
Advertising....................................................................................................................38
CERTAIN TAX CONSIDERATIONS........................................................................................................39
Our Tax Considerations.........................................................................................................39
Tax Considerations Relating to Your Annuity....................................................................................39
Non-natural Persons............................................................................................................39
Natural Persons................................................................................................................39
Distributions..................................................................................................................39
Loans, Assignments and Pledges.................................................................................................40
Gifts..........................................................................................................................40
Penalty on Distributions.......................................................................................................40
Annuity Payments...............................................................................................................41
Tax Free Exchanges.............................................................................................................41
Transfers Between Investment Options...........................................................................................41
Estate and Gift Tax Considerations.............................................................................................41
Generation-Skipping Transfers..................................................................................................41
Diversification................................................................................................................41
Federal Income Tax Withholding.................................................................................................41
Tax Considerations When Using Annuities in Conjunction with Qualified Plans....................................................41
Individual Retirement Programs.................................................................................................42
Tax Sheltered Annuities........................................................................................................42
Corporate Pension and Profit-sharing Plans.....................................................................................42
H.R. 10 Plans..................................................................................................................42
Tax Treatment of Distributions from Qualified Annuities........................................................................42
Section 457 Plans..............................................................................................................42
OTHER MATTERS.....................................................................................................................42
Deferral of Transactions.......................................................................................................42
Resolving Material Conflicts...................................................................................................43
Modification...................................................................................................................43
Misstatement of Age or Sex.....................................................................................................43
Ending the Offer...............................................................................................................43
Indemnification................................................................................................................43
Legal Proceedings..............................................................................................................44
THE COMPANY.......................................................................................................................44
Lines of Business..............................................................................................................44
Selected Financial Data........................................................................................................44
Management's Discussion and Analysis of Financial Condition and Results of Operations..........................................44
Reserves.......................................................................................................................44
Competition....................................................................................................................44
Employees......................................................................................................................44
Regulation.....................................................................................................................44
Executive Officers and Directors...............................................................................................45
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION...............................................................................47
FINANCIAL STATEMENTS..............................................................................................................47
APPENDIX A FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION..................................................48
APPENDIX B SHORT DESCRIPTIONS OF THE UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT
OBJECTIVES AND POLICIES........................................................................................................48
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DEFINITIONS: The following are key terms used in this Prospectus. Other terms
are defined in this Prospectus as they appear.
ACCOUNT VALUE is the value of each allocation to a Sub-account or a Fixed
Allocation prior to the Annuity Date, plus any earnings, and/or less any losses,
distributions and charges thereon, before assessment of any applicable
contingent deferred sales charge and/or any applicable maintenance fee. Account
Value is determined separately for each Sub-account and for each Fixed
Allocation, and then totaled to determine Account Value for your entire Annuity.
Account Value of each Fixed Allocation on other than such Fixed Allocation's
Maturity Date may be calculated using a market value adjustment.
ANNUITANT is the person upon whose life your Annuity is written.
ANNUITY is the type of annuity being offered pursuant to this Prospectus. It is
also, if issued, your individual Annuity, or with respect to a group Annuity,
the certificate evidencing your participation in a group Annuity. It also
represents an account we set up and maintain to track our obligations to you.
ANNUITY DATE is the date annuity payments are to commence.
ANNUITY YEARS are continuous 12-month periods commencing on the Issue Date and
each anniversary of the Issue Date.
APPLICATION is the enrollment form or application form we may require you to
submit for an Annuity.
BENEFICIARY is a person designated as the recipient of the death benefit.
CODE is the Internal Revenue Code of 1986, as amended from time to time.
CONTINGENT ANNUITANT is the person named to become the Annuitant on the
Annuitant's death prior to the Annuity Date.
CURRENT RATES are the interest rates we offer to credit to Fixed Allocations for
the duration of newly beginning Guarantee Periods under this Annuity. Current
Rates are contained in a schedule of rates established by us from time to time
for the Guarantee Periods then being offered. We may establish different
schedules for different classes and for different annuities.
FIXED ALLOCATION is an allocation of Account Value that is to be credited a
fixed rate of interest for a specified Guarantee Period during the accumulation
phase and is to be supported by assets in Separate Account D.
GUARANTEE PERIOD is a period of time during the accumulation phase during which
we credit a fixed rate of interest on a Fixed Allocation.
IN WRITING is in a written form satisfactory to us and filed at the Office.
INTERIM VALUE is, as of any particular date, the initial value of a Fixed
Allocation plus all interest credited thereon, less the sum of all previous
transfers and withdrawals of any type from such Fixed Allocation of such Interim
Value and interest thereon from the date of each withdrawal or transfer.
ISSUE DATE is the effective date of your Annuity.
MVA is a market value adjustment used in the determination of Account Value of
each Fixed Allocation as of a date other than such Fixed Allocation's Maturity
Date, and, where required by law, the 30 days prior to the Maturity Date.
MATURITY DATE is the last day in a Guarantee Period.
MINIMUM DISTRIBUTIONS are a specific type of Systematic Withdrawal such that the
amounts payable are not less than the minimum amounts that must be distributed
each year from an Annuity if used in relation to certain qualified plans under
the Code.
NET PURCHASE PAYMENT is a Purchase Payment less any applicable charge for taxes.
OFFICE is our business office, American Skandia Life Assurance Corporation, One
Corporate Drive, P.O. Box 883, Shelton, Connecticut 06484.
OWNER is either an eligible entity or person named as having ownership rights in
relation to an Annuity issued as an individual contract. An Annuity may be
issued as a certificate evidencing interest in a group annuity contract. If so,
the rights, benefits and requirements of and the events relating to an Owner, as
described in this Prospectus, will be the rights, benefits and requirements of
and events relating to the person or entity designated as the participant in
such certificate.
PURCHASE PAYMENT is a cash consideration you give to us for certain rights,
privileges and benefits provided under an Annuity according to its terms.
SUB-ACCOUNT is a division of Separate Account B. We use Sub-accounts to
calculate variable benefits under this Annuity.
SURRENDER VALUE is the value of your Annuity available upon surrender prior to
the Annuity Date. It equals the Account Value as of the date we price the
surrender less any applicable contingent deferred sales charge and any
applicable maintenance fee.
SYSTEMATIC WITHDRAWAL is one of a plan of periodic withdrawals of Surrender
Value during the accumulation phase. Such a plan is subject to our rules.
UNIT is a measure used to calculate your Account Value in a Sub-account prior to
the Annuity Date.
UNIT PRICE is used for calculating: (a) the number of Units allocated to a
Sub-account; and (b) the value of transactions into or out of a Sub-account or
benefits based on Account Value in a Sub-account prior to the Annuity Date. Each
Sub-account has its own Unit Price which will vary each Valuation Period to
reflect the investment experience of that Sub-account.
VALUATION DAY is every day the New York Stock Exchange is open for trading or
any other day that the Securities and Exchange Commission requires mutual funds
or unit investment trusts to be valued.
VALUATION PERIOD is the period of time between the close of business of the New
York Stock Exchange on successive Valuation Days.
"We", "us", "our" or "the Company" means American Skandia Life Assurance
Corporation.
"You" or "your" means the Owner.
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HIGHLIGHTS: The following are only the highlights of the Annuity being offered
pursuant to this Prospectus. A more detailed description follows these
highlights.
(1) Investment Options: We currently offer multiple variable and, in most
jurisdictions, fixed investment options.
During the accumulation phase, we currently offer a number of variable
investment options. Each of these investment options is a Class 1 Sub-account of
Separate Account B. Each Sub-account invests exclusively in one underlying
mutual fund, or a portfolio of an underlying mutual fund. The underlying mutual
fund portfolios are managed by various investment advisors, and in certain
cases, various sub-advisors. A short description of the investment objectives
and policies is found in Appendix B. Certain variable investment options may not
be available in all jurisdictions.
As of the date of this Prospectus, the underlying mutual funds (and the
portfolios of such underlying mutual funds in which Sub-accounts offered
pursuant to this Prospectus invest) are: (a) American Skandia Trust (portfolios
- - JanCap Growth, AST Janus Overseas Growth, Lord Abbett Growth and Income, Lord
Abbett Small Cap Value, Neuberger&Berman MidCap Value, Federated High Yield, AST
Money Market, T. Rowe Price Asset Allocation, T. Rowe Price International
Equity, T. Rowe Price Natural Resources, T. Rowe Price International Bond, T.
Rowe Price Small Company Value, Founders Capital Appreciation, Founders
Passport, INVESCO Equity Income, PIMCO Total Return Bond, PIMCO Limited Maturity
Bond, Neuberger&Berman MidCap Growth, Robertson Stephens Value + Growth, AST
Putnam Value Growth & Income, AST Putnam International Equity, AST Putnam
Balanced, Twentieth Century Strategic Balanced, Twentieth Century International
Growth, Cohen & Steers Realty, Stein Roe Venture, Bankers Trust Enhanced 500,
Marsico Capital Growth); (b) The Alger American Fund (portfolios - Growth, Small
Capitalization, MidCap Growth); (c) Neuberger&Berman Advisers Management Trust
(portfolio - Partners); (d) Montgomery Variable Series (portfolio - Emerging
Markets); and (e) Life and Annuity Trust (portfolio - Equity Value).
The Partners Portfolio of the Neuberger&Berman Advisor Management Trust is not
available as an investment option on Annuities issued on or after May 1, 1998.
Owners of Annuities with Account Value allocated to the NB Partners Sub-account
on May 1, 1998 may remain in the Sub-Account. However, no new allocations may be
made to the NB Partners Sub-Account on or after May 1, 1998. The Partners
portfolio of the Neuberger&Berman Advisors Management Trust and the NB Partners
Sub-Account of Separate Account B are the subject of an application with the
Securities and Exchange Commission to substitute shares of such portfolio for
shares of the Neuberger&Berman MidCap Value portfolio of American Skandia Trust.
Upon approval of the application for exemptive relief allowing the substitution,
Annuity Owners will be granted certain rights to transfer Account Value without
penalty.
The following changes to the American Skandia Trust ("AST") were approved by a
vote of shareholders on [DATE]. The respective shareholders of the Federated
Utility Income and Berger Capital Growth portfolios of AST have reappointed
American Skandia Investment Services, Incorporated (the "Manager") as investment
manager; appointed Neuberger&Berman Management Incorporated as new portfolio
sub-advisor, changed the respective portfolios' investment objectives and
certain fundamental investment restrictions, and changed the portfolios' names
to the "Neuberger&Berman MidCap Value Portfolio" and "Neuberger&Berman MidCap
Growth Portfolio", respectively.
In most jurisdictions, we also offer the option during the accumulation phase of
earning one or more fixed rates of interest on all or a portion of your Account
Value. As of the date of this Prospectus, we offered the option to make
allocations at interest rates that could be guaranteed for 1, 2, 3, 5, 7 and 10
years. Each such Fixed Allocation earns the fixed interest rate applicable as of
the date of such allocation. The interest rate credited to a Fixed Allocation
does not change during its Guarantee Period. You may maintain multiple Fixed
Allocations. From time-to-time we declare Current Rates for Fixed Allocations
beginning a new Guarantee Period. The rates we declare are subject to a minimum,
but we may declare higher rates. The minimum is determined in relation to an
index that we do not control.
The end of a Guarantee Period for a specific Fixed Allocation is called its
Maturity Date. At that time, the Guarantee Period normally "renews" and we begin
crediting interest for a new Guarantee Period lasting the same amount of time as
the one just ended. That Fixed Allocation then earns interest during the new
Guarantee Period at a rate that is not less than the one then being earned by
Fixed Allocations for that Guarantee Period by new Annuity purchasers in the
same class. You also may choose a different Guarantee Period from among those we
are then currently making available or you may transfer that Account Value to a
variable Sub-account.
In the payout phase, you may elect fixed annuity payments based on our then
current annuity rates. We also may make available adjustable annuity rates.
For more information, see the section entitled "Investment Options", including
the following subsections: (a) Variable Investment Options; and (b) Fixed
Investment Options.
(2) Operations of the Separate Accounts: In the accumulation phase, the
assets supporting guarantees we make in relation to Fixed Allocations are held
in our Separate Account D. This is a "non-unitized" separate account. However,
values and benefits calculated on the basis of Fixed Allocations are guaranteed
by our general account. In the payout phase, fixed annuity payments and any
adjustable annuity payments we may make available are also guaranteed by our
general account, but the assets supporting such payments are not held in
Separate Account D.
In the accumulation phase, the assets supporting the Account Values maintained
in the Sub-accounts are held in our Separate Account B. These are Class 1
Sub-accounts of Separate Account B. Values and benefits based on these
Sub-accounts are not guaranteed and will vary with the investment performance of
the underlying mutual funds or fund portfolios, as applicable.
For more information, see the section entitled Operations of the Separate
Accounts, including the following subsections: (a) Separate Accounts; (b)
Separate Account B; and (c) Separate Account D.
(3) Insurance Aspects of the Annuity: There are insurance risks which
we bear in relation to the Annuity. For more information, see the section
entitled Insurance Aspects of the Annuity.
(4) Charges Assessed or Assessable Against the Annuity: The Annuity
charges which are assessed or may be assessable under certain circumstances are
the contingent deferred sales charge, the maintenance fee, a charge for taxes
and a transfer fee. These charges are allocated according to our rules. We may
also charge for certain special services. For more information, see the section
entitled Charges Assessed or Assessable Against the Annuity, including the
following subsections: (a) Contingent Deferred Sales Charge; (b) Maintenance
Fee; (c) Tax Charges; (d) Transfer Fee; and (e) Allocation of Annuity Charges.
(5) Charges Assessed Against the Assets: The charges assessed against
assets in the Sub-accounts are the administration charge and the mortality and
expense risk charges. There are no charges deducted from the assets supporting
Fixed Allocations. For more information, see the section entitled Charges
Assessed Against the Assets, including the following subsections: (a)
Administration Charge; and (b) Mortality and Expense Risk Charges.
(6) Charges Of The Underlying Mutual Funds: Each underlying mutual fund
assesses various charges, including charges for investment management and
investment advisory fees. These charges generally differ between portfolios
within the same underlying mutual fund. You will find additional details in each
fund prospectus and its statement of additional information.
(7) Purchasing Annuities: Annuities are available for multiple uses,
including as a funding vehicle for various retirement programs which qualify for
special treatment under the Code. We may require a properly completed
Application, an acceptable Purchase Payment, and any other materials under our
underwriting rules before we agree to issue an Annuity. You have the right to
return an Annuity within a "free-look" period if you are not satisfied with it.
In most jurisdictions, the initial Purchase Payment and any Purchase Payments
received during the "free-look" period are allocated according to your
instructions. In jurisdictions that require a "free-look" provision such that,
if the Annuity is returned under that provision, we must return at least your
Purchase Payments less any withdrawals, we temporarily allocate such Purchase
Payments to the AST Money Market Sub-account. Where permitted by law in such
jurisdictions, we will allocate such Purchase Payments according to your
instructions, without any temporary allocation to the AST Money Market
Sub-account, if you execute a return waiver. We offer a balanced investment
program in relation to your initial Purchase Payment. Certain designations must
be made, including an Owner and an Annuitant. You may also make certain other
designations that apply to the Annuity if issued. These designations include a
contingent Owner, a Contingent Annuitant (Contingent Annuitants may be required
in conjunction with certain uses of the Annuity), a Beneficiary, and a
contingent Beneficiary. See the section entitled Purchasing Annuities, including
the following subsections: (a) Uses of the Annuity; (b) Application and Initial
Payment; (c) Skandia's Systematic Investment Plan; (d) Periodic Purchase
Payments; (e) Right to Return the Annuity; (f) Allocation of Net Purchase
Payments; (g) Balanced Investment Program; and (h) Ownership, Annuitant and
Beneficiary Designations.
(8) Account Value and Surrender Value: In the accumulation phase your
Annuity has an Account Value. Your total Account Value as of a particular date
is the sum of your Account Value in each Sub-account and in each Fixed
Allocation. Surrender Value is the Account Value less any applicable contingent
deferred sales charge and any applicable maintenance fee. To determine your
Account Value in each Sub-account we multiply the Unit Price as of the Valuation
Period for which the calculation is being made times the number of Units
attributable to you in that Sub-account as of that Valuation Period. We also
determine your Account Value separately for each Fixed Allocation. A Fixed
Allocation's Account Value as of a particular date is determined by multiplying
its then current Interim Value times the MVA. No MVA applies to a Fixed
Allocation as of its Maturity Date, and, where required by law, the 30 days
prior to the Maturity Date. Under certain circumstances, the MVA formula may
change. For more information, see the section entitled Account Value and
Surrender Value, including the following subsections: (a) Account Value in the
Sub-accounts; (b) Account Value of Fixed Allocations; and (c) Additional Amounts
in the Fixed Allocations.
(9) Rights, Benefits and Services: You have a number of rights and
benefits under an Annuity once issued. We also currently provide a number of
services to Owners. These rights, benefits and services are subject to a number
of rules and conditions. These rights, benefits and services include, but are
not limited to, those described in this Prospectus. We accept additional
Purchase Payments during the accumulation phase. You may use bank drafting to
make Purchase Payments. We support certain Periodic Purchase Payment programs
subject to our rules. You may change revocable designations. You may transfer
Account Values between investment options. Transfers in excess of 12 per Annuity
Year are subject to a fee. We offer dollar cost averaging and rebalancing during
the accumulation phase. During the accumulation phase, surrender, free
withdrawals and partial withdrawals are available, as are medically-related
surrenders under which the contingent deferred sales charge is waived under
specified circumstances. In the accumulation phase we offer Systematic
Withdrawals and, for Annuities used in qualified plans, Minimum Distributions.
We offer fixed annuity options, and may offer adjustable annuity options, that
can guarantee payments for life. In the accumulation phase, a death benefit may
be payable. You may transfer or assign your Annuity unless such rights are
limited in conjunction with certain uses of the Annuity. You may exercise
certain voting rights in relation to the underlying mutual fund portfolios in
which the Sub-accounts invest. You have the right to receive certain reports
periodically.
For additional information, see the section entitled Rights, Benefits and
Services including the following subsections: (a) Additional Purchase Payments;
(b) Changing Revocable Designations; (c) Allocation Rules; (d) Transfers; (e)
Renewals; (f) Dollar Cost Averaging; (g) Rebalancing; (h) Distributions
(including: (i) Surrender; (ii) Medically-Related Surrender; (iii) Free
Withdrawals; (iv) Partial Withdrawals; (v) Systematic Withdrawals; (vi) Minimum
Distributions; (vii) Death Benefit; (viii) Annuity Payments; and (ix) Qualified
Plan Withdrawal Limitations); (i) Pricing of Transfers and Distributions (j)
Voting Rights; (k) Transfers, Assignments and Pledges; and (l) Reports to You.
(10) The Company: American Skandia Life Assurance Corporation is a
wholly owned subsidiary of American Skandia Investment Holding Corporation,
whose indirect parent is Skandia Insurance Company Ltd. Skandia Insurance
Company Ltd. is a Swedish company that holds a number of insurance companies in
many countries. The predecessor to Skandia Insurance Company Ltd. commenced
operations in 1855. For more information, see the section entitled The Company
and the following subsections: (a) Lines of Business; (b) Selected Financial
Data; (c) Management's Discussion and Analysis of Financial Condition and
Results of Operations (including: (i) Results of Operations; (ii) Liquidity and
Capital Resources; and (iii) Segment Information); (d) Reinsurance; (e)
Reserves; (f) Competition; (g) Employees; (h) Regulation; and (i) Executive
Officers and Directors.
AVAILABLE INFORMATION: A Statement of Additional Information is available from
us without charge upon request by filling in the coupon at the end of this
Prospectus and sending it (or a written request) to American Skandia Life
Assurance Corporation, Concierge Desk, P.O. Box 883, Shelton, CT 06484. You also
may forward such a request electronically to our Customer Service Department or
call us at 1-800-752-6342. Our electronic mail address is
[email protected]. It includes further information, as described in
the section of this Prospectus entitled "Contents of the Statement of Additional
Information". This Prospectus is part of the registration statements we filed
with the Securities and Exchange Commission ("SEC") regarding this offering.
Additional information on us and this offering is available in those
registration statements and the exhibits thereto. You may obtain copies of these
materials at the prescribed rates from the SEC's Public Reference Section, 450
Fifth Street N.W., Washington, D.C., 20549. You may inspect and copy those
registration statements and the exhibits thereto at the SEC's public reference
facilities at the above address, Rm. 1024, and at the SEC's Regional Offices, 7
World Trade Center, New York, NY, and the Everett McKinley Dirksen Building, 219
South Dearborn Street, Chicago, IL. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http://www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE: To the extent and only to the
extent that any statement in a document incorporated by reference into this
Prospectus is modified or superseded by a statement in this Prospectus or in a
later-filed document, such statement is hereby deemed so modified or superseded
and not part of this Prospectus. The Annual Report on Form 10-K for the year
ended December 31, 1997 previously filed by the Company with the SEC under the
Securities Exchange Act of 1934 is incorporated by reference in this Prospectus.
We furnish you without charge a copy of any or all of the documents incorporated
by reference in this Prospectus, including any exhibits to such documents which
have been specifically incorporated by reference. We do so upon receipt of your
written or oral request. Please address your request to American Skandia Life
Assurance Corporation, Attention: Concierge Desk, P.O. Box 883, Shelton,
Connecticut, 06484. Our phone number is 1-800-752-6342. Our electronic mail
address is [email protected].
CONTRACT EXPENSE SUMMARY: The summary provided below includes information
regarding the expenses for your Annuity, for the Sub-accounts and for the
underlying mutual fund portfolios. The only expense applicable if you allocate
all your Account Value to Fixed Allocations would be the contingent deferred
sales charge. More detail regarding the expenses of the underlying mutual funds
and their portfolios may be found either in the prospectuses for such mutual
funds or in the annual reports of such mutual funds. The expenses of our
Sub-accounts (not those of the underlying mutual fund portfolios in which our
Sub-accounts invest) are the same no matter which Sub-account you choose.
Therefore, these expenses are only shown once below. In certain states, premium
taxes may be applicable.
<TABLE>
<CAPTION>
Your Transaction Expenses
<S> <C> <C> <C> <C>
Contingent Deferred Sales Charge, as a Year 1 -7.5%; year 2 - 7.0%; year 3-6.0%; year 4 - 5.0% year 5 - 4.0%;
percentage of Purchase Payments liquidated, year 6 - 3.0%; year 7 - 2.0% year 8 and thereafter - 0% of each
outside New York State Purchase Payment as measured from the date it was allocated to
Account Value
Contingent Deferred Sales Charge, as a Year 1 -7.0%; year 2 - 6.0%; year 3-5.0%; year 4 - 4.0% year 5 - 3.0%;
percentage of Purchase Payments liquidated, year 6 - 2.0%; year 7 - 1.0% year 8 and thereafter - 0% of each
in New York State Purchase Payment as measured from the date it was allocated to
Account Value
Annual Maintenance Fee Smaller of $30 or 2% of Account Value
Tax Charges Dependent on the requirements of the applicable jurisdiction
Transfer Fee $10 for each transfer after the twelfth in any Annuity Year
Annual Expenses of the Sub-accounts (as a percentage of average daily net assets)
Mortality and Expense Risk Charges 1.25%
Administration Charge 0.15%
-----
Total Annual Expenses of the Sub-accounts 1.40%
</TABLE>
Underlying Mutual Fund Portfolio Annual Expenses (as a percentage of average net
assets)
Unless otherwise indicated, the expenses shown below are for the year ending
December 31, 1997. "N/A" indicates that no entity has agreed to reimburse the
particular expense indicated. The expenses of the portfolios either are
currently being partially reimbursed or may be partially reimbursed in the
future. Management Fees, Other Expenses and Total Annual Expenses are provided
on both a reimbursed and not reimbursed basis, if applicable. See the
prospectuses or statements of additional information of the underlying mutual
funds for details.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Total Total
Annual Annual
Management Management Other Other Expenses Expenses
Fee Fee Expenses Expenses after any without any
after any without any after any without any applicable applicable
Portfolio: voluntary voluntary any applicable applicable waiver or waiver or
waiver waiver reimbursement reimbursement reimbursement reimbursement
- ------------------------------------------------------------------------------------------------------------------------------------
American Skandia Trust
Lord Abbett Growth and Income
Lord Abbett Small Cap Value
JanCap Growth
AST Janus Overseas Growth
AST Money Market
Neuberger&Berman MidCap Value
Federated High Yield
T. Rowe Price Asset Allocation
T. Rowe Price Int'l Equity
T. Rowe Price Natural Resources
T. Rowe Price Int'l Bond
T. Rowe Price Small Co. Value
Founders Capital Appreciation
Founders Passport
INVESCO Equity Income To be filed by amendment
PIMCO Total Return Bond
PIMCO Limited Maturity Bond
Neuberger&Berman MidCap Growth
Robertson Stephens Value + Growth
Twentieth Century Int'l Growth
Twentieth Century Strategic Balanced
AST Putnam Value Growth & Income
AST Putnam Int'l Equity
AST Putnam Balanced
Cohen & Steers Realty
Stein Roe Venture
Bankers Trust Enhanced 500
Marsico Capital Growth
The Alger American Fund
Growth
Small Capitalization
MidCap Growth
Neuberger&Berman Advisers
Management Trust
Partners
Montgomery Variable Series
Emerging Markets
Life & Annuity Trust
Equity Value
</TABLE>
[Footnotes to be filed by amendment]
The purpose of the above table is to assist you in understanding the various
costs and expenses that you would bear directly or indirectly as an investor in
the Portfolio(s).
The underlying mutual fund portfolio information was provided by the underlying
mutual funds. The Company has not independently verified such information.
EXPENSE EXAMPLES: The examples which follow are designed to assist you in
understanding the various costs and expenses you will bear directly or
indirectly if you maintain Account Value in the Sub-accounts. The examples
reflect expenses of our Sub-accounts, as well as those of the underlying mutual
fund portfolios.
The examples shown assume that: (a) all your Account Value is maintained only in
Sub-accounts; (b) fees and expenses remain constant; (c) there are no
withdrawals of Account Value during the period shown; (d) there are no transfers
or other transactions subject to a fee during the period shown; (e) no tax
charge applies; and (f) the expenses throughout the period for the underlying
mutual fund portfolios will be the lower of the expenses without any applicable
reimbursement or expenses after any applicable reimbursement, as shown above in
the section entitled "Contract Expense Summary."
THE EXAMPLES ARE ILLUSTRATIVE ONLY - THEY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE UNDERLYING MUTUAL FUNDS OR
THEIR PORTFOLIOS - ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
Sub-accounts are referred to below by their specific names.
<PAGE>
<TABLE>
<CAPTION>
Examples (amounts shown are rounded to the nearest dollar)
If you surrender your Annuity at the end of the If you do not surrender your Annuity at the end
applicable time period, you would pay the following of the applicable time period or begin taking
expenses on a $1,000 investment, assuming 5% annual annuity payments at such time, you would pay the
return on assets: following expenses on a $1,000 investment,
assuming 5% annual return on assets:
After: After:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sub-accounts 1 yr. 3 yr. 5 yr. 10 yr. 1 yr. 3 yr. 5 yr. 10 yr.
- ------------
JanCap Growth
AST Janus Overseas Growth
LA Growth and Income
LA Small Cap Value
NB MidCap Value
Fed High Yield
AST Money Market
T. Rowe Price Asset Allocation
T. Rowe Price International Equity
T. Rowe Price Natural Resources
T. Rowe Price International Bond
T. Rowe Price Small Company Value To be filed by amendment
Founders Capital Appreciation
Founders Passport
INVESCO Equity Income
PIMCO Total Return Bond
PIMCO Limited Maturity Bond
NB MidCap Growth
RS Value + Growth
AST Putnam Value Growth & Income
AST Putnam International Equity
AST Putnam Balanced
Twentieth Century Strategic Balanced
Twentieth Century International Growth
Cohen & Steers Realty
Stein Roe Venture
Bankers Trust Enhanced 500
Marsico Capital Growth
AA Growth
AA Small Capitalization
AA MidCap Growth
NB Partners
MV Emerging Markets
WF Equity Value
</TABLE>
CONDENSED FINANCIAL INFORMATION: The Unit Prices and number of Units in the
Sub-accounts that commenced operations prior to January 1, 1998 are shown below,
as is yield information on the AST Money Market Sub-account. All or some of
these Sub-accounts were available during the periods shown as investment options
for other variable annuities we offer pursuant to different prospectuses. The
charges assessed against the Sub-accounts under the terms of those other
variable annuities are the same as the charges assessed against such
Sub-accounts under the Annuity offered pursuant to this Prospectus.
Unit Prices And Numbers Of Units: The following table shows: (a) the
Unit Price as of the dates shown for Units in each of the Class 1 Sub-accounts
of Separate Account B that commenced operations prior to January 1, 1998 and are
being offered pursuant to this Prospectus or which we offer pursuant to certain
other prospectuses; and (b) the number of Units outstanding in each such
Sub-account as of the dates shown. The year in which operations commenced in
each such Sub-account is noted in parentheses. The portfolios in which a
particular Sub-account invests may or may not have commenced operations prior to
the date such Sub-account commenced operations. The initial offering price for
each Sub-account was $10.00.
<TABLE>
<CAPTION>
Sub-account and the Year Sub-account Operations Commenced
AA AST
Small AA AST Putnam
Capitali- AA MidCap Money International Founders JanCap
zation Growth Growth Market Equity Passport Growth
(1988) (1988) (1993) (1992) (1989) (1995) (1992)
------ ------ ------ ------ ------ ------ ------
No. of Units
as of 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C>
as of 12/31/96 14,939,269 15,666,357 14,528,945 42,435,169 17,220,688 9,922,698 46,779,164
as of 12/31/95 12,317,364 12,092,291 8,299,743 30,564,442 14,393,137 2,601,283 28,662,737
as of 12/31/94 9,356,764 5,614,760 4,308,374 27,491,389 14,043,215 0 22,354,170
as of 12/31/93 7,101,658 2,997,458 1,450,892 11,422,783 9,063,464 0 13,603,637
as of 12/31/92 4,846,024 1,482,037 0 457,872 1,948,773 0 1,476,139
as of 12/31/91 2,172,189 559,779 0 0 1,092,902 0 0
as of 12/31/90 419,718 82,302 0 0 398,709 0 0
as of 12/31/89 35,438 6,900 0 0 29,858 0 0
as of 12/31/88 3,000 0 0 0 0 0 0
Unit Price
as of 12/31/97
as of 12/31/96 $40.85 $34.84 $20.96 $11.16 $19.70 $11.39 $18.79
as of 12/31/95 39.78 31.18 19.00 10.77 18.23 10.23 14.85
as of 12/31/94 27.95 23.18 13.34 10.35 16.80 0 10.91
as of 12/31/93 29.65 23.18 13.74 10.12 16.60 0 11.59
as of 12/31/92 26.54 19.19 0 10.01 12.37 0 10.51
as of 12/31/91 26.00 17.32 0 0 13.69 0 0
as of 12/31/90 16.74 12.51 0 0 12.98 0 0
as of 12/31/89 15.61 12.19 0 0 13.64 0 0
as of 12/31/88 9.63 9.96 0 0 0 0 0
</TABLE>
<TABLE>
Sub-account and the Year Sub-account Operations Commenced
LA T. Rowe T. Rowe T. Rowe
Growth AST NB Fed Price Price Price
and Putnam MidCap High Asset International Natural
Income Balanced Value1 Yield Allocation Equity Resources
(1992) (1993) (1993) (1994) (1994) (1994) (1995)
------ ------ ------ ------ ------ ------ ------
No. of Units
as of 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C>
as of 12/31/96 28,937,085 20,691,852 9,062,152 15,460,522 8,863,840 32,628,595 6,061,852
as of 12/31/95 18,411,759 20,163,848 8,642,186 6,915,158 4,868,956 17,935,251 808,605
as of 12/31/94 7,479,449 13,986,604 7,177,232 2,106,791 2,320,063 11,166,758 0
as of 12/31/93 4,058,228 8,743,758 5,390,887 0 0 0 0
as of 12/31/92 956,949 0 0 0 0 0 0
as of 12/31/91 0 0 0 0 0 0 0
as of 12/31/90 0 0 0 0 0 0 0
as of 12/31/89 0 0 0 0 0 0 0
as of 12/31/88 0 0 0 0 0 0 0
Unit Price
as of 12/31/97
as of 12/31/96 $17.79 $13.70 $13.41 $12.62 $13.30 $11.70 $14.19
as of 12/31/95 15.22 12.49 12.20 11.27 11.92 10.39 11.01
as of 12/31/94 11.98 10.34 9.81 9.56 9.80 9.49 0
as of 12/31/93 11.88 10.47 10.69 0 0 0 0
as of 12/31/92 10.60 0 0 0 0 0 0
as of 12/31/91 0 0 0 0 0 0 0
as of 12/31/90 0 0 0 0 0 0 0
as of 12/31/89 0 0 0 0 0 0 0
as of 12/31/88 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
Sub-account and the Year Sub-account Operations Commenced
T. Rowe PIMCO PIMCO
Price Founders INVESCO Total Limited NB
International Capital Equity Return Maturity MidCap NB
Bond Appreciation Income Bond Bond Growth2 Partners
(1994) (1994) (1994) (1994) (1995) (1994) (1995)
------ ----- ------ ------ ------ ------ ------
No. of Units
as of 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C>
as of 12/31/96 8,677,712 12,282,211 23,592,226 29,921,643 18,894,375 9,563,858 18,457,334
as of 12/31/95 4,186,695 6,076,373 13,883,712 19,061,840 15,058,644 3,658,836 7,958,498
as of 12/31/94 1,562,364 2,575,105 6,633,333 4,577,708 0 301,267 0
as of 12/31/93 0 0 0 0 0 0 0
as of 12/31/92 0 0 0 0 0 0 0
as of 12/31/91 0 0 0 0 0 0 0
as of 12/31/90 0 0 0 0 0 0 0
as of 12/31/89 0 0 0 0 0 0 0
as of 12/31/88 0 0 0 0 0 0 0
Unit Price
as of 12/31/97
as of 12/31/96 $10.98 $16.54 $14.23 $11.48 $10.62 $13.99 $15.39
as of 12/31/95 10.51 13.97 12.33 11.26 10.37 12.20 12.05
as of 12/31/94 9.59 10.69 9.61 9.61 0 9.94 0
as of 12/31/93 0 0 0 0 0 0 0
as of 12/31/92 0 0 0 0 0 0 0
as of 12/31/91 0 0 0 0 0 0 0
as of 12/31/90 0 0 0 0 0 0 0
as of 12/31/89 0 0 0 0 0 0 0
as of 12/31/88 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
Sub-account and the Year Sub-account Operations Commenced
RS MV AST Twentieth Century Twentieth Century AST T. Rowe Price
Value + Emerging Putnam Value Strategic International Janus Small Company
Growth Markets Growth & Income Balanced Growth Overseas Growth Value
(1996) (1996) (1997) (1997) (1997) (1997) (1997)
No. of Units
as of 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C>
as of 12/31/96 4,324,161 2,360,940 0 0 0 0 0
as of 12/31/95 0 0 0 0 0 0 0
as of 12/31/94 0 0 0 0 0 0 0
as of 12/31/93 0 0 0 0 0 0 0
as of 12/31/92 0 0 0 0 0 0 0
as of 12/31/91 0 0 0 0 0 0 0
as of 12/31/90 0 0 0 0 0 0 0
as of 12/31/89 0 0 0 0 0 0 0
as of 12/31/88 0 0 0 0 0 0 0
Unit Price
as of 12/31/97
as of 12/31/96 $10.89 $10.25 0 0 0 0 0
as of 12/31/95 0 0 0 0 0 0 0
as of 12/31/94 0 0 0 0 0 0 0
as of 12/31/93 0 0 0 0 0 0 0
as of 12/31/92 0 0 0 0 0 0 0
as of 12/31/91 0 0 0 0 0 0 0
as of 12/31/90 0 0 0 0 0 0 0
as of 12/31/89 0 0 0 0 0 0 0
as of 12/31/88 0 0 0 0 0 0 0
</TABLE>
Sub-account and the Year Sub-account Operations Commenced
Marsico
Capital
Growth
(1997)
No. of Units
as of 12/31/97
as of 12/31/96 0
as of 12/31/95 0
as of 12/31/94 0
as of 12/31/93 0
as of 12/31/92 0
as of 12/31/91 0
as of 12/31/90 0
as of 12/31/89 0
as of 12/31/88 0
Unit Price
as of 12/31/97
as of 12/31/96 $0
as of 12/31/95 0
as of 12/31/94 0
as of 12/31/93 0
as of 12/31/92 0
as of 12/31/91 0
as of 12/31/90 0
as of 12/31/89 0
as of 12/31/88 0
1 The Neuberger&Berman MidCap Value Portfolio was formerly called the Federated
Utility Income Portfolio. The portfolio name was changed pursuant to a
shareholder vote on [DATE].
2 The Neuberger&Berman MidCap Growth Portfolio was
formerly called the Berger Capital Growth Portfolio. The portfolio name was
changed pursuant to a shareholder vote on [DATE].
Information is not shown above for Sub-accounts that had not commenced
operations prior to January 1, 1998.
The financial statements of the Sub-accounts being offered to you are found in
the Statement of Additional Information.
Yields On Money Market Sub-account: Shown below are the current and
effective yields for a hypothetical contract. The yield is calculated based on
the performance of the AST Money Market Sub-account during the last seven days
of the calendar year ending prior to the date of this Prospectus. At the
beginning of the seven day period, the hypothetical contract had a balance of
one Unit. The current and effective yields reflect the recurring charges against
the Sub-account. Please note that current and effective yield information will
fluctuate. This information may not provide a basis for comparisons with
deposits in banks or other institutions which pay a fixed yield over a stated
period of time, or with investment companies which do not serve as underlying
funds for variable annuities.
Sub-account Current Yield Effective Yield
AST Money Market [ ] [ ]
INVESTMENT OPTIONS: We offer a range of variable and fixed options as ways to
invest your Account Value. Compensation to your representative may depend on the
investment options selected (see "Sale of the Annuities").
Variable Investment Options: During the accumulation phase, we offer a
number of Sub-accounts as variable investment options. These are all Class 1
Sub-accounts of American Skandia Life Assurance Corporation Variable Account B
("Separate Account B"). Each of these Sub-accounts invests exclusively in one
underlying mutual fund, or a portfolio of an underlying mutual fund. As of the
date of this Prospectus, our Sub-accounts and the underlying mutual funds or
portfolios in which they invest are as follows:
<TABLE>
<CAPTION>
Underlying Mutual Fund: American Skandia Trust
<S> <C> <C> <C>
Sub-account Underlying Mutual Fund Portfolio
JanCap Growth JanCap Growth
AST Janus Overseas Growth AST Janus Overseas Growth
LA Growth and Income Lord Abbett Growth and Income
LA Small Cap Value Lord Abbett Small Cap Value
NB MidCap Value Neuberger&Berman MidCap Value
Fed High Yield Federated High Yield
AST Money Market AST Money Market
T. Rowe Price Asset Allocation T. Rowe Price Asset Allocation
T. Rowe Price International Equity T. Rowe Price International Equity
T. Rowe Price Natural Resources T. Rowe Price Natural Resources
T. Rowe Price International Bond T. Rowe Price International Bond
T. Rowe Price Small Company Value T. Rowe Price Small Company Value
Founders Capital Appreciation Founders Capital Appreciation
Founders Passport Founders Passport
INVESCO Equity Income INVESCO Equity Income
PIMCO Total Return Bond PIMCO Total Return Bond
PIMCO Limited Maturity Bond PIMCO Limited Maturity Bond
NB MidCap Growth Neuberger&Berman MidCap Growth
RS Value + Growth Robertson Stephens Value + Growth
AST Putnam Value Growth & Income AST Putnam Value Growth & Income
AST Putnam International Equity AST Putnam International Equity
AST Putnam Balanced AST Putnam Balanced
Twentieth Century Strategic Balanced Twentieth Century Strategic Balanced
Twentieth Century International Growth Twentieth Century International Growth
Cohen & Steers Realty Cohen & Steers Realty
Stein Roe Venture Stein Roe Venture
Bankers Trust Enhanced 500 Bankers Trust Enhanced 500
Marsico Capital Growth Marsico Capital Growth
Underlying Mutual Fund: The Alger American Fund
Sub-account Underlying Mutual Fund Portfolio
AA Growth Growth
AA Small Capitalization Small Capitalization
AA MidCap Growth MidCap Growth
Underlying Mutual Fund: Neuberger&Berman Advisers
Management Trust
Sub-account Underlying Mutual Fund Portfolio
NB Partners Partners
Underlying Mutual Fund: Montgomery Variable Series
Sub-account Underlying Mutual Fund Portfolio
MV Emerging Markets Montgomery Variable Series: Emerging Markets
Underlying Mutual Fund: Life and Annuity Trust
Sub-account Underlying Mutual Fund Portfolio
WF Equity Value Equity Value
</TABLE>
The Partners Portfolio of the Neuberger&Berman Advisor Management Trust is not
available as an investment option on Annuities issued on or after May 1, 1998.
Owners of Annuities with Account Value allocated to the NB Partners Sub-account
on May 1, 1998 may remain in the Sub-Account. However, no new allocations may be
made to the NB Partners Sub-Account on or after May 1, 1998. The Partners
portfolio of the Neuberger&Berman Advisors Management Trust and the NB Partners
Sub-Account of Separate Account B are the subject of an application with the
Securities and Exchange Commission to substitute shares of such portfolio for
shares of the Neuberger&Berman MidCap Value portfolio of American Skandia Trust.
Upon approval of the application for exemptive relief allowing the substitution,
Annuity Owners will be granted certain rights to transfer Account Value without
penalty.
The following changes to the American Skandia Trust ("AST") were approved by a
vote of shareholders on [DATE]. The respective shareholders of the Federated
Utility Income and Berger Capital Growth portfolios of AST have reappointed
American Skandia Investment Services, Incorporated (the "Manager") as investment
manager; appointed Neuberger&Berman Management Incorporated as new portfolio
sub-advisor, changed the respective portfolios' investment objectives and
certain fundamental investment restrictions, and changed the portfolios' names
to the "Neuberger&Berman MidCap Value Portfolio" and "Neuberger&Berman MidCap
Growth Portfolio", respectively.
Certain Sub-accounts may not be available in all jurisdictions. If and when we
obtain approval of the applicable authorities to make such variable investment
options available, we will notify Owners of the availability of such
Sub-accounts.
We may make other underlying mutual funds available by creating new
Sub-accounts. Additionally, new portfolios may be made available by the creation
of new Sub-accounts from time to time. Such a new portfolio of an underlying
mutual fund may be disclosed in its prospectus. However, addition of a portfolio
does not require us to create a new Sub-account to invest in that portfolio. We
may take other actions in relation to the Sub-accounts and/or Separate Account B
(see "Modifications").
Each underlying mutual fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act") as an open-end management investment company.
Each underlying mutual fund or portfolio thereof may or may not be diversified
as defined in the 1940 Act. As of the date of this Prospectus, the portfolios in
which Sub-accounts offered pursuant to this Prospectus invest are those shown
above. A summary of the investment objectives and policies of such underlying
mutual fund portfolios is found in Appendix B. The trustees or directors, as
applicable, of an underlying mutual fund may add, eliminate or substitute
portfolios from time to time. Generally, each portfolio issues a separate class
of shares. Shares of the underlying mutual fund portfolios are available to
separate accounts of life insurance companies offering variable annuity and
variable life insurance products. The shares may also be made available, subject
to obtaining all required regulatory approvals, for direct purchase by various
pension and retirement savings plans that qualify for preferential tax treatment
under the Code.
The investment objectives, policies, charges, operations, the attendant risks
and other details pertaining to each underlying mutual fund portfolio are
described in the prospectus of each underlying mutual fund and the statements of
additional information for such underlying mutual fund. Also included in such
information is the investment policy of each mutual fund or portfolio regarding
the acceptable ratings by recognized rating services for bonds and other debt
obligations. There can be no guarantee that any underlying mutual fund or
portfolio will meet its investment objectives.
Shares of the underlying mutual funds may be available to variable life
insurance and variable annuity separate accounts of other insurance companies.
Possible consequences of this multiple availability are discussed in the
subsection entitled Resolving Material Conflicts.
The prospectus for any underlying mutual fund or funds being considered by you
should be read in conjunction herewith. A copy of each prospectus may be
obtained without charge from us by calling our Concierge Desk, 1-800-752-6342 or
writing to us at either P.O. Box 883, Attention: Concierge Desk, Shelton,
Connecticut, 06484-0883, or to our electronic mail address which is
[email protected].
Fixed Investment Options: For the payout phase you may elect fixed
annuity payments based on our then current annuity rates. The discussion below
describes the fixed investment options in the accumulation phase.
As of the date of this Prospectus we offer in most jurisdictions in which the
Annuity is available Fixed Allocations with Guarantee Periods of 1, 2, 3, 5, 7
and 10 years. Each such Fixed Allocation is accounted for separately. Each Fixed
Allocation earns a fixed rate of interest throughout a set period of time called
a Guarantee Period. Multiple Fixed Allocations are permitted, subject to our
allocation rules. The duration of a Guarantee Period may be the same or
different from the duration of the Guarantee Periods of any of your prior Fixed
Allocations.
We may or may not be able to obtain approval in the future in certain
jurisdictions of endorsements to individual or group annuities that include the
type of Fixed Allocations offered pursuant to this Prospectus. If such approval
is obtained, we may take those steps needed to make such Fixed Allocations
available to purchasers to whom Annuities were issued prior to the date of such
approval.
To the extent permitted by law, we reserve the right at any time to offer
Guarantee Periods with durations that differ from those which were available
when your Annuity was issued. We also reserve the right at any time to stop
accepting new allocations, transfers or renewals for a particular Guarantee
Period. Such an action may have an impact on the MVA (see "Account Value of the
Fixed Allocations").
A Guarantee Period for a Fixed Allocation begins: (a) when all or part of a Net
Purchase Payment is allocated for that particular Guarantee Period; (b) upon
transfer of any of your Account Value to a Fixed Allocation for that particular
Guarantee Period; or (c) when a Guarantee Period attributable to a Fixed
Allocation "renews" after its Maturity Date.
We declare the rates of interest applicable during the various Guarantee Periods
offered. Declared rates are effective annual rates of interest. The rate of
interest applicable to a Fixed Allocation is the one in effect when its
Guarantee Period begins. The rate is guaranteed throughout the Guarantee Period.
We inform you of the interest rate applicable to a Fixed Allocation, as well as
its Maturity Date, when we confirm the allocation. We declare interest rates
applicable to new Fixed Allocations from time-to-time. Any new Fixed Allocation
in an existing Annuity is credited interest at a rate not less than the rate we
are then crediting to Fixed Allocations for the same Guarantee Period selected
by new Annuity purchasers in the same class.
To the extent permitted by law, we reserve the right, from time to time, to
increase interest rates offered to the class of Owners who, during the term of
such offering, choose to participate in various services we make available. This
may include, but is not limited to, Owners who elect to use dollar cost
averaging from Fixed Allocations (see "Dollar Cost Averaging") or the balanced
investment program (see "Balanced Investment Program"). We may do so at our sole
discretion.
The interest rates we credit are subject to a minimum. We may declare a higher
rate. The minimum is based on both an index and a reduction to the interest rate
determined according to the index.
The index is based on the published rate for certificates of indebtedness
(bills, notes or bonds, depending on the term of indebtedness) of the United
States Treasury at the most recent Treasury auction held at least 30 days prior
to the beginning of the applicable Fixed Allocation's Guarantee Period. The term
(length of time from issuance to maturity) of the certificates of indebtedness
upon which the index is based is the same as the duration of the Guarantee
Period. If no certificates of indebtedness are available for such term, the next
shortest term is used. If the United States Treasury's auction program is
discontinued, we will substitute indexes which in our opinion are comparable. If
required, implementation of such substitute indexes will be subject to approval
by the Securities and Exchange Commission and the Insurance Department of the
jurisdiction in which your Annuity was delivered. (For Annuities issued as
certificates of participation in a group contract, it is our expectation that
approval of only the jurisdiction in which such group contract was delivered
applies.)
The reduction used in determining the minimum interest rate is two and one
quarter percent of interest (2.25%).
Where required by the laws of a particular jurisdiction, a specific minimum
interest rate, compounded yearly, will apply should the index less the reduction
be less than the specific minimum interest rate applicable to that jurisdiction.
WE MAY CHANGE THE INTEREST RATES WE CREDIT NEW FIXED ALLOCATIONS AT ANY TIME.
Any such change does not have an impact on the rates applicable to Fixed
Allocations with Guarantee Periods that began prior to such change. However,
such a change will affect the MVA (see "Account Value of the Fixed
Allocations").
We have no specific formula for determining the interest rates we declare. Rates
may differ between classes and between types of annuities we offer, even for
guarantees of the same duration starting at the same time. We expect our
interest rate declarations for Fixed Allocations to reflect the returns
available on the type of investments we make to support the various classes of
annuities supported by the assets in Separate Account D. However, we may also
take into consideration in determining rates such factors including, but not
limited to, the durations offered by the annuities supported by the assets in
Separate Account D, regulatory and tax requirements, the liquidity of the
secondary markets for the type of investments we make, commissions,
administrative expenses, investment expenses, our mortality and expense risks in
relation to Fixed Allocations, general economic trends and competition. OUR
MANAGEMENT MAKES THE FINAL DETERMINATION AS TO INTEREST RATES TO BE CREDITED. WE
CANNOT PREDICT THE RATES WE WILL DECLARE IN THE FUTURE.
OPERATIONS OF THE SEPARATE ACCOUNTS: The assets supporting our obligations under
the Annuities may be held in various accounts, depending on the obligation being
supported. In the accumulation phase, assets supporting Account Values are held
in separate accounts established under the laws of the State of Connecticut. In
the payout phase, assets supporting fixed annuity payments and any adjustable
annuity payments we make available are held in our general account.
Separate Accounts: We are the legal owner of assets in the separate
accounts. Income, gains and losses, whether or not realized, from assets
allocated to these separate accounts, are credited to or charged against each
such separate account in accordance with the terms of the annuities supported by
such assets without regard to our other income, gains or losses or to the
income, gains or losses in any other of our separate accounts. We will maintain
assets in each separate account with a total market value at least equal to the
reserve and other liabilities we must maintain in relation to the annuity
obligations supported by such assets. These assets may only be charged with
liabilities which arise from such annuities. This may include Annuities offered
pursuant to this Prospectus or certain other annuities we may offer. The
investments made by separate accounts are subject to the requirements of
applicable state laws. These investment requirements may differ between those
for separate accounts supporting variable obligations and those for separate
accounts supporting fixed obligations.
Separate Account B: In the accumulation phase, the assets supporting
obligations based on allocations to the variable investment options are held in
our Separate Account B. Separate Account B consists of multiple Sub-accounts.
Separate Account B was established by us pursuant to Connecticut law. Separate
Account B also holds assets of other annuities issued by us with values and
benefits that vary according to the investment performance of Separate Account
B.
The Sub-accounts offered pursuant to this Prospectus are all Class 1
Sub-accounts of Separate Account B. Each class of Sub-accounts in Separate
Account B have a different level of charges assessed against such Sub-accounts.
The amount of our obligations in relation to allocations to the Sub-accounts is
based on the investment performance of such Sub-accounts. However, the
obligations themselves are our general corporate obligations.
Separate Account B is registered with the SEC under the 1940 Act as a unit
investment trust, which is a type of investment company. This does not involve
any supervision by the SEC of the investment policies, management or practices
of Separate Account B. Each Sub-account invests only in a single mutual fund or
mutual fund portfolio.
The only Sub-accounts available for allocation of your Account Value are those
offered pursuant to this Prospectus. Persons interested in our other annuities
may be offered the same or different Sub-accounts of Separate Account B or any
of our other separate accounts. Such sub-accounts may invest in some or all of
the same underlying mutual funds or portfolios of such underlying mutual funds
as the Sub-accounts offered pursuant to this Prospectus. As of the date of this
Prospectus, the Annuities offered pursuant to this Prospectus and annuities
offered pursuant to a number of other prospectuses maintained assets in Class 1
Sub-accounts. We may offer additional annuities that maintain assets in Class 1
Sub-accounts. In addition, some of the Class 1 Sub-accounts may invest in
underlying mutual funds or underlying mutual fund portfolios in which
Sub-accounts in other classes of Separate Account B invest.
You will find additional information about these underlying mutual funds and
portfolios in the prospectuses for such funds. Portfolios added to the
underlying mutual funds may or may not be offered through added Sub-accounts.
Sub-accounts are permitted to invest in underlying mutual funds or portfolios
that we consider suitable. We also reserve the right to add Sub-accounts,
eliminate Sub-accounts, to combine Sub-accounts, or to substitute underlying
mutual funds or portfolios of underlying mutual funds.
Values and benefits based on allocations to the Sub-accounts will vary with the
investment performance of the underlying mutual funds or fund portfolios, as
applicable. We do not guarantee the investment results of any Sub-account, nor
is there any assurance that the Account Value allocated to the Sub-accounts will
equal the amounts allocated to the Sub-accounts as of any time other than the
Valuation Period of such allocation. You bear the entire investment risk.
Separate Account D: In the accumulation phase, assets supporting our
obligations based on Fixed Allocations are held in Separate Account D, which is
a "non-unitized" separate account. Such obligations are based on the interest
rates we credit to Fixed Allocations and the terms of the Annuities. These
obligations do not depend on the investment performance of the assets in
Separate Account D. Separate Account D was established by us pursuant to
Connecticut law.
There are no discrete units in Separate Account D. No party with rights under
any annuity nor any group contract owner participates in the investment gain or
loss from assets belonging to Separate Account D. Such gain or loss accrues
solely to us. We retain the risk that the value of the assets in Separate
Account D may drop below the reserves and other liabilities we must maintain.
Should the value of the assets in Separate Account D drop below the reserve and
other liabilities we must maintain in relation to the annuities supported by
such assets, we will transfer assets from our general account to Separate
Account D to make up the difference. We have the right to transfer to our
general account any assets of Separate Account D in excess of such reserves and
other liabilities. We maintain assets in Separate Account D supporting a number
of annuities we offer.
If you surrender, withdraw or transfer Account Value from a Fixed Allocation
before the end of its Guarantee Period, you bear the risk inherent in the MVA
(see "Account Value of the Fixed Allocations"). The Account Value of a Fixed
Allocation is guaranteed on its Maturity Date (and, where required by law, the
30 days prior to the Maturity Date) to be its then current Interim Value.
We operate Separate Account D in a fashion designed to meet the obligations
created by Fixed Allocations. Factors affecting these operations include the
following:
(1) The State of New York, which is one of the jurisdictions in which
we are licensed to do business, requires that we meet certain "matching"
requirements. These requirements address the matching of the durations of the
assets with the durations of obligations supported by such assets. We believe
these matching requirements are designed to control an insurer's ability to risk
investing in long-term assets to support short term interest rate guarantees. We
also believe this limitation controls an insurer's ability to offer unrealistic
rate guarantees.
(2) We employ an investment strategy designed to limit the risk of
default. Some of the guidelines of our current investment strategy for Separate
Account D include, but are not limited to, the following:
(a) Investments may include cash; debt securities issued by
the United States Government or its agencies and instrumentalities; money market
instruments; short, intermediate and long-term corporate obligations; private
placements; asset-backed obligations; and municipal bonds.
(b) At the time of purchase, fixed income securities will be
in one of the top four generic lettered rating classifications as established by
a nationally recognized statistical rating organization ("NRSRO") such as
Standard & Poor's or Moody's Investor Services, Inc.
We are not obligated to invest according to the aforementioned guidelines or any
other strategy except as may be required by Connecticut and other state
insurance laws.
(3) We have the sole discretion to employ investment managers that we
believe are qualified, experienced and reputable to manage Separate Account D.
We currently employ investment managers for Separate Account D including, but
not limited to, J.P. Morgan Investment Management Inc. Each manager is
responsible for investment management of different portions of Separate Account
D. From time to time additional investment managers may be employed or
investment managers may cease being employed. We are under no obligation to
employ or continue to employ any investment manager(s).
(4) The assets in Separate Account D are accounted for at their market
value, rather than at book value.
(5) We are obligated by law to maintain our capital and surplus, as
well as our reserves, at the levels required by applicable state insurance law
and regulation.
INSURANCE ASPECTS OF THE ANNUITY: As an insurance company we bear the insurance
risk inherent in the Annuity. This includes the risks that mortality and
expenses exceed our expectations, and the investment and re-investment risks in
relation to the assets supporting obligations not based on the investment
performance of a separate account. We are subject to regulation that requires
reserving and other practices in a manner that minimizes the insurance risk (see
"Regulation").
CHARGES ASSESSED OR ASSESSABLE AGAINST THE ANNUITY: The Annuity charges which
are assessed or may be assessable under certain circumstances are the contingent
deferred sales charge, the maintenance fee, a charge for taxes and a transfer
fee. These charges are allocated according to our rules. The maintenance fee and
transfer charge are not assessed if no Account Value is maintained in the
Sub-accounts at the time such fee or charge is payable. However, we make certain
assumptions regarding maintenance and transfer expenses as part of the overall
expense assumptions used in determining the interest rates we credit to Fixed
Allocations. Charges are also assessed against the Sub-accounts and the
underlying mutual funds. We also may charge you for special services, such as
dollar cost averaging, rebalancing, Systematic Withdrawals, Minimum
Distributions, and additional reports. As of the date of this Prospectus, we do
not charge you for any special services.
Contingent Deferred Sales Charge: Although we incur sales expenses in
connection with the sale of contracts (for example, preparation of sales
literature, expenses of selling and distributing the contracts, including
commissions, and other promotional costs), we do not deduct any charge from your
Purchase Payments for such expenses. However, a contingent deferred sales charge
may be assessed. We assess a contingent deferred sales charge against the
portion of any withdrawal or surrender that is deemed to be a liquidation of
your Purchase Payments paid within the preceding seven years. The contingent
deferred sales charge applies to each Purchase Payment that is liquidated. It is
a decreasing percentage of each Purchase Payment being liquidated. The charge
decreases as the Purchase Payment ages. The aging of a Purchase Payment is
measured from the date it is applied to your Account Value. The charge for
Annuities issued for delivery in all jurisdictions except New York is: year 1
- -7.5%; year 2 - 7.0%; year 3 - 6.0%; year 4 - 5.0%; year 5 - 4.0%; year 6 -
3.0%; year 7 - 2.0%; year 8 and thereafter - 0%. The charge for Annuities issued
for delivery in New York is: year 1 - 7.0%; year 2 - 6.0%; year 3 - 5.0%; year 4
- - 4.0%; year 5 - 3.0%; year 6 - 2.0%; year 7 - 1.0%; year 8 and thereafter - 0%.
Each Annuity Year in the accumulation phase you may withdraw a limited amount of
Account Value without application of any contingent deferred sales charge (see
"Free Withdrawal"). However, for purposes of the contingent deferred sales
charge, amounts withdrawn as a free withdrawal are not considered a liquidation
of Purchase Payments. Account Value is deemed withdrawn according to specific
rules in determining how much, if any, contingent deferred sales charge applies
to a partial withdrawal (see "Partial Withdrawal"). There is no contingent
deferred sales charge on Purchase Payments that were applied at least 7 years
prior to the date of either a full surrender or a partial withdrawal. Where
permitted by law, any contingent deferred sales charge applicable to a full
surrender is waived if such full surrender qualifies under our rules as a
medically-related withdrawal (see "Medically-Related Surrenders").
From time to time we may reduce the amount of the contingent deferred sales
charge, the period during which it applies, or both, when Annuities are sold to
individuals or a group of individuals in a manner that reduces sales expenses.
We would consider such factors as: (a) the size and type of group; (b) the
amount of Purchase Payments; (c) present Owners making additional Purchase
Payments; and/or (d) other transactions where sales expenses are likely to be
reduced.
No contingent deferred sales charge is imposed when any group annuity contract
or any Annuity issued pursuant to this Prospectus is owned on its Issue Date by:
(a) any parent company, affiliate or subsidiary of ours; (b) an officer,
director, employee, retiree, sales representative, or in the case of an
affiliated broker-dealer, registered representative of such company; (c) a
director, officer or trustee of any underlying mutual fund; (d) a director,
officer or employee of any investment manager, sub-advisor, transfer agent,
custodian, auditing, legal or administrative services provider that is providing
investment management, advisory, transfer agency, custodianship, auditing, legal
and/or administrative services to an underlying mutual fund or any affiliate of
such firm; (e) a director, officer, employee or registered representative of a
broker-dealer or insurance agency that has a then current selling agreement with
us and/or with American Skandia Marketing, Incorporated; (f) a director,
officer, employee or authorized representative of any firm providing us or our
affiliates with regular legal, actuarial, auditing, underwriting, claims,
administrative, computer support, marketing, office or other services; (g) the
then current spouse of any such person noted in (b) through (f), above; (h) the
parents of any such person noted in (b) through (g), above; (i) such person's
child(ren) or other legal dependent under the age of 21; and (j) the siblings of
any such persons noted in (b) through (h) above.
No contingent deferred sales charge is assessed on Minimum Distributions, to the
extent such Minimum Distributions are required from your Annuity at the time it
is taken. However, the charge may be assessed for any partial withdrawal taken
in excess of the Minimum Distribution, even if such amount is taken to meet
minimum distribution requirements in relation to other savings or investments
held pursuant to various retirement plans designed to qualify for preferred tax
treatment under various sections of the Code (see "Minimum Distributions").
Any elimination of the contingent deferred sales charge or any reduction to the
amount or duration of such charges will not discriminate unfairly between
Annuity purchasers. We will not make any such changes to this charge where
prohibited by law.
Maintenance Fee: A maintenance fee equaling the smaller of $30 or 2% of
your then current Account Value is deducted from the Account Values in the
Sub-accounts annually and upon surrender. The fee is limited to the Account
Values in the Sub-accounts as of the Valuation Period such fee is due.
Tax Charges: In several states a tax is payable. We will deduct the
amount of tax payable, if any, from your Purchase Payments if the tax is then
incurred or from your Account Value when applied under an annuity option if the
tax is incurred at that time. The amount of the tax varies from jurisdiction to
jurisdiction. It may also vary depending on whether the Annuity qualifies for
certain treatment under the Code. In each jurisdiction, the state legislature
may change the amount of any current tax, may decide to impose the tax,
eliminate it, or change the time it becomes payable. In those jurisdictions
imposing such a tax, the tax rates currently in effect range up to 3 1/2% and
are subject to change. In addition to state taxes, local taxes may also apply.
The amounts of these taxes may exceed those for state taxes.
Transfer Fee: We charge $10.00 for each transfer after the twelfth in
each Annuity Year. However, the fee is only charged if there is Account Value in
at least one Sub-account immediately subsequent to such transfer.
Allocation Of Annuity Charges: Charges applicable to a surrender are
used in calculating Surrender Value. Charges applicable to any type of
withdrawal are taken from the investment options in the same ratio as such a
withdrawal is taken from the investment options (see "Allocation Rules"). The
transfer fee is assessed against the Sub-accounts in which you maintain Account
Value immediately subsequent to such transfer. The transfer fee is allocated on
a pro-rata basis in relation to the Account Values in such Sub-accounts as of
the Valuation Period for which we price the applicable transfer. No fee is
assessed if there is no Account Value in any Sub-account at such time. Tax
charges are assessed against the entire Purchase Payment or Account Value as
applicable. The maintenance fee is assessed against the Sub-accounts on a
pro-rata basis in relation to the Account Values in each Sub-account as of the
Valuation Period for which we price the fee.
CHARGES ASSESSED AGAINST THE ASSETS: There are charges assessed against assets
in the Sub-accounts. These charges are described below. There are no charges
deducted from the Fixed Allocations. The factors we use in determining the
interest rates we credit Fixed Allocations are described above in the subsection
entitled Fixed Investment Options. No charges are deducted from assets
supporting fixed or adjustable annuity payments. The factors we use in
determining fixed or adjustable annuity payments include, but are not limited
to, our expected investment returns, costs, risks and profit targets. We reserve
the right to assess a charge against the Sub-accounts and the Fixed Allocations
equal to any taxes which may be imposed upon the separate accounts.
Administration Charge: We assess each Class 1 Sub-account, on a daily
basis, an administration charge. The charge is 0.15% per year of the average
daily total value of such Sub-account. The administration charge and maintenance
fee can be increased only for Annuities issued subsequent to the effective date
of any such change.
From time to time we may reduce the amount of the maintenance fee and/or the
administration charge. We may do so when Annuities are sold to individuals or a
group of individuals in a manner that reduces maintenance and/or administrative
expenses. We would consider such factors as: (a) the size and type of group; (b)
the number of Annuities purchased by an Owner; (c) the amount of Purchase
Payments; and/or (d) other transactions where maintenance and/or administration
expenses are likely to be reduced.
Any elimination of the maintenance fee and/or the administration charge or any
reduction of such charges will not discriminate unfairly between Annuity
purchasers. We will not make any changes to these charges where prohibited by
law.
Mortality and Expense Risk Charges: For Class 1 Sub-accounts, the
mortality risk charge is 0.90% per year and the expense risk charge is 0.35% per
year. These charges are assessed in combination each day against each
Sub-account at the rate of 1.25% per year of the average daily total value of
each Sub-account.
With respect to the mortality risk charge, we assume the risk that the mortality
experience under the Annuities may be less favorable than our assumptions. This
could arise for a number of reasons, such as when persons upon whose lives
annuity payments are based live longer than we anticipated, or when the
Sub-accounts decline in value resulting in losses in paying death benefits. If
our mortality assumptions prove to be inadequate, we will absorb any resulting
loss. Conversely, if the actual experience is more favorable than our
assumptions, then we will benefit from the gain. We also assume the risk that
the administration charge may be insufficient to cover our administration costs.
CHARGES OF THE UNDERLYING MUTUAL FUNDS: Each underlying mutual fund assesses
various charges for investment management and investment advisory fees. These
charges generally differ between portfolios within the same underlying mutual
fund. You will find additional details in the fund prospectuses and the
statements of additional information.
PURCHASING ANNUITIES: You may purchase an Annuity for various purposes. You must
meet our requirements before we issue an Annuity and it takes effect. Certain
benefits may be available to certain classes of purchasers. You have a
"free-look" period during which you may return your Annuity for a refund amount
which may be less or more than your Purchase Payment, except in specific
circumstances.
Uses Of The Annuity: The Annuity may be issued in connection with or
purchased as a funding vehicle for certain retirement plans designed to meet the
requirements of various sections of the Code. These include, but are not limited
to: (a) Section 403(b) (tax-sheltered annuities available to employees of
certain qualifying employers); (b) Section 408 (individual retirement accounts
and individual retirement annuities - "IRAs"; Simplified Employee Pensions -
"SEPs"; and Savings Incentive Match Plans for Employees - "SIMPLE IRAs"); and
(c) Section 408A (Roth IRAs). We may require additional information regarding
the applicable retirement plans before we issue an Annuity to be used in
connection with such retirement plans. We may also restrict or change certain
rights and benefits if, in our opinion, such restrictions or changes are
necessary for your Annuity to be used in connection with such retirement plans.
We may elect to no longer offer Annuities in connection with various retirement
plans. Currently, the Annuity is not offered in connection with Section 401
plans. The Annuity may also be used in connection with plans that do not qualify
under the sections of the Code noted above. Some of the potential tax
consequences resulting from various uses of the Annuities are discussed in the
section entitled "Certain Tax Considerations".
Application And Initial Payment: You must meet our underwriting
requirements and forward a Purchase Payment if you seek to purchase an Annuity.
These requirements may include a properly completed Application. Where permitted
by law, we may issue an Annuity without completion of an Application for certain
classes of Annuities.
The minimum initial Purchase Payment we accept is $1,000 unless you authorize
the use of bank drafting to make Purchase Payments (see "Skandia's Systematic
Investment Plan"). If you choose bank drafting, we will accept a lower initial
Purchase Payment provided that the Purchase Payments received in the first year
total at least $1,000. The initial Purchase Payment must be paid by check or by
wire transfer. It cannot be made through bank drafting. Our Office must give you
prior approval before we accept a Purchase Payment that would result in the
Account Value of all annuities you maintain with us exceeding $500,000. We
confirm each Purchase Payment in writing. Multiple annuities purchased from us
within the same calendar year may be treated for tax purposes as if they were a
single annuity (see "Certain Tax Considerations").
We reserve the right to allocate your initial Net Purchase Payment to the
investment options up to two business days after we receive, at our Office, all
of our requirements for issuing the Annuity as applied for. We may retain the
Purchase Payment and not allocate the initial Net Purchase Payment to the
investment options for up to five business days while we attempt to obtain all
such requirements. We will try to reach you or any other party from whom we need
any information or materials. If the requirements cannot be fulfilled within
that time, we will: (a) attempt to inform you of the delay; and (b) return the
amount of the Purchase Payment, unless you specifically consent to our retaining
it until all our requirements are met. Once our requirements are met, the
initial Net Purchase Payment is applied to the investment options within two
business days. Once we accept your Purchase Payment and our requirements are
met, we issue an Annuity.
Skandia's Systematic Investment Plan ("bank drafting"): You may make
Purchase Payments to your Annuity using bank drafting, but only for allocations
to variable investment options. However, you must pay at least one prior
Purchase Payment by check or wire transfer. We will accept an initial Purchase
Payment lower than our standard minimum Purchase Payment requirement of $1,000
if you also furnish bank drafting instructions that provide amounts that will
meet a $1,000 minimum Purchase Payment requirement to be paid within 12 months.
We will accept an initial Purchase Payment in an amount as low as $100, but it
must be accompanied by a bank drafting authorization form allowing monthly
Purchase Payments of at least $75. We reserve the right to suspend or cancel
bank drafting privileges if sufficient funds are not available from the
applicable financial institution on any date that a transaction is scheduled to
occur.
Periodic Purchase Payments: We may, from time-to-time, offer
opportunities to make Purchase Payments automatically on a periodic basis,
subject to our rules. These opportunities may include, but are not limited to,
certain salary reduction programs agreed to by an employer. As of the date of
this Prospectus, we only agree to accept Purchase Payments on such a basis if:
(a) we receive your request In Writing for a salary reduction program and we
agree to accept Purchase Payments on this basis; (b) the allocations are only to
variable investment options or the frequency and number of allocations to fixed
investment options is limited in accordance with our rules; and (c) the total
amount of Purchase Payments in the first Annuity Year is scheduled to equal at
least our then current minimum requirements. We may also require an initial
Purchase Payment to be submitted by check or wire before agreeing to such a
program. Our minimum requirements may differ based on the usage of the Annuity,
such as whether it is being used in conjunction with certain retirement plans.
Right to Return the Annuity: You have the right to return the Annuity
within a specified period known as a "free-look" period. Depending on the
applicable legal and regulatory requirements, this period may be within ten days
of receipt, twenty-one days of receipt or longer. To exercise your right to
return the Annuity during the "free-look" period, you must return the Annuity.
The amount to be refunded is the then current Account Value, plus any tax charge
deducted. This is the "standard refund". If necessary to meet Federal
requirements for IRAs or certain state law requirements, we return the greater
of the "standard refund" or the Purchase Payments received less any withdrawals
(see "Allocation of Net Purchase Payments"). We tell you how we determine the
amount payable under any such right at the time we issue your Annuity. Upon the
termination of the "free-look" period, if you surrender your Annuity, you may be
assessed certain charges (see "Charges Assessed or Assessable Against the
Annuity").
For annuities subject to New York law, notice given by mail and return of the
Annuity by mail are effective on being postmarked, properly addressed and
postage prepaid. If the Annuity is returned to the agent, other than by mail,
the effective date of surrender of the Annuity will be the date the Annuity is
received by the agent. The amount payable as to any amounts allocated to the
variable investment options equals the Account Value plus any fees or charges
deducted as of the date the cancellation request is either postmarked or
returned to the agent. If you choose to allocate any portion of your Purchase
Payment to the variable investment options, you bear the investment risk during
this period. The amount payable as to any amounts allocated to the fixed
investment options equals the greater of (i) the Purchase Payment, less any
withdrawals, or (ii) the current Account Value of the Annuity plus any fees or
charges deducted on the date the cancellation request is either postmarked or
returned to the agent.
Allocation of Net Purchase Payments: All allocations of Net Purchase
Payments are subject to our allocation rules (see "Allocation Rules").
Allocation of the portion of the initial Net Purchase Payment and any Net
Purchase Payments received during the free-look period that you wish to allocate
to any Sub-accounts are subject to an additional allocation rule if state law
requires return of at least your Purchase Payments should you return the Annuity
under such free-look provision. If such state law applies to your Annuity: (a)
we allocate any portion of any such Net Purchase Payments that you indicate you
wish to go into the Sub-accounts to the AST Money Market Sub-account; and (b) at
the end of such free-look period we reallocate Account Value according to your
then most recent allocation instructions to us, subject to our allocation rules.
However, where permitted by law in such jurisdictions, we will allocate such Net
Purchase Payments according to your instructions, without any temporary
allocation to the AST Money Market Sub-account, if you execute a return waiver
("Return Waiver"). Under the Return Waiver, you waive your right to the return
of the greater of the "standard refund" or the Purchase Payments received less
any withdrawals. Instead, you only are entitled to the return of the "standard
refund" (see "Right to Return the Annuity").
Your initial Purchase Payment, as well as other Purchase Payments will be
allocated in accordance with the then current requirements of any rebalancing,
asset allocation or market timing program which you have authorized or have
authorized an independent third party to use in connection with your Annuity
(see "Allocation Rules"). You must provide us with allocation instructions In
Writing if you wish to change your current allocations when making subsequent
Purchase Payments.
Balanced Investment Program: We offer a balanced investment program in
relation to your Purchase Payments, if Fixed Allocations are available under
your Annuity. If you choose this program, we commit a portion of your Net
Purchase Payments as a Fixed Allocation for the Guarantee Period you select.
This Fixed Allocation will have grown pre-tax to equal the exact amount of your
entire Purchase Payments at the end of its initial Guarantee Period if no
amounts are transferred or withdrawn from such Fixed Allocation. The rest of
your Net Purchase Payments is invested in the variable investment options you
select.
We reserve the right, from time to time, to credit additional amounts to Fixed
Allocations ("Additional Amounts") if you allocate Purchase Payments in
accordance with the balanced investment program we offer. We offer to do so at
our sole discretion. Such an offer is subject to our rules, including but not
limited to, a change to the MVA formula. For more information, see "Additional
Amounts in the Fixed Allocations".
Ownership, Annuitant and Beneficiary Designations: You make certain
designations that apply to the Annuity if issued. These designations are subject
to our rules and to various regulatory or statutory requirements depending on
the use of the Annuity. These designations include an Owner, a contingent Owner,
an Annuitant, a Contingent Annuitant, a Beneficiary, and a contingent
Beneficiary. Certain designations are required, as indicated below. Such
designations will be revocable unless you indicate otherwise or we endorse your
Annuity to indicate that such designation is irrevocable to meet certain
regulatory or statutory requirements. Changing the Owner or Annuitant
designations may affect the minimum death benefit (see " Death Benefits").
Some of the tax implications of various designations are discussed in the
section entitled "Certain Tax Considerations". However, there are other tax
issues than those addressed in that section, including, but not limited to,
estate and inheritance tax issues. You should consult with a competent tax
counselor regarding the tax implications of various designations. You should
also consult with a competent legal advisor as to the implications of certain
designations in relation to an estate, bankruptcy, community property, where
applicable, and other matters.
An Owner must be named. You may name more than one Owner. If you do, all rights
reserved to Owners are then held jointly. We require the consent In Writing of
all joint Owners for any transaction for which we require the written consent of
Owners. Where required by law, we require the consent In Writing of the spouse
of any person with a vested interest in an Annuity. Naming someone other than
the payor of any Purchase Payment as Owner may have gift, estate or other tax
implications.
Where allowed by law, you may name a contingent Owner. However, this designation
takes effect only on or after the Annuity Date.
You must name an Annuitant. We do not accept a designation of joint Annuitants.
Where allowed by law, you may name one or more Contingent Annuitants.
There may be adverse tax consequences if a Contingent Annuitant succeeds an
Annuitant and the Annuity is owned by a trust that is neither tax exempt nor
qualifies for preferred treatment under certain sections of the Code, such as
Section 401 (a "non-qualified" trust). In general, the Code is designed to
prevent the benefit of tax deferral from continuing for long periods of time on
an indefinite basis. Continuing the benefit of tax deferral by naming one or
more Contingent Annuitants when the Annuity is owned by a non-qualified trust
might be deemed an attempt to extend the tax deferral for an indefinite period.
Therefore, adverse tax treatment may depend on the terms of the trust, who is
named as Contingent Annuitant, as well as the particular facts and
circumstances. You should consult your tax advisor before naming a Contingent
Annuitant if you expect to use an Annuity in such a fashion.
Where allowed by law, you must name Contingent Annuitants according to our rules
when an Annuity is used as a funding vehicle for certain retirement plans
designed to meet the requirements of Section 401 of the Code.
You may name more than one primary and more than one contingent Beneficiary, and
if you do, the proceeds will be paid in equal shares to the survivors in the
appropriate beneficiary class, unless you have requested otherwise In Writing.
If the primary Beneficiary dies before death proceeds become payable, the
proceeds will become payable to the contingent Beneficiary. If no Beneficiary is
alive when death proceeds become payable or in the absence of any Beneficiary
designation, the proceeds will vest in you or your estate.
If an Owner's spouse is designated as the sole primary Beneficiary of the
Annuity and the Owner dies prior to the Annuity Date, the Owner's Spouse, as
Beneficiary, may elect to be treated as Owner and continue the Annuity at its
current Account Value, subject to its terms and conditions. If the Annuity is
owned jointly by both spouses, and the primary Beneficiary is designated as
"surviving spouse", each spouse named individually, or a designation of similar
intent, then upon the death of either Owner, the surviving spouse may elect to
to be treated as Owner.
ACCOUNT VALUE AND SURRENDER VALUE: In the accumulation phase your Annuity has an
Account Value. Your total Account Value is the sum of your Account Value in each
investment option. Surrender Value is the Account Value less any applicable
contingent deferred sales charge and any applicable maintenance fee.
Account Value in the Sub-accounts: We determine your Account Value
separately for each Sub-account. To determine the Account Value in each
Sub-account we multiply the Unit Price as of the Valuation Period for which the
calculation is being made times the number of Units attributable to you in that
Sub-account as of that Valuation Period. The method we use to determine Unit
Prices is shown in the Statement of Additional Information.
The number of Units attributable to you in a Sub-account is the number of Units
you purchased less the number transferred or withdrawn. We determine the number
of Units involved in any transaction specified in dollars by dividing the dollar
value of the transaction by the Unit Price of the effected Sub-account as of the
Valuation Period applicable to such transaction.
Account Value of the Fixed Allocations: We determine the Account Value
of each Fixed Allocation separately. A Fixed Allocation's Account Value as of a
particular date is determined by multiplying its then current Interim Value
times the MVA.
A formula is used to determine the MVA. The formula is applied separately to
each Fixed Allocation. Values and time durations used in the formula are as of
the date for which the Account Value is being determined. The formula is:
[(1+I) / (1+J+0.0010)]N/12
where:
I is the interest rate being credited to the Fixed Allocation;
J is the interest rate for your class of annuities for new
Fixed Allocations with Guarantee Periods of durations equal to
the number of years (rounded to the next higher integer when
occurring on other than an anniversary of the beginning of the
Fixed Allocation's Guarantee Period) remaining in such
Guarantee Period;
N is the number of months (rounded to the next higher integer
when occurring on other than a monthly anniversary of the
beginning of the Guarantee Period) remaining in such Guarantee
Period.
The formula that applies if amounts are surrendered pursuant to the right to
return the Annuity is [(1 + I)/(1 + J)]N/12.
No MVA applies in determining a Fixed Allocation's Account Value on its Maturity
Date, and, where required by law, the 30 days prior to the Maturity Date. If we
are not offering a Guarantee Period with a duration equal to the number of years
remaining in a Fixed Allocation's Guarantee Period, we calculate a rate for "J"
above using a specific formula. This formula is described in the Statement of
Additional Information.
Our Current Rates are expected to be sensitive to interest rate fluctuations,
thereby making each MVA equally sensitive to such changes. There would be a
downward adjustment when the applicable Current Rate plus 0.10 percent of
interest exceeds the rate credited to the Fixed Allocation and an upward
adjustment when the applicable Current Rate is more than 0.10 percent of
interest lower than the rate being credited to the Fixed Allocation. See the
Statement of Additional Information for an illustration of how the MVA works.
We reserve the right, from time to time, to determine the MVA using an interest
rate lower than the Current Rate for all transactions applicable to a class of
Annuities. We may do so at our sole discretion. This would benefit all such
Annuities if transactions to which the MVA applies occur while we use such lower
interest rate.
Additional Amounts in the Fixed Allocations: To the extent permitted by
law, we reserve the right, from time to time, to credit Additional Amounts to
Fixed Allocations. We may do so at our sole discretion. We may offer to credit
such Additional Amounts only in relation to Fixed Allocations of specific
durations (i.e. 10 years) when used as part of certain programs we offer such as
the balanced investment program and dollar cost averaging (see "Balanced
Investment Program" and "Dollar Cost Averaging"). We would provide such
Additional Amounts with funds from our general account and credit them to the
applicable Fixed Allocation. Such a program is subject to the following rules:
(1) The Additional Amounts are credited in relation to initial or
additional Purchase Payments, not to Account Value transferred to a Fixed
Allocation for use in the applicable programs. The Additional Amounts are not
credited in relation to any exchange of another annuity issued by us for an
Annuity.
(2) The Additional Amounts are credited as of the later of the date the
applicable Purchase Payment is allocated to the applicable Fixed Allocation or
the 30th day after the Issue Date.
(3) Interest on the Additional Amounts is credited as of the date the
applicable Purchase Payment is allocated to the applicable Fixed Allocation.
(4) The Additional Amounts are a percentage of the amount credited to
the applicable Fixed Allocation. However, we may change the percentage from time
to time.
(5) There is an increase to any applicable "adjustment amount" in the
MVA formula, which otherwise is 0.0010, to 0.0020 (see "Account Value of the
Fixed Allocations"). This change would only apply to a transfer, surrender or
withdrawal from the applicable Fixed Allocation, but not to any payments of
death benefit proceeds or a medically-related surrender (see "Medically-Related
Surrender"). This change could reduce your Account Value.
(6) We do not consider Additional Amounts to be "investment in the
contract" for income tax purposes (see "Certain Tax Considerations").
(7) Additional Amounts credited are not included in any amounts you may
withdraw without assessment of the contingent deferred sales charge pursuant to
the Free Withdrawal provision (see "Free Withdrawals").
(8) We determine if a Purchase Payment is received during the period we
are offering such credits based on the earlier of: (a) the date we receive at
our Office the applicable Purchase Payment; or (b) the date we receive at our
Office our requirements in relation to either an exchange of an existing annuity
issued by another insurer or a "rollover" or transfer of such an annuity
pursuant to specific sections of the Code.
(9) No Purchase Payment may be applied to more than one program
crediting Additional Amounts solely to a Fixed Allocation.
RIGHTS, BENEFITS AND SERVICES: The Annuity provides various rights, benefits and
services subsequent to its issuance and your decision to keep it beyond the
free-look period. A number of these rights, benefits and services, as well as
some of the rules and conditions to which they are subject, are described below.
These rights, benefits and services include, but are not limited to: (a) making
additional Purchase Payments; (b) changing revocable designations; (c)
transferring Account Values between investment options; (d) receiving lump sum
payments, Systematic Withdrawals or Minimum Distributions, annuity payments and
death benefits; (e) transferring or assigning your Annuity; (f) exercising
certain voting rights in relation to the underlying mutual funds in which the
Sub-accounts invest; and (g) receiving reports. These rights, benefits and
services may be limited, eliminated or altered when an Annuity is purchased in
conjunction with a qualified plan. We may require presentation of proper
identification, including a personal identification number ("PIN") issued by us,
prior to accepting any instruction by telephone or other electronic means. We
forward your PIN to you shortly after your Annuity is issued. To the extent
permitted by law or regulation, neither we nor any person authorized by us will
be responsible for any claim, loss, liability or expense in connection with a
telephonic or electronic transfer if we or such other person acted on such
transfer instructions in good faith in reliance on your authorization of
telephone and/or electronic transfers and on reasonable procedures to identify
persons so authorized through verification methods which may include a request
for your Social Security number or a personal identification number (PIN) as
issued by us. We may be liable for losses due to unauthorized or fraudulent
instructions should we not follow such reasonable procedures.
Additional Purchase Payments: The minimum for any additional Purchase
Payment is $100, except as part of a bank drafting program (see "Skandia's
Systematic Investment Plan"), or unless we authorize lower payments pursuant to
a Periodic Purchase Payment program (see "Periodic Purchase Payments"), or less
where required by law. Additional Purchase Payments may be paid at any time
before the Annuity Date. Subject to our allocation rules, we allocate additional
Net Purchase Payments according to your written allocation instructions. Should
no written instructions be received with an additional Purchase Payment, we
shall return your additional Purchase Payment.
Changing Revocable Designations: Unless you indicated that a prior
choice was irrevocable or your Annuity has been endorsed to limit certain
changes, you may request to change Owner, Annuitant and Beneficiary designations
by sending a request In Writing. Where allowed by law, such changes will be
subject to our acceptance. Some of the changes we will not accept include, but
are not limited to: (a) a new Owner subsequent to the death of the Owner or the
first of any joint Owners to die, except where a spouse-Beneficiary has become
the Owner as a result of an Owner's death; (b) a new Annuitant subsequent to the
Annuity Date if the annuity option selected includes a life contingency; and (c)
a new Annuitant prior to the Annuity Date if the Annuity is owned by an entity.
Allocation Rules: As of the date of this Prospectus, during the
accumulation phase, you may maintain Account Value in multiple Sub-accounts and
an unlimited number of Fixed Allocations. We reserve the right, to the extent
permitted by law, to limit the number of Sub-accounts or the amount you may
allocate to any Fixed Allocation. As of the date of this Prospectus, we limited
the number of Sub-accounts available at any one time to ten. Should you request
a transaction that would leave less than any minimum amount we then require in
an investment option, we reserve the right, to the extent permitted by law, to
add the balance of your Account Value in the applicable Sub-account or Fixed
Allocation to the transaction and close out your balance in that investment
option.
Should you either: (a) request rebalancing services (see "Rebalancing"); (b)
authorize an independent third party to transact transfers on your behalf and
such third party arranges for rebalancing of any portion of your Account Value
in accordance with any asset allocation strategy; or (c) authorize an
independent third party to transact transfers in accordance with a market timing
strategy; then all Purchase Payments, including the initial Purchase Payment,
received while your Annuity is subject to such an arrangement are allocated to
the same investment options and in the same proportions as then required
pursuant to the applicable rebalancing, asset allocation or market timing
program, unless we have received alternate instructions. Such allocation
requirements terminate simultaneous to the termination of an authorization for
rebalancing or any authorization to a third party to transact transfers on your
behalf. Upon termination of any of the above arrangements, you must provide us
with allocation instructions In Writing for all subsequent Purchase Payments.
Withdrawals of any type are taken pro-rata from the investment options based on
the then current Account Values in such investment options unless we receive
instructions from you prior to such withdrawal. For this purpose only, the
Account Value in all your then current Fixed Allocations is deemed to be in one
investment option. If you transfer or withdraw Account Value from multiple Fixed
Allocations and do not provide instructions indicating the Fixed Allocations
from which Account Value should be taken: (a) we transfer Account Value first
from the Fixed Allocation with the shortest amount of time remaining to the end
of its Guarantee Period, and then from the Fixed Allocation with the next
shortest amount of time remaining to the end of its Guarantee Period, etc.; and
(b) if there are multiple Fixed Allocations with the same amount of time left in
each Guarantee Period, as between such Fixed Allocations we first take Account
Value from the Fixed Allocation that had the shorter Guarantee Period.
Transfers: In the accumulation phase you may transfer Account Value
between investment options, subject to our allocation rules (see "Allocation
Rules"). Transfers are not subject to taxation (see "Transfers Between
Investment Options"). We charge $10.00 for each transfer after the twelfth in
each Annuity Year including transfers transacted as part of any rebalancing,
market timing, asset allocation or similar program which you employ or you
authorize to be employed on your behalf. Transfers transacted as part of a
dollar cost averaging program are not counted in determining the applicability
of the transfer fee. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge and are not counted in determining whether other transfers may be subject
to the transfer charge (see "Renewals"). Your transfer request must be In
Writing or meet our requirements for accepting instructions we receive over the
phone or through means such as electronic mail with appropriate authorization.
We reserve the right to limit the number of transfers in any Annuity Year for
all existing or new Owners. We also reserve the right to limit the number of
transfers in any Annuity Year or to refuse any transfer request for an Owner or
certain Owners if we believe that: (a) excessive trading by such Owner or Owners
or a specific transfer request or group of transfer requests may have a
detrimental effect on Unit Values or the share prices of the underlying mutual
funds; or (b) we are informed by one or more of the underlying mutual funds that
the purchase or redemption of shares is to be restricted because of excessive
trading or a specific transfer or group of transfers is deemed to have a
detrimental effect on share prices of affected underlying mutual funds.
To the extent permitted by law, we may require up to 2 business days' notice of
any transfer into or out of a Fixed Allocation if the market value of such
transfer is at least $1,000,000.00.
In order to help you determine whether you wish to transfer Account Values to a
Fixed Allocation, you may obtain our Current Rates by writing us or calling us
at 1-800-766-4530 or contact our customer service department electronically at
[email protected]. When calling us by phone, please have readily
available your Annuity number and your PIN number. When contacting us
electronically, please provide your PIN number, social security or tax I.D.
number and the Annuity contract number.
Where permitted by law, we may accept your authorization of a third party to
transfer Account Values on your behalf, subject to our rules. We may suspend or
cancel such acceptance at any time. We notify you of any such suspension or
cancellation. We may restrict the investment options that will be available for
transfers or allocations of Net Purchase Payments during any period in which you
authorize such third party to act on your behalf. We give the third party you
authorize prior notification of any such restrictions. However, we will not
enforce such a restriction if we are provided evidence satisfactory to us that:
(a) such third party has been appointed by a court of competent jurisdiction to
act on your behalf; or (b) such third party has been appointed by you to act on
your behalf for all your financial affairs.
We or an affiliate of ours may provide administrative or other support services
to independent third parties you authorize to conduct transfers on your behalf
or who provide recommendations as to how your Account Values should be
allocated. This includes, but is not limited to, rebalancing your Account Value
among investment options in accordance with various investment allocation
strategies such third party may employ, or transferring Account Values between
investment options in accordance with market timing strategies employed by such
third parties. Such independent third parties may or may not be appointed our
agents for the sale of Annuities. However, we do not engage any third parties to
offer investment allocation services of any type, so that persons or firms
offering such services do so independent from any agency relationship they may
have with us for the sale of Annuities. We therefore take no responsibility for
the investment allocations and transfers transacted on your behalf by such third
parties or any investment allocation recommendations made by such parties. We do
not currently charge you extra for providing these support services.
Renewals: A renewal is a transaction that occurs automatically as of
the last day of a Fixed Allocation's Guarantee Period unless we receive
alternative instructions. This day as to each Fixed Allocation is called its
Maturity Date. As of the end of a Maturity Date, the Fixed Allocation's
Guarantee Period "renews" and a new Guarantee Period of the same duration as the
one just completed begins. However, the renewal will not occur if the Maturity
Date is on the date we apply your Account Value to determine the annuity
payments that begin on the Annuity Date (see "Annuity Payments").
As an alternative to a renewal, you may transfer all or part of that Fixed
Allocation's Account Value to a different Fixed Allocation or you may transfer
such Account Value to one or more Sub-accounts, subject to our allocation rules.
To accomplish this, we must receive instructions from you In Writing at least
two business days before the Maturity Date, and, where required by law, the 30
days prior to the Maturity Date. No MVA applies to transfers of a Fixed
Allocation's Account Value occurring as of its Maturity Date. An MVA will apply
in determining the Account Value of a Fixed Allocation at the time annuity
payments are determined, unless the Maturity Date of such Fixed Allocation is
the 15th day before the Annuity Date (see "Annuity Payments").
At least 30 days prior to a Maturity Date, or earlier if required by law or
regulation, we inform you of the Guarantee Periods available as of the date of
such notice. We do not provide a similar notice if the Fixed Allocation's
Guarantee Period is of less than a year's duration. Such notice may include an
example of the rates we are then crediting new Fixed Allocations as of the date
such notice is prepared. The rates actually credited to a Fixed Allocation as of
the date of any renewal or transfer immediately subsequent to the Maturity Date
may be more or less than any rates quoted in such notice.
If your Fixed Allocation's then ending Guarantee Period is no longer available
for new allocations and renewals or you choose a different Guarantee Period that
is no longer available on the date following the Maturity Date, we will try to
reach you so you may make another choice. If we cannot reach you, we will assign
the next shortest Guarantee Period then currently available for new allocations
and renewals to that Fixed Allocation.
Dollar Cost Averaging: We offer dollar cost averaging in the
accumulation phase. Dollar cost averaging is a program designed to provide for
regular, approximately level investments over time. You may choose to transfer
earnings only, principal plus earnings or a flat dollar amount. We make no
guarantee that a dollar cost averaging program will result in a profit or
protect against a loss in a declining market. You may select this program by
submitting to us a request In Writing. You may cancel your participation in this
program In Writing or by phone if you have previously authorized our acceptance
of such instructions.
Dollar cost averaging is available from any of the investment options we choose
to make available for such a program. Your Annuity must have an Account Value of
not less than $10,000 at the time we accept your request for a dollar cost
averaging program. Transfers under a dollar cost averaging program are not
counted in determining the applicability of the transfer fee (see "Transfers").
We reserve the right to limit the investment options into which Account Value
may be transferred as part of a dollar cost averaging program. We currently do
not permit dollar cost averaging programs where Account Value is transferred to
Fixed Allocations. We also reserve the right to charge a processing fee for this
service. Should we suspend or cancel the offering of this service, such
suspension or cancellation will not affect any dollar cost averaging programs
then in effect. Dollar cost averaging is not available while a rebalancing,
asset allocation or market timing type of program is used in connection with
your Annuity.
Dollar cost averaging from Fixed Allocations are subject to the following rules:
(a) you may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years; (b) such a program may only be selected in conjunction with and
simultaneous to a new or renewing Fixed Allocation; (c) only averaging of
earnings only or principal plus earnings is permitted; (d) a program averaging
principal plus earnings from a Fixed Allocation must be designed to last that
Fixed Allocation's entire current Guarantee Period; (e) dollar cost averaging
transfers from a Fixed Allocation are not subject to the MVA; (f) dollar cost
averaging may be done on a monthly basis only; and (g) you may not
simultaneously use Account Value in any Fixed Allocation to participate in
dollar cost averaging and receive Systematic Withdrawals or Minimum
Distributions from such Fixed Allocation (see "Systematic Withdrawals" and
"Minimum Distributions").
We reserve the right, from time to time, to credit additional amounts
("Additional Amounts") if you allocate Purchase Payments to Fixed Allocations as
part of a dollar cost averaging program. Such an offer is at our sole discretion
and is subject to our rules, including but not limited to, a change to the MVA
formula. For more information see "Additional Amounts in the Fixed Allocations".
Rebalancing: We offer, during the accumulation phase, automatic
quarterly, semi-annual or annual rebalancing among the variable investment
options of your choice. This provides the convenience of automatic rebalancing
without having to provide us instructions on a periodic basis. Failure to choose
this option does not prevent you from providing us with transfer instructions
from time-to-time that have the effect of rebalancing. It also does not prevent
other requested transfers from being transacted.
Under this program, Account Values in variable investment options are rebalanced
quarterly, semi-annually or annually, as applicable, to the percentages you
request. The rebalancing may occur quarterly, semi-annually or annually based
upon the Issue Date. If a transfer is requested involving any investment option
participating in an automatic rebalancing program, we automatically alter the
rebalancing percentages going forward (unless we receive alternate instructions)
to the ratios between Account Values in the variable investment options as of
the effective date of such requested transfer once it has been processed.
Automatic rebalancing is delayed one quarter if Account Value is being
maintained in the AST Money Market Sub-account for the duration of your
Annuity's "free-look" period and rebalancing would otherwise occur during such
period (see "Allocation of Net Purchase Payments").
You may change the percentage allocable to each variable investment option at
any time. However, you may not choose to allocate less than 5% of Account Value
to any variable investment option.
We do not offer automatic rebalancing in connection with Fixed Allocations. The
Account Value of your Annuity must be at least $10,000 when we receive your
automatic rebalancing request. We may require that all variable investment
options in which you maintain Account Value must be used in the rebalancing
program. You may maintain Account Value in at least two and not more than ten
variable investment options when using a rebalancing program. You may not
simultaneously participate in rebalancing and dollar cost averaging. Rebalancing
also is not available when a program of Systematic Withdrawals of earnings or
earnings plus principal is in effect.
For purposes of determining the number of transfers made in any Annuity Year,
all rebalancing transfers made on the same day are treated as one transfer. We
reserve the right to charge a processing fee for signing up for this service.
To elect to participate or to terminate participation in automatic rebalancing,
we may require instructions In Writing at our Office in a form satisfactory to
us.
Distributions: Distributions available from your Annuity during the
accumulation phase include surrender, medically-related surrender, free
withdrawals, partial withdrawals, Systematic Withdrawals, (including Minimum
Distributions in relation to qualified plans) and a death benefit. In the payout
phase we pay annuity payments. Distributions from your Annuity generally are
subject to taxation, and may be subject to a tax penalty as well (see "Certain
Tax Considerations"). You may wish to consult a professional tax advisor for tax
advice prior to exercising any right to an elective distribution. During the
accumulation phase, any distribution other than a death benefit: (a) must occur
prior to any death that would cause a death benefit to become payable; and (b)
will occur subsequent to our receipt of a completed request In Writing.
Distributions from your Annuity of any amounts derived from Purchase Payments
paid by personal check may be delayed until such time as the check has cleared
the applicable financial institution upon which such check was drawn.
Surrender: Surrender of your Annuity for its Surrender Value is
permitted during the accumulation phase. A contingent deferred sales charge may
apply to such surrender (see "Contingent Deferred Sales Charge"). Your Annuity
must accompany your surrender request.
Medically-Related Surrender: Where permitted by law, you may apply to
surrender your Annuity prior to the Annuity Date without application of any
contingent deferred sales charge, upon occurrence of a "Contingency Event". This
waiver of any applicable contingent deferred sales charge is subject to our
rules, including but not limited to the following: (a) the Annuitant must be
alive as of the date we pay the proceeds of such surrender request; (b) if the
Owner is one or more natural persons, all such Owners must also be alive at such
time; (c) we must receive satisfactory proof of the Annuitant's confinement or
Fatal Illness In Writing; and (d) this benefit is not available if the total
Purchase Payments received exceed $500,000.00 for all annuities issued by us
with this benefit for which the same person is named as Annuitant.
For contracts issued before May 1, 1996, a "Contingency Event" occurs if the
Annuitant is:
(1) First confined in a "Medical Care Facility" while your Annuity is
in force and remains confined for at least 90 days in a row; or
(2) First diagnosed as having a "Fatal Illness" while your Annuity is
in force.
For contracts issued on or after May 1, 1996, and where allowed by law, the
Annuitant must have been named or any change of Annuitant must have been
accepted by us, prior to the "Contingent Event" described above, in order to
qualify for a medically-related surrender.
"Medical Care Facility" means any state licensed facility providing medically
necessary in-patient care which is prescribed by a licensed "Physician" in
writing and based on physical limitations which prohibit daily living in a
non-institutional setting. "Fatal Illness" means a condition diagnosed by a
licensed "Physician" which is expected to result in death within 2 years for 80%
of the diagnosed cases. "Physician" means a person other than you, the Annuitant
or a member of either your or the Annuitant's families who is state licensed to
give medical care or treatment and is acting within the scope of that license.
Specific details and definitions of terms in relation to this benefit may differ
in certain jurisdictions.
Free Withdrawals: Each Annuity Year in the accumulation phase you may
withdraw a limited amount of Account Value without application of any applicable
contingent deferred sales charge. Such free withdrawals are available to meet
liquidity needs. Free withdrawals are not available at the time of a surrender
of an Annuity. Withdrawals of any type made prior to age 59 1/2 may be subject
to a 10% tax penalty (see "Penalty on Distributions").
The minimum amount available as a free withdrawal is $100. Amounts received as
Systematic Withdrawals or as Minimum Distributions are deemed to come first from
the amount available under this Free Withdrawal provision (see "Systematic
Withdrawals" and "Minimum Distributions"). You may also request to receive as a
lump sum any free withdrawal amount not already received that Annuity Year under
a plan of Systematic Withdrawals or as Minimum Distributions.
The maximum amount available as a free withdrawal depends on its Issue Date and
the jurisdiction in which your Annuity is delivered.
(1) For Annuities used in connection with retirement plans designed to
meet the requirements of Section 401 of the Code, the maximum amount available
as a free withdrawal, where permitted by law, is the greater of (a), (b) or (c),
where:
(a) is the then current "emergency withdrawal amount" (defined
below);
(b) is the Annuity's "growth" (defined below); and
(c) is 20% of "new" Purchase Payments ("new" Purchase Payments
are defined below) less prior free withdrawals or amounts deemed to come from
free withdrawals during the then current Annuity Year.
(2) For all other Annuities, the maximum amount available as a free
withdrawal is the greater of (a), (b) or (c), where:
(a) is the then current "emergency withdrawal amount" (defined
below);
(b) is the Annuity's "growth" (defined below); and
(c) is 10% of "new" Purchase Payments ("new" Purchase Payments
are defined below) less prior free withdrawals or amounts deemed to come from
free withdrawals during the then current Annuity Year.
The "emergency withdrawal amount" depends on the jurisdiction in which your
Annuity is issued and the date it is issued, as follows:
(i) For Annuities purchased before May 1, 1996, the
"emergency withdrawal amount" in the first Annuity Year is zero. Thereafter, it
equals 35% of "new" Purchase Payments, less the sum of all prior withdrawals of
any type.
(ii) For Annuities purchased on or after May 1, 1996,
in most jurisdictions, a new, revised emergency withdrawal provision applies. In
certain jurisdictions, approval to use this revised emergency withdrawal
provision was granted and implemented at a later date. Under this revised
provision, on the Issue Date, the "emergency withdrawal amount" is 10% of the
initial Purchase Payment. During any Annuity Year, the "emergency withdrawal
amount" is increased by 10% on any additional Purchase Payments. At the start of
each Annuity Year, the "emergency withdrawal amount" is increased by 10% of all
"new" Purchase Payments, to a maximum of 50% of all "new" Purchase Payments. The
"emergency withdrawal amount" is reduced by an amount equal to the sum of all
prior free withdrawals or amounts deemed to come from free withdrawals. For
example, assuming an initial Purchase Payment of $10,000, no subsequent Purchase
Payments and no prior free withdrawals, the emergency withdrawal amount in
Annuity Year 4 would be 40% of the initial Purchase Payment, which would be
$4,000. However, assuming there had been prior free withdrawals totaling $2,500,
the maximum emergency withdrawal amount in Annuity Year 4 would be $1,500
($4,000 minus the $2,500 prior free withdrawals). Assuming further, that no
additional free withdrawals were made in Annuity Year 4, and no additional
Purchase Payments were made, the emergency withdrawal amount in Annuity Year 5
would be $2,500 ($5,000 minus the $2,500 prior free withdrawals).
"Growth" equals the then current Account Value less all "unliquidated" Purchase
Payments and less the value at the time credited of any exchange credits or
Additional Amounts (see "Additional Amounts in the Fixed Allocations").
"Unliquidated" means not previously surrendered or withdrawn. "New" Purchase
Payments are those received in the seven (7) years prior to the date as of which
a free withdrawal occurs. For purposes of the contingent deferred sales charge,
amounts withdrawn as a free withdrawal are not considered a liquidation of
Purchase Payments. Therefore, any free withdrawal will not reduce the amount of
any applicable contingent deferred sales charge upon any partial withdrawal or
subsequent surrender.
Partial Withdrawals: You may withdraw part of your Surrender Value. The
minimum partial withdrawal is $100. The Surrender Value that must remain in the
Annuity as of the date of this transaction is $1,000. If the amount of the
partial withdrawal request exceeds the maximum amount available, we reserve the
right to treat your request as one of a full surrender.
On a partial withdrawal, the contingent deferred sales charge is assessed
against any "unliquidated" "new" Purchase Payments withdrawn. "Unliquidated"
means not previously surrendered or withdrawn. For these purposes, amounts are
deemed to be withdrawn in the following order:
(1) From any amount then available as a free withdrawal; then from
(2) "Old" Purchase Payments (Purchase Payments allocated to Account
Value more than seven years prior to the partial withdrawal); then from
(3) "New" Purchase Payments (If there are multiple "new" Purchase
Payments, the one received earliest is liquidated first, then the one received
next earliest, and so forth); then from
(4) Other Surrender Value.
Systematic Withdrawals: We offer Systematic Withdrawals of earnings
only, principal plus earnings or a flat dollar amount. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. However, we will permit Systematic Withdrawals
from Fixed Allocations of principal plus earnings in connection with a program
of "substantially equal periodic payments" designed to meet the requirements of
Section 72(t) of the Code, as described in more detail below. A program of
Systematic Withdrawals begins on the date we accept, at our Office, your request
for such a program. Systematic Withdrawals are deemed to be withdrawn from
Surrender Value in the same order as partial withdrawals for purposes of
determining if the contingent deferred sales charge applies. Penalties may apply
(see "Free Withdrawals".)
A Systematic Withdrawal from a Fixed Allocation is not subject to the MVA unless
it is part of a program of withdrawals of principal plus earnings which we allow
in conjunction with a program of "substantially equal periodic payments"
designed to meet the requirements of Section 72(t) of the Code. We calculate the
Fixed Allocation's credited interest since the prior withdrawal as A minus B,
plus C, where:
A is the Interim Value of the applicable Fixed Allocation as of the
date of the Systematic Withdrawal;
B is the Interim Value of the applicable Fixed Allocation as of
the later of the beginning of its then current Guarantee
Period or the beginning of the Systematic Withdrawal program;
and
C is the total of all partial or free withdrawals and any
transfers from such Fixed Allocation since the later of the
beginning of its then current Guarantee Period or the
beginning of the Systematic Withdrawal program.
Systematic Withdrawals are available on a monthly, quarterly, semi-annual or
annual basis. You may not simultaneously receive Systematic Withdrawals from a
Fixed Allocation and participate in a dollar cost averaging program under which
Account Value is transferred from the same Fixed Allocation (see "Dollar Cost
Averaging"). Systematic Withdrawals are not concurrently available while you are
taking any Minimum Distributions (see "Minimum Distributions"). Systematic
Withdrawals of earnings or earnings plus principal are not available while any
rebalancing or asset allocation program is in effect in relation to your
Annuity.
The Surrender Value of your Annuity must be at least $20,000 when we accept your
request for a program of Systematic Withdrawals. The minimum for each Systematic
Withdrawal is $100. For any scheduled Systematic Withdrawal other than the last
that does not meet this minimum, we reserve the right to defer such a withdrawal
and add the amount that would have been withdrawn to the amount that is to be
withdrawn at the next Systematic Withdrawal.
If your Annuity is used as a funding vehicle for certain retirement plans that
receive special tax treatment under Sections 401, 408, or 403(b) of the Code,
Section 72(t) of the Code may provide an exception to the 10% penalty tax on
distributions made prior to age 59 1/2 if you elect to receive distributions as
a series of "substantially equal periodic payments". Distributions in any
Annuity Year received under this provision that exceed the maximum amount
available as a free withdrawal are subject to contingent deferred sales charges.
If distributions are to be taken from Fixed Allocations pursuant to a program
based on payments of principal and earnings, such amounts will be subject to the
MVA. To receive distributions in the form of "substantially equal periodic
payments" in accordance with the exception to the 10% penalty tax found in
Section 72(t) of the Code, you must provide us with certain required information
In Writing on a form acceptable to us.
We reserve the right to charge a processing fee for this service. Should we
suspend or cancel offering Systematic Withdrawals, such suspension or
cancellation will not affect any Systematic Withdrawal programs then in effect.
Minimum Distributions: Minimum Distributions are a specific type of
Systematic Withdrawal program. Minimum Distributions are subject to all the
rules applicable to Systematic Withdrawals unless we specifically indicate that
one or more of such rules do not apply. In addition, certain rules apply only to
Minimum Distributions.
You may elect to have us calculate Minimum Distributions annually if your
Annuity is being used for certain qualified purposes under the Code. Requests to
calculate a Minimum Distribution amount must be made three (3) days prior to the
date that your Minimum Distribution payment is processed to allow for
calculation and processing of the required amount. We calculate such amounts
assuming the Minimum Distribution amount is based solely on the value of your
Annuity. The required Minimum Distribution amounts applicable to your particular
situation may depend on other annuities, savings or investments of which we are
unaware, so that the required amount may be greater than the Minimum
Distribution amount we calculate based on the value of your Annuity. We reserve
the right to charge a fee for each annual calculation. Minimum Distributions are
not concurrently available with any other programs of Systematic Withdrawals.
You may elect to have Minimum Distributions paid out monthly, quarterly,
semi-annually or annually. The $100 minimum for Systematic Withdrawals does not
apply to Minimum Distributions.
Each Minimum Distribution will be taken from the investment options you select.
However, the portion of any Minimum Distribution that can be taken from any
Fixed Allocations may not exceed the then current ratio between your Account
Value in all Fixed Allocations you maintain and your total Account Value. No MVA
applies to any portion of Minimum Distributions taken from Fixed Allocations.
Minimum Distributions are not available from any Fixed Allocations if such Fixed
Allocation is being used in a dollar cost averaging program (see "Dollar Cost
Averaging"). Minimum Distributions from Fixed Allocations are not subject to the
limitation on Systematic Withdrawals that limits a program of Systematic
Withdrawals from Fixed Allocations only to earnings accrued after program
inception.
No contingent deferred sales charge is assessed against amounts withdrawn as a
Minimum Distribution, but only to the extent of the Minimum Distribution
required from your Annuity at the time it is taken. The contingent deferred
sales charge may apply to additional amounts withdrawn to meet minimum
distribution requirements in relation to other retirement programs you may
maintain.
Amounts withdrawn as Minimum Distributions are considered to come first from the
amounts available as a free withdrawal (see "Free Withdrawals") as of the date
of the yearly calculation of the Minimum Distribution amount. Minimum
Distributions over that amount are not deemed to be a liquidation of Purchase
Payments (see "Partial Withdrawals").
Death Benefit: In the accumulation phase, a death benefit is payable.
If the Annuity is owned by one or more natural persons, it is payable upon the
first death of such Owners. If the Annuity is owned by an entity, the death
benefit is payable upon the Annuitant's death, if there is no Contingent
Annuitant. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, the Contingent Annuitant then becomes the Annuitant.
There may be adverse tax consequences for certain entity Owners if they name a
Contingent Annuitant (see "Ownership, Annuitant and Beneficiary Designations").
The person upon whose death the death benefit is payable is referred to below as
the "decedent". For purposes of this death benefit provision, "withdrawals"
means withdrawals of any type (free withdrawals, partial withdrawals, Systematic
Withdrawals, Minimum Distributions) before assessment of any applicable
contingent deferred sales charge and after any applicable MVA. For purposes of
this provision, persons named Owner or Annuitant within 60 days of the Issue
Date are treated as if they were an Owner or Annuitant on the Issue Date.
The death benefit is as follows, and is subject to the conditions described in
(1), (2) and (3) below:
(1) If death occurs prior to the decedent's age 90: the death benefit
is the greater of your Account Value in Sub-accounts plus the Interim Value of
any Fixed Allocations, or the minimum death benefit ("Minimum Death Benefit").
The Minimum Death Benefit is the sum of all Purchase Payments less the sum of
all withdrawals.
(2) If death occurs when the decedent is age 90 or older: the death
benefit is your Account Value.
(3) If a decedent was not named an Owner or Annuitant as of the Issue
Date and did not become such as a result of a prior Owner's or Annuitant's
death: the Minimum Death Benefit is suspended as to that person for a two year
period from the date he or she first became an Owner or Annuitant. If that
person's death occurs during the suspension period and prior to age 90, the
death benefit is your Account Value in Sub-accounts plus the Interim Value of
any Fixed Allocations. If death occurs during the suspension period when such
decedent is age 90 or older, the death benefit is your Account Value. After the
suspension period is completed, the death benefit is the same as if such person
had been an Owner or Annuitant on the Issue Date.
The amount of the death benefit is determined as of the date we receive In
Writing: (a) "due proof of death"; (b) all representations we require or which
are mandated by applicable law or regulation in relation to the death claim and
the payment of death proceeds; and (c) any applicable election of the mode of
payment of the death benefit, if not previously elected by the Owner. The death
benefit is reduced by any annuity payments made prior to the date we receive In
Writing such due proof of death. The following constitutes "due proof of death":
(a) a certified copy of a death certificate; (b) a certified copy of a decree of
a court of competent jurisdiction as to the finding of death; or (c) any other
proof satisfactory to us.
If the death benefit becomes payable prior to the Annuity Date due to the death
of the Owner and the Beneficiary is the Owner's spouse, then in lieu of
receiving the death benefit, such Owner's spouse may elect to be treated as an
Owner and continue the Annuity at its current Account Value, subject to its
terms and conditions. An Owner's spouse may only assume ownership of the Annuity
if such spouse is designated as the sole primary Beneficiary.
In the event of your death, the benefit must be distributed within: (a) five
years of the date of death; or (b) over a period not extending beyond the life
expectancy of the Beneficiary or over the life of the Beneficiary. Distribution
after your death to be paid under (b) above, must commence within one year of
the date of death.
If the Annuitant dies before the Annuity Date, the Contingent Annuitant will
become the Annuitant. Where allowed by law, if the Annuity is owned by one or
more natural persons, the oldest of any such Owners not named as the Annuitant
immediately becomes the Contingent Annuitant if: (a) the Contingent Annuitant
predeceases the Annuitant; or (b) if you do not designate a Contingent
Annuitant.
In the payout phase, we continue to pay any "certain" payments (payments not
contingent on the continuance of any life) to the Beneficiary subsequent to the
death of the Annuitant.
Annuity Payments: Annuity payments can be guaranteed for life, for a
certain period, or for a certain period and life. We make available fixed
payments, and as of the date of this Prospectus, adjustable payments (payments
which may or may not be changed on specified adjustment dates based on annuity
purchase rates we are then making available to annuities of the same class). We
may or may not be making adjustable annuities available on the Annuity Date. To
the extent there is any tax basis in the annuity, a portion of each annuity
payment is treated for tax purposes as a return of such basis until such tax
basis is exhausted. The amount deemed such a return of basis is determined in
accordance with the requirements of the Code (see "Certain Tax Considerations").
You may choose an Annuity Date, an annuity option and the frequency of annuity
payments when you purchase an Annuity, or at a later date. Your choice of
Annuity Date and annuity option may be limited depending on your use of the
Annuity and the applicable jurisdiction. Subject to our rules, you may choose an
Annuity Date, option and frequency of payments suitable to your needs and
circumstances. You should consult with competent tax and financial advisors as
to the appropriateness of any such choice. For Annuities subject to New York
law, the Annuity Date for such Annuities may not exceed the first day of the
calendar month following the Annuitant's 90th birthday.
You may change your choices at any time up to 30 days before the earlier of: (a)
the date we would have applied your Account Value to an annuity option had you
not made the change; or (b) the date we will apply your Account Value to an
annuity option in relation to the new Annuity Date you are then selecting. You
must request this change In Writing. The Annuity Date must be the first or the
fifteenth day of a calendar month.
In the absence of an election In Writing: (a) the Annuity Date is the first day
of the calendar month first following the later of the Annuitant's 85th birthday
or the fifth anniversary of our receipt at our Office of your request to
purchase an Annuity; and (b) where allowed by law, fixed monthly payments will
commence under option 2, described below, with 10 years certain. For Annuities
subject to New York law, in the absence of an election In Writing: (a) the
Annuity Date is the first day of the calendar month following the Annuitant's
90th birthday; and (b) fixed monthly payments will commence under Option 2,
described below, with 10 years certain. The amount to be applied is your
Annuity's Account Value 15 business days prior to the Annuity Date. In
determining your annuity payments, we credit interest using our then current
crediting rate for this purpose, which is not less than 3% of interest per year,
between the date Account Value is applied to an annuity option and the Annuity
Date. If there is any remaining contingent deferred sales charge applicable as
of the Annuity Date, then the annuity option you select must include a certain
period of not less than 5 years' duration. As a result of this rule, making
additional Purchase Payments within seven years of the Annuity Date will prevent
you from choosing an annuity option with a certain period of less than 5 years'
duration. Annuity options in addition to those shown are available with our
consent. The minimum initial amount payable is the minimum initial annuity
amount we allow under our then current rules. Should you wish to receive a lump
sum payment, you must request to surrender your Annuity prior to the Annuity
Date (see "Surrender").
You may elect to have any amount of the proceeds due to the Beneficiary applied
under any of the options described below, but only to the extent selecting such
an option does not alter the tax status of the Annuity. Except where a lower
amount is required by law, the minimum monthly annuity payment is $100.
If you have not made an election prior to proceeds becoming due, the Beneficiary
may elect to receive the death benefit under one of the annuity options.
However, if you made an election, the Beneficiary may not alter such election.
For purposes of the annuity options described below, the term "key life" means
the person or persons upon whose life any payments dependent upon the
continuation of life are based.
(1) Option 1 - Payments for Life: Under this option, income is payable
periodically prior to the death of the key life, terminating with the last
payment due prior to such death. Since no minimum number of payments is
guaranteed, this option offers the maximum level of periodic payments of the
life contingent annuity options. It is possible that only one payment will be
payable if the death of the key life occurs before the date the second payment
was due, and no other payments nor death benefits would be payable.
(2) Option 2 - Payments for Life with 10, 15, or 20 Years Certain:
Under this option, income is payable periodically for 10, 15, or 20 years, as
selected, and thereafter until the death of the key life. Should the death of
the key life occur before the end of the period selected, the remaining payments
are paid to the Beneficiary to the end of such period.
(3) Option 3 - Payments Based on Joint Lives: Under this option, income
is payable periodically during the joint lifetime of two key lives, and
thereafter during the remaining lifetime of the survivor, ceasing with the last
payment prior to the survivor's death. No minimum number of payments is
guaranteed under this option. It is possible that only one payment will be
payable if the death of all the key lives occurs before the date the second
payment was due, and no other payments nor death benefits would be payable.
(4) Option 4 - Payments for a Certain Period: Under this option, income
is payable periodically for a specified number of years. The number of years is
subject to our then current rules. Should the payee die before the end of the
specified number of years, the remaining payments are paid to the Beneficiary to
the end of such period. Note that under this option, payments are not based on
how long we expect any key life to live. Therefore, that portion of the
mortality risk charge assessed to cover the risk that key lives outlive our
expectations provides no benefit to an Owner selecting this option.
The first payment varies according to the annuity options and payment frequency
selected. The first periodic payment is determined by multiplying the Account
Value (expressed in thousands of dollars) as of the close of business on the
fifteenth day preceding the Annuity Date, plus interest at not less than 3% per
year from such date to the Annuity Date, by the amount of the first periodic
payment per $1,000 of value obtained from our annuity rates for that type of
annuity and for the frequency of payment selected. Our rates will not be less
than our guaranteed minimum rates. These guaranteed minimum rates are derived
from the 1983a Individual Annuity Mortality Table with ages set back one year
for males and two years for females and with an assumed interest rate of 3% per
annum. Where required by law or regulation, such annuity table will have rates
that do not differ according to the gender of the key life. Otherwise, the rates
will differ according to the gender of the key life.
Qualified Plan Withdrawal Limitations: The Annuities are endorsed such
that there are surrender or withdrawal limitations when used in relation to
certain retirement plans for employees which are designed to qualify under
various sections of the Code. These limitations do not affect certain roll-overs
or exchanges between qualified plans. Distribution of amounts attributable to
contributions made pursuant to a salary reduction agreement (as defined in Code
section 403(b)), or attributable to transfers to a tax sheltered annuity from a
custodial account (as defined in Code section 403(b)(7)), is restricted to the
employee's: (a) separation from service; (b) death; (c) disability (as defined
in Section 72(m)(7) of the Code); (d) reaching age 59 1/2; or (e) hardship.
Hardship withdrawals are restricted to amounts attributable to salary reduction
contributions, and do not include investment results. In the case of tax
sheltered annuities, these limitations do not apply to certain salary reduction
contributions made and investment results earned prior to dates specified in the
Code. In addition, the limitation on hardship withdrawals does not apply to
salary reduction contributions made and investment results earned prior to dates
specified in the Code which have been transferred from custodial accounts.
Rollovers from the types of plans noted to another qualified plan or to an
individual retirement account or individual retirement annuity are not subject
to the limitations noted. Certain distributions, including rollovers that are
not transferred directly to the trustee of another qualified plan, the custodian
of an individual retirement account or the issuer of an individual retirement
annuity may be subject to automatic 20% withholding for Federal income tax. This
may also trigger withholding for state income taxes (see "Certain Tax
Considerations").
We may make annuities available through the Texas Optional Retirement Program
subsequent to receipt of the required regulatory approvals and implementation.
In addition to the restrictions required for such Annuities to qualify under
Section 403(b) of the Code, Annuities issued in the Texas Optional Retirement
Program are amended as follows: (a) no benefits are payable unless you die
during, or are retired or terminated from, employment in all Texas institutions
of higher education; and (b) if a second year of participation in such program
is not begun, the total first year State of Texas' contribution will be
returned, upon its request, to the appropriate institute of higher education.
With respect to the restrictions on withdrawals set forth above, we are relying
upon: 1) a no-action letter dated November 28, 1988 from the staff of the
Securities and Exchange Commission to the American Council of Life Insurance
with respect to annuities issued under Section 403(b) of the Code, the
requirements of which have been complied with by the us; and 2) Rule 6c-7 under
the 1940 Act with respect to annuities made available through the Texas Optional
Retirement Program, the requirements of which have been complied with by the us.
Pricing of Transfers and Distributions: We "price" transfers and
distributions on the dates indicated below.
(1) We price "scheduled" transfers and distributions as of the date
such transactions are so scheduled. However, if a transaction is "scheduled" to
occur on a day other than a Valuation Day, such transaction will be processed
and priced on the last Valuation Day prior to the scheduled transaction.
"Scheduled" transactions include transfers under a dollar cost averaging
program, Systematic Withdrawals, Minimum Distributions, transfers previously
scheduled with us at our Office pursuant to any on-going rebalancing, asset
allocation or similar program, and annuity payments.
(2) We price "unscheduled" transfers, partial withdrawals and free
withdrawals as of the date we receive at our Office the request for such
transactions. "Unscheduled" transfers include any transfers processed in
conjunction with any market timing program, or transfers not previously
scheduled with us at our Office pursuant to any rebalancing, asset allocation or
similar program which you employ or you authorize to be employed on your behalf.
"Unscheduled" transfers received pursuant to an authorization to accept
transfers, using voice or data transmission over the phone are priced as of the
Valuation Period we receive the request at our Office for such transactions.
(3) We price surrenders, medically-related surrenders and death
benefits as of the date we receive at our Office all materials we require for
such transactions and such materials are satisfactory to us (see "Surrenders",
"Medically-related Surrenders" and "Death Benefits").
The pricing of transfers and distributions involving Sub-accounts includes the
determination of the applicable Unit Price for the Units transferred or
distributed. The pricing of transfers and distributions involving Fixed
Allocations includes the determination of any applicable MVA. Any applicable MVA
alters the amount available when all the Account Value in a Fixed Allocation is
being transferred or distributed. Any applicable MVA alters the amount of
Interim Value needed when only a portion of the Account Value is being
transferred or distributed. Unit Prices may change each Valuation Period to
reflect the investment performance of the Sub-accounts. The MVA applicable to
each Fixed Allocation changes once each month and also each time we declare a
different rate for new Fixed Allocations. Payment is subject to our right to
defer transactions for a limited period (see "Deferral of Transactions").
Voting Rights: You have voting rights in relation to Account Value
maintained in the Sub-accounts. You do not have voting rights in relation to
Account Value maintained in any Fixed Allocations or in relation to fixed or
adjustable annuity payments.
We will vote shares of the underlying mutual funds or portfolios in which the
Sub-accounts invest in the manner directed by Owners. Owners give instructions
equal to the number of shares represented by the Sub-account Units attributable
to their Annuity.
We will vote the shares attributable to assets held in the Sub-accounts solely
for us rather than on behalf of Owners, or any share as to which we have not
received instructions, in the same manner and proportion as the shares for which
we have received instructions. We will do so separately for each Sub-account
from various classes that may invest in the same underlying mutual fund
portfolio.
The number of votes for an underlying mutual fund or portfolio will be
determined as of the record date for such underlying mutual fund or portfolio as
chosen by its board of trustees or board of directors, as applicable. We will
furnish Owners with proper forms and proxies to enable them to instruct us how
to vote.
You may instruct us how to vote on the following matters: (a) changes to the
board of trustees or board of directors, as applicable; (b) changing the
independent accountant; (c) approval of changes to the investment advisory
agreement or adoption of a new investment advisory agreement; (d) any change in
the fundamental investment policy; and (e) any other matter requiring a vote of
the shareholders.
With respect to approval of changes to the investment advisory agreement,
approval of a new investment advisory agreement or any change in fundamental
investment policy, only Owners maintaining Account Value as of the record date
in a Sub-account investing in the applicable underlying mutual fund portfolio
will instruct us how to vote on the matter, pursuant to the requirements of Rule
18f-2 under the 1940 Act.
Transfers, Assignments or Pledges: Generally, your rights in an Annuity
may be transferred, assigned or pledged for loans at any time. However, these
rights may be limited depending on your use of the Annuity. These transactions
may be subject to income taxes and certain penalty taxes (see "Certain Tax
Considerations"). You may transfer, assign or pledge your rights to another
person at any time, prior to any death upon which the death benefit is payable.
You must request a transfer or provide us a copy of the assignment In Writing. A
transfer or assignment is subject to our acceptance. Prior to receipt of this
notice, we will not be deemed to know of or be obligated under any assignment
prior to our receipt and acceptance thereof. We assume no responsibility for the
validity or sufficiency of any assignment. Transfer of all or a portion of
ownership rights may affect the minimum death benefit (see "Death Benefits").
Reports to You: We send any statements and reports required by
applicable law or regulation to you at your last known address of record. Owners
should therefore give us prompt notice of any address change. We reserve the
right, to the extent permitted by law, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at http://www.americanskandia.com
or any other electronic means. We send a confirmation statement to you each time
a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. You may request additional reports. We reserve the right to charge up
to $50 for each such additional report. Instead of immediately confirming
transactions made pursuant to some type of periodic transfer program (such as a
dollar cost averaging program) or a periodic Purchase Payment program, such as a
salary reduction arrangement, we may confirm such transactions in quarterly
statements. You should review the information in these statements carefully. All
errors or corrections must be reported to us at our Office as soon as possible
and no later than the date below to assure proper accounting to your Annuity.
For transactions that are confirmed immediately, we assume all transactions are
accurate unless you notify us otherwise within 10 days from the date you receive
the confirmation. For transactions that are only confirmed on the quarterly
statement, we assume all transactions are accurate unless you notify us within
10 days from the date you receive the quarterly statement. All transactions
confirmed immediately or by quarterly statement are deemed conclusive after the
applicable 10 day period. We may also send to Owners or make available
electronically through our Internet Website an annual report and a semi-annual
report containing financial statements for the applicable Sub-accounts, as of
December 31 and June 30, respectively.
SALE OF THE ANNUITIES: American Skandia Marketing, Incorporated ("ASM, Inc.), a
wholly-owned subsidiary of American Skandia Investment Holding Corporation, acts
as the principal underwriter of the Annuities. ASM, Inc.'s principal business
address is One Corporate Drive, Shelton, Connecticut 06484. ASM, Inc. is a
member of the National Association of Securities Dealers, Inc.
("NASD").
Distribution: ASM, Inc. will enter into distribution agreements with
certain broker-dealers registered under the Securities and Exchange Act of 1934
or with entities which may otherwise offer the Annuities that are exempt from
such registration. Under such distribution agreements such broker-dealers or
entities may offer Annuities to persons who have established an account with the
broker-dealer or entity. In addition, ASM, Inc. may offer Annuities directly to
potential purchasers. The maximum initial concession to be paid on premiums
received is 7.0% and a portion of compensation may be paid from time to time
based on all or a portion of Account Value. We reserve the right to base
concessions from time-to-time on the investment options chosen by Annuity
Owners, including investment options that may be deemed our "affiliates" or
"affiliates" of ASM, Inc. under the Investment Company Act of 1940.
As of the date of this Prospectus, we expect to pay an on-going service fee in
relation to providing certain statistical information upon request by Owners
about the variable investment options and the underlying mutual fund portfolios.
The fee is payable to the service providers based on your Annuity's Account
Value maintained in the variable investment options. Currently, no fee is
payable based on any Account Values maintained in any Fixed Allocations.
However, the service fee may be payable in the future based on Account Values of
new Purchase Payments allocated to the Fixed Allocations after implementation of
such service fee. Under most circumstances, we will engage the broker-dealer of
record for your Annuity, or the entity of record if such entity could offer
Annuities without registration as a broker-dealer (i.e. certain banks), to be
your resource for the statistical information, and to be available upon your
request to both provide and explain such information to you. The broker-dealer
of record or the entity of record is the firm which sold you the Annuity, unless
later changed. Some portion of the fee we pay for this service may be payable to
your representative. Therefore, your representative may receive on-going service
fee compensation, currently only in relation to Account Values maintained in
variable investment options but, at a later date, on Account Values maintained
in the Fixed Allocations.
From time to time, we may promote the sale of our products and the solicitation
of additional purchase payments, where applicable, for our products, including
Annuities offered pursuant to this Prospectus, through programs of non-cash
rewards to registered representatives of participating broker-dealers. We may
withdraw or alter such promotions at any time.
Advertising: We may advertise certain information regarding the
performance of the investment options. Details on how we calculate performance
measures for the Sub-accounts are found in the Statement of Additional
Information. This performance information may help you review the performance of
the investment options and provide a basis for comparison with other annuities.
This information may be less useful when comparing the performance of the
investment options with other savings or investment vehicles. Such other
investments may not provide some of the benefits of annuities, or may not be
designed for long-term investment purposes. Additionally other savings or
investment vehicles may not be treated like annuities under the Code.
The information we may advertise regarding the Fixed Allocations may include the
then current interest rates we are crediting to new Fixed Allocations.
Information on Current Rates will be as of the date specified in such
advertisement. Rates will be included in advertisements to the extent permitted
by law. Given that the actual rates applicable to any Fixed Allocation are as of
the date of any such Fixed Allocation's Guarantee Period begins, the rate
credited to a Fixed Allocation may be more or less than those quoted in an
advertisement.
Performance information on the Sub-accounts is based on past performance only
and is no indication of future performance. Performance of the Sub-accounts
should not be considered a representation of the performance of such
Sub-accounts in the future. Performance of the Sub-accounts is not fixed. Actual
performance will depend on the type, quality and, for some of the Sub-accounts,
the maturities of the investments held by the underlying mutual funds or
portfolios and upon prevailing market conditions and the response of the
underlying mutual funds to such conditions. Actual performance will also depend
on changes in the expenses of the underlying mutual funds or portfolios. Such
changes are reflected, in turn, in the Sub-accounts which invest in such
underlying mutual fund or portfolio. In addition, the amount of charges assessed
against each Sub-account will affect performance.
Some of the underlying mutual fund portfolios existed prior to the inception of
these Sub-accounts. Performance quoted in advertising regarding such
Sub-accounts may indicate periods during which the Sub-accounts have been in
existence but prior to the initial offering of the Annuities, or periods during
which the underlying mutual fund portfolios have been in existence, but the
Sub-accounts have not. Such hypothetical performance is calculated using the
same assumptions employed in calculating actual performance since inception of
the Sub-accounts.
As part of any advertisement of Standard Total Return, we may advertise the
"Non-standard Total Return" of the Sub-accounts. Non-standard Total Return does
not take into consideration the Annuity's contingent deferred sales charge
and/or the Annual Maintenance Fee.
Advertisements we distribute may also compare the performance of our
Sub-accounts with: (a) certain unmanaged market indices, including but not
limited to the Dow Jones Industrial Average, the Standard & Poor's 500, the
Shearson Lehman Bond Index, the Frank Russell non-U.S. Universal Mean, the
Morgan Stanley Capital International Index of Europe, Asia and Far East Funds,
and the Morgan Stanley Capital International World Index; and/or (b) other
management investment companies with investment objectives similar to the mutual
fund or portfolio underlying the Sub-accounts being compared. This may include
the performance ranking assigned by various publications, including but not
limited to the Wall Street Journal, Forbes, Fortune, Money, Barron's, Business
Week, USA Today and statistical services, including but not limited to Lipper
Analytical Services Mutual Funds Survey, Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey, SEI, the Morningstar Mutual Fund
Sourcebook and the Morningstar Variable Annuity/Life Sourcebook.
American Skandia Life Assurance Corporation may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay minimum death benefits, pay annuity payments or administer Annuities. Such
rankings and ratings do not reflect or relate to the performance of Separate
Account B.
CERTAIN TAX CONSIDERATIONS: The following is a brief summary of certain Federal
income tax laws as they are currently interpreted. No one can be certain that
the laws or interpretations will remain unchanged or that agencies or courts
will always agree as to how the tax law or regulations are to be interpreted.
This discussion is not intended as tax advice. You may wish to consult a
professional tax advisor for tax advice as to your particular situation.
Our Tax Considerations: We are taxed as a life insurance company under
Part I, subchapter L, of the Code.
Tax Considerations Relating to Your Annuity: Section 72 of the Code
governs the taxation of annuities in general. Taxation of an annuity is largely
dependent upon: (a) whether it is used in a qualified pension or profit sharing
plan or other retirement arrangement eligible for special treatment under the
Code; and (b) the status of the beneficial owner as either a natural or
non-natural person (when the annuity is not used in a retirement plan eligible
for special tax treatment). Non-natural persons include corporations, trusts,
and partnerships, except where these entities own an annuity as an agent or
nominal owner for a natural person who is the beneficial owner. Natural persons
are individuals.
Non-natural Persons: Any increase during a tax year in the value of an
annuity if not used in a retirement plan eligible for special treatment under
the Code is currently includible in the gross income of a non-natural person
that is the contractholder. There are exceptions if an annuity is held by: (a) a
structured settlement company; (b) an employer with respect to a terminated
pension plan; (c) entities other than employers, such as a trust, holding an
annuity as an agent for a natural person; or (d) a decedent's estate by reason
of the death of the decedent.
Natural Persons: Increases in the value of an annuity when the
contractholder is a natural person generally are not taxed until distribution
occurs. Distribution can be in a lump sum payment or in annuity payments under
the annuity option elected. Certain other transactions may be deemed to be a
distribution. The provisions of Section 72 of the Code concerning these
distributions are summarized briefly below.
Distributions: Generally, distributions received before the annuity
payments begin are treated as being derived first from "income on the contract"
and includible in gross income. The amount of the distribution exceeding "income
on the contract" is not included in gross income. "Income on the contract" for
an annuity is computed by subtracting from the value of all "related contracts"
(our term, discussed below) the taxpayer's "investment in the contract": an
amount equal to total purchase payments for all "related contracts" less any
previous distributions or portions of such distributions from such "related
contracts" not includible in gross income. "Investment in the contract" may be
affected by whether an annuity or any "related contract" was purchased as part
of a tax-free exchange of life insurance or annuity contracts under Section 1035
of the Code.
"Related contracts" may mean all annuity contracts or certificates evidencing
participation in a group annuity contract for which the taxpayer is the
policyholder and which are issued by the same insurer within the same calendar
year, irrespective of the named annuitants. It is clear that "related contracts"
include contracts prior to when annuity payments begin. However, there may be
circumstances under which "related contracts" may include contracts recognized
as immediate annuities under state insurance law or annuities for which annuity
payments have begun. In a ruling addressing the applicability of a penalty on
distributions, the Internal Revenue Service treated distributions from a
contract recognized as an immediate annuity under state insurance law like
distributions from a deferred annuity. The situation addressed by such ruling
included the fact that: (a) the immediate annuity was obtained pursuant to an
exchange of contracts; and (b) the purchase payments for the exchanged contract
were contributed more than one year prior to the first annuity payment payable
under the immediate annuity. This ruling also may or may not imply that annuity
payments from a deferred annuity on or after its annuity date may be treated the
same as distributions prior to the annuity date if such deferred annuity was:
(a) obtained pursuant to an exchange of contracts; and (b) the purchase payments
for the exchanged contract were made or may be deemed to have been made more
than one year prior to the first annuity payment.
If "related contracts" include immediate annuities or annuities for which
annuity payments have begun, then "related contracts" would have to be taken
into consideration in determining the taxable portion of each annuity payment
(as outlined in the "Annuity Payments" subsection below) as well as in
determining the taxable portion of distributions from an annuity or any "related
contracts" before annuity payments have begun. We cannot guarantee that
immediate annuities or annuities for which annuity payments have begun could not
be deemed to be "related contracts". You are particularly cautioned to seek
advice from your own tax advisor on this matter.
Amounts received under a contract on its complete surrender, redemption, or
maturity are includible in gross income to the extent that they exceed the cost
of the contract, i.e., they exceed the total premiums or other consideration
paid for the contract minus amounts received under the contract that were not
reportable as gross income.
Loans, Assignments and Pledges: Any amount received directly or
indirectly as a loan from, or any assignment or pledge of any portion of the
value of an annuity before annuity payments have begun are treated as a
distribution subject to taxation under the distribution rules set forth above.
Any gain in an annuity subsequent to the assignment or pledge of an entire
annuity while such assignment or pledge remains in effect is treated as "income
on the contract" in the year in which it is earned. For annuities not issued for
use as qualified plans (see "Tax Considerations When Using Annuities in
Conjunction with Qualified Plans"), the cost basis of the annuity is increased
by the amount of any assignment or pledge includible in gross income. The cost
basis is not affected by any repayment of any loan for which the annuity is
collateral or by payment of any interest thereon.
Gifts: The gift of an annuity to other than the spouse of the contract
holder (or former spouse incident to a divorce) is treated for income tax
purposes as a distribution.
Penalty on Distributions: Subject to certain exceptions, any
distribution from an annuity not used in conjunction with qualified plans is
subject to a penalty equal to 10% of the amount includible in gross income. This
penalty does not apply to certain distributions, including: (a) distributions
made on or after the taxpayer's age 59 1/2 ; (b) distributions made on or after
the death of the holder of the contract, or, where the holder of the contract is
not a natural person, the death of the annuitant; (c) distributions attributable
to the taxpayer's becoming disabled; (d) distributions which are part of a
scheduled series of substantially equal periodic payments for the life (or life
expectancy) of the taxpayer (or the joint lives of the taxpayer and the
taxpayer's Beneficiary); (e) distributions of amounts which are allocable to
"investments in the contract" made prior to August 14, 1982; (f) payments under
an immediate annuity as defined in the Code; (g) distributions under a qualified
funding asset under Code Section 130(d); or (h) distributions from an annuity
purchased by an employer on the termination of a qualified pension plan that is
held by the employer until the employee separates from service. With respect to
Roth IRAs only, distributions are not subject to federal income tax or the 10%
penalty tax if five (5) tax years have passed since the first contribution was
made or any conversion from a traditional IRA was made, and the distribution is
made (a) once the taxpayer is age 59 1/2 or older, (b) upon the death or
disability of the taxpayer, or (c) for qualified first-time home buyer expenses,
subject to certain limitations. Distributions from a Roth IRA that are not
"qualified" as described above may be subject to a penalty tax.
Any modification, other than by reason of death or disability, of distributions
which are part of a scheduled series of substantially equal periodic payments as
noted in (d), above, that occur before the taxpayer's age 59 1/2 or within 5
years of the first of such scheduled payments will result in the requirement to
pay the taxes that would have been due had the payments been treated as subject
to tax in the years received, plus interest for the deferral period. It is our
understanding that the Internal Revenue Service does not consider a scheduled
series of distributions to qualify under (d), above, if the holder of the
annuity retains the right to modify such distributions at will, even if such
right is not exercised, or, for a variable annuity, if the distributions are not
based on a substantially equal number of Units, rather than a substantially
equal dollar amount.
The Internal Revenue Service has ruled that the exception to the 10% penalty
described above for "non-qualified" immediate annuities as defined under the
Code may not apply to annuity payments under a contract recognized as an
immediate annuity under state insurance law obtained pursuant to an exchange of
contracts if: (a) purchase payments for the exchanged contract were contributed
or deemed to be contributed more than one year prior to the first annuity
payment payable under the immediate annuity; and (b) the annuity payments under
the immediate annuity do not meet the requirements of any other exception to the
10% penalty. This ruling may or may not imply that the exception to the 10%
penalty may not apply to annuity payments paid pursuant to a deferred annuity
obtained pursuant to an exchange of contract if: (a) purchase payments for the
exchanged contract were contributed or may be deemed to be contributed more than
one year prior to the first annuity payment pursuant to the deferred annuity
contract; or (b) the annuity payments pursuant to the deferred annuity do not
meet the requirements of any other exception to the 10% penalty.
Annuity Payments: The taxable portion of each payment received as an
annuity on or after the annuity start date is determined by a formula which
establishes the ratio that "investment in the contract" bears to the total value
of annuity payments to be made. However, the total amount excluded under this
ratio is limited to the "investment in the contract". The formula differs
between fixed and variable annuity payments. Where the annuity payments cease
because of the death of the person upon whose life payments are based and, as of
the date of death, the amount of annuity payments excluded from taxable income
by the exclusion ratio does not exceed the investment in the contract, then the
remaining portion of unrecovered investment is allowed as a deduction in the tax
year of such death.
Tax Free Exchanges: Section 1035 of the Code permits certain tax-free
exchanges of a life insurance, annuity or endowment contract for an annuity. If
an annuity is obtained by a tax-free exchange of a life insurance, annuity or
endowment contract purchased prior to August 14, 1982, then any distributions
other than as annuity payments which do not exceed the portion of the
"investment in the contract" (purchase payments made into the other contract,
less prior distributions) prior to August 14, 1982, are not included in taxable
income. In all other respects, the general provisions of the Code apply to
distributions from annuities obtained as part of such an exchange.
Transfers Between Investment Options: Transfers between investment
options are not subject to taxation. The Treasury Department may promulgate
guidelines under which a variable annuity will not be treated as an annuity for
tax purposes if persons with ownership rights have excessive control over the
investments underlying such variable annuity. Such guidelines may or may not
address the number of investment options or the number of transfers between
investment options offered under a variable annuity. It is not known whether
such guidelines, if in fact promulgated, would have retroactive effect. It is
also not known what effect, if any, such guidelines may have on transfers
between the investment options of the Annuity offered pursuant to this
Prospectus. We will take any action, including modifications to your Annuity or
the Sub-accounts, required to comply with such guidelines if promulgated.
Estate and Gift Tax Considerations: You should obtain competent tax
advice with respect to possible federal and state estate and gift tax
consequences flowing from the ownership and transfer of annuities.
Generation-Skipping Transfers: Under the Code certain taxes may be due
when all or part of an annuity is transferred to or a death benefit is paid to
an individual two or more generations younger than the contract holder. These
generation-skipping transfers generally include those subject to federal estate
or gift tax rules. There is an aggregate $1 million exemption from taxes for all
such transfers. We may be required to determine whether a transaction is a
direct skip as defined in the Code and the amount of the resulting tax. We will
deduct from your Annuity or from any applicable payment treated as a direct skip
any amount of tax we are required to pay.
Diversification: Section 817(h) of the Code provides that a variable
annuity contract, in order to qualify as an annuity, must have an "adequately
diversified" segregated asset account (including investments in a mutual fund by
the segregated asset account of insurance companies). The Treasury Department's
regulations prescribe the diversification requirements for variable annuity
contracts. We believe the underlying mutual fund portfolios should comply with
the terms of these regulations.
Federal Income Tax Withholding: Section 3405 of the Code provides for
Federal income tax withholding on the portion of a distribution which is
includible in the gross income of the recipient. Amounts to be withheld depend
upon the nature of the distribution. However, under most circumstances a
recipient may elect not to have income taxes withheld or have income taxes
withheld at a different rate by filing a completed election form with us.
Certain distributions, including rollovers, from most retirement plans, may be
subject to automatic 20% withholding for Federal income taxes. This will not
apply to: (a) any portion of a distribution paid as Minimum Distributions; (b)
direct transfers to the trustee of another retirement plan; (c) distributions
from an individual retirement account or individual retirement annuity; (d)
distributions made as substantially equal periodic payments for the life or life
expectancy of the participant in the retirement plan or the life or life
expectancy of such participant and his or her designated beneficiary under such
plan; and (e) certain other distributions where automatic 20% withholding may
not apply.
Tax Considerations When Using Annuities in Conjunction with Qualified
Plans: There are various types of qualified plans for which an annuity may be
suitable. Benefits under a qualified plan may be subject to that plan's terms
and conditions irrespective of the terms and conditions of any annuity used to
fund such benefits ("qualified contract"). We have provided below general
descriptions of the types of qualified plans in conjunction with which we may
issue an Annuity. These descriptions are not exhaustive and are for general
informational purposes only. We are not obligated to make or continue to make
new Annuities available for use with all the types of qualified plans shown
below.
The tax rules regarding qualified plans are complex. The application of these
rules depends on individual facts and circumstances. Before purchasing an
Annuity for use in funding a qualified plan, you should obtain competent tax
advice, both as to the tax treatment and suitability of such an investment.
Qualified contracts include special provisions changing or restricting certain
rights and benefits otherwise available to non-qualified annuities. You should
read your Annuity carefully to review any such changes or limitations. The
changes and limitations may include, but may not be limited to, restrictions on
ownership, transferability, assignability, contributions, distributions, as well
as reductions to the minimum allowable purchase payment for an annuity and any
subsequent annuity you may purchase for use as a qualified contract.
Additionally, various penalty and excise taxes may apply to contributions or
distributions made in violation of applicable limitations.
Individual Retirement Programs: Eligible individuals may maintain an
individual retirement account or individual retirement annuity ("IRA"). Subject
to limitations, contributions of certain amounts may be deductible from gross
income. Such persons may also maintain a form of IRA called a "Roth IRA".
Contributions to a Roth IRA are not deductible but, under certain circumstances,
distributions from such an account are tax-free. Purchasers of IRAs and Roth
IRAs will receive a special disclosure document, which describes limitations on
eligibility, contributions, transferability and distributions. It also describes
the conditions under which distributions from IRAs and qualified plans may be
rolled over or transferred into an IRA on a tax-deferred basis and the
conditions under which distributions from traditional IRAs may be rolled over
to, or the traditional IRA itself may be converted into a Roth IRA. Eligible
employers that meet specified criteria may establish savings incentive match
plans for employees or Simplified Employee Pensions using the employees' IRAs.
These arrangements are known as SIMPLE IRAs and others as SEP IRAs. Employer
contributions that may be made to SIMPLE IRAs and SEP IRAs are larger than the
amounts that may be contributed to other IRAs, and may be deductible to the
employer.
Tax Sheltered Annuities: A tax sheltered annuity ("TSA") under Section
403(b) of the Code is a contract into which contributions may be made for the
benefit of their employees by certain qualifying employers: public schools and
certain charitable, educational and scientific organizations. Such contributions
are not taxable to the employee until distributions are made from the TSA. The
Code imposes limits on contributions, transfers and distributions.
Nondiscrimination requirements apply as well.
Corporate Pension and Profit-sharing Plans: Annuities may be used to
fund employee benefits of various retirement plans established by corporate
employers. Contributions to such plans are not taxable to the employee until
distributions are made from the retirement plan. The Code imposes limitations on
contributions and distributions. The tax treatment of distributions is subject
to special provisions of the Code, and also depends on the design of the
specific retirement plan. There are also special requirements as to
participation, nondiscrimination, vesting and nonforfeitability of interests.
H.R. 10 Plans: Annuities may also be used to fund benefits of
retirement plans established by self-employed individuals for themselves and
their employees. These are commonly known as "H.R. 10 Plans" or "Keogh Plans".
These plans are subject to most of the same types of limitations and
requirements as retirement plans established by corporations. However, the exact
limitations and requirements may differ from those for corporate plans.
Tax Treatment of Distributions from Qualified Annuities: A 10% penalty
tax applies to the taxable portion of a distribution from a qualified contract
unless one of the following exceptions apply to such distribution: (a) it is
part of a properly executed transfer to another IRA, an individual retirement
account or another eligible qualified plan; (b) it occurs on or after the
taxpayer's age 59 1/2; (c) it is subsequent to the death or disability of the
taxpayer (for this purpose disability is as defined in Section 72(m)(7) of the
Code); (d) it is part of substantially equal periodic payments to be paid not
less frequently than annually for the taxpayer's life or life expectancy or for
the joint lives or life expectancies of the taxpayer and a designated
beneficiary; (e) it is subsequent to a separation from service after the
taxpayer attains age 55; (f) it does not exceed the employee's allowable
deduction in that tax year for medical care; and (g) it is made to an alternate
payee pursuant to a qualified domestic relations order. The exceptions stated
above in (e), (f) and (g) do not apply to IRAs.
Section 457 Plans: Under Section 457 of the Code, deferred compensation
plans established by governmental and certain other tax exempt employers for
their employees may invest in annuity contracts. The Code limits contributions
and distributions, and imposes eligibility requirements as well. Contributions
are not taxable to employees until distributed from the plan. However, plan
assets remain the property of the employer and are subject to the claims of the
employer's general creditors until such assets are made available to
participants or their beneficiaries.
OTHER MATTERS: Outlined below are certain miscellaneous matters you should know
before investing in an Annuity.
Deferral of Transactions: We may defer any distribution or transfer
from a Fixed Allocation or an annuity payout for a period not to exceed the
lesser of 6 months or the period permitted by law. If we defer a distribution or
transfer from any Fixed Allocation or any annuity payout for more than thirty
days, or less where required by law, we pay interest at the minimum rate
required by law but not less than 3%, or at least 4% if required by your
contract, per year on the amount deferred. We may defer payment of proceeds of
any distribution from any Sub-account or any transfer from a Sub-account for a
period not to exceed 7 calendar days from the date the transaction is effected.
Any deferral period begins on the date such distribution or transfer would
otherwise have been transacted (see "Pricing of Transfers and Distributions").
All procedures, including payment, based on the valuation of the Sub-accounts
may be postponed during the period: (1) the New York Stock Exchange is closed
(other than customary holidays or weekends) or trading on the New York Stock
Exchange is restricted as determined by the SEC; (2) the SEC permits
postponement and so orders; or (3) the SEC determines that an emergency exists
making valuation or disposal of securities not reasonably practical.
Resolving Material Conflicts: Underlying mutual funds or portfolios may
be available to registered separate accounts offering either or both life and
annuity contracts of insurance companies not affiliated with us. We also may
offer life insurance and/or annuity contracts that offer different variable
investment options from those offered under this Annuity, but which invest in
the same underlying mutual funds or portfolios. It is possible that differences
might arise between our Separate Account B and one or more accounts of other
insurance companies which participate in a portfolio. It is also possible that
differences might arise between a Sub-account offered under this Annuity and
variable investment options offered under different life insurance policies or
annuities we offer, even though such different variable investment options
invest in the same underlying mutual fund or portfolio. In some cases, it is
possible that the differences could be considered "material conflicts". Such a
"material conflict" could also arise due to changes in the law (such as state
insurance law or Federal tax law) which affect either these different life and
annuity separate accounts or differing life insurance policies and annuities. It
could also arise by reason of differences in voting instructions of persons with
voting rights under our policies and/or annuities and those of other companies,
persons with voting rights under annuities and those with rights under life
policies, or persons with voting rights under one of our life policies or
annuities with those under other life policies or annuities we offer. It could
also arise for other reasons. We will monitor events so we can identify how to
respond to such conflicts. If such a conflict occurs, we will take the necessary
action to protect persons with voting rights under our life policies or
annuities vis-a-vis those with rights under life policies or annuities offered
by other insurance companies. We will also take the necessary action to treat
equitably persons with voting rights under this Annuity and any persons with
voting rights under any other life policy or annuity we offer.
Modification: We reserve the right to any or all of the following: (a)
combine a Sub-account with other Sub-accounts; (b) combine Separate Account B or
a portion thereof with other "unitized" separate accounts; (c) terminate
offering certain Guarantee Periods for new or renewing Fixed Allocations; (d)
combine Separate Account D with other "non-unitized" separate accounts; (e)
deregister Separate Account B under the 1940 Act; (f) operate Separate Account B
as a management investment company under the 1940 Act or in any other form
permitted by law; (g) make changes required by any change in the Securities Act
of 1933, the Exchange Act of 1934 or the 1940 Act; (h) make changes that are
necessary to maintain the tax status of your Annuity under the Code; (i) make
changes required by any change in other Federal or state laws relating to
retirement annuities or annuity contracts; and (j) discontinue offering any
variable investment option at any time.
Also, from time to time, we may make additional Sub-accounts available to you.
These Sub-accounts will invest in underlying mutual funds or portfolios of
underlying mutual funds we believe to be suitable for the Annuity. We may or may
not make a new Sub-account available to invest in any new portfolio of one of
the current underlying mutual funds should such a portfolio be made available to
Separate Account B.
We may eliminate Sub-accounts, combine two or more Sub-accounts or substitute
one or more new underlying mutual funds or portfolios for the one in which a
Sub-account is invested. Substitutions may be necessary if we believe an
underlying mutual fund or portfolio no longer suits the purpose of the Annuity.
This may happen due to a change in laws or regulations, or a change in the
investment objectives or restrictions of an underlying mutual fund or portfolio,
or because the underlying mutual fund or portfolio is no longer available for
investment, or for some other reason. We would obtain prior approval from the
insurance department of our state of domicile, if so required by law, before
making such a substitution, deletion or addition. We also would obtain prior
approval from the SEC so long as required by law, and any other required
approvals before making such a substitution, deletion or addition.
We reserve the right to transfer assets of Separate Account B, which we
determine to be associated with the class of contracts to which your Annuity
belongs, to another "unitized" separate account. We also reserve the right to
transfer assets of Separate Account D which we determine to be associated with
the class of contracts to which your annuity belongs, to another "non-unitized"
separate account. We notify you (and/or any payee during the payout phase) of
any modification to your Annuity. We may endorse your Annuity to reflect the
change.
Misstatement of Age or Sex: If there has been a misstatement of the age
and/or sex of any person upon whose life annuity payments or the minimum death
benefit are based, we make adjustments to conform to the facts. As to annuity
payments: (a) any underpayments by us will be remedied on the next payment
following correction; and (b) any overpayments by us will be charged against
future amounts payable by us under your Annuity.
Ending the Offer: We may limit or discontinue offering Annuities.
Existing Annuities will not be affected by any such action.
Indemnification: Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing provisions, the
registrant has been informed 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.
Legal Proceedings: As of the date of this Prospectus, neither we nor
ASM, Inc. were involved in any litigation outside of the ordinary course of
business, and know of no material claims.
THE COMPANY:
To be filed by amendment
Management's Discussion and Analysis of Financial Condition and Results of
Operations
To be filed by amendment
Reserves: We are obligated to carry on our statutory books, as
liabilities, actuarial reserves to meet our obligations on outstanding annuity
or life insurance contracts. This is required by the life insurance laws and
regulations in the jurisdictions in which we do business. Such reserves are
based on mortality and/or morbidity tables in general use in the United States.
In general, reserves are computed amounts that, with additions from premiums to
be received, and with interest on such reserves compounded at certain assumed
rates, are expected to be sufficient to meet our policy obligations at their
maturities if death occurs in accordance with the mortality tables employed. In
the accompanying Financial Statements these reserves for policy obligations are
determined in accordance with generally accepted accounting principles and are
included in the liabilities of our separate accounts and the general account
liabilities for future benefits of annuity or life insurance contracts we issue.
Competition: We are engaged in a business that is highly competitive
due to the large number of insurance companies and other entities competing in
the marketing and sale of insurance products. There are approximately 2300
stock, mutual and other types of insurers in the life insurance business in the
United States.
Employees: As of December 31, 1997, we had 456 direct salaried
employees. An affiliate, American Skandia Information Services and Technology
Corporation, which provides services almost exclusively to us, had 79 direct
salaried employees.
Regulation: We are organized as a Connecticut stock life insurance
company, and are subject to Connecticut law governing insurance companies. We
are regulated and supervised by the Connecticut Commissioner of Insurance. By
March 1 of every year, we must prepare and file an annual statement, in a form
prescribed by the Connecticut Insurance Department, which covers our operations
for the preceding calendar year, and must prepare and file our statement of
financial condition as of December 31 of such year. The Commissioner and his or
her agents have the right at all times to review or examine our books and
assets. A full examination of our operations will be conducted periodically
according to the rules and practices of the National Association of Insurance
Commissioners ("NAIC"). We are subject to the insurance laws and various federal
and state securities laws and regulations and to regulatory agencies, such as
the Securities and Exchange Commission (the "SEC") and the Connecticut Banking
Department, which administer those laws and regulations.
We can be assessed up to prescribed limits for policyholder losses incurred by
insolvent insurers under the insurance guaranty fund laws of most states. We
cannot predict or estimate the amount any such future assessments we may have to
pay. However, the insurance guaranty laws of most states provide for deferring
payment or exempting a company from paying such an assessment if it would
threaten such insurer's financial strength.
Several states, including Connecticut, regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates. Under such laws, inter-company transactions, such as dividend
payments to parent companies and transfers of assets, may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.
Currently, the federal government does not directly regulate the business of
insurance. However, federal legislative, regulatory and judicial decisions and
initiatives often have significant effects on our business. Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance companies; (b) the tax treatment of insurance products; (c)
the securities laws, particularly as they relate to insurance and annuity
products; (d) the "business of insurance" exemption from many of the provisions
of the anti-trust laws; (e) the barriers preventing most banks from selling or
underwriting insurance: and (f) any initiatives directed toward improving the
solvency of insurance companies. We would also be affected by federal
initiatives that have impact on the ownership of or investment in United States
companies by foreign companies or investors.
Executive Officers and Directors:
Our executive officers, directors and certain significant employees, their ages,
positions with us and principal occupations are indicated below. The immediately
preceding work experience is provided for officers that have not been employed
by us or an affiliate for at least five years as of the date of this Prospectus.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name/ Position with American Skandia
Age Life Assurance Corporation Principal Occupation
Gordon C. Boronow* Deputy Chief Executive Deputy Chief Executive
45 Officer and President Officer and President:
Director (since July, 1991) American Skandia Life
Assurance Corporation
Nancy F. Brunetti Director (since February, 1996) Executive Vice President and
36 Chief Operating Officer:
American Skandia Information
Services and Technology Corporation
Malcolm M. Campbell Director (since July, 1991) Director of Operations and
42 Chief Actuary, Assurance and
Financial Services Division:
Skandia Insurance Company Ltd.
Jan R. Carendi* Chief Executive Senior Executive Vice President and
53 Officer and Member of Executive Management Group:
Chairman of the Skandia Insurance Company Ltd.
Board of Directors
Director (since May, 1988)
Lincoln R. Collins Executive Vice President and Executive Vice President
37 Chief Operating Officer and Chief Operating Officer:
Director (since February, 1996) American Skandia Life
Assurance Corporation
Henrik Danckwardt Director (since July, 1991) Director of Finance
44 and Administration,
Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Wade A. Dokken Deputy Chief Executive Officer Deputy Chief Executive Officer:
38 and Director (since July, 1991) American Skandia Life
Assurance Corporation;
President and Deputy
Chief Executive Officer:
American Skandia Marketing, Incorporated
Brian L. Hirst Vice President, Vice President,
50 Corporate Actuary Corporate Actuary:
American Skandia Life
Assurance Corporation
Mr. Hirst joined us in 1996. He previously held the positions of Vice President from 1993 to 1996 and Second Vice President from
1987 to 1992 at Allmerica Financial.
N. David Kuperstock Vice President, Vice President,
46 Product Development Product Development:
American Skandia Life
Assurance Corporation
Thomas M. Mazzaferro Executive Vice President and Executive Vice President and
45 Chief Financial Officer, Chief Financial Officer:
Director (since September, 1994) American Skandia Life
Assurance Corporation
Gunnar J. Moberg Director (since October, 1994) Director - Marketing and Sales,
43 Assurances and Financial
Services Division:
Skandia Insurance Company Ltd.
David R. Monroe Vice President, Vice President,
36 Controller Controller:
American Skandia Life
Assurance Corporation
Mr. Monroe joined us in 1996. He previously held positions of Assistant Vice President and Director at Allmerica Financial
from August, 1994 to July, 1996 and Senior Manager at KPMG Peat Marwick from July, 1983 to July, 1994.
Polly Rae Vice President, Vice President,
35 Service Development Service Development:
American Skandia Life
Assurance Corporation
Rodney D. Runestad Vice President Vice President:
48 American Skandia Life
Assurance Corporation
Anders O. Soderstrom Director (since September, 1994) President and
38 Chief Information Officer:
American Skandia Information
Services and Technology Corporation
Amanda C. Sutyak Executive Vice President Executive Vice President
40 and Deputy Chief and Deputy Chief
Operating Officer, Operating Officer:
Director (since July, 1991) American Skandia Life
Assurance Corporation
C. Ake Svensson Treasurer, Vice President, Corporate
47 Director (since December, 1994) Controller and Treasurer:
American Skandia Investment
Holding Corporation
Mr. Svensson joined us in 1994. He previously held the position of Senior Vice President with Nordenbanken.
Bayard F. Tracy Director (since September, 1994) Senior Vice President,
50 National Sales Manager:
American Skandia
Marketing, Incorporated
Jeffrey M. Ulness Vice President, Vice President,
37 Product Management Product Management:
American Skandia Life
Assurance Corporation
Mr. Ulness joined us in 1994. He previously held the positions of Counsel at North American Security Life Insurance Company
from March, 1991 to July, 1994 and Associate at LeBoeuf, Lamb, Leiby, Green and MacRae from January, 1990 to March 1991.
* Trustees of American Skandia Trust, one of the underlying mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.
</TABLE>
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION: The following are the
contents of the Statement of Additional Information:
(1) General Information Regarding American Skandia Life Assurance
Corporation
(2) Principal Underwriter
(3) Calculation of Performance Data
(4) Unit Price Determinations
(5) Calculating the Market Value Adjustment
(6) Independent Auditors
(7) Legal Experts
(8) Appendix A - Financial Statements for Separate Account B (Class 1
Sub-accounts)
FINANCIAL STATEMENTS: The consolidated financial statements which follow in
Appendix A are those of American Skandia Life Assurance Corporation as of
December 31, 1997 and 1996, and for the three years in the period ended December
31, 1997. Financial statements for the Class 1 Sub-accounts of Separate Account
B are found in the Statement of Additional Information.
<PAGE>
APPENDIXES
APPENDIX A FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
APPENDIX B SHORT DESCRIPTIONS OF THE UNDERLYING MUTUAL FUNDS'
PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES
<PAGE>
APPENDIX A FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
To be filed by amendment
<PAGE>
APPENDIX B
SHORT DESCRIPTIONS OF THE
UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES
The investment objectives for each underlying mutual fund are in bold face.
Please refer to the prospectuses of each underlying mutual fund for more
complete details and risk factors applicable to certain portfolios.
American Skandia Trust
JanCap Growth Portfolio: The investment objective of the JanCap Growth Portfolio
is growth of capital in a manner consistent with the preservation of capital.
Realization of income is not a significant investment consideration and any
income realized on investments, therefore, will be incidental to this objective.
The objective will be pursued by emphasizing investments in common stocks.
Common stock investments will be in industries and companies that the
Portfolio's sub-advisor believes are experiencing favorable demand for their
products and services, and which operate in a favorable competitive and
regulatory environment. Investments may be made to a lesser degree in preferred
stocks, convertible securities, warrants, and debt securities of U.S. issuers,
when the Portfolio's sub-advisor perceives an opportunity for capital growth
from such securities or so that a return may be received on the Portfolio's idle
cash. Debt securities which the Portfolio may purchase include corporate bonds
and debentures (not to exceed 5% of net assets in bonds rated below investment
grade), mortgage-backed and asset-backed securities, zero-coupon bonds,
indexed/structured notes, high-grade commercial paper, certificates of deposit
and repurchase agreements. Securities of foreign issuers, including securities
of foreign governments and Euromarket securities, also may be purchased.
Although it is the general policy of the JanCap Growth Portfolio to purchase and
hold securities for capital growth, changes will be made whenever the
Portfolio's sub-advisor believes they are advisable. Because investment changes
usually will be made without reference to the length of time a security has been
held, a significant number of short-term transactions may result.
Investments also may be made in "special situations" from time to time. A
"special situation" arises when, in the opinion of the Portfolio's sub-advisor,
the securities of a particular company will be recognized and appreciate in
value due to a specific development, such as a technological breakthrough,
management change or a new product at that company. Subject to certain
limitations, the JanCap Growth Portfolio may purchase and write options on
securities (including index options) and options on foreign currencies, and may
invest in futures contracts on securities, financial indices and foreign
currencies, ("futures contracts"), options on futures contracts, forward
contracts and swaps and swap-related products. These instruments will be used
primarily for hedging purposes. Investment of up to 15% of the JanCap Growth
Portfolio's total assets may be made in securities that are considered illiquid
because of the absence of a readily available market or due to legal or
contractual restrictions.
AST Janus Overseas Growth Portfolio: The investment objective of the AST Janus
Overseas Growth Portfolio is to seek long-term growth of capital. The Portfolio
pursues its objective primarily through investments in common stocks of issuers
located outside the United States. The Portfolio normally invests at least 65%
of its total assets in securities of issuers from at least five different
countries, excluding the United States; however, it may at times invest in U.S.
issuers and it may at times invest all of its assets in fewer than five
countries or even a single country. The Portfolio invests primarily in common
stocks of foreign issuers selected for their growth potential. The Portfolio may
invest to a lesser degree in other types of securities, including preferred
stocks, warrants, convertible securities and debt securities. The Portfolio may
also invest in short-term debt securities, including money market funds managed
by the Sub-advisor, as a means of receiving a return on idle cash.
When the Sub-advisor believes that market conditions are not favorable for
profitable investing or when the Sub-advisor is otherwise unable to locate
favorable investment opportunities, the Portfolio's investments may be hedged to
a greater degree and/or its cash or similar investments may increase; therefore,
it does not always stay fully invested in stocks and bonds. The Portfolio may
invest in "special situations" from time to time. A special situation arises
when, in the opinion of the Sub-advisor, the securities of a particular issuer
will be recognized and appreciate in value due to a specific development with
respect to that issuer. Investment in special situations may carry an additional
risk of loss in the event that the anticipated development does not occur or
does not attract the expected attention.
The Sub-advisor generally takes a "bottom up" approach to building the
Portfolio. In other words, the Sub-advisor seeks to identify individual
companies with earnings growth potential that may not be recognized by the
market at large regardless of country of organization or place of principal
business activity.
The Portfolio may use options, futures and other types of derivatives as well as
forward foreign currency contracts for hedging purposes or as a means of
enhancing return. The Portfolio intends to use most derivative instruments
primarily to hedge the value of its portfolio against potential adverse
movements in securities prices, foreign currency markets or interest rates.
Although the Sub-advisor believes the use of derivative instruments will benefit
the Portfolio, the Portfolio's performance could be worse than if the Portfolio
had not used such instruments if the Sub-advisor's judgment proves incorrect.
The Portfolio may invest up to 15% of its net assets in illiquid investments,
including restricted securities or private placements that are not deemed to be
liquid by the Sub-advisor. The Portfolio may invest up to 35% of its net assets
in corporate debt securities that are rated below investment grade (securities
rated BB or lower by Standard & Poor's Ratings Services ("Standard & Poor's") or
Ba or lower by Moody's Investors Services, Inc. ("Moody's") (commonly referred
to as "junk bonds")). The Portfolio may also invest in unrated debt securities
of foreign and domestic issuers. The Portfolio generally intends to purchase
securities for long-term investment rather than short-term gains.
Lord Abbett Growth and Income Portfolio: The investment objective of the Lord
Abbett Growth and Income Portfolio is long-term growth of capital and income
while attempting to avoid excessive fluctuations in market value. This objective
will be pursued by investing in securities which are selling at reasonable
prices in relation to value. Normally, investments will be made in common stocks
of seasoned companies which are expected to show above-average growth and which
the Sub-advisor believes to be in sound financial condition.
Lord Abbett Small Cap Value Portfolio: The investment objective of the Lord
Abbett Small Cap Value Portfolio (the "Portfolio") is to seek long-term capital
appreciation. This is a fundamental objective of the Portfolio. The Portfolio
will seek its objective through investments primarily in equity securities,
which are believed to be undervalued in the marketplace. The Portfolio seeks
companies which are primarily small-sized, based on the value of their
outstanding stock. As a result, under normal circumstances, at least 65% of the
Portfolio's total assets will be invested in common stocks issued by smaller,
less well-known companies (with market capitalizations of less than $1 billion)
selected on the basis of fundamental investment analysis. Smaller companies may
carry more risk than larger companies. Generally, small companies rely on
limited product lines and markets, financial resources, or other factors, and
this may make them more susceptible to setbacks or economic downturns. Small
capitalized companies may be more volatile in price, normally have fewer shares
outstanding and trade less frequently than large companies. The Portfolio may
invest up to 35% of its total assets in the securities of issuers without regard
to their size or the market capitalization of their common stock. Dividend and
investment income is of incidental importance, and the Portfolio may invest in
securities, which do not produce any income. Although the Portfolio typically
will hold a large, diversified number of securities identified through a
quantitative, value-driven investment strategy, it does entail above-average
investment risk in comparison to the overall U.S. stock market. The Portfolio
also may invest in preferred stocks and bonds, which have either attached
warrants or a conversion privilege into common stocks. In addition, the
Portfolio may purchase options on stocks that it holds as protection against a
significant price decline; purchase and sell stock index options and futures to
hedge overall market risk and the investment of cash flows; and write listed put
and listed covered call options. The Sub-advisor will use such techniques as
market conditions warrant. The Portfolio's ability to use these strategies may
be limited by market conditions, regulatory limitations and tax considerations
and there can be no assurance that any of these strategies will succeed. The
Portfolio may purchase and sell stock index futures, which are traded on a
commodities exchange or board of trade for certain hedging and risk management
purposes, in accordance with regulations of the Commodities Futures Trading
Commission. The Portfolio may invest up to 35% of its net assets (at the time of
investment) in securities that are primarily traded in foreign countries. The
Portfolio may enter into forward foreign currency contracts. The Portfolio also
may purchase foreign currency put options and write foreign currency call
options on U.S. exchanges or U.S. over-the-counter markets. The Portfolio may,
on occasion, enter into repurchase agreements whereby the seller of a security
agrees to repurchase that security at a mutually agreed-upon time and price. The
Portfolio may purchase or sell securities on a when-issued or delayed delivery
basis. The Portfolio may invest in (a) other investment companies to the extent
permitted under applicable law, and (b) straight bonds or other debt securities,
including lower rated, high-yield bonds.
Neuberger&Berman MidCap Value:The investment objective of the
Neuberger&Berman MidCap Value Portfolio is to seek capital growth. The Portfolio
seeks capital growth through an investment approach that is designed to increase
capital with reasonable risk. The Portfolio invests principally in common stocks
of medium to large capitalization established companies, using a value-oriented
investment approach. A value-oriented portfolio manager buys stocks that are
selling for less than their perceived market value. The Sub-advisor looks for
securities believed to be undervalued based on strong fundamentals, including a
low price-to-earnings ratio, consistent cash flow, and the company's track
record through all parts of the market cycle.
Although the Portfolio ordinarily invests primarily in common stocks, when
market conditions warrant it may invest in preferred stocks, securities
convertible into or exchangeable for common stocks, U.S. Government and agency
securities, debt securities, or money market instruments, or may retain assets
in cash or cash equivalents. Up to 15% of the Portfolio's net assets, measured
at the time of investment, may be invested in corporate debt securities that are
below investment grade or in comparable unrated securities ("junk bonds"). Such
securities are considered to be predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations.
For temporary defensive purposes, the Portfolio may invest up to 100% of its
assets in cash or cash equivalents, U.S. Government and agency securities,
commercial paper and certain other money market instruments, as well as
repurchase agreements collateralized by the foregoing.
Federated High Yield Portfolio: The investment objective of the Federated High
Yield Portfolio is to seek high current income by investing primarily in a
diversified portfolio of fixed income securities. The Portfolio will invest at
least 65% of its assets in lower-rated (BBB or lower) fixed rate corporate debt
obligations. Investments of this type are subject to a greater risk of loss of
principal and interest than investments in higher rated securities and are
generally considered to be high risk. The fixed rate corporate debt obligations
in which the Portfolio intends to invest are usually not in the three highest
rating categories of a nationally recognized rating organization (AAA, AA, or A
for Standard & Poor's and Aaa, Aa or A for Moody's) but are in the lower rating
categories or are unrated but are of comparable quality and are regarded as
predominantly speculative. Lower-rated or unrated bonds are commonly referred to
as "junk bonds". There is no minimal acceptable rating for a security to be
purchased or held in the Portfolio, and the Portfolio may, from time to time,
purchase or hold securities rated in the lowest rating category or securities
that may be in default. Under normal circumstances, the Portfolio will not
invest more than 10% of the value of its total assets in equity securities. The
fixed income securities in which the Portfolio may invest include, but are not
limited to: preferred stocks, bonds, debentures, notes, equipment lease
certificates and equipment trust certificates.
AST Money Market Portfolio: The investment objective of the AST Money Market
Portfolio are to maximize current income and maintain high levels of liquidity.
The Portfolio attempts to accomplish its objectives by maintaining a
dollar-weighted average maturity of not more than 90 days and by investing in
the types of securities described below which have effective maturities of not
more than 397 days. Investments may include obligations of the United States
government, its agencies or instrumentalities; certificates of deposit, time
deposits and bankers' acceptances of certain financial institutions which have
more than $2 billion in total assets; commercial paper and corporate bonds;
asset-backed securities; and repurchase and reverse repurchase agreements.
Securities may be purchased on a when-issued or delayed delivery basis. Subject
to applicable investment restrictions, the AST Money Market Portfolio also may
lend its securities.
T. Rowe Price Asset Allocation Portfolio: The investment objective of the T.
Rowe Price Asset Allocation Portfolio is to seek a high level of total return by
investing primarily in a diversified group of fixed income and equity
securities. The Portfolio is designed to balance the potential appreciation of
common stocks with the income and principal stability of bonds over the long
term. Under normal market conditions over the long-term, the Portfolio expects
to allocate its assets so that approximately 40% of such assets will be in fixed
income securities and approximately 60% in equity securities.
The Portfolio's fixed income securities will be allocated among investment
grade, high yield and non-dollar debt securities. The weighted average maturity
for this portion of the Portfolio is generally expected to be intermediate,
although it may vary significantly. High-yielding, income-producing debt
securities (commonly referred to as "junk bonds") and preferred stocks including
convertible securities may be purchased without regard to maturity, however, the
average maturity of the bonds is expected to be approximately 10 years, although
it may vary if market conditions warrant. Quality will generally range from
lower-medium to low and the Portfolio may also purchase bonds in default if, in
the opinion of the Sub-advisor, there is significant potential for capital
appreciation.
The Portfolio's equity securities will be allocated among large and small-cap
U.S. and non-dollar equity securities. Large-cap will generally be stocks of
well-established companies with capitalization over $1 billion which can produce
increasing dividend income. Small-cap will be common stocks of small companies
or companies which offer the possibility of accelerated earnings growth because
of rejuvenated management, new products or structural changes in the economy.
Current income is not a factor in the selection of these stocks.
T. Rowe Price International Equity Portfolio: The investment objective of the T.
Rowe Price International Equity Portfolio is to seek a total return on its
assets from long-term growth of capital and income, principally through
investments in common stocks of established, non-U.S. companies. Investments may
be made solely for capital appreciation or solely for income or any combination
of both for the purpose of achieving a higher overall return. Total return
consists of capital appreciation or depreciation, dividend income, and currency
gains or losses. The Portfolio intends to diversify investments broadly among
countries and to normally have at least three different countries represented in
the Portfolio. The Portfolio may invest in countries of the Far East and Western
Europe as well as South Africa, Australia, Canada and other areas (including
developing countries). Under unusual circumstances, the Portfolio may invest
substantially all of its assets in one or two countries. The Portfolio may also
invest in a variety of other equity-related securities, such as preferred
stocks, warrants, and convertible securities, as well as corporate and
governmental debt securities, when considered consistent with the Portfolio's
investment objective and program.
T. Rowe Price Natural Resources: The investment objective of the T. Rowe Price
Natural Resources Portfolio is to seek long-term growth of capital through
investment primarily in common stocks of companies which own or develop natural
resources and other basic commodities. Current income is not a factor in the
selection of stocks for investment by the Portfolio. Total return will consist
primarily of capital appreciation (or depreciation). The Portfolio will invest
primarily (at least 65% of its total assets) in common stocks of companies which
own or develop natural resources and other basic commodities. However, it may
also purchase other types of securities, such as selected, non-resource growth
companies, foreign securities, convertible securities and warrants, when
considered consistent with the Portfolio's investment objective and policies.
The Portfolio may also engage in a variety of investment management practices,
such as buying and selling futures and options.
Some of the most important factors evaluated by the Sub-advisor in selecting
natural resource companies are the capability for expanded production, superior
exploration programs and production facilities, and the potential to accumulate
new resources. The Portfolio expects to invest in those natural resource
companies which own or develop energy sources (such as oil, gas, coal and
uranium), precious metals, forest products, real estate, nonferrous metals,
diversified resources, and other basic commodities which, in the opinion of the
Sub-advisor, can be produced and marketed profitably during periods of rising
labor costs and prices. However, the percentage of the Portfolio's assets
invested in natural resource and related businesses versus the percentage
invested in non-resource companies may vary greatly depending upon economic
monetary conditions and the outlook for inflation. The earnings of natural
resource companies may be expected to follow irregular patterns, because these
companies are particularly influenced by the forces of nature and international
politics. Companies which own or develop real estate might also be subject to
irregular fluctuations of earnings, because these companies are affected by
changes in the availability of money, interest rates, and other factors.
The Portfolio may invest up to 50% of its total assets in foreign securities.
These include non-dollar denominated securities traded outside of the U.S. and
dollar denominated securities traded in the U.S. (such as ADRs). Some of the
countries in which the Portfolio may invest may be considered to be developing
and may involve special risks. The Portfolio will not purchase a non-investment
grade debt security (or junk bond) if immediately after such purchase the
Portfolio would have more than 10% of its total assets invested in such
securities. Junk bonds are regarded as predominantly speculative and high risk.
The Portfolio may invest up to 10% of its total assets in hybrid instruments.
Such instruments may take a variety of forms, such as debt instruments with
interest or principal payments determined by reference to the value of a
currency, security index or commodity at a future point in time.
T. Rowe Price International Bond Portfolio: The investment objective of the T.
Rowe Price International Bond Portfolio is to provide high current income and
capital appreciation by investing in high-quality, non dollar-denominated
government and corporate bonds outside the United States. The Portfolio is
intended for long-term investors who can accept the risks associated with
investing in international bonds. Total return consists of income after
expenses, bond price gains (or losses) in terms of the local currency and
currency gains (or losses). The value of the Portfolio will fluctuate in
response to various economic factors, the most important of which are
fluctuations in foreign currency exchange rates and interest rates. Because the
Portfolio's investments are primarily denominated in foreign currencies,
exchange rates are likely to have a significant impact on total Portfolio
performance. Investors should be aware that exchange rate movements can be
significant and endure for long periods of time.
The Portfolio will invest at least 65% of its assets in high-quality, non
dollar-denominated government and corporate bonds outside the United States. The
Portfolio may also invest up to 20% of its assets in below investment-grade,
high-risk bonds, including bonds in default or those with the lowest rating.
Defaulted bonds are acquired only if the Sub-advisor foresees the potential for
significant capital appreciation. Securities rated below investment-grade are
commonly referred to as "junk bonds" and involve greater price volatility and
higher degrees of speculation with respect to the payment of principal and
interest than higher quality fixed-income securities.
The Portfolio may also invest more than 5% of its assets in the fixed-income
securities of individual foreign governments. The Portfolio generally will not
invest more than 5% of its assets in any individual corporate issuer. Since, as
a nondiversified investment company, the Portfolio is permitted to invest a
greater proportion of its assets in the securities of a smaller number of
issuers, the Portfolio may be subject to greater credit risk with respect to its
portfolio securities than an investment company that is more broadly
diversified.
Because of the Portfolio's long-term investment objective, investors should not
rely on an investment in the Portfolio for their short-term financial needs and
should not view the Portfolio as a vehicle for playing short-term swings in the
international bond and foreign exchange markets. Shares of the Portfolio alone
should not be regarded as a complete investment program. Also, investors should
be aware that investing in international bonds may involve a higher degree of
risk than investing in U.S. bonds.
T. Rowe Price Small Company Value Portfolio: The investment objective of the T.
Rowe Price Small Company Value Portfolio is to provide long-term capital
appreciation by investing primarily in small-capitalization stocks that appear
to be undervalued. Reflecting a value approach to investing, the Portfolio will
seek the stocks of companies whose current stock prices do not appear to
adequately reflect their underlying value as measured by assets, earnings, cash
flow, or business franchises. The Portfolio will invest at least 65% of its
total assets in companies with a market capitalization of $1 billion or less
that appear undervalued by various measures, such as price/earnings or
price/book value ratios. Although the Portfolio will invest primarily in U.S.
common stocks, it may also purchase other types of securities, for example,
foreign securities, convertible stocks and bonds, and warrants when considered
consistent with the Portfolio's investment objective and policies. Small
companies--those with a capitalization (market value) of $1 billion or less--may
offer greater potential for capital appreciation since they are often overlooked
or undervalued by investors. Investing in small companies involves greater risk,
as well as greater opportunity, than is customarily associated with more
established companies.
The Portfolio may invest in debt or preferred equity securities convertible into
or exchangeable for equity securities. The Portfolio may invest up to 20% of its
total assets (excluding reserves) in foreign securities. These include
nondollar-denominated securities traded outside of the U.S. and
dollar-denominated securities of foreign issuers traded in the U.S. (such as
ADRs). Some of the countries in which the Portfolio may invest may be considered
to be developing and may involve special risks. The Portfolio may invest in debt
securities of any type without regard to quality or rating. The Portfolio will
not purchase a noninvestment-grade debt security (or junk bond) if immediately
after such purchase the Portfolio would have more than 5% of its total assets
invested in such securities.
The Portfolio may invest up to 10% of its total assets in hybrid instruments.
Hybrids can have volatile prices and limited liquidity and their use by the
Portfolio may not be successful. These instruments (a type of potentially
high-risk derivative) can combine the characteristics of securities, futures,
and options. The Portfolio may acquire illiquid securities; however, the
Portfolio will not invest more than 15% of its net assets in illiquid
securities, and not more than 10% of its total assets in restricted securities
(other than Rule 144A securities). The Portfolio will hold a certain portion of
its assets in U.S. and foreign dollar-denominated money market securities,
including repurchase agreements, in the two highest rating categories, maturing
in one year or less.
The Portfolio may enter into futures contracts (or options thereon) to hedge all
or a portion of its portfolio against changes in prevailing levels of interest
rates or currency exchange rates, or as an efficient means of adjusting its
exposure to the bond, stock, and currency markets. The Portfolio may also write
call and put options and purchase put and call options on securities, financial
indices, and currencies. The aggregate market value of the Portfolio's
securities or currencies covering call or put options will not exceed 25% of the
Portfolio's net assets.
Founders Capital Appreciation Portfolio: The investment objective of Founders
Capital Appreciation Portfolio is capital appreciation. The Portfolio will
normally invest at least 65% of its total assets in common stocks of U.S.
companies with market capitalizations of $1.5 billion or less. These stocks
normally will be traded in the over-the-counter market. The Portfolio may engage
in short-term trading and therefore normally will have annual portfolio turnover
rates which are considered to be high. Investment in such companies may involve
greater risk than is associated with more established companies. The Portfolio
may invest in convertible securities, preferred stocks, bonds, debentures, and
other corporate obligations, when these investments offer opportunities for
capital appreciation.
Founders Passport Portfolio: The investment objective of the Founders Passport
Portfolio is to seek capital appreciation. To achieve its objective, the
Portfolio invests primarily in securities issued by foreign companies which have
market capitalizations or annual revenues of $1 billion or less. These
securities may represent companies in both established and emerging economies
throughout the world. At least 65% of the Portfolio's total assets will normally
be invested in foreign securities representing a minimum of three countries. The
Portfolio may invest in larger foreign companies or in U.S.-based companies if,
in the Sub-advisor's opinion, they represent better prospects for capital
appreciation. The Portfolio normally will invest a significant proportion of its
assets in the securities of small and medium-sized companies. As used with
respect to this Portfolio, small and medium-sized companies are those which are
still in the developing stages of their life cycles and are attempting to
achieve rapid growth in both sales and earnings. Investments in small and
medium-sized companies involve greater risk than is customarily associated with
more established companies.
The Portfolio may invest in convertible securities, preferred stocks, bonds,
debentures, and other corporate obligations when the Sub-advisor believes that
these investments offer opportunities for capital appreciation. Current income
will not be a substantial factor in the selection of these securities. The
Portfolio will only invest in bonds, debentures, and corporate obligations
(other than convertible securities and preferred stock) rated investment grade
(BBB or higher) at the time of purchase. Bonds in the lowest investment grade
category (BBB) have speculative characteristics. Convertible securities and
preferred stocks purchased by the Portfolio may be rated in medium and lower
categories by Moody's or S&P (Ba or lower by Moody's and BB or lower by S&P),
but will not be rated lower than B. The Portfolio may also invest in unrated
convertible securities and preferred stocks in instances in which the
Sub-advisor believes that the financial condition of the issuer or the
protection afforded by the terms of the securities limits risk to a level
similar to that of securities eligible for purchase by the Portfolio rated in
categories no lower than B. The Portfolio may invest without limit in American
Depository Receipts and may invest in foreign securities. Foreign investments of
the Portfolio may include securities issued by companies located in countries
not considered to be major industrialized nations, which involve certain risks.
The Portfolio may use futures contracts and options for hedging purposes. The
Portfolio may engage in short-term trading and therefore normally will have
annual portfolio turnover rates which are considered to be high.
INVESCO Equity Income Portfolio: The investment objective of the INVESCO Equity
Income Portfolio is to seek high current income while following sound investment
practices. Capital growth potential is an additional, but secondary,
consideration in the selection of portfolio securities. The Portfolio seeks to
achieve its objective by investing in securities which will provide a relatively
high-yield and stable return and which, over a period of years, may also provide
capital appreciation. The Portfolio normally will invest at least 65% of its
assets in dividend-paying, marketable common stocks of domestic and foreign
industrial issuers. The Portfolio also will invest in convertible bonds,
preferred stocks and debt securities. The Portfolio may depart from the basic
investment objective and assume a defensive position with a large portion of its
assets temporarily invested in high quality corporate bonds, or notes and
government issues, or held in cash. The Portfolio's investments in common stocks
may decline in value. To minimize the risk this presents, the Portfolio only
invests in dividend-paying common stocks of domestic and foreign industrial
issuers which are marketable, and will not invest more than 5% of the
Portfolio's assets in the securities of any one company or more than 25% of the
Portfolio's assets in any one industry. There are no fixed-limitations regarding
portfolio turnover. The rate of portfolio turnover may fluctuate as a result of
constantly changing economic conditions and market circumstances. Securities
initially satisfying the Portfolio's basic objectives and policies may be
disposed of when they are no longer suitable. As a result, it is anticipated
that the Portfolio's annual portfolio turnover rate may be higher than that of
other investment companies seeking current income with capital growth as a
secondary consideration.
PIMCO Total Return Bond Portfolio: The investment objective of the PIMCO Total
Return Bond Portfolio is to seek to maximize total return, consistent with
preservation of capital. The Sub-advisor will seek to employ prudent investment
management techniques, especially in light of the broad range of investment
instruments in which the Portfolio may invest. The proportion of the Portfolio's
assets committed to investment in securities with particular characteristics
(such as maturity, type and coupon rate) will vary based on the outlook for the
U.S. and foreign economies, the financial markets and other factors. The
Portfolio will invest at least 65% of its assets in the following types of
securities which may be issued by domestic or foreign entities and denominated
in U.S. dollars or foreign currencies: securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; corporate debt securities;
corporate commercial paper; mortgage and other asset-backed securities; variable
and floating rate debt securities; bank certificates of deposit; fixed time
deposits and bankers' acceptances; repurchase agreements and reverse repurchase
agreements; obligations of foreign governments or their subdivisions, agencies
and instrumentalities, international agencies or supranational entities; and
foreign currency exchange-related securities, including foreign currency
warrants. The Portfolio will invest in a diversified portfolio of fixed-income
securities of varying maturities with a portfolio duration from three to six
years. The Portfolio may invest up to 10% of its assets in fixed income
securities that are rated below investment grade (i.e., rated below Baa by
Moody's or BBB by S&P or, if unrated, determined by the Sub-advisor to be of
comparable quality). These securities are regarded as high risk and
predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments. The Portfolio may also invest up to 20% of
its assets in securities denominated in foreign currencies. The "total return"
sought by the Portfolio will consist of interest and dividends from underlying
securities, capital appreciation reflected in unrealized increases in value of
portfolio securities (realized by the shareholder only upon selling shares) or
realized from the purchase and sale of securities, and use of futures and
options, or gains from favorable changes in foreign currency exchange rates. The
Portfolio may invest directly in U.S. dollar- or foreign currency-denominated
fixed income securities of non-U.S. issuers. The Portfolio will limit its
foreign investments to securities of issuers based in developed countries
(including newly industrialized countries, such as Taiwan, South Korea and
Mexico). Investing in the securities of issuers in any foreign country involves
special risks. The Portfolio will limit its investments in newly industrialized
countries to 10% of its assets.
PIMCO Limited Maturity Bond Portfolio: The investment objective of the PIMCO
Limited Maturity Bond Portfolio is to seek to maximize total return, consistent
with preservation of capital and prudent investment management. The Portfolio
will invest at least 65% of its total assets in the following types of
securities, which may be issued by domestic or foreign entities and denominated
in U.S. dollars or foreign currencies: securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; corporate debt securities;
corporate commercial paper; mortgage and other asset-backed securities; variable
and floating rate debt securities; bank certificates of deposit, fixed time
deposits and bankers' acceptances; repurchase agreements and reverse repurchase
agreements; obligations of foreign governments or their subdivisions, agencies
and instrumentalities, international agencies or supranational entities; and
foreign currency exchange-related securities, including foreign currency
warrants. The Portfolio may hold different percentages of its assets in these
various types of securities, and may invest all of its assets in derivative
instruments or in mortgage- or asset-backed securities. There are special risks
involved in these instruments. The Portfolio will invest in a diversified
portfolio of fixed income securities of varying maturities with a portfolio
duration from one to three years. The Portfolio may invest up to 10% of its
assets in corporate debt securities that are rated below investment grade but
rated B or higher by Moody's or S&P (or, if unrated, determined by the
Sub-advisor to be of comparable quality). The Portfolio may also invest up to
20% of its assets in securities denominated in foreign currencies. The "total
return" sought by the Portfolio will consist of interest and dividends from
underlying securities, capital appreciation reflected in unrealized increases in
value of portfolio securities (realized by the shareholder only upon selling
shares) or realized from the purchase and sale of securities, and use of futures
and options, or gains from favorable changes in foreign currency exchange rates.
The Portfolio may invest directly in U.S. dollar- or foreign
currency-denominated fixed income securities of non-U.S. issuers. The Portfolio
will limit its foreign investments to securities of issuers based in developed
countries (including newly industrialized countries, such as Taiwan, South Korea
and Mexico). Investing in the securities of issuers in any foreign country
involves special risks. The Portfolio will limit its investments in newly
industrialized countries to 5% of its assets.
Neuberger&Berman MidCap Growth: The investment objective of the
Neuberger&Berman MidCap Growth Portfolio is to seek capital appreciation The
Portfolio invests in a diversified portfolio of common stocks believed to have
the maximum potential for long-term above-average capital appreciation. Under
normal conditions, the Portfolio primarily invests in the common stocks of
companies with equity market capitalizations from $300 million to $10 billion at
the time of investment ("mid-cap companies"). Investments may also be made in
the securities of larger, widely traded companies ("large-cap companies") as
well as smaller, less well-known companies ("small-cap companies"). The
Portfolio does not seek to invest in securities that pay dividends or interest,
and any such income is incidental.
Investments in small- and mid-cap company stocks may present greater
opportunities for capital appreciation than investments in stocks of large-cap
companies. However, small- and mid-cap company stocks may have higher risk and
volatility. The Portfolio is normally managed using a growth-oriented investment
approach. A growth approach seeks stocks of companies that the Sub-advisor
projects will grow at above-average rates and faster than others expect. In
selecting equity securities for the Portfolio, the Sub-advisor will consider,
among other factors, an issuer's financial strength, competitive position,
projected future earnings, management strength and experience, reasonable
valuations, and other investment criteria. The Portfolio diversifies its
investments among companies and industries.
Although equity securities are normally the Portfolio's primary investment, when
market conditions warrant it may invest in preferred stocks, securities
convertible into or exchangeable for common stocks, U.S. Government and Agency
Securities, investment grade and non-investment grade debt securities, or money
market instruments, or may retain assets in cash or cash equivalents. The
Portfolio may invest up to 20% of its net assets in securities of issuers
organized and doing business principally outside the United States.
For temporary defensive purposes, the Portfolio may invest up to 100% of its
assets in cash or cash equivalents, U.S. Government and agency securities,
commercial paper and certain other money market instruments, as well as
repurchase agreements collateralized by the foregoing.
Robertson Stephens Value + Growth Portfolio: The investment objective of the
Robertson Stephens Value + Growth Portfolio is to seek capital appreciation. The
Portfolio will invest primarily in growth companies believed by the Sub-advisor
to have favorable relationships between price/earnings ratios and growth rates
in sectors offering the potential for above-average returns.
In selecting investments for the Portfolio, the Sub-advisor's primary emphasis
is typically on evaluating a company's management, growth prospects, business
operations, revenues, earnings, cash flows, and balance sheet in relationship to
its share price. The Sub-advisor may select stocks which it believes are
undervalued relative to the current stock price. When the Sub-advisor
anticipates that the price of a security will decline, it may sell the security
short and borrow the same security from a broker or other institution to
complete the sale.
The Portfolio may invest a substantial portion of its assets in securities
issued by small companies. Such companies may offer greater opportunities for
capital appreciation than larger companies, but investments in such companies
may involve certain special risks such as limited product lines, markets and
financial or managerial resources. These securities may be less frequently
traded and the values may fluctuate more sharply than other securities.
The Portfolio may invest up to 35% of its net assets in securities principally
traded in foreign markets. The Portfolio may buy or sell foreign currencies and
options and futures contracts on foreign currencies for hedging purposes in
connection with its foreign investments. The Portfolio may also at times invest
a substantial portion of their assets in securities of issuers in developing
countries. Although many of the securities in which the Portfolio may invest are
traded on securities exchanges, the Portfolio may trade in limited volume, and
the exchanges may not provide all of the conveniences or protections provided by
securities exchanges in more developed markets.
At times, the Portfolio may invest more than 25% of its assets in securities of
issuers in one or more market sectors such as, for example, the technology
sector. A market sector may be made up of companies in a number of related
industries. The Portfolio would only concentrate its investments in a particular
market sector if the Sub-advisor were to believe the investment return available
from concentration in that sector justifies any additional risk associated with
concentration in that sector.
AST Putnam Value Growth & Income Portfolio: The primary investment objective of
the AST Putnam Value Growth & Income Portfolio is to seek capital growth.
Current income is a secondary investment objective. The Portfolio invests
primarily in common stocks that offer potential for capital growth, and may,
consistent with its investment objectives, invest in stocks that offer potential
for current income. The Portfolio may also purchase corporate bonds, notes and
debentures, preferred stocks, or convertible securities (both debt securities
and preferred stocks) or U.S. government securities, if the Sub-advisor
determines that their purchase would help further the Portfolio's investment
objectives. The Portfolio may invest up to 20% of its assets in securities
traded in foreign markets. The Portfolio may also purchase ADRs and Eurodollar
certificates of deposit, without regard to the 20% limit. The Portfolio may
invest in securities principally traded in, or issued by issuers located in,
underdeveloped and developing nations, which are sometimes referred to as
"emerging markets." The Portfolio may buy or sell foreign currencies, foreign
currency futures contracts and foreign currency forward contracts for hedging
purposes in connection with its foreign investments.
The Portfolio may invest a portion of its assets in fixed-income securities,
including lower-rated fixed-income securities, which are commonly known as "junk
bonds," without limitation as to credit rating. The Portfolio may invest in zero
coupon bonds and payment-in-kind bonds. The Portfolio may buy and sell stock
index futures contracts. The Portfolio may buy and sell call and put options on
index futures or on stock indices in addition to or as an alternative to
purchasing or selling index futures or, to the extent permitted by applicable
law, to earn additional income. The Portfolio may seek to increase its current
return by writing covered call and put options on securities it owns or in which
it may invest. The Portfolio may also buy and sell put and call options for
hedging purposes. The aggregate value of the securities underlying the options
may not exceed 25% of Portfolio assets. The Portfolio may enter into repurchase
agreements. The Portfolio may purchase securities for future delivery, which may
increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.
AST Putnam International Equity Portfolio: The investment objective of the AST
Putnam International Equity Portfolio is to seek capital appreciation. The
Portfolio seeks its objective by investing primarily in equity securities of
companies located in a country other than the United States. The Portfolio's
investments will normally include common stocks, preferred stocks, securities
convertible into common or preferred stocks, and warrants to purchase common or
preferred stocks. The Portfolio may also invest to a lesser extent in debt
securities and other types of investments if the Sub-advisor believes purchasing
them would help achieve the Portfolio's objective. The Portfolio will, under
normal circumstances, invest at least 65% of its total assets in issuers located
in at least three different countries other than the United States.
The Portfolio may invest in securities of issuers in emerging markets, as well
as more developed markets. Investing in emerging markets generally involves more
risks then in investing in developed markets. The Portfolio may invest in
companies, large or small, whose earnings are believed to be in a relatively
strong growth trend, or in companies in which significant further growth is not
anticipated but whose market value per share is thought to be undervalued.
Smaller companies may present greater opportunities for capital appreciation,
but may also involve greater risks. The Portfolio may engage in a variety of
transactions involving the use of options and futures contracts and in foreign
currency exchange transactions for purposes of increasing its investment return
or hedging against market changes. Options and futures transactions involve
certain special risks. The Portfolio may engage in foreign currency exchange
transactions to protect against uncertainty in the level of future exchange
rates. The Sub-advisor may engage in foreign currency exchange transactions in
connection with the purchase and sale of portfolio securities and to protect
against changes in the value of specific portfolio positions.
AST Putnam Balanced Portfolio: The investment objective of the AST Putnam
Balanced Portfolio is to provide a balanced investment composed of a
well-diversified portfolio of stocks and bonds which will produce both capital
growth and current income. In seeking its objective, the Portfolio may invest in
almost any type of security or negotiable instrument, including cash or money
market instruments. The Portfolio's portfolio will include some securities
selected primarily to provide for capital protection, others selected for
dependable income and still others for growth in value. The portion of the
Portfolio's assets invested in equity securities and fixed income securities
will vary from time to time in light of the Portfolio's investment objective,
changes in interest rates and economic and other factors. However, under normal
market conditions, it is expected that at least 25% of the Portfolio's total
assets will be invested in fixed income securities, which for this purpose
includes debt securities, preferred stocks and that portion of the value of
convertible securities attributable to the fixed income characteristics of those
securities. The Portfolio may invest up to 20% of its assets in equity
securities principally traded in foreign markets or in fixed income securities
denominated in foreign currencies. The Portfolio may also purchase ADRs and
Eurodollar certificates of deposit without regard to the 20% limit. The
Portfolio may invest in securities principally traded in, or issued by issuers
located in, underdeveloped and developing nations, which are sometimes referred
to as "emerging markets" which may entail special risks.
The Portfolio may buy or sell foreign currencies and foreign currency forward
contracts for hedging purposes in connection with its foreign investments. The
Portfolio may invest in both higher-rated and lower-rated fixed-income
securities. The Portfolio will not invest in securities rated at the time of
purchase lower than B by Moody's or S&P, or in unrated securities which the
Sub-advisor determines are of comparable quality. Securities rated B are
predominantly speculative and have large uncertainties or major risk exposures
to adverse conditions. The Portfolio may invest in so-called zero coupon bonds
whose values are subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest currently. The Portfolio may buy and
sell futures contracts. The Portfolio may seek to increase its current return by
writing covered call and put options on securities it owns or in which it may
invest.
Twentieth Century Strategic Balanced Portfolio: The investment objective of the
Twentieth Century Strategic Balanced Portfolio is to seek capital growth and
current income. It is the Sub-advisor's intention to maintain approximately 60%
of the Portfolio's assets in common stocks that are considered by the
Sub-advisor to have better-than-average prospects for appreciation and the
remainder in bonds and other fixed income securities. With the equity portion of
the Portfolio, the Sub-advisor seeks capital growth by investing in securities,
primarily common stocks, that meet certain fundamental and technical standards
of selection (relating primarily to earnings and revenue acceleration) and have,
in the opinion of the Sub-advisor, better-than-average potential for
appreciation. So long as a sufficient number of such securities are available,
the Sub-advisor intends to keep the equity portion of the Portfolio fully
invested in these securities regardless of the movement of stock prices
generally. The Portfolio may purchase securities only of companies that have a
record of at least three years continuous operation.
The Sub-advisor intends to maintain approximately 40% of the Portfolio's assets
in fixed income securities, approximately 80% of which will be invested in
domestic fixed income securities and approximately 20% of which will be invested
in foreign fixed income securities. This percentage will fluctuate from time to
time. The fixed income portion of the Portfolio will include U.S. Treasury
securities, securities issued or guaranteed by the U.S. government or a foreign
government, or an agency or instrumentality of the U.S. or a foreign government,
and non-convertible debt obligations issued by U.S. or foreign corporations. The
Portfolio may also invest in mortgage-related and other asset-backed securities.
Debt securities that comprise part of the Portfolio's fixed income portfolio
will primarily be limited to "investment grade" obligations. However, the
Portfolio may invest up to 10% of its fixed income assets in "high yield"
securities. Under normal market conditions, the maturities of fixed-income
securities in which the Portfolio invests will range from 2 to 30 years.
The Portfolio may invest up to 25% of its total assets in the securities of
foreign issuers, including debt securities of foreign governments and their
agencies primarily from developed markets, when these securities meet its
standards of selection. Some of the foreign securities held by the Portfolio may
be denominated in foreign currencies. To protect against adverse movements in
exchange rates between currencies, the Portfolio may, for hedging purposes only,
enter into forward currency exchange contracts and buy put and call options
relating to currency futures contracts.
The Portfolio may purchase mortgage-related and other asset-backed securities.
The Portfolio may also invest in collateralized mortgage obligations. The
Portfolio may invest in repurchase agreements when such transactions present an
attractive short-term return on cash that is not otherwise committed to the
purchase of securities pursuant to the investment policies of the Portfolio. To
the extent permitted by its investment objectives and policies, the Portfolio
may invest in securities that are commonly referred to as "derivative"
securities. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. The
Portfolio may not invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the Portfolio.
There are a range of risks associated with derivative investments. The Portfolio
may, from time to time, purchase Rule 144A securities when they present
attractive investment opportunities that otherwise meet the Portfolio's criteria
for selection. The portfolio turnover of the Portfolio may be higher than other
mutual funds with similar investment objectives.
Twentieth Century International Growth Portfolio: The investment objective of
the Twentieth Century International Growth Portfolio is to seek capital growth.
The Portfolio will seek to achieve its investment objective by investing
primarily in securities of foreign issuers that meet certain fundamental and
technical standards of selection (relating primarily to acceleration of earnings
and revenues) and have, in the opinion of the Sub-advisor, potential for
appreciation. The Portfolio will invest primarily in issuers in developed
markets. The Portfolio will invest primarily in equity securities (defined to
include equity equivalents) of such issuers. The Portfolio will attempt to stay
fully invested in such securities, regardless of the movement of stock prices
generally. The Portfolio may also invest in other types of securities consistent
with the accomplishment of the Portfolio's objectives. When the Sub-advisor
believes that the total return potential of other securities equals or exceeds
the potential return of equity securities, the Portfolio may invest up to 35% in
such other securities. The other securities the Portfolio may invest in are
bonds, notes and debt securities of companies and obligations of domestic or
foreign governments and their agencies. The Portfolio will limit its purchases
of debt securities to investment grade obligations.
The Portfolio may also invest in other equity securities and equity equivalents.
Examples of other equity securities and equity equivalents are preferred stock,
convertible preferred stock and convertible debt securities. Equity equivalents
may also include securities whose value or return is derived from the value or
return of a different security. Under normal conditions, the Portfolio will
invest at least 65% of its assets in equity and equity equivalent securities of
issuers from at least three countries outside of the United States. While
securities of U.S. issuers may be included in the Portfolio from time to time,
it is the primary intent of the Sub-advisor to diversify investments across a
broad range of foreign issuers.
In order to achieve maximum investment flexibility, the Portfolio has not
established geographic limits on asset distribution, on either a
country-by-country or region-by-region basis. The Sub-advisor expects to invest
both in issuers in developed markets (such as Germany, the United Kingdom and
Japan) and in issuers in emerging market countries. Subject to certain
restrictions contained in the Investment Company Act, the Portfolio may invest
up to 10% of its assets in certain foreign countries indirectly through
investment funds and registered investment companies authorized to invest in
those countries. Some of the securities held by the Portfolio will be
denominated in foreign currencies. To protect against adverse movements in
exchange rates between currencies, the Portfolio may, for hedging purposes only,
enter into forward currency exchange contracts.
Notwithstanding the Portfolio's investment objective of capital growth, under
exceptional market or economic conditions, the Portfolio may temporarily invest
all or a substantial portion of its assets in cash or investment-grade
short-term securities (denominated in U.S. dollars or foreign currencies). The
Portfolio may invest in repurchase agreements when such transactions present an
attractive short-term return on cash that is not otherwise committed to the
purchase of securities pursuant to the investment policies of the Portfolio. The
Portfolio will not invest more than 15% of its assets in repurchase agreements
maturing in more than seven days. The Portfolio may, from time to time, purchase
Rule 144A securities when they present attractive investment opportunities that
otherwise meet the Portfolio's criteria for selection.
The portfolio turnover may be higher than other mutual funds with similar
investment objectives. Investments in the Portfolio should not be considered a
complete investment program and may not be appropriate for an individual with
limited investment resources or who is unable to tolerate fluctuations in the
value of the investment.
Cohen & Steers Realty Portfolio: The investment objective of the Cohen & Steers
Realty Portfolio (the "Portfolio") is to maximize total return through
investment in real estate securities. This is a fundamental objective of the
Portfolio. The Portfolio pursues its investment objective of maximizing total
return by seeking, with approximately equal emphasis, capital appreciation (both
realized and unrealized) and current income. There can be no assurance that the
Portfolio's investment objective will be achieved. Under normal circumstances,
the Portfolio will invest substantially all of its assets in the equity
securities of real estate companies. Such equity securities will consist of (i)
common stocks (including shares in real estate investment trusts), (ii) rights
or warrants to purchase common stocks, (iii) securities convertible into common
stocks where the conversion feature represents, in the Sub-advisor's view, a
significant element of the securities' value, and (iv) preferred stocks. For
purposes of the Portfolio's investment policies, a "real estate company" is one
that derives at least 50% of its revenues from the ownership, construction,
financing, management or sale of commercial, industrial, or residential real
estate or that has at least 50% of its assets in such real estate. The Portfolio
may invest without limit in shares of real estate investment trusts ("REITs").
REITs pool investors' funds for investment primarily in income producing real
estate or real estate related loans or interests. REITs can generally be
classified as Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs, which
invest the majority of their assets directly in real property, derive their
income primarily from rents. Mortgage REITs, which invest the majority of their
assets in real estate mortgages, derive their income primarily from interest
payments. Hybrid REITs combine the characteristics of both Equity REITs and
Mortgage REITs. The Portfolio will not invest in real estate directly, but only
in securities issued by real estate companies. However, the Portfolio may be
subject to risks similar to those associated with the direct ownership of real
estate (in addition to securities markets risks) because of its policy of
concentration in the securities of companies in the real estate industry. These
include declines in the value of real estate, risks related to general and local
economic conditions, dependency on management skill, heavy cash flow dependency,
possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increased competition, increases in property taxes and
operating expenses, changes in zoning laws, losses due to costs resulting from
the clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
limitations on rents, changes in neighborhood values, the appeal of properties
to tenants and changes in interest rates. The Portfolio may invest up to 10% of
its total assets in securities of foreign real estate companies. When, in the
judgment of the Portfolio's Sub-advisor, market or general economic conditions
justify a temporary defensive position, the Portfolio will deviate from its
investment objective and invest all or any portion of its assets in high-grade
debt securities, including corporate debt securities, U.S. government
securities, and short-term money market instruments, without regard to whether
the issuer is a real estate company. The Portfolio may also at any time invest
funds awaiting investment or funds held as reserves to satisfy redemption
requests or to pay dividends and other distributions to shareholders in
short-term money market instruments. The Portfolio will not invest more than 15%
of its net assets in illiquid securities. The Portfolio is classified as a
"non-diversified" investment company under the 1940 Act, which means the
Portfolio is not limited by the 1940 Act in the proportion of its assets that
may be invested in the securities of a single issuer. Because the Portfolio, as
a non-diversified investment company, may invest in a smaller number of issuers
than a diversified investment company, an investment in the Portfolio may
present greater risk to an investor than an investment in a diversified company.
The Portfolio may have higher portfolio turnover than other mutual funds with
similar objectives.
Stein Roe Venture Portfolio: The investment objective of the Stein Roe Venture
Portfolio (the "Portfolio") is long-term capital appreciation. The Portfolio
emphasizes investments in financially strong small and medium-sized companies,
based principally on management appraisal and stock valuation. The Portfolio
will pursue its objective by investing primarily in a diversified portfolio of
common stocks and other equity-type securities (such as preferred stocks,
securities convertible or exchangeable for common stocks, and warrants or rights
to purchase common stocks) of entrepreneurially managed companies that the
Sub-advisor believes represent special opportunities. The Sub-advisor considers
"small" and "medium-sized" companies to be those with market capitalizations of
less than $1 billion and $1 to $3 billion, respectively. The Portfolio is
designed for long-term investors who want greater return potential than is
available from the stock market in general, and who are willing to tolerate the
greater investment risk and market volatility associated with investments in
small and medium-sized companies. Attractive company characteristics include
unit growth, favorable cost structures or competitive positions, and financial
strength that enables management to execute business strategies under difficult
conditions. Although the Portfolio does not attempt to reduce or limit risk
through wide industry diversification of investment, it usually allocates its
investments among a number of different industries rather than concentrating in
a particular industry or group of industries. The Portfolio will not invest more
than 25% of the total value of its assets (at the time of investment) in the
securities of companies in any one industry. In pursuing its investment
objective, the Portfolio may invest in debt securities of corporate and
governmental issuers. The Portfolio may invest up to 35% of its net assets in
debt securities, but does not expect to invest more than 5% of its net assets in
debt securities that are rated below investment grade (i.e., below the four
highest grades assigned by a nationally recognized statistical rating
organization). Securities that are rated below investment grade are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation, and therefore
carry greater investment risk, including the possibility of issuer default and
bankruptcy. The Portfolio may invest in foreign securities. Other than American
Depositary Receipts (ADRs), foreign debt securities denominated in U.S. dollars,
and securities guaranteed by a U.S. person, the Portfolio is limited to
investing no more than 25% of its total assets in foreign securities. The
Portfolio also may enter into foreign currency contracts as a hedging technique
to limit or reduce exposure to currency fluctuations. In addition, the Portfolio
may use options and futures contracts to limit or reduce exposure to currency
fluctuations. Consistent with its objective, the Portfolio may invest in a broad
array of financial instruments and securities, including conventional
exchange-traded and non-exchange-traded options, futures contracts, futures
options, swaps, caps, floors, collars, securities collateralized by underlying
pools of mortgages or other receivables, floating rate instruments, and other
instruments that securitize assets of various types ("Derivatives"). In each
case, the value of the instrument or security is "derived" from the performance
of an underlying asset or a "benchmark" such as a security index, an interest
rate, or a currency. The Portfolio does not expect to invest more than 5% of its
net assets in any type of Derivative except for options, futures contracts, and
futures options.
Bankers Trust Enhanced 500 Portfolio: The investment objective of the Bankers
Trust Enhanced 500 Portfolio (the "Portfolio") is to outperform the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500(R)") through stock
selection resulting in different weightings of common stocks relative to the
index. The Portfolio will include the common stock of companies included in the
S&P 500. The S&P 500 is an index of 500 common stocks, most of which trade on
the New York Stock Exchange Inc. The Sub-advisor believes that the S&P 500 is
representative of the performance of publicly traded common stocks in the U.S.
in general. In seeking to outperform the S&P 500, the Sub-advisor starts with a
portfolio of stocks representative of the holdings of the index. It then uses a
set of quantitative criteria that are designed to indicate whether a particular
stock will predictably generate returns that will exceed or be less than the
performance of the S&P 500. Based on these criteria, the Sub-advisor determines
whether the Portfolio should overweight, underweight or hold a neutral position
in the stock relative to the proportion of the S&P 500 that the stock
represents. While the majority of the issues held by the Portfolio will have
neutral weightings to the S&P 500, approximately 100 will be over or
underweighted relative to the index. The Sub-advisor will not purchase the stock
of its parent company, Bankers Trust New York Corporation, which is included in
the S&P 500, and instead will overweight its holdings of companies engaged in
similar businesses. The Portfolio is not managed according to traditional
methods of "active" investment management, which involve the buying and selling
of securities based upon economic, financial and market analysis and investment
judgment. Instead, the Portfolio utilizes a "quantitative" investment approach
and attempts to outperform the S&P 500 through statistical procedures.
Therefore, the Sub-advisor will not attempt to judge the merits of any
particular stock as an investment. The Portfolio may be appropriate for
investors who are willing to endure stock market fluctuations in pursuit of
potentially higher long-term returns. The Portfolio invests for growth and does
not pursue income. No more than 15% of the Portfolio's net assets may be
invested in illiquid or not readily marketable securities (including repurchase
agreements and time deposits with maturities of more than seven days). The
Portfolio may maintain up to 25% of its assets in short-term debt securities and
money market instruments. Short-term fixed income securities may be used to
invest uncommitted cash balances, to maintain liquidity to meet shareholder
redemptions or to serve as collateral for the obligations underlying the
Portfolio's investment in securities index futures or related options or
warrants. The Portfolio may invest in various instruments that are commonly
known as derivatives. The Portfolio will only use derivatives for cash
management purposes. The Portfolio may enter into securities index futures
contracts and related options provided that not more than 5% of its assets are
required as a margin deposit for futures contracts or options and provided that
not more than 20% of the Portfolio's assets are invested in futures and options
at any time. The Portfolio may invest in convertible securities, which are bonds
or preferred stocks that may be converted at a stated price within a specific
period of time into a specified number of shares of common stock of the same or
different issuer. "Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard &
Poor's 500," and "500" are trademarks of the McGraw-Hill Companies, Inc. and
have been licensed for use by American Skandia Investment Services, Incorporated
and Bankers Trust. The Portfolio 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 Portfolio.
Marsico Capital Growth Portfolio: The investment objective of the Portfolio is
to seek capital growth. This is a fundamental objective of the Portfolio. Income
realization is not an investment objective and any income realized on the
Portfolio's investments, therefore, will be incidental to the Portfolio's
objective. Please refer to the Portfolio prospectus for a more detailed
description of the investment objective and the risks involved therein. The
Portfolio will pursue its objective by investing primarily in common stocks.
Common stock investments will be in industries and companies that the
Sub-advisor believes are experiencing favorable demand for their products and
services, and which operate in a favorable competitive and regulatory
environment. Although the Sub-advisor expects to invest primarily in equity
securities, the Sub-advisor may increase the Portfolio's cash position without
limitation when the Sub-advisor is of the opinion that appropriate investment
opportunities for capital growth with desirable risk/reward characteristics are
unavailable. The Portfolio may also invest to a lesser degree in preferred
stocks, convertible securities, warrants, and debt securities when the Portfolio
perceives an opportunity for capital growth from such securities or so that the
Portfolio may receive a return on its idle cash. Debt securities that the
Portfolio may purchase include corporate bonds and debentures (not to exceed 5%
of net assets in bonds rated below investment grade), government securities,
mortgage- and asset-backed securities, zero-coupon bonds, indexed/structured
notes, high-grade commercial paper, certificates of deposit and repurchase
agreements. The Portfolio may invest in "special situations" from time to time.
A "special situation" arises when, in the opinion of the Sub-advisor, the
securities of a particular company will be recognized and appreciate in value
due to a specific development, such as a technological breakthrough, management
change or new product at that company. Investment in "special situations"
carries an additional risk of loss in the event that the anticipated development
does not occur or does not attract the expected attention. The Portfolio may
also purchase securities of foreign issuers, including foreign equity and debt
securities and depositary receipts. Foreign securities are selected on a
stock-by-stock basis without regard to any defined allocation among countries or
geographic regions. The Portfolio may purchase and write options on securities,
financial indices, and foreign currencies, and may invest in futures contracts
on securities, financial indices, and foreign currencies ("futures contracts"),
options on futures contracts, forward contracts and swaps and swap-related
products. These instruments will be used primarily to hedge the Portfolio's
positions against potential adverse movements in securities prices, foreign
currency markets or interest rates. The Portfolio is permitted to enter into
reverse repurchase agreements. In a reverse repurchase agreement, the Portfolio
sells a security and agrees to repurchase it at a mutually agreed upon date and
price. The Portfolio may purchase securities on a when-issued or delayed
delivery basis, which generally involves the purchase of a security with payment
and delivery due at some time in the future. The Portfolio does not earn
interest on such securities until settlement and bears the risk of market value
fluctuations between the purchase and settlement dates. The Portfolio may invest
no more than 5% of its net assets (at the time of investment) in lower-rated
high-yield bonds. Because investment changes usually will be made without
reference to the length of time a security has been held, a significant number
of short-term transactions may result. To a limited extent, the Portfolio may
also purchase individual securities in anticipation of relatively short-term
price gains, and the rate of portfolio turnover will not be a determining factor
in the sale of such securities. Although it is the general policy of the
Portfolio to purchase and hold securities for capital growth, changes in the
Portfolio will be made as the Sub-advisor deems advisable. For example,
portfolio changes may result from liquidity needs, securities having reached a
price objective, or by reason of developments not foreseen at the time of the
original investment decision. Portfolio changes may be effected for other
reasons. In such circumstances, investment income will increase and may
constitute a large portion of the return on the Portfolio and the Portfolio will
not participate in the market advances or declines to the extent that it would
if it were fully invested.
The Alger American Fund
Alger American Growth Portfolio: The investment objective of the Alger American
Growth Portfolio is long-term capital appreciation. Income is a consideration in
the selection of investments but is not an investment objective of the
portfolio. It seeks to achieve its objective by investing in equity securities,
such as common or preferred stocks that are listed on a national securities
exchange, or securities convertible into or exchangeable for equity securities,
including warrants and rights, often selected by the investment manager on the
basis of original research produced by its research analysts. Except during
temporary defensive periods, the portfolio invests at least 65 percent of its
total assets in equity securities of companies that, at the time of purchase,
have total market capitalization of $1 billion or greater.
Alger American Small Capitalization Portfolio: The investment objective of the
Alger American Small Capitalization Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65% of
its total assets in equity securities of companies that, at the time of purchase
of the securities, have total market capitalization within the range of
companies included within the Russell 2000 Growth Index or the S&P SmallCap 600
Index, updated quarterly. Both indexes are broad indexes of small capitalization
stocks. The Portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization outside this combined range, and in excess of that amount (up to
100% of its assets) during temporary defensive periods.
Alger American MidCap Growth Portfolio: The investment objective of the
Portfolio is long-term capital appreciation. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in equity
securities of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the S&P
MidCap 400 Index, updated quarterly. The S&P MidCap 400 Index is designed to
track the performance of medium capitalization companies. The Portfolio may
invest up to 35% of its total assets in equity securities of companies that, at
the time of purchase, have total market capitalization outside the range of
companies included in the S&P MidCap 400 Index and in excess of that amount (up
to 100% of its assets) during temporary defensive periods.
Neuberger&Berman Advisers Management Trust
The Partners Portfolio of the Neuberger&Berman Advisor Management Trust is not
available as an investment option on Annuities issued on or after May 1, 1998.
Owners of Annuities with Account Value allocated to the NB Partners Sub-account
on May 1, 1998 may remain in the Sub-Account. However, no new allocations may be
made to the NB Partners Sub-Account on or after May 1, 1998. The Partners
portfolio of the Neuberger&Berman Advisors Management Trust and the NB Partners
Sub-Account of Separate Account B are the subject of an application with the
Securities and Exchange Commission to substitute shares of such portfolio for
shares of the Neuberger&Berman MidCap Value portfolio of American Skandia Trust.
Upon approval of the application for exemptive relief allowing the substitution,
Annuity Owners will be granted certain rights to transfer Account Value without
penalty.
(Each portfolio of Neuberger&Berman Advisers Management Trust invests
exclusively in a corresponding series of Advisers Managers Trust in what is
sometimes known as a "master/feeder" fund structure. Therefore, the investment
objective of each portfolio matches that of the series of Advisers Managers
Trust in which the portfolio invests. Therefore, the following information is
presented in terms of the applicable series of Neuberger&Berman Advisers
Management Trust).
AMT Partners Portfolio: The investment objective of the AMT Partners Portfolio
is to seek capital growth. This investment objective is non-fundamental.
AMT Partners Portfolio invests primarily in common stocks of medium to large
capitalization established companies, using the value-oriented investment
approach. The Portfolio seeks capital growth through an investment approach that
is designed to increase capital with reasonable risk. Its investment program
seeks securities believed to be undervalued based on strong fundamentals
including a low price-to-earnings ratios, consistent cash flow, and the
company's track record through all parts of the market cycle.
AMT Partners Portfolio may invest up to 15% of its net assets, measured at the
time of investment, in corporate debt securities rated below investment grade or
in comparable unrated securities. Securities rated below investment grade as
well as unrated securities are often considered to be speculative and usually
entail greater risk.
Montgomery Variable Series
Emerging Markets Fund: The investment objective of the Emerging Markets Fund is
capital appreciation which, under normal conditions, it seeks by investing at
least 65% of its total assets in equity securities of emerging markets
companies. Under normal conditions, the Emerging Markets Fund maintains
investments in at least six emerging market countries at all times and invests
no more than 35% of its total assets in any one emerging market country. The
Manager currently regards the following to be emerging market countries: Latin
American (Argentina, Brazil, Chile, Colombia, Costa Rica, Jamaica, Mexico, Peru,
Trinidad and Tobago, Uruguay, Venezuela); Asia (Bangladesh, China, India,
Indonesia, Korea, Malaysia, Pakistan, the Philippines, Singapore, Sri Lanka,
Taiwan, Thailand, Vietnam); southern and eastern Europe (Czech Republic, Greece,
Hungary, Poland, Portugal, Russia, Turkey); the Middle East (Israel, Jordan);
and Africa (Egypt, Ghana, Ivory Coast, Kenya, Morocco, Nigeria, South Africa,
Tunisia, Zimbabwe). In the future, the Fund may invest in other emerging market
countries.
This Fund uses a proprietary, quantitative asset allocation model created by the
Manager. This model employs mean-variance optimization, a process used in
developed markets based on modern portfolio theory and statistics. Mean-variance
optimization helps determine the percent of assets to invest in each country to
maximize expected returns for a given risk level. The Fund's aims are to invest
in those countries that are expected to have the highest risk/reward trade-off
when incorporated into a total portfolio context. This "top-down" country
selection is combined with "bottom-up" fundamental industry analysis and stock
selection based on original research, publicly available information and company
visits.
This Fund invests primarily in common stock, but also may invest in other types
of equity and equity derivative securities. It may invest up to 35% of its total
assets in debt securities, including up to 5% in debt securities rated below
investment grade.
This Fund may invest in certain debt securities issued by the governments of
emerging market countries that are, or may be eligible for, conversion into
investments in emerging market companies under debt conversion programs
sponsored by such governments. If such securities are convertible to equity
investments, the Fund deems them to be equity derivative securities.
Life and Annuity Trust
Equity Value Fund: The Equity Value Fund seeks to provide investors with
long-term capital appreciation by investing primarily in equity securities,
including common stocks and may invest in debt instruments that are convertible
into common stocks of both domestic and foreign companies. Income generation is
a secondary consideration. The Fund may invest in large, well-established
companies and smaller companies with market capitalization exceeding $50
million. The Fund may invest up to 25% of its assets in American Depositary
Receipts and similar instruments. The Fund may purchase dividend paying stocks
of particular issuers when the issuer's dividend record may, in the opinion of
Wells Fargo Bank ("Wells Fargo"), the Fund's investment adviser, have a
favorable influence on the market value of the securities. The Fund also may
purchase convertible securities with the same characteristics as common stocks.
There can be no assurance that the Fund, which is a diversified portfolio, will
achieve its investment objective.
In selecting equity investments (which may include common stocks of both
domestic and foreign companies) for the Fund, Wells Fargo selects companies for
investment using both quantitative and qualitative analysis to identify those
issuers that, in the opinion of Wells Fargo, exhibit below-average valuation
multiples, above-average financial strength, a strong position in their industry
and a history of steady profit growth.
Wells Fargo may also select other equity securities in addition to common stocks
for investment by the Fund. Such other equity securities are preferred stocks,
high grade securities convertible into common stocks, and warrants.
The Fund also may hold short-term U.S. Government obligations, money market
instruments, repurchase agreements, securities issued by other investment
companies within the limits prescribed by the Investment Company Act of 1940 and
cash, pending investment, to meet anticipated redemption requests or if Wells
Fargo deems suitable investments for the Fund to be unavailable.
<PAGE>
American Skandia Life Assurance Corporation
Attention: Concierge Desk
For Written Requests:
P.O. Box 883
Shelton, Connecticut 06484
For Electronic Requests:
[email protected]
For Requests by Phone:
1-800-752-6342
- -------------------------------------------------------------------------------
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT
CONTAINS FURTHER DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY
DESCRIBED IN PROSPECTUS ASAP2 -PROS (05/98).
- --------------------------------------------------------------------------------
-------------------------------------------------------
(print your name)
-------------------------------------------------------
(address)
-------------------------------------------------------
(city/state/zip code)
<PAGE>
ADDITIONAL INFORMATION: Inquiries will be answered by calling your
representative or by writing to:
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
at
P.O. Box 883
Shelton, Connecticut 06484
or
[email protected]
Issued by: Serviced at:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION ASSURANCE CORPORATION
One Corporate Drive P.O. Box 883
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 1-800-752-6342
http://www.AmericanSkandia.com http://www.AmericanSkandia.com
Distributed by:
AMERICAN SKANDIA MARKETING, INCORPORATED
One Corporate Drive
Shelton, Connecticut 06484
Telephone: 203-926-1888
http://www.AmericanSkandia.com
STATEMENT OF ADDITIONAL lNFORMATION
The variable investment options under the annuity contracts, registered under
the Securities Act of 1933 and the Investment Company Act of 1940, are issued by
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION VARIABLE ACCOUNT B (CLASS 1
SUB-ACCOUNTS) and AMERICAN SKANDIA LIFE ASSURANCE CORPORATION. The fixed
investment options thereunder, registered solely under the Securities Act of
1933, are issued by AMERICAN SKANDIA LIFE ASSURANCE CORPORATION and the assets
supporting such securities are maintained in AMERICAN SKANDIA LIFE ASSURANCE
CORPORATION SEPARATE ACCOUNT D.
THIS STATEMENT OF ADDITIONAL lNFORMATlON IS NOT A PROSPECTUS. THE INFORMATION
CONTAINED HEREIN SHOULD BE READ IN CONJUNCTlON WITH THE PROSPECTUS FOR THE
ANNUITIES WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT
TO KNOW BEFORE lNVESTING. FOR A COPY OF THE PROSPECTUS SEND A WRITTEN REQUEST TO
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION, P.O. BOX 883, SHELTON, CONNECTICUT
06484, OR TELEPHONE 1-800-752-6342. OUR ELECTRONIC MAIL ADDRESS IS
[email protected].
Date of Prospectus: May 1, 1998
Date of Statement of Additional Information: May 1, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
<S> <C>
General Information Regarding American Skandia Life Assurance Corporation 1
Principal Underwriter 1
Calculation of Performance Data 2
Unit Price Determinations 5
Calculating the Market Value Adjustment 5
Independent Auditors 7
Legal Experts 7
Appendix A Financial Statements for Separate Account B (Class 1 Sub-accounts) 8
</TABLE>
GENERAL INFORMATION REGARDING AMERICAN SKANDIA LIFE ASSURANCE CORPORATION:
American Skandia Life Assurance Corporation ("we", "our" or "us") is a
wholly-owned subsidiary of American Skandia Investment Holding Corporation whose
indirect parent is Skandia Insurance Company Ltd. Skandia Insurance Company Ltd.
is part of a group of companies whose predecessor commenced operations in 1855.
Skandia Insurance Company Ltd. is a major worldwide insurance company operating
from Stockholm, Sweden which owns and controls, directly or through subsidiary
companies, numerous insurance and related companies. We are organized as a
Connecticut stock life insurance company, and are subject to Connecticut law
governing insurance companies. Our mailing address is P.O. Box 883, Shelton,
Connecticut 06484.
PRINCIPAL UNDERWRITER: American Skandia Marketing, Incorporated ("ASM, Inc.")
serves as principal underwriter for the Annuities. We, ASM, Inc. and American
Skandia Investment Services, Incorporated ("ASISI"), the investment manager of
the American Skandia Trust, are wholly-owned subsidiaries of American Skandia
Investment Holding Corporation. Most of the Class 1 Sub-accounts of Separate
Account B invest in portfolios offered by American Skandia Trust.
ASAP2-SAI (05/98)
<PAGE>
Annuities may be sold by agents of ASM, Inc. or agents of securities brokers or
insurance brokers who enter into agreements with ASM, Inc. and who are legally
qualified under federal and state law to sell the Annuities in those states
where the Annuities are to be offered. The Annuities are offered on a continuous
basis. ASM, Inc. is registered with the Securities and Exchange Commission under
the Securities Exchange Act of 1934 as a broker dealer and is a member of the
National Association of Securities Dealers, Inc. ASM, Inc. receives no
underwriting commissions.
CALCULATION OF PERFORMANCE DATA: We may advertise our Current Rates for new
Fixed Allocations, to the extent permitted by law.
We may advertise the performance of Sub-accounts using two types of measures.
These measures are "current and effective yield", which may be used for money
market-type Sub-accounts, and "total return", which may be used with other types
of Sub-accounts. The following descriptions provide details on how we calculate
these measures for Sub-accounts:
(1) Current and effective yield: The current yield of a money
market-type Sub-account is calculated based upon a seven day period ending on
the date of calculation. The current yield of such a Sub-account is computed by
determining the change (exclusive of capital changes) in the Account Value of a
hypothetical pre-existing allocation by an Owner to such a Sub-account (the
"Hypothetical Allocation") having a balance of one Unit at the beginning of the
period, subtracting a hypothetical maintenance fee, and dividing such net change
in the Account Value of the Hypothetical Allocation by the Account Value of the
Hypothetical Allocation at the beginning of the same period to obtain the base
period return, and multiplying the result by (365/7). The resulting figure will
be carried to at least the nearest l00th of one percent.
We compute effective compound yield for a money market-type Sub-account
according to the method prescribed by the Securities and Exchange Commission.
The effective yield reflects the reinvestment of net income earned daily on
assets of such a Sub-account. Net investment income for yield quotation purposes
will not include either realized or capital gains and losses or unrealized
appreciation and depreciation.
(2) Total Return: Total return for the other Sub-accounts is computed
by using the formula:
P(1+T)n = ERV
where:
P = a hypothetical allocation of $1,000;
T = average annual total return;
n = the number of years over which total return is being measured; and
ERV = the Account Value of the hypothetical $1,000 payment as of the
end of the period over which total return is being measured.
The Sub-accounts offered as variable investment options for the Annuities have
been available as variable investment options in other annuities we offer. In
addition, some of the underlying mutual fund portfolios existed prior to the
inception of these Sub-accounts. Performance quoted in advertising regarding
such Sub-accounts may indicate periods during which the Sub-accounts have been
in existence but prior to the initial offering of the Annuities, or periods
during which the underlying mutual fund portfolios have been in existence, but
the Sub-accounts have not. Such hypothetical performance is calculated using the
same assumptions employed in calculating actual performance since inception of
the Sub-accounts.
As part of any advertisement of Standard Total Return, we may advertise the
"Non-standard Total Return" of the Sub-accounts. Non-standard Total Return is
calculated in the same manner as the standardized returns except that the
calculations assume no redemption at the end of the applicable periods, thus
these figures do not take into consideration the Annuity's contingent deferred
sales charge. In addition, we may calculate Non-standard Total Return that does
not reflect deduction of the Annual Maintenance Fee.
As described in the Prospectus, Annuities may be offered in certain situations
in which the contingent deferred sales charge or certain other charges or fees
may be eliminated or reduced. Advertisements of performance in connection with
the offer of such Annuities will be based on the charges applicable to such
Annuities.
Shown below are total return figures for the periods shown. Figures are shown
only for Sub-accounts operational as of December 31, 1997. "Standard" total
return and "Non-standard" total return figures, as described above, are shown.
"Standard" total return figures assume that all charges and fees are applicable.
"Non-standard" return figures may not reflect all fees and charges, as noted in
the charts below. The "inception-to-date" figures shown below are based on the
inception date of an underlying mutual fund portfolio. "N/A" means "not
applicable" and indicates that the underlying mutual fund portfolio was not in
operation for the applicable period. Any performance of such portfolios prior to
inception of a Sub-account is provided by the underlying mutual funds. The total
return for any Sub-account reflecting performance prior to such Sub-account's
inception is based on such information.
<TABLE>
<CAPTION>
Standard Total Return Non-Standard Total Return
(Assuming maximum sales charge (Assuming maximum sales charge
and maximum maintenance fees) and no maintenance fees)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incep- Incep-
1 3 5 10 tion-to- 1 3 5 10 tion-to-
Yr. Yr. Yr. Yr. Date Yr. Yr. Yr. Yr. Date
JanCap Growth
AST Janus Overseas Growth
LA Growth and Income
Fed Utility Inc
Fed High Yield
T. Rowe Price Asset Allocation
T. Rowe Price International Equity
T. Rowe Price Natural Resources
T. Rowe Price International Bond
T. Rowe Price Small Company Value
Founders Capital Appreciation
Founders Passport
INVESCO Equity Income
PIMCO Total Return Bond
PIMCO Limited Maturity Bond
Berger Capital Growth
RS Value + Growth
AST Putnam Value Growth & Income To be filed by amendment
AST Putnam International Equity
AST Putnam Balanced
Twentieth Century Strategic Balanced
Twentieth Century International Growth
Marsico Capital Growth
AA Growth
AA Small Capitalization
AA MidCap Growth
NB Partners
MV Emerging Markets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Non-Standard Total Return Non-Standard Total Return
(Assuming no sales charge and (Assuming no sales charge
no maintenance fees) with maintenance fees)
Incep- Incep-
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 3 5 10 tion-to- 1 3 5 10 tion-to-
Yr. Yr. Yr. Yr. Date Yr. Yr. Yr. Yr. Date
JanCap Growth
AST Janus Overseas Growth
LA Growth and Income
Fed Utility Inc
Fed High Yield
T. Rowe Price Asset Allocation
T. Rowe Price International Equity
T. Rowe Price Natural Resources
T. Rowe Price International Bond To be filed by amendment
T. Rowe Price Small Company Value
Founders Capital Appreciation
Founders Passport
INVESCO Equity Income
PIMCO Total Return Bond
PIMCO Limited Maturity Bond
Berger Capital Growth
RS Value + Growth
AST Putnam Value Growth & Income
AST Putnam International Equity
AST Putnam Balanced
Twentieth Century Strategic Balanced
Twentieth Century International Growth
Marsico Capital Growth
AA Growth
AA Small Capitalization
AA MidCap Growth
NB Partners
MV Emerging Markets
</TABLE>
[Footnotes to be filed by amendment]
Some of the underlying portfolios may be subject to an expense reimbursement or
waiver that in the absence of such reimbursement or waiver would reduce the
portfolio's performance.
The performance quoted in any advertising should not be considered a
representation of the performance of these Sub-accounts in the future since
performance is not fixed. Actual performance will depend on the type, quality
and, for some of the Sub-accounts, the maturities of the investments held by the
underlying mutual funds and upon prevailing market conditions and the response
of the underlying mutual funds to such conditions. Actual performance will also
depend on changes in the expenses of the underlying mutual funds. In addition,
the amount of charges against each Sub-account will affect performance.
The information provided by these measures may be useful in reviewing
the performance of the Sub-accounts, and for providing a basis for comparison
with other annuities. These measures may be less useful in providing a basis for
comparison with other investments that neither provide some of the benefits of
such annuities nor are treated in a similar fashion under the Code.
UNIT PRICE DETERMINATIONS: For each Sub-account the initial Unit Price was
$10.00. The Unit Price for each subsequent period is the net investment factor
for that period, multiplied by the Unit Price for the immediately preceding
Valuation Period. The Unit Price for a Valuation Period applies to each day in
the period. The net investment factor is an index that measures the investment
performance of and charges assessed against a Sub-account from one Valuation
Period to the next. The net investment factor for a Valuation Period is: (a)
divided by (b), less (c) where:
(a) is the net result of:
(1) the net asset value per share of the underlying mutual
fund shares held by that Sub-account at the end of the current Valuation Period
plus the per share amount of any dividend or capital gain distribution declared
and unpaid by the underlying mutual fund during that Valuation Period; plus or
minus
(2) any per share charge or credit during the Valuation Period
as a provision for taxes attributable to the operation or maintenance of that
Sub-account.
(b) is the net result of:
(1) the net asset value per share plus any declared and unpaid
dividends per share of the underlying mutual fund shares held in that
Sub-account at the end of the preceding Valuation Period; plus or minus
(2) any per share charge or credit during the preceding
Valuation Period as a provision for taxes attributable to the operation or
maintenance of that Sub-account.
(c) is the mortality and expense risk charges and the administration
charge.
We value the assets in each Sub-account at their fair market value in accordance
with accepted accounting practices and applicable laws and regulations. The net
investment factor may be greater than, equal to, or less than one.
CALCULATING THE MARKET VALUE ADJUSTMENTS: The market value adjustment ("MVA") is
used in determining the Account Value of each Fixed Allocation. The formula used
to determine the MVA is applied separately to each Fixed Allocation. Values and
time durations used in the formula are as of the date the Account Value is being
determined. Current Rates and available Guarantee Periods are those for the
class of Annuities you purchase pursuant to the Prospectus available in
conjunction with this Statement of Additional Information. The formula is:
[(1+I) / (1+J+0.0010)]N/12
where:
I is the interest rate being credited to the Fixed Allocation;
J is the interest rate (for your class of annuity) being
credited to new Fixed Allocations with Guarantee Period
durations equal to the number of years (rounded to the next
higher integer when occurring on other than an anniversary of
the beginning of the Fixed Allocation's Guarantee Period)
remaining in your Fixed Allocation Guarantee Period;
N is the number of months (rounded to the next higher integer
when occurring on other than a monthly anniversary of the
beginning of the Guarantee Period) remaining in such Guarantee
Period.
The formula that applies if amounts are surrendered pursuant to the right to
return the annuity is [(1 + I)/(1 + J)]N/12.
No MVA applies in determining a Fixed Allocation's Account Value on its Maturity
Date. The formula may be changed if Additional Amounts have been added to a
Fixed Allocation. For more information, see the section of the Prospectus
entitled "Additional Amounts in the Fixed Allocations."
Irrespective of the above, we apply certain formulas to determine "I" and "J"
when we do not offer Guarantee Periods with a duration equal to the Remaining
Period. These formulas are as follows:
(a) If we offer Guarantee Periods to your class of Annuities with
durations that are both shorter and longer than the Remaining Period, we
interpolate a rate for "J" between our then current interest rates for Guarantee
Periods with the next shortest and next longest durations then available for new
Fixed Allocations for your class of Annuities .
(b) If we no longer offer Guarantee Periods to your class of Annuities
with durations that are both longer and shorter than the Remaining Period, we
determine rates for "J" and, for purposes of determining the MVA only, for "I"
based on the Moody's Corporate Bond Yield Average - Monthly Average Corporates
(the "Average"), as published by Moody's Investor Services, Inc., its successor,
or an equivalent service should such Average no longer be published by Moody's.
For determining I, we will use the Average published on or immediately prior to
the start of the applicable Guarantee Period. For determining J, we will use the
Average for the Remaining Period published on or immediately prior to the date
the MVA is calculated.
The following examples show the effect of the MVA in determining Account Value.
The example assumes: (a) Account Value of $50,000 for the Fixed Allocation at
the beginning of its Guarantee Period; (b) a Guarantee Period of 5 years; (c) an
interest rate of 5%, which is an effective annual rate; and (d) the date of the
calculation is the end of the third year since the beginning of the Guarantee
Period. That means there are two exact years remaining to the end of the
Guarantee Period.
Example of Upward Adjustment: Assume that J = 3.5% and there have been
no transfers or withdrawals. At this point I = 5% (0.05) and N = 24 (number of
months remaining in the Guarantee Period). Then:
(a) MVA = [(1+I)/(I+J+0.0010)]N/12 = [1.05/1.036]2 = 1.027210; and
(b) Account Value = Interim Value X MVA = $59,456.20.
Example of Downward Adjustment: Assume that J = 6% and there have been
no transfers or withdrawals. At this point I = 5% (0.05) and N = 24, the number
of months remaining in the Guarantee Period. Then:
(a) MVA = [(1+I)/(1+J+0.0010)]N/12 = [1.05/1.061)]2 = 0.979372; and
(b) Account Value = Interim Value X MVA = $56,687.28.
INDEPENDENT AUDITORS: Ernst & Young LLP, Goodwin Square, 225 Asylum Street,
Hartford, Connecticut 06103, independent auditors, have audited the financial
statements of American Skandia Life Assurance Corporation and American Skandia
Life Assurance Corporation Variable Account B (Class 1 Sub-accounts) with
respect to the period ended December 31, 1997. Deloitte & Touche LLP, Two World
Financial Center, New York, New York 10281-1433, independent auditors, have
audited the financial statements of American Skandia Life Assurance Corporation
and American Skandia Life Assurance Corporation Variable Account B (Class 1
Sub-accounts) with respect to the period ended December 31, 1996. Audited
financial statements regarding American Skandia Life Assurance Corporation as of
December 31, 1997 and 1996, and the related statements of operations,
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 1997 are included in the Prospectus. Audited financial
statements for Variable Account B (Class 1 Sub-accounts) are included herein.
The financial statements included herein and in the Prospectus have been audited
by Ernst & Young LLP and Deloitte & Touche LLP, independent auditors, as stated
in their respective reports herein and in the Prospectus, and are included in
reliance upon the report of such firms given upon their authority as experts in
accounting and auditing.
LEGAL EXPERTS: Counsel with respect to Federal laws and regulations applicable
to the issue and sale of the Annuities and with respect to Connecticut law is
Werner & Kennedy, 1633 Broadway, New York, New York 10019.
FINANCIAL STATEMENTS FOR SEPARATE ACCOUNT B (CLASS 1 SUB-ACCOUNTS): The
financial statements which follow in Appendix A are those of American Skandia
Life Assurance Corporation Variable Account B (Class 1 Sub-accounts) for the
year ended December 31, 1997. There are other Sub-accounts included in Variable
Account B that are not available in the product described in the applicable
prospectus.
To the extent and only to the extent that any statement in a document
incorporated by reference into this Statement of Additional Information is
modified or superseded by a statement in this Statement of Additional
Information or in a later-filed document, such statement is hereby deemed so
modified or superseded and not part of this Statement of Additional Information.
We furnish you without charge a copy of any or all the documents incorporated by
reference in this Statement of Additional Information, including any exhibits to
such documents which have been specifically incorporated by reference. We do so
upon receipt of your written or oral request. Please address your request to
American Skandia Life Assurance Corporation, Attention: Concierge Desk, P.O. Box
883, Shelton, Connecticut, 06484. Our phone number is 1-800-752-6342. You may
also forward such a request electronically to our Customer Service Department at
[email protected].
Appendix A
Financial Statements for Separate Account B
(Class 1 Sub-accounts)
APPENDIX A
To be filed by amendment
PART C
OTHER INFORMATION
<PAGE>
Item 24. Financial Statements and Exhibits:
(a) All financial statements are included in Parts A & B of this Registration
Statement.
(b) Exhibits are attached as indicated.
(1) Copy of the resolution of the board of directors of Depositor
authorizing the establishment of the Registrant for Separate
Account B (previously filed in the initial Registration
Statement to Registration Statement No.
33-19363, filed December 30, 1987).
(2) Not applicable. American Skandia Life Assurance Corporation
maintains custody of all assets.
(3) (a) Form of revised Principal Underwriting Agreement between
American Skandia Life Assurance Corporation and American
Skandia Marketing, Incorporated, formerly known as Skandia
Life Equity Sales Corporation (previously filed in
Post-Effective Amendment No. 3 to Registration Statement No.
33-44436, filed April 20, 1993).
(b) Form of Revised Dealer Agreement (previously filed in
Post-Effective Amendment No. 3 of Registration Statement No.
33-44436, filed April 20, 1993).
(4) Copy of the Form of Annuity (previously filed in
Post-Effective Amendment No. 1 to this Registration Statement,
filed April 20, 1995.) (I) Filed via EDGAR with Post-effective
Amendment No. 3 to this Registration Statement No. 33-87010,
filed April 25, 1996.
(5) A copy of the application form used with the Annuity
(previously filed in Pre-Effective Amendment No. 9 to
Registration Statement No. 33-44436, filed February 17, 1995).
(6) (a) Copy of the certificate of incorporation of American
Skandia Life Assurance Corporation (previously filed in
Pre-Effective Amendment No. 2 to Registration Statement No.
33-19363, filed July 27, 1988).
(b) Copy of the By-Laws of American Skandia Life Assurance
Corporation (previously filed in Pre-Effective Amendment No. 2
to Registration Statement No. 33-19363, filed July 27, 1988).
(7) Annuity Reinsurance Agreements between Depositor and:
(a) Transamerica Occidental Life Assurance Company effective
May 1, 1995, filed via EDGAR with Post-effective Amendment No.
3 to Registration Statement No. 33-87010, filed April 25,
1996.
(b) PaineWebber Life Insurance Company effective January 1,
1995, filed via EDGAR with Post-effective Amendment No. 3 to
Registration Statement No. 33-87010, filed April 25, 1996.
(c) Connecticut General Life Insurance Company effective
January 1, 1995, filed via EDGAR with Post-effective Amendment
No. 3 to Registration Statement No. 33-87010, filed April 25,
1996.
(8) Agreements between Depositor and:
(a) Neuberger & Berman Advisers Management Trust (previously
filed in Post-Effective Amendment No. 5 to Registration
Statement No. 33-19363, filed February 28, 1990).(i) Filed via
EDGAR with Post-Effective Amendment No. 4 to Registration
Statement No. 33-87010, filed February 25, 1997
(b) The Alger American Fund (previously filed in
Post-Effective Amendment No. 5 to Registration Statement No.
33-19363, filed February 28, 1990).
(c) American Skandia Trust (previously filed in Post-Effective
Amendment No. 5 to Registration Statement No. 33-19363, filed
February 28, 1990. At such time, what later became American
Skandia Trust was known as the Henderson Global Asset Trust).
(i) Filed via EDGAR with Post-Effective Amendment No. 4 to
Registration Statement No. 33-87010, filed February 25, 1997
(d) The Montgomery Funds III filed via EDGAR in the Initial
Registration Statement to Registration Statement No.
333-08853, filed July 25, 1996.
<TABLE>
<CAPTION>
<S> <C> <C>
(9) Opinion and Consent of Werner & Kennedy. To be filed by amendment
(10) (a) Consent of Ernst & Young To be filed by amendment
(b) Consent of Deloitte & Touche LLP. To be filed by amendment
(11) Not applicable.
(12) Not applicable.
</TABLE>
(13) Calculation of Performance Information for Advertisement of
Performance (previously filed in Pre-Effective Amendment No.1
to Registration Statement No. 33-44436, filed March 30, 1992).
(i) Filed via EDGAR with Post-effective Amendment No. 12 to
Registration Statement No. 33-44436, filed April 29, 1996.
(14) Not applicable
Item 25. Directors and Officers of the Depositor: The Directors and Officers of
the Depositor are shown in Part A.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant: The Depositor does not directly or indirectly control any person.
The following persons are under common control with the Depositor by American
Skandia Investment Holding Corporation:
(1) American Skandia Information Services and Technology
Corporation ("ASIST"): The organization is a general business
corporation organized in the State of Delaware. Its primary
purpose is to provide various types of business services to
American Skandia Investment Holding Corporation and all of its
subsidiaries including computer systems acquisition,
development and maintenance, human resources acquisition,
development and management, accounting and financial reporting
services and general office services.
(2) American Skandia Marketing, Incorporated ("ASM, Inc."): The
organization is a general business corporation organized in
the State of Delaware. It was formed primarily for the purpose
of acting as a broker-dealer in securities. It acts as the
principal "underwriter" of annuity contracts deemed to be
securities, as required by the Securities and Exchange
Commission, which insurance policies are to be issued by
American Skandia Life Assurance Corporation. It provides
securities law supervisory services in relation to the
marketing of those products of American Skandia Life Assurance
Corporation registered as securities. It also may provide such
services in relation to marketing of certain public mutual
funds. It also has the power to carry on a general financial,
securities, distribution, advisory, or investment advisory
business; to act as a general agent or broker for insurance
companies and to render advisory, managerial, research and
consulting services for maintaining and improving managerial
efficiency and operation.
(3) American Skandia Investment Services, Incorporated ("ASISI"):
The organization is a general business corporation organized
in the state of Connecticut. The organization is authorized to
provide investment service and investment management advice in
connection with the purchasing, selling, holding or exchanging
of securities or other assets to insurance companies,
insurance-related companies, mutual funds or business trusts.
It's primary role is expected to be as investment manager for
certain mutual funds [to be made available primarily through
the variable insurance products of American Skandia Life
Assurance Corporation.]
(4) Skandia Vida: This subsidiary of American Skandia Life
Assurance Corporation was organized in March, 1995, and began
operations in July, 1995. It offers investment oriented life
insurance designed for long-term savings products through
independent banks and brokers in Mexico.
Item 27. Number of Contract Owners: As of December 31, 1997, there were 77,930
owners of Annuities.
Item 28. Indemnification: Under Section 33-320a of the Connecticut General
Statutes, the Depositor must indemnify a director or officer against judgments,
fines, penalties, amounts paid in settlement and reasonable expenses including
attorneys' fees, for actions brought or threatened to be brought against him in
his capacity as a director or officer when certain disinterested parties
determine that he acted in good faith and in a manner he reasonably believed to
be in the best interests of the Depositor. In any criminal action or proceeding,
it also must be determined that the director or officer had no reason to believe
his conduct was unlawful. The director or officer must also be indemnified when
he is successful on the merits in the defense of a proceeding or in
circumstances where a court determines that he is fairly and reasonable entitled
to be indemnified, and the court approves the amount. In shareholder derivative
suits, the director or officer must be finally adjudged not to have breached
this duty to the Depositor or a court must determine that he is fairly and
reasonably entitled to be indemnified and must approve the amount. In a claim
based upon the director's or officer's purchase or sale of the Registrants'
securities, the director or officer may obtain indemnification only if a court
determines that, in view of all the circumstances, he is fairly and reasonably
entitled to be indemnified and then for such amount as the court shall
determine. The By-Laws of American Skandia Life Assurance Corporation ("ASLAC")
also provide directors and officers with rights of indemnification, consistent
with Connecticut Law.
The foregoing statements are subject to the provisions of Section 33-320a.
Directors and officers of ASLAC and ASM, Inc. can also be indemnified pursuant
to indemnity agreements between each director and officer and American Skandia
Investment Holding Corporation, a corporation organized under the laws of the
state of Delaware. The provisions of the indemnity agreement are governed by
Section 45 of the General Corporation Law of the State of Delaware.
The directors and officers of ASLAC and ASM, Inc. are covered under a directors
and officers liability insurance policy issued by an unaffiliated insurance
company to Skandia Insurance Company Ltd., their ultimate parent. Such policy
will reimburse ASLAC or ASM, Inc., as applicable, for any payments that it shall
make to directors and officers pursuant to law and, subject to certain
exclusions contained in the policy, will pay any other costs, charges and
expenses, settlements and judgments arising from any proceeding involving any
director or officer of ASLAC or ASM, Inc., as applicable, in his or her past or
present capacity as such.
Registrant hereby undertakes as follows: Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of Registrant pursuant
to the foregoing provisions, or otherwise, 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, therefore, is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by Registrant of expenses incurred or paid by a director,
officer or controlling person of 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, unless in the opinion
of Registrant's counsel the matter has been settled by controlling precedent,
Registrant will submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters:
<TABLE>
<CAPTION>
(a) At present, ASM, Inc. acts as principal underwriter only for annuities to be issued by ASLAC.
(b) Directors and officers of ASM, Inc.
<S> <C>
Name and Principal Business Address Position and Offices with Underwriter
Gordon C. Boronow Deputy Chief Executive Officer
American Skandia Life Assurance Corporation and Director
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Kimberly A. Bradshaw Vice President,
American Skandia Life Assurance Corporation National Accounts Manager
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Robert Brinkman Senior Vice President,
American Skandia Life Assurance Corporation National Sales Manager
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Jan R. Carendi Chairman of the Board
American Skandia Life Assurance Corporation of Directors and
One Corporate Drive, P.O. Box 883 Chief Executive Officer
Shelton, Connecticut 06484-0883
Kathleen A. Chapman Assistant Corporate Secretary
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Lucinda C. Ciccarello Vice President, Mutual Funds
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
William F. Cordner, Jr. Vice President, Customer Focus Teams
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Daniel R. Darst Senior Vice President,
American Skandia Life Assurance Corporation National Marketing Director
One Corporate Drive, P.O. Box 883 and Director
Shelton, Connecticut 06484-0883
Paul A. DeSimone Vice President, Corporate
American Skandia Life Assurance Corporation Controller and Director
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Wade A. Dokken President, Deputy Chief
American Skandia Life Assurance Corporation Executive Officer and
One Corporate Drive, P.O. Box 883 Director
Shelton, Connecticut 06484-0883
Walter G. Kenyon Vice President,
American Skandia Life Assurance Corporation National Accounts Manager
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Lawrence Kudlow Senior Vice President,
American Skandia Life Assurance Corporation Chief Economist
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
N. David Kuperstock Vice President, Product Development
American Skandia Life Assurance Corporation and Director
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Thomas M. Mazzaferro Executive Vice President,
American Skandia Life Assurance Corporation Chief Financial Officer
One Corporate Drive, P.O. Box 883 and Director
Shelton, Connecticut 06484-0883
Brian O'Connor Vice President, National Sales
American Skandia Life Assurance Corporation Manager, Internal Wholesaling
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
M. Patricia Paez Director
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
M. Priscilla Pannell Corporate Secretary
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Hayward L. Sawyer Senior Vice President,
American Skandia Life Assurance Corporation National Sales Manager
One Corporate Drive, P.O. Box 883 and Director
Shelton, Connecticut 06484-0883
Anders O. Soderstrom Executive Vice President and
American Skandia Life Assurance Corporation Chief Information Officer
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Leslie S. Sutherland Vice President,
American Skandia Life Assurance Corporation National Accounts Manager
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
C. Ake Svensson Treasurer
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Christian Thwaites Vice President,
American Skandia Life Assurance Corporation Qualified Plans
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Bayard F. Tracy Senior Vice President,
American Skandia Life Assurance Corporation National Sales Manager and
One Corporate Drive, P.O. Box 883 Director
Shelton, Connecticut 06484-0883
</TABLE>
Item 30. Location of Accounts and Records: Accounts and records are maintained
by ASLAC at its principal office in Shelton, Connecticut.
Item 31. Management Services: None
Item 32. Undertakings:
(a) 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 annuity contracts may be accepted and
allocated to the Sub-accounts of Separate Account B.
(b) Registrant hereby undertakes to include either (1) as part of any enrollment
form or application to purchase a contract offered by the prospectus, a space
that an applicant or enrollee 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) 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.
(d) American Skandia Life Assurance Corporation ("Depositor") hereby represents
that the aggregate fees and charges under the annuity contracts are reasonable
in relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by the Depositor.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has duly caused this registration statement to be
signed on its behalf, in the Town of Shelton and State of Connecticut, on this
2nd day of March, 1998.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION VARIABLE ACCOUNT B
(CLASS 1 SUB-ACCOUNTS)
Registrant
By: American Skandia Life Assurance Corporation
By:/s/ Kathleen A. Chapman Attest:/s/ Scott K. Richardson
Kathleen A. Chapman, Assistant Corporate Secretary Scott K. Richardson
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Depositor
By:/s/ Kathleen A. Chapman Attest:/s/ Scott K. Richardson
Kathleen A. Chapman, Assistant Corporate Secretary Scott K. Richardson
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signature Title Date
(Principal Executive Officer)
Jan R. Carendi* Chief Executive Officer, March 2, 1998
Jan R. Carendi Chairman of the Board and Director
(Principal Financial Officer and Principal Accounting Officer)
/s/ Thomas M. Mazzaferro Executive Vice President and March 2, 1998
Thomas M. Mazzaferro Chief Financial Officer
/s/ David R. Monroe Vice President and Controller March 2, 1998
David R. Monroe
(Board of Directors)
Jan. R. Carendi* Gordon C. Boronow* Malcolm M. Campbell*
Jan. R. Carendi Gordon C. Boronow Malcolm M. Campbell
Henrik Danckwardt* Amanda C. Sutyak* Wade A. Dokken*
Henrik Danckwardt Amanda C. Sutyak Wade A. Dokken
Thomas M. Mazzaferro* Gunnar Moberg* Bayard F. Tracy*
Thomas M. Mazzaferro Gunnar Moberg Bayard F. Tracy
Anders Soderstrom* C. Ake Svensson* Lincoln R. Collins*
Anders Soderstrom C. Ake Svensson Lincoln R. Collins
Nancy F. Brunetti*
Nancy F. Brunetti
*By: /s/ Kathleen A. Chapman
Kathleen A. Chapman
*Pursuant to Powers of Attorney filed with initial Registration Statement No. 333-25733
</TABLE>
EXHIBITS
As noted in Item 24(b), various exhibits are incorporated by reference or are
not applicable. The exhibits included are as follows:
No. 1 Copy of the resolution of the board of directors establishing the
Separate Account(Edgar)
No. 3(a) Form of revised Principal Underwriting Agreement (Edgar)
No. 3(b) Form of revised Dealer Agreement (Edgar)
No. 5 Copy of the application form used with the Annuity (Edgar)
No. 6(a) Copy of the Certificate of Incorporation (Edgar)
No. 6(b) Copy of the By-Laws (Edgar)
No. 8(b) Copy of Agreement of Alger American Fund (Edgar)
CERTIFICATE OF ASSISTANT SECRETARY
OF
SKANDIA LIFE AMERICA CORPORATION
The undersigned, being the duly elected Assistant Secretary of Skandia
Life America Corporation (the "Corporation"), does hereby certify that
the following resolutions were duly adopted by the Board of Directors of
the Corporation on November 25, 1987, and further certifies that the
"Statement of Suitability" and "Standards of Conduct and Code of Ethics"
attached hereto are true, correct and complete copies of the "Standards
of Suitability" and "Standards of Conduct and Code of Ethics" of the
Corporation, and further certifies that no amendments have been made to
the resolutions or the attached documents and the same are in full force
and effect:
RESOLVED, That pursuant to Section 38-154a of the Connecticut
General Statutes, management of the Corporation, in the exercise of
their discretion, may use the "Skandia Life Variable Account A" now in
existence, assuming compliance with all legal and regulatory
requirements, or establish a separate account designated "Skandia Life
Variable Account B", (herein, such Account A or Account B shall be
referred to as "the Account") for the purposes set forth in the
following resolutions, and subject to such conditions as hereinafter set
forth; and it is further
RESOLVED, That the Account may be used to fund reserves required for
such variable annuity contracts ("Contracts") issued by the Corporation,
as the President and the Board of Directors may designate for such
purpose; and it is further
RESOLVED, That the assets of the Account be maintained separate
from the assets of the Corporation, and that the income, gains and
losses, realized or unrealized, from assets allocated to a separate
account in accordance with the Contracts, shall be credited to or charged
against such Account without regard to other income, gains or losses of
the Corporation; and it is further
RESOLVED, That the Account shall invest or reinvest the assets of
the Account in securities issued by investment companies registered under
the Investment Company Act of 1940, as may be specified in the Contracts
from time to time; and it is further
RESOLVED, That the President or the Vice President of the
Corporation be, and hereby is, authorized to change the designation of
the Account to such other designation as he may deem necessary or
appropriate in furtherance of the goals of the Corporation with respect
to such variable annuities; and it is further
RESOLVED, That the appropriate officers of the Corporation, with
such assistance from the Corporation's auditors, Touche, Ross & Co, its
legal, counsel, Werner, Kennedy & French, and independent consultants or
others as they may require, be and they hereby are, authorized and
directed to the extent required under federal 1aw to take all action
necessary to: (a) register the Account as a unit investment trust under
the Investment Company Act of 1940, as amended; and (b) register the
Contracts in such amounts, which may be an indefinite amount, under the
Securities Act of 1933 as the officers of the Corporation shall from time
to time deem appropriate, and (c) take all other actions which are
necessary or desirable in connection with the offer and sale of said
Contracts and the operation of the Account in order to comply with the
Investment Company Act of 1940, the Securities Exchange Act of 1934, the
Securities Act of 1933 and other applicable federal laws, and state
securities laws, including filing of any amendments to registration
statements, and undertakings, and any applications for exemptions from
the Investment Company Act of 1940 or other applicable federal laws as
the officers of the Corporation shall deem necessary or appropriate; and
it is further
RESOLVED, That the President, the Vice President(s), and each of
them with full power to act without the others, hereby are severally
authorized and empowered to the extent required under federal law in
cooperation with Werner, Kennedy & French, legal counsel to the
Corporation, to prepare, execute and cause to be filed with the
Securities and Exchange Commission on behalf of the Account and by the
Corporation as sponsor and depositor such documents, including a
Registration Statement registering the Account as an investment company
under the Investment Company Act of 1940, and a Registration Statement
under the Securities Act of 1933 registering the Contracts, and any and
all amendments to the foregoing on behalf of the Account and the
Corporation and on behalf of and as attorneys for the principal executive
officer and/or the principal financial officer and/or the principal
accounting officer and/or any other officer of the Corporation; and it is
further
RESOLVED, That Robert B. Goode, Jr., President, and John T.
Buckley, Esq. of Werner, Kennedy & French, 220 East 42nd Street, New York,
New York 10017, are hereby appointed as agents for service under any such
registration statements duly authorized to receive communications and
notices from the Securities and Exchange Commission with respect thereto;
and it is further
RESOLVED, That the President or the Vice President of the
Corporation be, and hereby is authorized to establish procedures under
which the Corporation will institute procedures for the voting rights for
owners of such Contracts with respect to securities owned by the Account;
and it is further
RESOLVED, That the President or the Vice President of the
Corporation is hereby authorized to execute such agreement or agreements
with Skandia Life Equity Sales Corporation (a corporation formed as a
wholly owned subsidiary of Skandia U.S. Investment Holding Corporation) as
are deemed necessary, appropriate or desirable under which Skandia Life
Equity Sales Corporation will be appointed principal underwriter and
distributor for the Contracts and under which Skandia Life Equity Sales
Corporation will provide administrative services in connection with the
establishment and maintenance of the Accounts and the design, issuance,
and administration of the Contracts; and it is further
RESOLVED, That, since the Corporation anticipates that the Account will
invest in securities issued by one or more investment companies, the
appropriate officers of the Corporation are hereby authorized to execute
such agreement or agreements as may be necessary or appropriate with the
manager, adviser, distributor or sponsor of such investment companies to
permit such investments; and it is further
RESOLVED, That the appropriate officers of the Corporation, and each of
them, are authorized to execute and deliver all such documents and papers
and to perform or cause to be performed all such acts and things as he may
deem necessary or desirable to carry out the foregoing resolutions and the
intent and purposes thereof; and it is further
RESOLVED, That the Standards of Suitability and the Standards of
Conduct as approved by the Board of Directors, in the manner set forth in
the annexed schedules, are hereby ratified and approved.
IN WITNESS WHEREOF, the undersigned has executed this certificate this
28th day of December, 1987.
(Seal)
Skandia Life America Corporation
/s/William J. Lazarou
William J. Lazarou
Assistant Secretary
<PAGE>
PRINCIPAL UNDERWRITER AGREEMENT
AGREEMENT dated _______ ___, 1993 by and between American Skandia Life Assurance
Corporation ("Skandia Life"), a Connecticut corporation, on its own behalf and
on behalf of American Skandia Life Assurance Corporation Variable Account B
("Variable Account B") and Skandia Life Equity Sales Corporation ("SLESCO"), a
Delaware corporation.
WITNESSETH:
WHEREAS, Variable Account B is an account established and maintained by Skandia
Life pursuant to the laws of the State of Connecticut to support variable
annuities issued by Skandia Life (the "Annuities"), under which income, gains
and losses, whether or not realized, from assets allocated to such account, are,
in accordance with the Annuities, credited to or charged against such account
without regard to other income, gains, or losses of Skandia Life;
WHEREAS, Skandia Life, as depositor, has registered, on behalf of Variable
Account B, as registrant, the Annuities under the Securities Act of 1933 (the
"Securities Act"), and has registered such Account as a unit investment trust
under the provisions of the Investment Company Act of 1940 (the "Investment
Company Act"), to issue and sell the Annuities to the public through SLESCO
acting as principal underwriter; and
WHEREAS, SLESCO is registered as a broker-dealer under the Securities Exchange
Act of 1934 (the "Securities Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the parties have previously executed a Distribution Agreement and now
wish to revise and replace that agreement;
NOW, THEREFORE, Skandia Life and SLESCO hereby agree as follows:
1. Principal Underwriter. Skandia Life grants to SLESCO the exclusive right,
during the term of this Agreement, subject to the registration requirements of
the Securities Act and the Investment Company Act and the provisions of the
Securities Exchange Act, to be the distributor and principal underwriter of
Annuities. SLESCO is responsible for compliance with the foregoing laws, and the
rules and regulations thereunder, and all other securities laws, rules and
regulations relating to the underwriting of sales and distributions.
2. Sales Agreements. SLESCO is authorized to enter into written agreements, on
such terms and conditions as SLESCO may determine not inconsistent with this
Agreement, with organizations which agree to participate in the distribution of
Annuities and to use their best efforts to solicit applications for Annuities.
Such organizations and their agents or representatives soliciting applications
for Annuities shall be duly and appropriately licensed, registered or otherwise
qualified for the sale of such Annuities (and the riders and other contracts
offered in connection therewith) under the insurance laws and any applicable
blue-sky laws of each state or other jurisdiction in which such Annuities,
riders and contracts may be lawfully sold and in which Skandia Life is licensed
to sell such Annuities, riders and other contracts. Unless an organization is
exempt from registration as a broker/dealer for the sale of certain securities,
including registered insurance products, each organization shall be registered
both as a broker/dealer under the Securities Exchange Act and a member of the
NASD, or if not so registered or not such a member, then the agents and
representative of such organization soliciting applications for contracts shall
be agents and registered representatives of a registered broker/dealer and NASD
member which is the parent of such organization and which maintains full
responsibility for the training, supervision, and control of the agents or
representatives selling the Annuities. SLESCO shall have the responsibility for
supervision of all such organizations only to the extent required by law.
3. Life Insurance Agents. SLESCO is authorized to appoint the organizations
described in paragraph 2 above as independent general agents of Skandia Life for
the sale of the Annuities and any riders or contracts in connection therewith.
Skandia Life will undertake to obtain all required insurance agent licenses
and/or appointments in the appropriate states or jurisdictions for the
designated agents or representatives of those organizations so appointed by
SLESCO; provided that Skandia Life reserves the right to refuse to appoint any
proposed agent or sub-agent of such agent, or once appointed to terminate the
same.
4. Suitability. SLESCO shall take reasonable steps to inform brokers and dealers
of their duty to not make recommendations to an applicant to purchase a Contract
in the absence or reasonable grounds to believe that the purchase of the
Contract is suitable for such applicant. While not limited to the following, it
is the duty of such brokers and dealers to determine suitability based on
information furnished to an agent after reasonable inquiry of such applicant
concerning the applicant's insurance and investment objectives, financial
situation and needs, and the likelihood of whether the applicant will persist
with the Contract for such a period of time that Skandia Life's acquisition
costs are amortized over a reasonable period of time.
5. Promotional Materials, Prospectuses. SLESCO shall have the responsibility for
consulting with Skandia Life with respect to the design and the drafting and
legal review and filing of sales promotion materials, and, if permitted by law,
for the preparation of individual sales proposals related to the sale of the
Annuities.
6. Records. SLESCO shall maintain and preserve for the periods prescribed such
accounts, bodies and other documents as are required of it by applicable laws
and regulations. The books, accounts and records of Skandia Life, Variable
Account B and SLESCO as to all transactions hereunder shall be maintained so as
to clearly and accurately disclose the nature and details of the transactions.
7. Independent Contractor. SLESCO shall act as an independent contractor
and nothing herein contained shall constitute SLESCO or its agents or employees
as employees of Skandia Life in connection with the sale of the Annuities.
8. Non-Exclusivity. This agreement is non-exclusive with respect to SLESCO.
SLESCO may render services, whether of like or unlike kind to those described
herein, to or for others, and whether as underwriter, distributor, or dealer.
9. Investigations and Proceedings.
(a) SLESCO and Skandia Life agree to cooperate fully in any insurance regulatory
investigation or proceeding or judicial proceeding arising in connection with
the Annuities distributed under this Agreement. SLESCO and Skandia further agree
to cooperate with each other in any securities regulatory investigation or
proceeding or judicial proceeding with respect to Skandia Life, SLESCO, their
affiliates and their agents or representatives to the extent that such
investigation or proceeding is in connection with Annuities distributed under
this Agreement. Without limiting the foregoing:
(i) SLESCO will be notified promptly of any customer complaint or notice of any
regulatory investigation or proceeding or judicial proceeding received by
Skandia Life with respect to SLESCO.
(ii) SLESCO will promptly notify Skandia Life of any customer complaint or
notice of any regulatory investigation or proceeding received by SLESCO or its
affiliates with respect to SLESCO or any agent or representative in connection
with any Contract distributed under this Agreement or any activity in connection
with any such Contract.
(b) In the case of a substantive customer complaint against both Skandia Life
and SLESCO, SLESCO and Skandia Life will cooperate in investigating such
complaint and any response to such complaint will be sent to the other party to
this Agreement for approval not less than five (5) business days prior to it
being sent to the customer or regulatory authority, except that if a more prompt
response is required, the proposed response shall be communicated by telephone
or telefax.
10. Limitations on Liability. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of its obligations and duties hereunder
on the part of SLESCO, SLESCO shall not be subject to liability to Separate
Account B or to any Contract Owner or party in interest under any such Annuity
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any such Annuity or security.
11. Guarantee. Skandia Life undertakes to guarantee the performance of all of
SLESCO's obligations, imposed by Section 27 (f) of the Investment Company Act,
as amended, and paragraph (b) of Rule 27d-2 adopted by the Securities and
Exchange Commission, to make refunds of charges required of the principal
underwriter of Annuities issued in connection with Variable Account B.
12. Assignment and Termination. This Agreement may not be assigned nor duties
hereunder delegated without the signed written consent of the other party. This
Agreement shall terminate automatically if it shall be assigned without such
approval. This Agreement may be terminated at any time by either party hereto on
60 days' written notice to the other party hereto, without the payment of any
penalty. Upon termination of this Agreement all authorizations, rights and
obligations shall cease except (i) the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Annuities in effect
at the time of termination and (ii) the agreements contained in paragraph 9
hereof.
13. Regulation. This Agreement shall be subject of the provisions of the
Securities Act, the Investment Company Act and the Securities Exchange Act and
the rules, regulations and rulings thereunder, and of the NASD, from time to
time in effect, including such exemptions from the Investment Company Act as the
Securities and Exchange Commission may grant, and the terms hereof shall be
interpreted and construed in accordance therewith. Without limiting the
generality of the foregoing, the term "assigned" shall not include any
transaction exempted from section 15(b) (2) of the Investment Company Act.
SLESCO shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of Skandia Life or Variable Account B, present
or future, any information, reports or other material which any such body by
reason of this Agreement may request or require pursuant to applicable laws or
regulations.
14. Severability. 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.
15. Applicable Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Connecticut.
16. Complete Agreement. This Agreement contains the entire agreement between the
parties with respect to the underwriting and distribution of Annuities issued
through Separate Account B, and supersedes any prior agreements or understanding
with respect to the subject matter thereof, including, but not limited to, the
Distribution Agreement previously executed by the parties, and may not be
altered or amended except by an agreement in writing, signed by both parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION
By: ___________________________
Attest:
- -----------------------------
AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION
SEPARATE ACCOUNT B
By: __________________________
Attest:
- -----------------------------
Secretary
SKANDIA LIFE EQUITY
SALES CORPORATION
By: __________________________
Attest:
- -----------------------------
Secretary
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
SALES AGREEMENT
(With Commission Schedules)
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION, Tower One, Corporate Drive.
P. 0. Box 883, Shelton, CT 06484
<PAGE>
SALES AGREEMENT
Definitions
1.1 "We," "Our" or "Us" refers to American Skandia Life Assurance Corporation
and, with respect to contracts registered as securities with the SEC, Skandia
Life Equity Sales Company, Inc., which serves as principal underwriter for such
contracts.
l.2 "You" or "Your" refers to the person(s) or organization(s) being appointed
under this contract as Our Dealer and named as such in the Schedule and to the
extent, and only to the extent as set out in such Schedule, as our agent.
1.3 "Schedule" is (are) the specifications page(s) attached to and made part of
this Sales Agreement.
1.4 "Contracts" are those Insurance and/or annuity plans set out in the
Schedule.
1.5 "SEC" is the Securities and Exchange Commission.
1.6 "NASD" is the National Association of Securities Dealers, Inc.
1.7 "Broker/Dealer" and or "Dealer" is a broker/dealer registered with the SEC
and a member of the NASD with respect to contracts registered as securities with
the SEC. "Dealer" is an insurance agency or agent with respect to contracts not
registered as securities with the SEC.
1.8 "Agreement" is this Sales Agreement.
1.9 "Home Office" is our office at Tower One, Corporate Drive, Shelton,
Connecticut 06484-9932.
2.0 Appointment
We hereby appoint you as Our Dealer for the solicitation and procurement
of applications for Contracts in all states in which we are authorized to do
business and in which You are properly licensed and appointed, without exclusive
representation. You may also be appointed as Our agent for purposes of state
insurance law, as set out in the agreement, or schedule hereto.
2.0 Authority
3.1 You have the power or authority to represent Us only to the extent expressly
granted in the Agreement. No further power or authority is implied.
3.2 Nothing contained in this Agreement is intended to create a relationship of
employee and employer between You and Us. You, and any agents appointed by You,
are an Independent contractor in relation to Us. While You are free to exercise
Your own judgment as to the time, place and means of performing all acts under
this Agreement, all such actions must conform to all our regulations not
unreasonably interfering with freedom of action or judgment.
3.3 This Agreement terminates any and all previous agreements between You and Us
relating to the subject matter hereof. However, execution of this Agreement
shall not affect any obligations which have already accrued under any prior
agreement.
3 4 You are authorized to collect only the initial premiums for each line of
business unless specifically set out in the Schedule.
3.5 You may procure and solicit applications for Contracts through agents
appointed by you. Each such appointment is subject to Our approval. We are not
liable and take on no obligations under any Contract between You and any agent
unless We have agreed to do so in writing. Agents must be duly licensed for the
appropriate lines of business under the applicable laws and by the proper
authorities in each jurisdiction in which You propose to solicit and procure
applications for Contracts. Agents must indicate in each application for a
Contract that it has been solicited on Your behalf.
3.6 You must supervise any Agents you appoint for solicitation and procurement
of Contracts. At all times you are responsible for all acts and omissions for
each agent within the scope of his or her agency appointment. You shall exercise
all responsibilities required by the applicable Federal and state laws and
regulations. Additionally, You shall supervise Your agents to act in accordance
with Your responsibilities under the following sections of this Agreement: 6.1,
6.2, 6.9, 6.10, 6.11, 7.1 and 7.2. We shall not have any responsibility for the
supervision of any of Your agents.
3.7 We may, by written notice to You, refuse to permit any of Your agents to
solicit or procure applications for the sale of any of the Contracts. By such
notice We may also require You to cause any of Your agents to cease such
solicitation or procurement, and/or require You to cancel the appointment of any
of Your agents.
4.0 SEC Registered Contracts
4.1 If you are a Broker/Dealer, You agree that You have full responsibility for
the training and supervision of all persons, including Your agents, employees
and/or other affiliated persons or organizations, who are engaged directly or
indirectly in the offer or sale of Contracts that are registered with the SEC.
You also agree that all such persons or organizations shall be subject to Your
control with respect to their activities in connection with such Contracts. You
must certify to Our satisfaction the qualifications of all such persons or
organizations. You must notify us immediately if any such person or organization
ceases to be Your registered representative or ceases to be qualified in any
manner to sell, procure or in any way service such Contracts.
4.1.1 You shall fully comply with the requirements of the NASD and the
Securities and Exchange Act of 1934 and all other applicable Federal or state
laws. You shall establish such rules and procedures as may be necessary to cause
diligent supervision of the securities activities of Your agents, employees
and/or affiliated persons or organizations. Upon Our request, you shall furnish
in a timely fashion any records necessary to establish such diligent
supervision.
4.1.2 Each of Your agents will not be permitted to solicit and procure
applications for Contracts until You and that agent have entered into an
agreement appointing that person or organization as both Your agent and
registered representative. Under that agreement, such agent must agree: (a) that
his or her selling activities relating to the Contracts will be under Your
supervision and control; and (b) that his or her right to continue to solicit
and procure such Contracts is subject to his or her continued compliance with
such agreement.
4.1.3 Should one of Your agents fail or refuse to submit to Your supervision in
accordance with both this Agreement and the agreement noted above in Section
4.1.2, or if such agent otherwise fail to comply with your rules or meet Your
standards, You shall immediately: (a) notify such agent that he or she is no
longer authorized to solicit or procure Contracts; (b) take whatever additional
action is necessary to terminate sales activities of such agent in relation to
the Contracts: and (c) notify Us that You have terminated such agent's
authority.
4.2 If You are not a Broker/Dealer but a member of an affiliated group of legal
entities one of which is a Broker/Dealer and a party to this Agreement. You
agree that with respect to contracts registered with the SEC, Your agents shall
be registered representatives of such Broker/Dealer.
4.2.1 As appropriate, any reference in this Agreement to You shall apply equally
to such Broker/Dealer.
4.2.2 You hereby direct Us to pay any compensation due under paragraph 5 of this
Agreement to such Broker/Dealer.
4.3 You shall not solicit or procure any Contracts registered with the SEC or
permit any agent to do so until You have been appointed as a registered
representative of Skandia Life Equity Sales Company, Inc. if You are neither a
Broker/Dealer nor a member of an affiliated group of legal entities one of which
is a Broker/Dealer.
4.4 All other provisions of this Agreement apply to the sale of Contracts
registered with the SEC.
5.0 Compensation
5.1 We pay You as full compensation under this Agreement, commissions and/or
service fees on premiums to Us while this Agreement is in effect on account of
Contracts issued upon applications procured under this Agreement.
5.2 We pay commissions and/or service fees in relation to Contracts in the
amounts and for the periods of time set out in the Schedule which is in effect
at the time such Contracts are sold.
5.3 Schedules are subject to change upon written notice to You. Such changes
shall not affect compensation due on either premiums or applications received
for contracts later issued if receipt at Our Home Office occurs prior to the
effective date of a change.
5.4 Any current or subsequent Schedule may provide other or additional
conditions regarding compensation and if so, will be controlling to the extent
of other or additional conditions.
5.5 Compensation is payable only on applications We accept, and only after We
receive at Our Home Office both the required premium and any outstanding
delivery requirements as established by law, regulation or by Us.
5.6 No compensation is payable on premium (other than premiums on health
insurance contracts) we waive under any "waiver of premium" provision.
5.7 You agree to repay to Us in full the total compensation paid to You on any
Contract premium. We return for any reason any amounts related to such premium.
You agree to repay such compensation within thirty (30) business days of notice
to You of such a return of amounts relating to premium.
5.8 Any compensation otherwise payable to You in accordance with this Section 5
shall be reduced by any amount payable: (1) on Your behalf and on Your
instructions directly to any person or organization appointed by You and Us;
and/or (2) to a resident licensed agent in a state which requires the
countersignature by, or the effectuating of insurance through, a resident
licensed agent.
Any compensation shall cease to be payable on and after termination of this
Agreement if such occurs for one or more of the reasons specified in Section
8.2.
5.10 We shall not be obligated to pay any compensation related to Contracts
registered with the SEC if You are disqualified for continued registration with
the NASD, as such would represent a violation of NASD rules. In such event, We
shall hold any compensation due in "escrow" from the date of such
disqualification, provided You (a) commence an appeal to the NASD within 180
days following the disqualification notice; (b) actively pursue such appeal, and
(c) notify Us of such appeal. Should Your NASD registration be reinstated, all
compensation due or becoming due to You during the period of disqualification
shall be immediately paid, without interest, provided this does not violate any
NASD rules or regulations in effect at said time.
6.0 General Provisions
6.1 You shall cooperate with Us in the investigation and settlement of all
claims against You, and of Your agents and/or Us relating to the solicitation or
procurement of Contracts under this Agreement. You shall promptly forward to Us
at Our Home Office any notice of claim into Your possession.
6.2 You shall keep full and accurate records of the business You transact under
this Agreement and shall forward to Us such reports of said business as We may
prescribe. We have the right to examine and inspect said records at reasonable
times. All rate books, manuals, forms. supplies, and any other properties
furnished by Us and in Your possession shall be returned to Us Immediately on
termination of this Agreement.
6.3 You shall bear all of Your expenses incurred in the performance of this
Agreement.
6.4 It is Your duty under this Agreement to obtain applications for the
contracts, and, where appropriate, to conserve and renew coverage placed with
Us.
6.5 All applications for Contracts are subject to Our acceptance. We reserve the
right to prescribe conditions, rules and regulations for the offer and
acceptance of its Contracts, which may be changed from time to time. Such
conditions, rules and regulations, and changes to such, will be forwarded to
your last known mailing address.
6.6 We reserve the right to modify, change or discontinue the offering of any
form of Contract at any time in any jurisdiction.
6.7 No waiver or modification of this Agreement will be effective unless it is
in writing and is signed by one of Our duly authorized officers, and by You or
one of Your duly authorized officers.
6.8 Our failure to enforce any provision of this Agreement shall not constitute
a waiver of any such provision. Our past waiver of a provision shall not
constitute a course of conduct or a waiver in the future of that provision.
6.9 You shall forward to Us at Our Home Office, by certified mail, any legal
process or notice served on You in a suit or proceeding against You.
6.10 You may not use any advertising material, prospectus, proposal or
representation, either in general or in relation to a Contract, unless furnished
by Us or until You obtain Our prior consent. You shall cease using any such
materials or making any such representation upon receipt of notice that such
materials are no longer available for such purposes. You shall not issue or
recirculate any illustration, circular, statement or memorandum of any sort
which misrepresent the terms, benefits or advantages of any Contract issued by
the Company, or make any misleading statement as to either benefits to be
received in relation to a Contract or the practices of financial position of the
Company.
6.11 In regard to Contracts registered with the SEC, You agree not to make
written or oral representations except such as are contained in current
prospectuses and authorized supplementary sales literature made available by Us.
In respect to such products You also agree to comply with the SEC Statement of
Policy and the regulations thereunder of the NASD.
6.12 You shall indemnify and hold Us Harmless from any loss or expense on
account of breach of this agreement, including but not limited to, any
unauthorized act of transaction by You, Your employees or persons appointed by
or affiliated with You, or any claim by one or more of Your agents for
compensation due or to become due on account of such agent(s) sale(s) of
Contracts.
6.13 You expressly authorize Us to charge against all compensation due or to
become due You under this Agreement any amounts paid or liabilities incurred by
Us under this Agreement.
6.14 You shall not offer or pay any rebate of premium or make any offer of or
provide any other inducement not specified in the Contracts to any person or
organization in relation to the solicitation or procurement of Contracts. You
shall not make any misrepresentation or incomplete comparison between contracts
or companies for the purposes of inducing a policy or contract holder of any
other company to lapse, forfeit or surrender such policy or contract.
6.15 No assignment of this Agreement or compensation payable hereunder shall be
valid unless We authorize it in writing. Every assignment shall be subject to
any indebtedness and obligation You owe Us and any applicable state insurance
laws or regulations pertaining to such assignments.
6.16 We may deduct at any time every indebtedness or obligation You owe Us from
any monies due under this Agreement.
6.17 Any outstanding indebtedness You owe Us shall become immediately due and
payable on termination of the Agreement.
7.0 Limitation of Authority
7.1 You are not authorized, and are expressly forbidden on Our behalf, to incur
any indebtedness or liability, or make, alter, or discharge agreements, or to
waive forfeitures, extend time of payment of any premium, waive payment in cash,
or to receive any money due or to become due Us, or to perform any other act,
except as specifically provided in this Agreement.
7.2 No individual Contract providing life, health or disability insurance
coverage shall be delivered if You or Your sub-agent has knowledge that the
health of any person proposed for insurance has changed since the application
was taken or unless the first premium has been fully paid and delivery made by
the delivery date We specify, or if no delivery date is specified, within sixty
(60) days from the date we mail the Contract. You shall return immediately to Us
at Our Home Office any Contract not delivered in accordance with this Paragraph.
8.0 Termination
8.1 This entire Agreement may be terminated by either party by giving thirty
(30) days' notice in writing to the other party. Such notice shall be mailed to
Your last known mailing address on Our records, or in the event you choose to
terminate the Agreement, to Our Home Office.
8.2 This Agreement shall automatically terminate without notice upon occurrence
of any of the following events:
(a) Your bankruptcy or dissolution, or if You are organized as a
partnership, bankruptcy or dissolution of any of the partners, except that in
such case the Agreement shall only terminate as to the bankrupt or dissolved
partner.
(b) Fraud or gross negligence by You in the performance of any duties
imposed on You by this Agreement or withholding or misappropriation, for Your
own use, of Our funds or those of Our policy or contract holders, applicants,
beneficiaries or payees.
(c) When and if You materially breach this Agreement or materially
violate Federal or state insurance and/or securities laws in any jurisdiction in
which You transact business, whether or not in relation to Us or Our Contracts.
(d) When and if You fail to obtain renewal of a necessary license in
any jurisdiction, but only as to that jurisdiction.
(e) When and if You are disqualified for continued membership with the
NASD or registration with the SEC, but only as to Contracts registered with the
SEC.
8.3 Sections 6.0 and 7.0 shall survive the termination of this Agreement,
as appropriate.
In witness whereof, the undersigned have executed this agreement this
___________ day of
_________________________, 19 ___.
_____ American Skandia Life Assurance Corporation
_____ Skandia Life Equity Sales Corporation
by: ____________________________________________________________________________
- --------------------------------------------------------------------------------
(Name of Dealer)
by: ____________________________________________________________________________
ATTACHED SCHEDULES
_____ American Skandia Advisors Plan Annuity (ASAP - 05/92)
_____ Lifevest Guaranteed Maturity Annuity (Capital Appreciation and
Tax Savings Plan)"Front-End Load" Contract (CATS - 05/90)
_____ LifeVest Guaranteed Maturity Annuity "Back-End" Load Contract
(GMA - 05/89)
_____ LifeVest Principal and Income Plan (PIP - 01/90)
_____ LifeVest Savers Guaranteed Annuity (B/D) (SGA - 01/91)
_____ LifeVest Personal Security Annuity (PSA - 09/88)
_____ Alliance Capital Navigator Annuity (NAV - 07/92)
<TABLE>
<CAPTION>
- --------------------------------------------------------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Logo American Annuity Application
Skandia Life (Individual)
- --------------------------------------------------------------- -------------------------------------------------------------------
- --------------------------------------------------------------- -------------------------------------------------------------------
1. Owner(Applicant) 3. Annuitant(if other than Owner)
Name John Doe Name
Address 10 Any Street Address
Anytown, Anystate 12345
Sex X Male Female Date of Birth 03/29/47 Sex Male Female Date of Birth
Social Security/Tax I.D. No. 123-45-6789 Social Security/Tax I.D. No.
- --------------------------------------------------------------- -------------------------------------------------------------------
- --------------------------------------------------------------- -------------------------------------------------------------------
2. Co-Owner(if applicable) 4. Contingent Annuitant(if applicable)
Name Name
Address Address
Sex Male Female Date of Birth Sex Male Female Date of Birth
Social Security/Tax I.D. No. Social Security/Tax I.D. No.
- --------------------------------------------------------------- -------------------------------------------------------------------
- --------------------------------------------------------------- -------------------------------------------------------------------
5. Beneficiary Designation (The Owner reserves the right to change the Beneficiaries unless indicated in No. 10.)
Primary Beneficiary Contingent Beneficiary
Name Jane Doe Relationship to Owner Name Susan Doe Relationship to Owner
Wife Daughter
- ---------------------------------------------------------------
6. Initial Premium -------------------------------------------------------------------
$ 50,000 9. Type of Plan
Type of Payment X Check/Wire 1035 Exchange -------------------------------------------------------------------
Trustee-to-Trustee Transfer X Non-qualified Qualified (indicate plan type):
IRA SEP/IRA IRA Rollover 401k 403b
Other
- ---------------------------------------------------------------
- ---------------------------------------------------------------
7. Investment Selection 10. Replacement
(Indicate your investment allocation below. Please use Is this annuity intended to replace (in whole or in part)
only whole number percentages. They must total 100%.) an existing life insurance or annuity? Yes X No
Variable Investment Options (if applicable) (If yes, please indicate carrier, contract no. and
X XX Money Market 100 % approximate premium amount in No. 11)
- --------------------------------------------------------------- -------------------------------------------------------------------
- --------------------------------------------------------------- -------------------------------------------------------------------
% 11. Special Instructions
%
%
Fixed Investment Options (if applicable)
YR % YR %
YR % YR %
- --------------------------------------------------------------- -------------------------------------------------------------------
- --------------------------------------------------------------- -------------------------------------------------------------------
8. Amendments to the Application(Home office use only). 12. Statement of Additional Information
Yes. Please send me a statement of additional information.
- --------------------------------------------------------------- -------------------------------------------------------------------
</TABLE>
Agreement
I/We represent to the best of my/our knowledge and belief the statements made in
this application are true and complete; including, under penalty of perjury, the
Social Security or Tax ID numbers provided. It is indicated and agreed that the
only statements which are to be construed as the basis of the contract are those
contained in this application or in any amendment to this application. I/WE HAVE
ALSO RECEIVED A COPY OF THE PROSPECTUS AND I/WE UNDERSTAND THAT: (A) ANNUITY
PAYMENTS OR SURRENDER VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE
SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED AS TO A DOLLAR AMOUNT; AND (B)
ALL PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN EITHER AN UPWARD OR
DOWNWARD ADJUSTMENT.
Signatures
Owner(s) X /s/John Doe
Proposed Annuitant (if other than Owner) X
Dated at (location) Anytown, Anystate Date 01/03/92
Signature of Agent X /s/ Robert Smith Agent Name Robert Smith
Name and Address of Firm XYZ Agency, 100 South Street, Anytown, Anystate 12345
Agent Report
Do you have any reason to believe that the contract applied for is to replace
existing annuities or life insurance? Yes X No
INAA-2-92
seal STATE OF CONNECTICUT
INSURANCE DEPARTMENT
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
Vol 1133
0510
This is to Certify, that The attached certificate amending the Certificate of
Incorporation of American Skandia Life Assurance Corporation is Approved.
Witness my hand and official seal, at Hartford,
This 9th day of February 1989
/s/ Peter F. Kelly
Insurance Commissioner
Form 2
<PAGE>
CERTIFICATE OF SECRETARY
OF
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
AND
SKANDIA U.S. INVESTMENT HOLDING CORPORATION
The undersigned, being the duly elected Secretary of American Skandia Life
Assurance Corporation (the "Corporation") and Skandia U.S. Investment Holding
Corporation, the Corporation's sole shareholder, hereby certifies that the
following resolutions were duly adopted by Unanimous Consent to Action Taken
Without a Meeting by the Board of Directors of the Corporation and by the Board
of Directors of Skandia U.S. Investment Holding Corporation on October 17, 1988,
and are in full force and effect as of the date of this certificate:
RESOLVED, that the Certificate of Incorporation be amended to reflect the
change in the Corporation's principal office to Shelton, Connecticut as follows:
Section 4, line 2, delete "City of Hartford" and substitute "Town of
Shelton".
RESOLVED, that the par value of the Corporation's share of Class A and
Class B common stock be decreased from $100.00 per share to $80.00 per share
thereby decreasing the current stated capital of the Corporation from its
present level of $2,500,000.00 to $2,000,000.00, said decrease to be
accomplished through a corresponding increase in the Corporation's surplus
accounts and that the officers of the Corporation be and hereby are authorized
and directed to take such action as is necessary to amend the Corporation's
Certificate of Incorporation in order to effect such change in par value,
including preparing and filing amendments to the Corporation's Certificate of
Incorporation and obtaining such state insurance regulatory approvals as may be
required.
RESOLVED, that the present requirement for a staggered Board of Directors
be eliminated by amending the Corporation's Certificate of Incorporation as
follows:
Section 4, line 6, delete the phrase, "and provided further the
classification shall be such that the term of one or more classes shall expire
each succeeding year" and insert a period in line 6 following the word years".
In Witness Whereof, the undersigned has duly executed this Secretarial
Certificate the 7 day of February, 1989.
/s/William J. Lazarou
William J. Lazarou
Secretary
[NW] CSM.321
<PAGE>
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION
By action of ___INCORPORATORS
___BOARD OF DIRECTORS
XX BOARD OF DIRECTORS
AND SHAREHOLDERS
(Stock Corporation)
___BOARD OF DIRECTORS
AND MEMBERS
(Nonstock Corporation)
100.00
For office use only
Account No.
Initials
STATE OF CONNECTICUT
SECRETARY OF THE STATE
1. NAME OF CORPORATION DATE
American Skandia Life Assurance Corporation Feb. 8, 1988
2. The Certificate of incorporation is XX A. AMENDED ONLY
___B. AMENDED AND RESTATED
___C. RESTATED ONLY by the following
resolution
See Attached Rider
3. (Omit if 2A is checked)
(a)The above resolution merely restates and does not change the provisions
of the original Certificate of Incorporation as supplemented and amended
to date, except as follows: (Indicate amendments made, if any, if none,
so indicate)
(b) Other than as indicated in Par. 3(a), there is no discrepancy between
the provisions of the original Certificate of Incorporation as supplemented to
date, and the provisions of this Certificate Restating the Certificate of
Incorporation.
BY ACTION OF INCORPORATORS
__4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote if any)
<TABLE>
<CAPTION>
We (at least two-thirds of the incorporators) hereby declare, under the penalties of false statement that the statements made in
the foregoing certificate are true.
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
APPROVED
<TABLE>
<CAPTION>
(All subscribers, or, if nonstock corporation, all applicants for membership entitled to vote, if none, so indicate)
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
<PAGE>
Continued
<TABLE>
<CAPTION>
BY ACTION OF BOARD OF DIRECTORS
<S> <C>
__4. (Omit if 2C is checked.) The above resolution was adopted by the board of directors acting alone,
__there being no shareholders or subscribers.
__the board of directors being so authorized pursuant to Section 33-341, Conn. G.S. as amended
__the corporation being a nonstock corporation and having no members and no applicants for membership entitled to vote on such
resolution.
</TABLE>
5. The number of affirmative votes required to adopt such resolution is:
6. The number of directors' votes in favor of the resolution was:
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (SECRETARY OR ASSISTANT SECRETARY)
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
X 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class) NUMBER OF
SHARES ENTITLED TO VOTE
100
TOTAL VOTING POWER
100
VOTE REQUIRED FOR ADOPTION
67
VOTE FAVORING ADOPTION
100
(b) (If the shares of any class are entitled to vote as a class,
indicate the designation and number of outstanding shares of each
such class, the voting power thereof, and the vote of each such
class for the amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
Robert B. Goode, Jr. President
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
William J. Lazarou, Secretary
SIGNED (President or Vice President)
/s/Robert B. Goode, Jr
SIGNED (Secretary or Assistant Secretary)
/s/William J. Lazarou, Secretary
BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
__ 4.The above resolution was adopted by the board of directors and by members.
5. Vote of members:
(a) (Use if no members are required to vote as a class.)
NUMBER OF MEMBERS VOTING
TOTAL VOTING POWER
VOTE REQURIED FOR ADOPTION
VOTE FAVORING ADOPTION
(b)(If the members of any class are entitled to vote as a class,
indicate the designation and number of members of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (Secretary or Assistant Secretary)
FOR OFFICE USE ONLY
<PAGE>
FILING FEE
$30.20
CERTIFICATION FEE
$40.80
TOTAL FEES
$170.00
<PAGE>
SIGNED (For secretary of the State) (4CC's)
CERTIFIED COPY SENT ON (Date)
TO
CARD REC & 4CC'S
2/14/89
INFOSEARCH, INC
30 HIGH STREET
HARTFORD, CT 06103
INFOSEARCH WILL PICK UP
<PAGE>
RIDER
RESOLVED, that the Certificate of Incorporation be amended to reflect the change
in the Corporation's principal office to Shelton, Connecticut as follows:
Section 4, line 2, delete "City of Hartford" and substitute "Town of Shelton".
RESOLVED, that the par value of the Corporation's shares of Class A and Class B
common stock be decreased from $100.00 per share to $80.00 per share thereby
decreasing the current stated capital of the Corporation from its present level
of $2,500,000.00 to $2,000,000.00 said decrease to be accomplished through a
corresponding increase in the Corporation's surplus accounts and that the
officers of the Corporation be and hereby are authorized and directed to take
such action as is necessary to amend the Corporation's Certificate of
Incorporation in order to effect such change in par value, including preparing
and filing amendments to the Corporation's Certificate of Incorporation and
obtaining such state insurance regulatory approvals as may be required.
RESOLVED, that the present requirement for a staggered Board of Directors be
eliminated by amending the Corporation's Certificate of Incorporation as
follows:
Section 4, line 6, delete the phrase, "and provided further the classification
shall be such that the term of one or more classes shall expire each succeeding
year" and insert a period in line 6 following the word years".
[NW] CSM.323
<PAGE>
CERTIFICATE OF SECRETARY
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
The undersigned, being duly elected Secretary of American Skandia Life Assurance
Corporation (the "Corporation"), does hereby certify that the annexed
Certificate of Incorporation of the Corporation, together with the annexed
amendments to such Certificate of Incorporation, are true and correct copies of
the originals, as are currently in full force and effect.
In witness whereof, the undersigned has executed this certificate this 25th day
of July, 1988.
/s/William J. Lazarou
William J. Lazarou
Secretary, American Skandia
Life Assurance Corporation
JTB 31.15
<PAGE>
HOUSE BILL NO. 5920.
SPECIAL ACT NO. 136
AN ACT CONCERNING THE INCORPORATION OF HARTFORD INSURANCE GROUP LIFE INSURANCE
COMPANY.
Be it enacted by the Senate and House of Representatives in General Assembly
convened:
SECTION 1. H.V. Williams, J.W. Clarke and D.C. Thomas, with such other persons
as may hereafter be associated with them, their successors and assigns forever,
are created a body politic and corporate by the name of Hartford Insurance Group
Life Insurance Company, with power under that name to sue and be sued; to plead
and be impleaded in the courts of this state and elsewhere; to adopt a common
seal and alter the same at pleasure; to purchase, acquire and hold both real and
personal property of every kind, and, to sell, grant, alien, invest, use and
dispose of the same for the purposes of the corporation; to make such bylaws and
regulations as may be deemed proper for the management of the affairs of the
corporation, and from time to time to amend the same; and generally to do and
cause to be done and executed all such acts as may seem necessary and proper
within the limitations herein contained. If any of said incorporators is, for
any reason, unable to act, the remaining incorporators are authorized to name a
successor to act in his place and stead.
SEC. 2. Said corporation may make insurance upon lives, may grant and issue
annuities, either in connection with or separate from contracts of insurance
predicated upon life risks, may issue policies stipulated to be with or without
participation in profits, may issue policies or certificates of insurance
against loss of life or personal injury resulting from any cause, and against
loss resulting from disease or accident, and against any other casualty or risk
which may be subject to life, accident or health insurance. Said corporation in
addition to the foregoing is authorized generally to do a life, accident and
health insurance business, and is authorized to insure against any and all
hazards against which life, accident and health insurance companies are on the
effective date of this act, or may thereafter at any time be, authorized to
insure by the laws of this state, or of any other state or territory of the
United States or foreign countries in which the company may be licensed to carry
on business. In addition to the foregoing powers, the purposes of said
corporation are all those permitted by the Stock Corporation Act and other
applicable laws of this state.
SEC. 3. (a) The capital with which said corporation shall commence business
shall not be less than two hundred and fifty thousand dollars and may, from time
to time, be increased when authorized by the stockholders to any sum not
exceeding in the whole twenty million dollars, and shall be divided into shares
of the par value of not less than one dollar each.
(b) The corporation, from time to time, may change the par value and number of
shares of its issued and outstanding capital stock, but no such change shall be
valid unless approved by a vote of at least two-thirds of the stock represented
at a meeting of the stockholders duly warned and held for that purpose nor
unless a majority of the directors shall make, sign and swear to and file in the
office of the secretary of the state a certificate stating that such change has
been duly approved by the stockholders and setting forth a copy of the vote of
the stockholders, which vote shall show the details of such change.
(c) The corporation may, from time to time, and to the amount of capital stock
authorized by its certificate of incorporation, issue shares of stock with the
same par value as its then outstanding capital stock. There shall be no
pre-emptive right to additional shares of stock issued by the corporation.
(d) The shares of the capital stock shall be subscribed and paid for at such sum
in cash per share, not less than par, as the incorporators shall prescribe, and
the subscribers therefor shall, at the time of subscription, pay to the
commissioners hereinafter named, for the use of the corporation, not less than
ten per cent of the par value thereof. The balance due upon such subscriptions
shall be paid to the corporation in such installments and at such times as the
directors shall determine, provided the entire capital stock to the amount of
not less than two hundred and fifty thousand dollars and a surplus of not less
than two hundred and fifty thousand dollars shall be paid in, in cash, before
said corporation shall commence business.
SEC. 4. The principal office of the corporation shall be located in the city of
Hartford, and the affairs of the corporation shall be managed by a board of not
fewer than nine directors. Such directors may be classified as to their terms of
office for terms established by the bylaws, provided no directors shall be
elected for a shorter term than one year nor for a longer term than five years,
and provided further the classification shall be such that the term of one or
more classes shall expire each succeeding year. The first meeting of the
subscribers shall be held at a time and place within the city of Hartford to be
appointed for that purpose by the commissioners hereinafter named, and written
notice of such meeting, stating the time and place thereof, shall be given by
the commissioners to each subscriber in person or by mail at least five days
before such meeting. At such meeting or at any adjournment thereof the
subscribers to the capital stock may adopt such bylaws, rules and regulations as
may be deemed proper for the regulation of the affairs of the corporation, and
shall elect by ballot not less than nine persons to serve as directors until the
first annual meeting and until others are chosen in their stead.
SEC. 5. The annual meetings of the corporation, after the first meeting as
aforesaid, shall be held at such time in each year and upon such notice as the
bylaws shall prescribe. If the corporation fails to hold its annual meeting at
the time specified for the same in any year, or fails to elect directors
thereat, the corporation shall not be dissolved nor its rights impaired thereby,
but a special meeting for that purpose shall be called by the president or by a
majority of the directors of said corporation in case of his refusal or neglect
so to do, and in case of the refusal of the president and of the directors to
call such meeting, such special meeting may be called by the holders of
one-tenth of the capital stock, upon the same notice as is required by the
bylaws for calling an annual meeting, and at such meeting, directors to fill the
places of the directors whose terms of office shall have expired may be elected.
SEC. 6. The directors shall determine how many of their number, not fewer than
five, shall constitute a quorum for the transaction of business, and may fill
any vacancy which may occur in the board between the annual meetings of the
stockholders, by choosing a director to act until the next annual meeting and
until a successor shall be chosen.
SEC. 7. The directors shall choose a president, a vice president, a treasurer
and one or more secretaries of the corporation, and may appoint such other
officers and authorize the employment or appointment of clerks, agents or other
employees or representatives and may authorize the establishment of such
agencies in this state and elsewhere as shall be deemed advisable for conducting
the business of the corporation, prescribe the duties and fix the compensation
of officers and employees and take bonds of any of them for the faithful
performance of his duty. The president shall be chosen from the directors, and
any officer or employee of the corporation may be displaced and a new one
appointed at the pleasure of the directors.
SEC. 8. The president shall have power at any time to call a special meeting of
stockholders, upon such notice as the bylaws shall prescribe, and he shall call
such special meeting when requested in writing by the holders of at least
one-tenth of the capital stock, and in case of his refusal or neglect to call a
meeting on such request, such stockholders may call the same.
SEC. 9. At all meetings of the stockholders all questions shall be determined by
a majority vote of those present, allowing one vote to each share, and
stockholders shall be entitled to vote in person or by proxies duly appointed.
SEC. 10. Subject to the approval of the insurance commissioner, said corporation
my enter into a merger or consolidation with one or more other insurance
companies organized within or without this state or acquire the assets thereof
by issuance of shares of its stock or otherwise, whether or not the charter of
such other company expressly so provides. The provisions of the general statutes
relating to the merger or consolidation of corporations, or relating to the
acquisition of assets of other corporations, shall apply to any such merger,
consolidation or acquisition of assets.
SEC. 11. To carry out the purposes of this act and to organize said corporation,
H.V. Williams, J.W. Clarke and D.C. Thomas are appointed commissioners to open
books of subscription and to receive subscriptions to the capital stock of said
corporation, to receive the first installment on such subscriptions, to close
the subscription books when the capital stock shall have been subscribed to the
full amount, not less than two hundred and fifty thousand dollars, with which
the incorporators shall have determined to commence business, and, if the
capital stock is oversubscribed, to apportion the same in their discretion among
the subscribers. When the capital stock has been so subscribed, said
commissioners, or a majority of them, shall call the first meeting of the
subscribers as provided in section 4 of this act for the purposes therein set
forth, and when the bylaws have been adopted and the directors chosen, and the
board of directors so chosen have been organized by the choice of a president
and a secretary, the commissioners shall pay over to the officers of the
corporation all moneys received by them upon subscriptions to the capital stock,
and said corporation shall thereupon be deemed to be fully organized. If any of
said commissioners is, for any reason, unable to act, the remaining
commissioners are authorized to name a successor or successors to act in his
place and stead.
SEC. 12. This charter shall be void unless said corporation shall be organized
and a certificate of such organization shall be executed and filed according to
law on or before October 3, 1971.
Certified as correct by
-----------------------------------------
Legislative Commissioner.
-----------------------------------------
Clerk of the Senate.
-----------------------------------------
Clerk of the House.
Approved May 21, 1969.
-----------------------------------------
Governor.
<PAGE>
FILED State of Connecticut
Jul 24 1969 - 8:30 AM
Ella T. Grasso Secretary of State By________
/s/_________
Card
List
Proof HN-LA
Day, Berry & Howard
1 Constitution Plaza
Hartford, Conn
/s/Michael Halloran
<PAGE>
CERTIFICATE AMENDING CERTIFICATE OF INCORPORATION
BY ACTION OF INCORPORATORS
1. The name of the corporation is Hartford Insurance Group Life Insurance
Company.
2. The Certificate of Incorporation is amended only by the following resolution
of incorporators:
RESOLVED: That subsections (a) and (d) of Section 3, Section 4,
Section 6, Section 9 and Section 11 of the Corporation's certificate of
incorporation, as that term is defined in the Connecticut Stock Corporation Act,
is amended to read as follows:
Section 3(a). The capital with which said Corporation shall
commence business shall be not less than two hundred and fifty thousand dollars
and may, from time to time, be increased when authorized by the stockholders to
any sum not exceeding in the whole twenty million dollars. The initial capital
stock of the Corporation shall consist of one hundred shares of Common Stock,
ten dollars par value per share, and twenty-four thousand nine hundred shares of
Non-Voting Common Stock, ten dollars par value per share, which Non-Voting
Common Stock shall be identical in all respects to the Common Stock of the
Corporation except that the Non-Voting Common Stock shall have no voting power
or right to notice of any meeting.
(d) The shares of the capital stock shall be subscribed and paid
for at such sum in cash per share, not less than par, as the incorporators shall
prescribe, and the subscribers therefor shall, at the time of subscription, pay
to the commissioners hereinafter named, for the use of the corporation, not less
than ten per cent of the par value thereof. The balance due upon such
subscriptions shall be paid to the corporation in such installments and at such
times as the directors shall determine, provided the entire capital stock to the
amount of not less than two hundred and fifty thousand dollars and a surplus of
not less than two hundred and fifty thousand dollars shall be paid in, in cash,
before said corporation shall commence any insurance business.
Section 4. The principal office of the corporation shall be
located in the city of Hartford, and the affairs of the corporation shall be
managed by a board of not fewer than three directors. Such directors may be
classified as to their terms of office for terms established by the by-laws,
provided no directors shall be elected for a shorter term than one year nor for
a longer term than five years, and provided further the classification shall be
such that the term of one or more classes shall expire each succeeding year. The
first meeting of the subscribers shall be held at a time and place within the
city of Hartford to be appointed for that purpose by the commissioners
hereinafter named, and written notice of such meeting, stating the time and
place thereof, shall be given by the commissioners to each subscriber in person
or by mail at least five days before such meeting. At such meeting or at any
adjournment thereof the subscribers to the capital stock may adopt such by-laws,
rules and regulations as may be deemed proper for the regulation of the affairs
of the corporation, and shall elect by ballot not less than three persons to
serve as directors until the first annual meeting and until others are chosen in
their stead.
Section 6. The directors shall determine how many of their
number, not fewer than two, shall constitute a quorum for the transaction of
business, and may fill any vacancy which may occur in the board between the
annual meetings of the stockholders, by choosing a director to act until the
next annual meeting and until a successor shall be chosen.
Section 9. At all meetings of the stockholders all questions
shall be determined by a majority vote of those present, allowing one vote to
each share of Common Stock, and stockholders shall be entitled to vote in person
or by proxies duly appointed.
Section 11. To carry out the purposes of this act and to
organize said corporation, H.V. Williams, J.W. Clarke and D.C. Thomas are
appointed commissioners to open books of subscription and to receive
subscriptions to the capital stock of said corporation, to receive the first
installment on such subscriptions, to close the subscription books when the
capital stock shall have been subscribed to the full amount, not less than two
hundred and fifty thousand dollars, with which the incorporators shall have
determined to commence any insurance business, and, if the capital stock is
oversubscribed, to apportion the same in their discretion among the subscribers.
When the capital stock has been so subscribed, said commissioners, or a majority
of them, shall call the first meeting of the subscribers as provided in section
4 of this act for the purpose therein set forth, and when the by-laws have been
adopted and the directors chosen, and the board of directors so chosen have been
organized by the choice of a president and a secretary, the commissioners shall
pay over to the officers of the corporation all moneys received by them upon
subscriptions to the capital stock, and said corporation shall thereupon be
deemed to be fully organized. If any of said commissioners is, for any reason,
unable to act, the remaining commissioners are authorized to name a successor or
successors to act in his place and stead.
3. There are no subscribers to the shares of the capital stock of the
Corporation and, as provided in Section 33-360(b)(1) of the Connecticut General
Statutes, as amended, the above resolution was adopted by vote of two-thirds of
the incorporators.
Dated at Hartford, Connecticut, this 23rd day of July, 1969.
------------------------------
/s/ H.V. Williams
------------------------------
/s/ D.C. Thomas
BEING TWO-THIRDS OF THE INCORPORATORS
STATE OF CONNECTICUT :
: ss. July 23, 1969
COUNTY OF HARTFORD :
Personally appeared H.V. Williams and D.C. Thomas and made oath to the
truth of the foregoing certificate by them signed, before me.
_/s/Michael Halloran
Notary Public
<PAGE>
FILED State of Connecticut
Jul 24 1969 - 8:30 AM
Ella T. Grasso Secretary of State
/s/________________
Card
List
Proof HN-LA
Day, Berry & Howard
1 Constitution Plaza
Hartford, Conn
/s/ Michael Halloran
<PAGE>
CERTIFICATE AMENDING CERTIFICATE OF INCORPORATION BY
ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
1. The name of the Corporation is Hartford Variable Annuity Life Insurance
Company.
2. The Certificate of Incorporation is amended only by the following Resolution
of Directors and Shareholders:
RESOLVED: That Subsection 3(a) of the Corporation's Certificate of
Incorporation is amended to increase the par value of the Corporation's shares
from sixty dollars ($60) to eighty dollars ($80) per share, as follows:
The capital stock of the Corporation shall consist of one hundred
(100) shares of Common Stock, eighty dollars ($80) par value per share, and
twenty-four thousand nine hundred (24,900) shares of Non-Voting Common Stock,
eighty dollars ($80) par value per share, which Non-Voting Common Stock shall be
identical in all respects to the Common Stock of the Corporation except that the
Non-Voting Common Stock shall have no voting power or right to notice of any
meeting.
3. The above Resolution was adopted by the Board of Directors and by the
Shareholders.
4. Vote of Shareholders:
No. of Shares Total Voting Vote Required Vote
Entitled to Power of Shares for Favoring
Vote Entitled to Vote Adoption Adoption
100 100 67 100
5. The number of affirmative votes of Directors required to adopt such
Resolution is 12. The number of Director votes in favor of the Resolution was
12.
Dated at Hartford, Connecticut this 30th day of September, 1980.
We hereby declare, under penalties of false statement, that the statements made
in the foregoing Certificate are true.
/s/ George H. Rieger /s/ William A. McMahon
Senior Vice President Secretary
State of Connecticut
Filed
Sep 30, 1980
Secretary of State
<PAGE>
Seal
STATE OF CONNECTICUT
INSURANCE DEPARTMENT
STATE OFFICE BUILDING HARTFORD, CONNECTICUT 06115
This Is to Certify, that HARTFORD VARIABLE ANNUITY LIFE INSIJRANCE COMPANY is
authorized to amend its Restated Certificate of incorporation by increasing
the par value of its shares of common capital stock to $100.00 each for a
total authorized capital of $2,500,000.00.
Witness my hand and official seal, at Hartford,
this 3rd day of August 1984
/s/
Insurance Commissioner
FILED
STATE OF CONNECTICUT
Aug - 3 1984
/s/
Secretary of the State
By /s/______3:00 P.M. F.F. $4.00
<PAGE>
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION By ACTION OF___INCORPORATORS
___BOARD OF DIRECTORS
__X BOARD OF DIRECTORS
AND SHAREHOLDERS
(Stock Corporation)
__BOARD OF DIRECTORS AND MEMBERS
(Nonstock Corporation)
STATE OF CONNECTICUT For office use only
SECRETARY OF STATE ACCOUNT NO.
INITIALS
1. Name of Corporation Date
Hartford Variable Annuity Life Insurance Company August 2, 1984
2. The Certificate of incorporation is X A AMENDED ONLY B. AMENDED AND RESTATED
C. RESTATED ONLY by the following resolution
RESOLVED, that Section 3 of the Corporation's Restated Certificate of
Incorporation be amended to read as follows:
"Section 3. The capital stock of the Corporation shall consist of one
hundred (100) shares of Common Stock, one hundred dollars ($100) par
value per share and twenty-four thousand nine hundred (24,900) shares
of Non-Voting Common Stock, one hundred dollars ($100) par value per
share, for a total authorized capital of two million five hundred
thousand dollars ($2,500,000). The Non-Voting Common Stock shall be
identical in all respects to the Common Stock of the Corporation
except that the Non-Voting Stock shall have no voting power or right
to notice of any meeting. There shall be no preemptive right to
additional shares of stock issued by the Corporation."
3. (Omit if 2 A is checked.)
(a) The above resolution merely restates and does not change the
provisions of the original Certificate of Incorporation as supplemented and
amended to date, except as follows: Indicate amendments made, if any, if more,
so indicate)
(b) Other than as indicated in Par. 3(a), there is no discrepancy
between the provisions of the original Certificate of Incorporation as
supplemented to date, and the provisions of the Certificate of Incorporation.
BY ACTION OF INCORPORATORS
__4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote if any)
<TABLE>
<CAPTION>
We (at least two-thirds of the incorporators) hereby declare, under the penalties of false statement that the statements made in
the foregoing certificate are true.
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
APPROVED
<TABLE>
<CAPTION>
(All subscribers, or if nonstock corporation, all applicants for membership entitled to vote, if none, so indicate)
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
<PAGE>
Continued
<TABLE>
<CAPTION>
BY ACTION OF BOARD OF DIRECTORS
<S> <C>
__4. (Omit if 2C is checked.) The above resolution was adopted by the board of directors acting alone,
__there being no shareholders or subscribers.
__the board of directors being so authorized pursuant to Section 33-341, Conn. G.S. as amended
__the corporation being a nonstock corporation and having no members and no applicants for membership entitled to vote on such
resolution.
</TABLE>
5. The number of affirmative votes required to adopt such resolution is:
6. The number of directors' votes in favor of the resolution was:
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
/s/
SIGNED (Secretary or Assistant Secretary)
/s/
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
X 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class) NUMBER OF
SHARES ENTITLED TO VOTE
100
TOTAL VOTING POWER
100
VOTE REQUIRED FOR ADOPTION
67
VOTE FAVORING ADOPTION
100
(b) (If shares of any class are entitled to vote as a class, indicate
the designation and number of outstanding shares of each such
class, the voting power thereof, and the vote of each such class
for the amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
Edward N. Bennett (Sr. Vice President)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
Robert C. Fischer (Secretary)
SIGNED (President or Vice President)
/s/Edward N. Bennett
SIGNED (Secretary or Assistant Secretary)
/s/Robert C, Fischer
BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
__4.The above resolution was adopted by the board of directors and by members.
5. Vote of members:
(a) (Use if no members are required to vote as a class.)
NUMBER OF MEMBERS VOTING
TOTAL VOTING POWER
VOTE REQURIED FOR ADOPTION
VOTE FAVORING ADOPTION
(b)(If the members of any class are entitled to vote as a class,
indicate the designation and number of members of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
FILED
STATE OF CONNECTICUT
8/3/84
/S/ secretary of State
SIGNED (President or Vice President)
/s/
SIGNED (SECRETARY OR ASSISTANT SECRETARY
/s/
FOR OFFICE USE ONLY
<PAGE>
FILING FEE
$30.00
CERTIFICATION FEE
$27
TOTAL FEES
$57
<PAGE>
SIGNED (For secretary of the State)
Rec to: sent 8/31
CERTIFIED COPY SENT ON (Date)
8/6/84 INITIALS /s/
TO
Hartford Variable Annuity Life Ins. Co.
Hartford Plaza, Hartford, Ct 06115
CARD LIST PROOF
FILED
STATE OF CONNECTICUT
AUG - 3 1984
/s/
SECRETARY OF THE STATE
By [ ]/s/ Time 3:00 P.M.
<PAGE>
FILED
STATE OF CONNECTICUT
Aug 4 1976
/s/ SECRETARY OF STATE
/s/ Time 9:50 A.M.
Hartford Variable Annuity Life Insurance of Connecticut
CERTIFICATE AMENDING CERTIFICATE OF
INCORPORATION BY ACTION OF BOARD
OF DIRECTORS AND SHAREHOLDERS
1. The name of the Corporation is Hartford Insurance Group Life Insurance
Company.
2. The Certificate of Incorporation is amended only by the following Resolution
of directors and shareholders:
RESOLVED: That Section 1, Subsections (b) and (d) of Section 3, and
Section 7 of the Corporation's Certificate of Incorporation are amended to read
as follows:
Section 1.H.V. Williams, J.W. Clarke and D.C. Thomas, with such other
persons as may hereafter be associated with them, their successors and assigns
forever, are created a body politic and corporate by the name of Hartford
Variable Annuity Life Insurance Company of Connecticut, with power under that
name to sue and be sued; to plead and be impleaded in the courts of this state
and elsewhere; to adopt a common seal and alter the same at pleasure; to
purchase, acquire and hold both real and personal property of every kind, and to
sell, grant, alien, invest, use and dispose of the same for the purposes of the
Corporation, and from time to time to amend the same; and generally to do and
cause to be done and executed all such acts as may seem necessary and proper
within the limitations herein contained. If any of said incorporators is, for
any reason, unable to act, the remaining incorporators are authorized to name a
successor to act in his place and stead.
Section 3(b). The Corporation, from time to time, may change the par value
and number of shares of its issued and outstanding capital stock, but no such
change shall be valid unless approved by a vote of at least two-thirds of the
stock represented at a meeting of the stockholders duly warned and held for that
purpose nor unless a certificate shall be sworn to and filed in the office of
the secretary of the state stating that such change has been duly approved by
the stockholders and setting forth a copy of the vote of the stockholders, which
vote shall show the details of such change.
Section 3(d). The shares of the capital stock shall be subscribed and paid
for at such sum in cash per share, not less than par, as the incorporators shall
prescribe, and the subscribers therefor shall, at the time of subscription, pay
to the commissioners hereinafter named, for the use of the Corporation, not less
than ten percent of the par value thereof. The balance due upon such
subscriptions shall be paid to the Corporation in such installments and at such
times as the directors shall determine, provided the entire capital stock to the
amount of not less than two hundred and fifty thousand dollars shall be paid in,
in cash, before said Corporation shall commence any insurance business.
Section 7.The directors shall choose a president, a vice president, a
treasurer and one or more secretaries of the Corporation and may appoint such
other officers and authorize the employment or appointment of clerks, agents or
other employees or representatives and may authorize the establishment of such
agencies in this state and elsewhere as shall be deemed advisable for conducting
the business of the Corporation, prescribe the duties and fix the compensation
of officers and employees and take bonds of any of them for the faithful
performance of his duty. Any officer or employee of the Corporation may be
displaced and a new one appointed at the pleasure of the directors.
3. The above Resolution was adopted by the Board of Directors and by the
shareholders.
4. Vote of Shareholders:
No. of Shares Total Voting Vote Required Vote
Entitled to Power of Shares for Favoring
Vote Entitled to Vote Adoption Adoption
100 100 67 100
5. The number of affirmative votes of Directors required to adopt such
Resolution is two (2). The number of Directors votes in favor of the Resolution
was three (3).
Dated at Hartford, Connecticut this 2nd day of August, 1976.
We hereby declare, under penalties of false statement, that the statements made
in the foregoing Certificate are true.
/s/ Robert R. Baird s/s Michael O'Halloran
Vice President Assistant Secretary
[ ] to: The Hartford
Htfd Plaza, Htfd 06115
Attn: Michael O'Halloran, Esq.
<PAGE>
FILED
STATE OF CONNECTICUT
AUG 31 1976
/s/_____SECRETARY OF STATE By
/s/_________Time 4:00P.M.
Hartford Variable Annuity Life Insurance Company of
Connecticut
CERTIFICATE OF MERGER
of
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY, INC.
and
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
1. The name of the surviving Corporation in the merger is HARTFORD VARIABLE
ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT.
2. The Plan of Merger is as attached hereto.
3. The Plan of Merger was adopted by the merging Corporations in the following
manner:
(a) The Plan was approved by resolution adopted by the Board of Directors
of each merging Corporation.
(b) Vote of Shareholders:
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY, INC.
(A Delaware Corporation)
No. of Shares Total Voting Vote Required Vote
Entitled to Power of Shares for Favoring
Vote Entitled to Vote Adoption Adoption
350 350 176 350
Common Shares
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
(A Connecticut Corporation)
No. of Shares Total Voting Vote Required Vote
Entitled to Power of Shares for Favoring
Vote Entitled to Vote Adoption Adoption
100 100 67 100
Voting Common
Shares
Dated at Hartford, Connecticut this 31st day of August, 1976.
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing Certificate, insofar as they pertain to Hartford Variable
Annuity Life Insurance Company of Connecticut, are true.
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
(Surviving Corporation)
By /s/Robert R. Baird /s/Michael O'Halloran
Vice President Assistant Secretary
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing Certificate, insofar as they pertain to Hartford Variable
Annuity Life Insurance Company, Inc., are true.
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY, INC.
(Terminating Corporation)
By /s/Robert R. Baird By /s/Michael O'Halloran
Vice President Assistant Secretary
<PAGE>
AGREEMENT AND ARTICLES OF MERGER
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY, INC.
(A Delaware Corporation)
and
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
(A Connecticut Corporation)
THIS AGREEMENT AND ARTICLES OF MERGER (hereinafter referred to as "Agreement")
made and entered into this 23rd day of August, 1976, by and between HARTFORD
VARIABLE ANNUITY LIFE INSURANCE COMPANY, INC. (hereinafter "HVA-Delaware"), a
stock insurance company incorporated and existing under the laws of the State of
Delaware and having its registered office in Wilmington, Delaware and its
principal place of business in Hartford, Connecticut; and HARTFORD VARIABLE
ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT (hereinafter "HVA-Connecticut" or
"the Surviving Corporation"), a stock insurance company incorporated and
existing under the laws of the State of Connecticut and having its principal
place of business in Hartford, Connecticut; HVA-Delaware and HVA-Connecticut are
sometimes hereinafter referred to as "the Constituent Corporations".
WITNESSETH:
WHEREAS, HVA-Connecticut has authorized, issued and outstanding, capital stock
consisting of One Hundred (100) shares of voting common stock, $10 par value per
share, and of Twenty-Four Thousand Nine Hundred (24,900) shares of non-voting
common stock, $10 par value per share; and HVA-Delaware has issued and
outstanding Three Hundred Fifty (350) shares of common stock, $1,000 par value
per share, and is authorized to issue Two Thousand (2,000) shares of said common
stock; and Hartford Life Insurance Company, a Connecticut corporation, owns all
of the aforesaid issued and outstanding shares of HVA-Connecticut and
HVA-Delaware; and
WHEREAS, the Boards of Directors of the Constituent Corporations have decreed it
in the best interests of the corporations and their shareholders that the
domicile of HVA-Delaware be transferred from the State of Delaware to the State
of Connecticut, and that such change of domicile be accomplished by a merger of
HVA-Delaware into HVA-Connecticut, pursuant to the applicable laws of the States
of Delaware and Connecticut; and that as a result of said merger HVA-Connecticut
will be the Surviving Corporation and each holder of each share of the common
stock of HVA-Connecticut shall be deemed to hold one identical share of the
common stock of the Surviving Corporation and all shares of capital stock of
HVA-Delaware shall be canceled; and
WHEREAS, the intent of this Agreement is to accomplish the aforementioned
purposes;
NOW, THEREFORE, in consideration of the promises and of the mutual provisions,
agreements, covenants, conditions and grants herein contained, HVA-Connecticut
and HVA-Delaware, by their respective Boards of Directors and in accordance with
the applicable provisions of the laws of the State of Delaware and Connecticut
have agreed and do hereby agree, each with the other, as follows:
FIRST: Merger. On the effective date of the merger (as defined in Article
SIXTH, Paragraph 2 of this Agreement), HVA-Delaware shall be merged, pursuant to
the General Corporation Law of the State of Delaware and the Connecticut General
Statutes, into and with HVA-Connecticut, and HVA-Connecticut on such date shall
merge HVA-Delaware with and into itself. HVA-Connecticut shall be the
corporation which survives such merger, and HVA-Connecticut, as Surviving
Corporation, shall continue and be deemed to continue for all purposes
whatsoever after the merger of HVA-Delaware with and into itself.
SECOND: Jurisdiction and Name. The Surviving Corporation shall be
governed by the laws of the State of Connecticut and its name shall be Hartford
Variable Annuity Life Insurance Company of Connecticut.
THIRD: Certificate of Incorporation and By-Laws. From and after the
effective date of the merger, the Certificate of Incorporation and By-Laws of
the Surviving Corporation shall be the Certificate of Incorporation and By-Laws
of HVA-Connecticut as constituted on the effective date of the merger. A true
and exact copy of said Certificate of Incorporation is attached hereto as
Exhibit "A".
FOURTH: Board of Directors of the Surviving Corporation. The initial Board
of Directors of the Surviving Corporation upon the effective date of the merger,
and thereafter until a regular or special meeting of stockholders called for the
purpose of electing Directors, shall consist of the following persons:
William A. McMahon 124 Ridgewood Road
West Hartford, Connecticut
Michael O'Halloran 105 Sherbrooke Avenue
Hartford, Connecticut
Michael S. Wilder 3 Rocklyn Drive
West Simsbury, Connecticut
In addition, the officers of the Surviving Corporation shall be the officers of
HVA-Connecticut immediately prior to the effective date of the merger.
FIFTH: Conversion of Securities on Merger. The manner of converting the
shares of the Constituent Corporations into shares of the Surviving Corporation
shall be as follows:
1. Each share of voting common stock and each share of non-voting common
stock of HVA-Connecticut issued and outstanding on the effective date of the
merger and all rights in respect thereof shall be, immediately upon the
effective date of the merger and without further action, deemed to be one
identical share of the common stock of the Surviving Corporation.
2. Each share of common stock of HVA-Delaware issued and outstanding on
the effective date of merger and all rights in respect thereof shall be,
immediately upon the effective date of the merger, and without further action,
canceled as of that date.
SIXTH: Effective Date and Effects of Merger.
1. This Agreement is expressly conditioned and contingent upon its
adoption and approval by (a) the stockholders of the Constituent Corporations,
and (b) the Insurance Commissioners of the States of Delaware and Connecticut,
and of other appropriate governmental regulatory agencies. The officers and
directors of the Constituent Corporations agree to do and perform each and every
act and to execute and acknowledge all documents of every character required to
obtain the adoption and approval of said stockholders and governmental agencies;
and agree to do and perform each and every act and to execute and acknowledge
all documents of every character required to make the merger effective under the
General Corporation Law and Insurance Code of the State of Delaware, and the
Connecticut General Statutes.
2. Upon the performance of the conditions and the happening of the
contingencies set forth in subparagraph 1 of this Article SIXTH, this Agreement
shall be filed in the manner required by the Insurance Code of the State of
Delaware and the General Corporation Law of the State of Delaware. The merger
shall become effective and the effective date of the merger for purposes of
Delaware Law shall be, and hereby is defined to mean, the date on which the
Secretary of State shall approve this Agreement and Articles of Merger and shall
issue a certificate as provided by 18 Del. C. 4941. On the same or the following
day, an executed counterpart of this Agreement and Articles of Merger shall be
filed in the office of the Secretary of State of the State of Connecticut in the
manner required by the Connecticut General Statutes. The merger shall become
effective and the effective date of the merger for purposes of Connecticut law
shall be, and is hereby defined to mean, 12:01 a.m. on the first day of the
month following such filing in the State of Connecticut.
3. Except as herein otherwise specifically set forth, as of the effective
date, the identity, existence, purposes, powers, assets, franchises, property
rights and immunities of HVA-Connecticut shall continue unimpaired and
unaffected by the merger; and the corporate identity, existence, purposes,
powers, assets, property rights and immunities of HVA-Delaware, including real
and personal and tangible and intangible assets of whatsoever character and
wherever located, and including all separate accounts of HVA-Delaware, shall
become the assets of HVA-Connecticut, and shall be merged into HVA-Connecticut,
and pursuant to any and all applicable laws, HVA-Connecticut shall be fully
vested therewith. Likewise, as of the effective date, HVA-Connecticut, as the
Surviving Corporation, shall assume and shall be liable and responsible for any
and all of the legal liabilities and legal obligations of HVA-Delaware,
including, without limitation, all liabilities for taxes, all liabilities under
insurance contracts theretofore issued or then on binder, and all other legal
liabilities and obligations of HVA-Delaware. The existence of HVA-Delaware,
except insofar as it may be continued by statute, shall cease on the effective
date and thereupon, HVA-Connecticut and HVA-Delaware shall become a single
corporation, namely HVA-Connecticut. The Surviving Corporation shall continue as
a stock insurance company, and shall have the objects and purposes stated in its
Certificate of Incorporation, and in general terms shall have the power and
authority to transact any business which HVA-Delaware was empowered and
authorized to transact prior to the merger.
4. HVA-Delaware shall from time to time execute and deliver or cause to be
executed and delivered all such deeds or other instruments, and shall take or
cause to be taken such further or other action, as the Surviving Corporation may
deem necessary or desirable in order to vest in and confirm to the Surviving
Corporation title to and possession of all of the aforesaid rights, privileges,
powers and franchises and property, and otherwise to carry out the intent and
purpose of this Agreement.
5. Prior to the effective date, the Board of Directors of HVA-Connecticut
shall adopt a resolution to be effective as of the effective date of the merger,
providing that such separate account or accounts as may be established and
maintained by HVA-Delaware at the time of the merger shall be deemed to be
separate accounts of the Surviving Corporation pursuant to the provisions of
Connecticut law and that the existence of such separate account or accounts
shall continue uninterrupted.
SEVENTH: Voidability and Abandonment. Anything herein contained to the
contrary notwithstanding, this Agreement of Merger, at any time prior to the
effective date of the merger, may be terminated and abandoned by the mutual
consent of the Board of Directors of each of the Constituent Corporations.
EIGHT: Connecticut Registered Agent. The name and address of the
registered agent in the State of Connecticut of HVA-Connecticut are Michael S.
Wilder, The Hartford, Hartford Plaza, Hartford, Connecticut 06115. The principal
office of the Surviving Corporation shall be in the City of Hartford, County of
Hartford, State of Connecticut.
NINTH: Right to Amend Certificate of Incorporation. The Surviving
Corporation reserves the right to amend, alter, change or repeal its Certificate
of Incorporation in the manner now or hereafter prescribed by Connecticut law,
and all rights and powers conferred therein on stockholders, directors and
officers are subject to this reserved power.
TENTH: Expenses of Merger. The Surviving Corporation shall pay all
expenses of carrying the Agreement of Merger into effect and accomplishing the
merger herein provided for; provided, however, that in the event the merger
herein provided for shall not be effectuated for any reason, each of the
Constituent Corporations shall assume and bear all expenses incurred by or
attributable to it. No director or officer of either of the Constituent
Corporations or of any parent corporation or subsidiary insurer, shall receive
any fee, commission, other compensation or valuable consideration whatever other
than regular salary, directly or indirectly, for in any manner aiding, promoting
or assisting in the merger.
ELEVENTH: Service in Delaware Upon Surviving Corporation. The Surviving
Corporation agrees that it may be served with process in the State of Delaware
in any proceeding for enforcement of any obligation of HVA-Delaware as well as
for any obligation of the Surviving Corporation arising from the merger,
including any suit or other proceeding to enforce the right of any stockholder
as determined in appraisal proceedings pursuant to the provisions of Section 262
of the General Corporation Law of the State of Delaware, and hereby irrevocably
appoints the Secretary of State of the State of Delaware as its agent to accept
service of process in any such suit or other proceeding. The address to which a
copy of such process shall be mailed by the Secretary of State of the State of
Delaware is: Hartford Variable Annuity Life Insurance Company of Connecticut,
Hartford Plaza, Hartford, Connecticut 06115.
TWELFTH: Descriptive Headings. The descriptive headings of the several
Articles and paragraphs of the Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
THIRTEENTH: Counterparts. For the convenience of the parties and to
facilitate the filing or recording of the Agreement, any number of counterparts
hereof may be executed and each such executed counterpart shall be deemed to be
an original instrument.
IN WITNESS WHEREOF, the Constituent Corporations have caused this
Agreement and Articles of Merger to be signed in their respective corporate
names by their respective Presidents or Vice Presidents and their corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
HARTFORD VARIABLE ANNUITY LIFE
INSURANCE COMPANY, INC.
By: /s/George H. Rieger
President
[SEAL] Attest: /s/Michael O'Halloran
Assistant Secretary
Approved by the Directors of Hartford Variable Annuity Life Insurance
Company, Inc. by unanimous consent at Hartford, Connecticut this 23rd day of
August, 1976.
HARTFORD VARIABLE ANNUITY LIFE
INSURANCE COMPANY OF CONNECTICUT
By: /s/George H. Rieger
President
[SEAL] Attest: /s/Michael O'Halloran
Assistant Secretary
Approved by the Directors of Hartford Variable Annuity Life Insurance
Company of Connecticut by unanimous consent at Hartford, Connecticut this 23rd
day of August, 1976.
<PAGE>
CERTIFICATE RESTATING THE CERTIFICATE
OF INCORPORATION BY ACTION OF
BOARD OF DIRECTORS
1. The name of the Corporation is Hartford Variable Annuity Life Insurance
Company of Connecticut.
2. The Certificate of Incorporation is restated only by the following Resolution
of the Board of Directors acting alone:
RESOLVED: That the Restated Certificate of Incorporation, as supplemented
and amended to date, is restated only to read as follows:
Section 1.H.V. Williams, J.W. Clarke and D.C. Thomas, with such other
persons as may hereafter be associated with them, their successors and assigns
forever, are created a body politic and corporate by the name of Hartford
Variable Annuity Life Insurance Company of Connecticut, with power under that
name to sue and be sued; to plead and be impleaded in the courts of this state
and elsewhere; to adopt a common seal and alter the same at pleasure; to
purchase, acquire and hold both real and personal property of every kind, and to
sell, grant, alien, invest, use and dispose of the same for the purposes of the
Corporation, and from time to time to amend the same; and generally to do and
cause to be done and executed all such acts as may seem necessary and proper
within the limitations herein contained. If any of said incorporators is, for
any reason, unable to act, the remaining incorporators are authorized to name a
successor to act in his place and stead.
Section 2.Said Corporation may make insurance upon lives, may grant and
issue annuities, either in connection with or separate from contracts of
insurance predicated upon life risks, may issue policies stipulated to be with
or without participation in profits, may issue policies or certificates of
insurance against loss of life or personal injury resulting from any cause, and
against loss resulting from disease or accident, and against any other casualty
or risk which may be subject to life, accident or health insurance. Said
Corporation in addition to the foregoing is authorized generally to do a life,
accident and health insurance business, and is authorized to insure against any
and all hazards against which life, accident and health insurance companies are
on the effective date of this act, or may thereafter at any time be, authorized
to insure by the laws of this state, or of any other state or territory of the
United States or foreign countries in which the company may be licensed to carry
on business. In addition to the foregoing powers, the purposes of said
Corporation are all those permitted by the Stock Corporation Act and other
applicable laws of this state.
Section 3(a). The capital with which said Corporation shall commence
business shall be not less than two hundred and fifty thousand dollars and may,
from time to time, be increased when authorized by the stockholders to any sum
not exceeding in the whole twenty million dollars. The initial capital stock of
the Corporation shall consist of one hundred shares of Common Stock, ten dollars
par value per share, and twenty-four thousand nine hundred shares of Non-Voting
Common Stock, ten dollars par value per share, which Non-Voting Common Stock
shall be identical in all respects to the Common Stock of the Corporation except
that the Non-Voting Common Stock shall have no voting power or right to notice
of any meeting.
Section 3(b). The Corporation, from time to time, may change the par value
and number of shares of its issued and outstanding capital stock, but no such
change shall be valid unless approved by a vote of at least two-thirds of the
stock represented at a meeting of the stockholders duly warned and held for that
purpose nor unless a certificate shall be sworn to and filed in the office of
the secretary of the state stating that such change has been duly approved by
the stockholders and setting forth a copy of the vote of the stockholders, which
vote shall show the details of such change.
Section 3(c). The Corporation may, from time to time, and to the amount of
capital stock authorized by its Certificate of Incorporation, issue shares of
stock with the same par value as its then outstanding capital stock. There shall
be no pre-emptive right to additional shares of stock issued by the Corporation.
Section 3(d). The shares of the capital stock shall be subscribed and paid
for at such sum in cash per share, not less than par, as the incorporators shall
prescribe, and the subscribers therefor shall, at the time of subscription, pay
to the commissioners hereinafter named, for the use of the Corporation, not less
than ten percent of the par value thereof. The balance due upon such
subscriptions shall be paid to the Corporation in such installments and at such
times as the directors shall determine, provided the entire capital stock to the
amount of not less than two hundred and fifty thousand dollars shall be paid in,
in cash, before said Corporation shall commence any insurance business.
Section 4.The principal office of the Corporation shall be located in the
City of Hartford, and the affairs of the Corporation shall be managed by a Board
of not fewer than three directors. Such directors may be classified as to their
terms of office for terms established by the By-Laws, provided no directors
shall be elected for a shorter term than one year nor for a longer term than
five years, and provided further the classification shall be such that the term
of one or more classes shall expire each succeeding year. The first meeting of
the subscribers shall be held at a time and place within the City of Hartford to
be appointed for that purpose by the commissioners hereinafter named, and
written notice of such meeting, stating the time and place thereof, shall be
given by the commissioners to each subscriber in person or by mail at least five
days before such meeting. At such meeting or at any adjournment thereof the
subscribers to the capital stock may adopt such By-Laws, rules and regulations
as may be deemed proper for the regulation of the affairs of the Corporation,
and shall elect by ballot not less than three persons to serve as directors
until the first annual meeting and until others are chosen in their stead.
Section 5.The annual meetings of the Corporation, after the first meeting
as aforesaid, shall be held at such time in each year and upon such notice as
the By-Laws shall prescribe. If the Corporation fails to hold its annual meeting
at the time specified for the same in any year, or fails to elect directors
thereat, the Corporation shall not be dissolved nor its rights impaired thereby,
but a special meeting for that purpose shall be called by the president or by a
majority of the directors of said Corporation in case of his refusal or neglect
so to do, and in case of the refusal of the president and of the directors to
call such meeting, such special meeting may be called by the holders of
one-tenth of the capital stock, upon the same notice as is required by the
By-Laws for calling an annual meeting, and at such meeting, directors to fill
the places of the directors whose terms of office shall have expired may be
elected.
Section 6.The directors shall determine how many of their number, not
fewer than two, shall constitute a quorum for the transaction of business, and
may fill any vacancy which may occur in the Board between the annual meetings of
the stockholders, by choosing a director to act until the next annual meeting
and until a successor shall be chosen.
Section 7.The directors shall choose a president, a vice president, a
treasurer and one or more secretaries of the Corporation and may appoint such
other officers and authorize the employment or appointment of clerks, agents or
other employees or representatives and may authorize the establishment of such
agencies in this state and elsewhere as shall be deemed advisable for conducting
the business of the Corporation, prescribe the duties and fix the compensation
of officers and employees and take bonds of any of them for the faithful
performance of his duty. Any officer or employee of the Corporation may be
displaced and a new one appointed at the pleasure of the directors.
Section 8.The president shall have power at any time to call a special
meeting of stockholders, upon such notice as the By-Laws shall prescribe, and he
shall call such special meeting when requested in writing by the holders of at
least one-tenth of the capital stock, and in case of his refusal or neglect to
call a meeting on such request, such stockholders may call the same.
Section 9.At all meetings of the stockholder, all questions shall be
determined by a majority vote of those present, allowing one vote to each share
of Common Stock, and stockholders shall be entitled to vote in person or by
proxies duly appointed.
Section 10. Subject to the approval of the insurance commissioner, said
Corporation may enter into a merger or consolidation with one or more other
insurance companies organized within or without this state or acquire the assets
thereof by issuance of shares of its stock or otherwise, whether or not the
charter of such other company expressly so provides. The provisions of the
general statutes relating to the merger or consolidation of corporations, shall
apply to any such merger, consolidation or acquisition of assets.
Section 11. To carry out the purposes of this act and to organize said
Corporation, H.V. Williams, J.W. Clarke and D.C. Thomas are appointed
commissioners to open books of subscription and to receive subscriptions to the
capital stock of said Corporation, to receive the first installment on such
subscriptions, to close the subscription books when the capital stock shall have
been subscribed to the full amount, not less than two hundred and fifty thousand
dollars, with which the incorporators shall have determined to commence any
insurance business, and, if the capital stock is oversubscribed, to apportion
the same in their discretion among the subscribers. When the capital stock has
been so subscribed, said commissioners, or a majority of them, shall call the
first meeting of the subscribers as provided in Section 4 of this act for the
purposes therein set forth, and when the By-Laws have been adopted and the
directors chosen, and the Board of Directors so chosen have been organized by
the choice of a president and a secretary, the commissioners shall pay over to
the officers of the Corporation all moneys received by them upon subscriptions
to the capital stock, and said Corporation shall thereupon be deemed to be fully
organized. If any of said commissioners is, for any reason, unable to act, the
remaining commissioners are authorized to name a successor or successors to act
in his place and stead.
Section 12. This charter shall be void unless said Corporation shall be
organized and a certificate of such organization shall be executed and filed
according to law on or before October 3, 1971.
3. (a) The above Resolution merely restates and does not change the provisions
of the original Certificate of Incorporation as amended to date.
(b) Other than as indicated in Paragraph 3(a), there is no discrepancy
between the provisions of the original Certificate of Incorporation as
supplemented and amended to date and the provisions of this Certificate
Restating the Certificate of Incorporation.
4. The number of affirmative votes required to adopt such Resolution is two (2).
5. The number of directors' votes in favor of the Resolution was three (3).
Dated at Hartford, Connecticut this 2nd day of August, 1976.
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing Certificate are true.
/s/Robert R. Baird /s/Michael O'Halloran
Vice President Assistant Secretary
FILED
STATE OF CONNECTICUT
AUG 4 1976
/s/_________SECRETARY OF STATE
By /s/______Time 9:55 A.M.
<PAGE>
CERTIFICATE AMENDING CERTIFICATE OF INCORPORATION BY
ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
1. The name of the Corporation is Hartford Variable Annuity Life Insurance
Company of Connecticut.
2. The Certificate of Incorporation is amended only by the following Resolution
of Directors and Shareholders:
RESOLVED: That Subsection 3(a) of the Corporation's Certificate of
Incorporation is amended to increase the par value of the Corporation's shares
from ten dollars ($10) to sixty dollars ($60) per share, as follows:
The capital with which said Corporation shall commence business shall
be not less than two hundred and fifty thousand dollars ($250,000) and may, from
time to time, be increased when authorized by the stockholders to any sum not
exceeding in the whole twenty million dollars ($20,000,000). The capital stock
of the Corporation shall consist of one hundred (100) shares of Common Stock,
sixty dollars ($60) par value per share, and twenty-four thousand nine hundred
(24,900) shares of Non-Voting Common Stock, sixty dollars ($60) par value per
share, which Non-Voting Common Stock shall be identical in all respects to the
Common Stock of the Corporation except that the Non-Voting Common Stock shall
have no voting power or right to notice of any meeting.
3. The above Resolution was adopted by the Board of Directors and by the
Shareholders.
4. Vote of Shareholders:
No. of Shares Total Voting Vote Required Vote
Entitled to Power of Shares for Favoring
Vote Entitled to Vote Adoption Adoption
100 100 67 100
5. The number of affirmative votes of Directors required to adopt such
Resolution is two (2). The number of Director votes in favor of the Resolution
was three (3).
Dated at Hartford, Connecticut this 30th day of December, 1976.
We hereby declare, under penalties of false statement, that the statements made
in the foregoing Certificate are true.
/s/George H. Rieger /s/Michael O'Halloran
President Assistant Secretary
<PAGE>
seal STATE OF CONNECTICUT
INSURANCE DEPARTMENT
STATE OFFICE BUILDINGHARTFORD, CONNECTICUT 06115
This is to Certify, that the name change of the Hartford Variable Annuity Life
Insurance Company to Skandia Life Assurance Corporation of America is approved.
Witness my hand and official seal, at Hartford,
this 6th day of June 1988
/s/________
Insurance Commissioner
FILED
STATE OF CONNECTICUT
JUN 10 1988
/s/__________
SECRETARY OF THE STATE
/s/______-time 12:00 P.M.
F.F. 4
Form 2
<PAGE>
STATE OF CONNECTICUT
INSURANCE DEPARTMENT
STATE OFFICE BUILDING - HARTFORD, CONNECTICUT 06115
This is to Certify, that the name change of the Hartford Variable Annuity Life
Insurance Company to Skandia Life Assurance Corporation of America is approved.
FILED
STATE OF CONNECTICUT
June ______ 1988
/s/ Secretary of State
Witness my hand and official
seal, at Hartford. This 6th day
of June _____ 1988.
/s/ Insurance Commissioner
<PAGE>
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION
By action of ___INCORPORATORS
___BOARD OF DIRECTORS
XX BOARD OF DIRECTORS
AND SHAREHOLDERS
(Stock Corporation)
___BOARD OF DIRECTORS
AND MEMBERS
(Nonstock Corporation)
For office use only
Account No.
20.00
Initials
STATE OF CONNECTICUT
SECRETARY OF THE STATE
1. NAME OF CORPORATION DATE
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY May 27, 1988
2. The Certificate of incorporation is XX A. AMENDED ONLY
___B. AMENDED AND RESTATED
___C. RESTATED ONLY
by the following resolution
Resolved Article "1" of the Certificate of Incorporation of this corporation be
and it hereby is amended to read in its entirety:
"1. The name of the corporation is: Skandia Life Assurance Corporation
of America."
3. (Omit if 2A is checked)
(a)The above resolution merely restates and does not change the provisions
of the original Certificate of Incorporation as supplemented and amended
to date, except as follows: (Indicate amendments made, if any, if none,
so indicate)
(b) Other than as indicated in Par. 3(a), there is no discrepancy between
the provisions of the original Certificate of Incorporation as supplemented to
date, and the provisions of this Certificate Restating the Certificate of
Incorporation.
BY ACTION OF INCORPORATORS
__4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote if any)
<TABLE>
<CAPTION>
We (at least two-thirds of the incorporators) hereby declare, under the penalties of false statement that the statements made in
the foregoing certificate are true.
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
APPROVED
<TABLE>
<CAPTION>
(All subscribers, or, if nonstock corporation, all applicants for membership entitled to vote, if none, so indicate)
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
<PAGE>
Continued
<TABLE>
<CAPTION>
BY ACTION OF BOARD OF DIRECTORS
<S> <C>
__4. (Omit if 2C is checked.) The above resolution was adopted by the board of directors acting alone,
__there being no shareholders or subscribers.
__the board of directors being so authorized pursuant to Section 33-341, Conn. G.S. as amended
__the corporation being a nonstock corporation and having no members and no applicants for membership entitled to vote on such
resolution.
</TABLE>
5. The number of affirmative votes required to adopt such resolution is:
6. The number of directors' votes in favor of the resolution was:
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (SECRETARY OR ASSISTANT SECRETARY)
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
X 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class) NUMBER OF
SHARES ENTITLED TO VOTE
100
TOTAL VOTING POWER
100
VOTE REQUIRED FOR ADOPTION
67
VOTE FAVORING ADOPTION
100
(b) (If shares of any class are entitled to vote as a class, indicate
the designation and number of outstanding shares of each such
class, the voting power thereof, and the vote of each such class
for the amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
Jon H. Nicholson, Vice President
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
William J. Lazarou, Secretary
SIGNED (President or Vice President)
/s/Jon H. Nicholson
SIGNED (Secretary or Assistant Secretary)
/s/William J. Lazarou
BY ACTION OF BOARD OF DIECTORS AND MEMBERS
__ 4.The above resolution was adopted by the board of directors and by members.
5. Vote of members:
(a) (Use is no members are required to vote as a class.)
NUMBER OF MEMBERS VOTING
TOTAL VOTING POWER
VOTE REQURIED FOR ADOPTION
VOTE FAVORING ADOPTION
(b)(If the members of any class are entitled to vote as a class,
indicate the designation and number of members of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (Secretary or Assistant Secretary)
FOR OFFICE USE ONLY
FILING FEE
$30.
CERTIFICATION FEE
$27 (3CC's)
TOTAL FEES
$137
<PAGE>
SIGNED (For secretary of the State)
Rec3CC's
CERTIFIED COPY SENT ON (Date)
TO
CARD
REC & 3CC'S
P/u 6/7/88 11:00
Prentice Hall Corp Services
1 Gulf & Western Plaza
New York, NY 10023
LIST
PROOF
INFOSEARCH WILL PICK UP
FILED
STATE OF CONNECTICUT
Jun 6 12:00 PM '88
<PAGE>
seal STATE OF CONNECTICUT
INSURANCE DEPARTMENT
STATE OFFICE BUILDINGHARTFORD, CONNECTICUT 06115
This is to Certify, that the name change of the Skandia Life Assurance
Corporation of America to America Skandia Life Assurance Corporation is
approved..
Witness my hand and official seal, at Hartford,
this 26th day of July 1988
/s/________
Acting Insurance Commissioner
FILED
STATE OF CONNECTICUT
JUL 26 1988
/s/__________
SECRETARY OF THE STATE
/s/______-time 3:00 P.M.
F.F. 4
Form 2
<PAGE>
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION
By action of ___INCORPORATORS
___BOARD OF DIRECTORS
XX BOARD OF DIRECTORS
AND SHAREHOLDERS
(Stock Corporation)
___BOARD OF DIRECTORS
AND MEMBERS
(Nonstock Corporation)
For office use only
Account No.
Initials
STATE OF CONNECTICUT
SECRETARY OF THE STATE
1. NAME OF CORPORATION DATE
SKANDIA LIFE ASSURANCE CORPORATION OF AMERICA July 18, 1988
2. The Certificate of incorporation is XX A. AMENDED ONLY
___B. AMENDED AND RESTATED
___C. RESTATED ONLY
by the following resolution
Resolved Article "1" of the Certificate of Incorporation of the corporation be
and it hereby is amended to read in its entirety:
"1. The name of the corporation is: American Skandia Life
Assurance Corporation of America."
3. (Omit if 2A is checked)
(a)The above resolution merely restates and does not change the provisions
of the original Certificate of Incorporation as supplemented and amended
to date, except as follows: (Indicate amendments made, if any, if none,
so indicate)
(b) Other than as indicated in Par. 3(a), there is no discrepancy between
the provisions of the original Certificate of Incorporation as supplemented to
date, and the provisions of this Certificate Restating the Certificate of
Incorporation.
BY ACTION OF INCORPORATORS
__4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote if any)
<TABLE>
<CAPTION>
We (at least two-thirds of the incorporators) hereby declare, under the penalties of false statement that the statements made in
the foregoing certificate are true.
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
APPROVED
<TABLE>
<CAPTION>
(All subscribers, or, if nonstock corporation, all applicants for membership entitled to vote, if none, so indicate)
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
<PAGE>
Continued
<TABLE>
<CAPTION>
BY ACTION OF BOARD OF DIRECTORS
<S> <C>
__4. (Omit if 2C is checked.) The above resolution was adopted by the board of directors acting alone,
__there being no shareholders or subscribers.
__the board of directors being so authorized pursuant to Section 33-341, Conn. G.S. as amended
__the corporation being a nonstock corporation and having no members and no applicants for membership entitled to vote on such
resolution.
</TABLE>
5. The number of affirmative votes required to adopt such resolution is:
6. The number of directors' votes in favor of the resolution was:
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (SECRETARY OR ASSISTANT SECRETARY
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
X 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class) NUMBER OF
SHARES ENTITLED TO VOTE
100
TOTAL VOTING POWER
100
VOTE REQUIRED FOR ADOPTION
67
VOTE FAVORING ADOPTION
100
(b) (If shares of any class are entitled to vote as a class, indicate
the designation and number of outstanding shares of each such
class, the voting power thereof, and the vote of each such class
for the amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
Jon H. Nicholson, Vice President
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
William J. Lazarou, Secretary
SIGNED (President or Vice President)
/s/Jon H. Nicholson
SIGNED (Secretary or Assistant Secretary)
/s/William J. Lazarou
BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
__ 4.The above resolution was adopted by the board of directors and by members.
5. Vote of members:
(a) (Use if no members are required to vote as a class.)
NUMBER OF MEMBERS VOTING
TOTAL VOTING POWER
VOTE REQUIRED FOR ADOPTION
VOTE FAVORING ADOPTION
(b)(If the members of any class are entitled to vote as a class,
indicate the designation and number of members of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (Secretary or Assistant Secretary)
FOR OFFICE USE ONLY
FILED
STATE OF CONNECTICUT
/s/ Secretary of State
<PAGE>
FILING FEE
$30.
CERTIFICATION FEE
$10
TOTAL FEES
$80
<PAGE>
SIGNED (For secretary of the State)
Rec & CC's sent 3:00PM 7/26/88 (260001A)
CERTIFIED COPY SENT ON (Date)
TO
Infosearch
30 High St.
Hartford, Ct
CARD
LIST
PROOF
FILED
STATE OF CONNECTICUT
Jul 26 3:00PM
<PAGE>
CERTIFICATE OF MERGER
of
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY
and
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
1. The name of the surviving Corporation in the merger is HARTFORD VARIABLE
ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT.
2. The Plan of Merger is an attached hereto. The effective date thereof is May
1, 1977.
3. The Plan of Merger was adopted by the merging Corporations in the following
manner.
(a) The Plan was approved by resolution adopted by the Board of Directors
of each merging Corporation.
(b) Vote of shareholders:
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY
(A South Carolina Corporation)
No. of Shares Total Voting Vote Required Vote
Entitled to Power of Shares for Favoring
Vote Entitled to Vote Adoption Adoption
15,000 Common 15,000 7,501 15,000
10,000 Preferred 10,000 6,667 10,000
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
(A Connecticut Corporation)
No. of Shares Total Voting Vote Required Vote
Entitled to Power of Shares for Favoring
Vote Entitled to Vote Adoption Adoption
100 100 67 100
Dated at Hartford, Connecticut this 27th day of April, 1977.
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing Certificate, insofar as they pertain to Hartford Variable
Annuity Life Insurance Company of Connecticut, are true.
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
(Surviving Corporation)
By /s/Robert R. Baird /s/Michael O'Halloran
Vice President Assistant Secretary
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing Certificate, insofar as they pertain to Hartford Variable
Annuity Life Insurance Company, are true.
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY
(Terminating Corporation)
By /s/Robert R. Baird /s/Michael S. Wilder
Vice President Secretary
FILED
STATE OF CONNECTICUT
APR 29 1977
/s/_________SECRETARY OF STATE
By /s/________Time 8:50 A.M.
$20. filing
17.CC
.42 SC
.42 overpayment
$37.84 Total
<PAGE>
AGREEMENT OF MERGER
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY
(A South Carolina Corporation)
and
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT
(A Connecticut Corporation)
THIS AGREEMENT OF MERGER (hereinafter referred to as "Agreement") made and
entered into this 1st day of March, 1977, by and between HARTFORD VARIABLE
ANNUITY LIFE INSURANCE COMPANY (hereinafter "HVA-South Carolina"), a stock
insurance company incorporated and existing under the laws of the State of South
Carolina and having its place of business in Hartford, Connecticut; and HARTFORD
VARIABLE ANNUITY LIFE INSURANCE COMPANY OF CONNECTICUT (hereinafter
"HVA-Connecticut" or the "Surviving Corporation"), a stock insurance company
incorporated and existing under the laws of the State of Connecticut and having
its principal place of business in Hartford, Connecticut; HVA-South Carolina and
HVA-Connecticut are sometimes hereinafter referred to as "The Constituent
Corporations".
WITNESSETH:
WHEREAS, HVA-Connecticut has authorized, issued and outstanding capital stock
consisting of One Hundred (100) shares of voting common stock, $60 par value per
share, and of Twenty-Four Thousand Nine Hundred (24,900) shares of non-voting
common stock, $60 par value per share; and HVA-South Carolina has issued and
outstanding Fifteen Thousand (15,000) shares of common stock, $100 par value per
share, and of Ten Thousand (10,000) shares of preferred stock, $1 par value per
share; and
WHEREAS, Hartford Life Insurance Company, a Massachusetts corporation, owns all
of the aforesaid issued and outstanding shares of HVA-South Carolina and
HVA-South Carolina owns all of the aforesaid issued and outstanding shares of
HVA-Connecticut; and
WHEREAS, the Boards of Directors of the Constituent Corporations have decreed it
in the best interests of the corporations and their shareholders that the
domicile of HVA-South Carolina be transferred from the State of South Carolina
to the State of Connecticut, and that such change of domicile be accomplished by
a merger of HVA-South Carolina into HVA-Connecticut, pursuant to the applicable
laws of the States of South Carolina and Connecticut; and that as a result of
said merger HVA-Connecticut will be the Surviving Corporation and each holder of
each share of the common stock of HVA-South Carolina shall be deemed to hold the
shares of the common stock of the Surviving Corporation and all shares of
capital stock of HVA-South Carolina shall be canceled; and
WHEREAS, the intent of this Agreement is to accomplish the aforementioned
purposes:
NOW, THEREFORE, in consideration of the promises and of the mutual provisions,
agreements, covenants, conditions and grants herein contained, HVA-Connecticut
and HVA-South Carolina, by their respective Boards of Directors and in
accordance with the applicable provisions of the laws of the State of South
Carolina and Connecticut have agreed and do hereby agree, each with the other,
as follows:
FIRST: Merger. On the effective date of the merger (as defined in Article SIXTH,
Paragraph 2 of this Agreement), HVA-South Carolina shall be merged, pursuant to
the South Carolina Business Corporation Act of 1962 and the Connecticut General
Statutes, into and with HVA-Connecticut, and HVA-Connecticut on such date shall
merge HVA-South Carolina with and into itself. HVA-Connecticut shall be the
corporation which survives such merger, and HVA-Connecticut, as Surviving
Corporation, shall continue and be deemed to continue for all purposes
whatsoever after the merger of HVA-South Carolina with and into itself.
SECOND: Jurisdiction and Name. The Surviving Corporation shall be governed by
the laws of the State of Connecticut and its name shall be Hartford Variable
Annuity Life Insurance Company.
THIRD: Certificate of Incorporation and By-Laws. From and after the effective
date of the merger, the Certificate of Incorporation and By-Laws of the
Surviving Corporation shall be the Certificate of Incorporation and By-Laws of
HVA-Connecticut as constituted on the effective date of the merger except that
the name of the Surviving Corporation shall be Hartford Variable Annuity Life
Insurance Company.
FOURTH: Board of Directors of the Surviving Corporation. The initial Board of
Directors of the Surviving Corporation upon the effective date of the merger,
and thereafter until a regular or special meeting of stockholders called for the
purpose of electing Directors, shall consist of the following persons:
Harry V. Williams Raoul J. Grandpre
Herbert P. Schoen Robert R. Baird
DeRoy C. Thomas Howard T. Cohn
William M. Griffin George H. Rieger
Raymond H. Deck Dean L. Hones
Robert B. Goode, Jr. Donald R. Sondergeld
In addition, the officers of the Surviving Corporation shall be the officers of
HVA-South Carolina immediately prior to the effective date of the merger.
FIFTH: Conversion of Securities on Merger. The manner of converting the shares
of the Constituent Corporations into shares of the Surviving Corporation shall
be as follows:
1. Each share of voting common stock and each share of non-voting common stock
of HVA-Connecticut issued and outstanding on the effective date of the merger
and all rights in respect thereof shall be, immediately upon the effective date
of the merger and without further action, deemed to be one identical share of
the common stock of the Surviving Corporation to be owned by the holder of the
shares of HVA-South Carolina.
2. Each share of common stock of HVA-South Carolina issued and outstanding on
the effective date of merger and all rights in respect thereof shall be,
immediately upon the effective date of the merger, and without further action,
canceled as of that date.
SIXTH: Effective Date and Effects of Merger.
1. This Agreement is expressly conditioned and contingent upon its adoption and
approval by (a) the stockholders of the Constituent Corporations, (b) a majority
of the variable annuity contract owners of the HVA-South Carolina Separate
Account, and (c) the Insurance Commissioners of the States of South Carolina and
Connecticut, and of other appropriate governmental regulatory agencies. The
officers and directors of the Constituent Corporations agree to do and perform
each and every act and to execute and acknowledge all documents of every
character required to obtain the adoption and approval of said stockholders and
governmental agencies; and agree to do and perform each and every act and to
execute and acknowledge all documents of every character required to make the
merger effective under the General Corporation Law and Insurance Code of the
State of South Carolina, and the Connecticut General Statutes.
2. Upon the performance of the conditions and the happening of the contingencies
set forth in subparagraph 1 of this Article SIXTH the effective date of the
merger shall be, and is hereby defined to mean, 12:01 a.m. on such date as the
directors of both Constituent Corporations shall adopt by resolution, provided
that the effective date will in no event be later than January 1, 1978.
3. Except as herein otherwise specifically set forth, as of the effective date,
the identity, existence, purposes, powers, assets, franchises, property rights
and immunities of HVA-South Carolina, including real and personal and tangible
and intangible assets of whatsoever character and wherever located, and
including all separate accounts of HVA-South Carolina, shall become the assets
of HVA-Connecticut, and shall be merged into HVA-Connecticut, and pursuant to
any and all applicable laws, HVA-Connecticut shall be fully vested therewith.
Likewise, as of the effective date, HVA-Connecticut, as the Surviving
Corporation, shall assume and shall be liable and responsible for any and all of
the legal liabilities and legal obligations of HVA-South Carolina then
outstanding, including, without limitation, all liabilities for taxes, all
liabilities under insurance contracts theretofore issued or then on binder, and
all other legal liabilities and obligations of HVA-South Carolina. The existence
of HVA-South Carolina, except insofar as it may be continued by statute, shall
cease on the effective date and thereupon, HVA-Connecticut and HVA-South
Carolina shall become a single corporation. The Surviving Corporation shall
continue as a stock insurance company, and shall have the objects and purposes
stated in its Certificate of Incorporation, and in general terms shall have the
power and authority to transact any business which HVA-South Carolina was
empowered and authorized to transact prior to the merger.
4. HVA-South Carolina shall from time to time execute and deliver or cause to be
executed and delivered all such deeds or other instruments, and shall take or
cause to be taken such further or other action, as the Surviving Corporation may
deem necessary or desirable in order to vest in and confirm to the Surviving
Corporation title to and possession of all of the aforesaid rights, privileges,
powers and franchises and property, and otherwise to carry out the intent and
purpose of this Agreement.
SEVENTH: Voidability and Abandonment. Anything herein contained to the contrary
notwithstanding, this Agreement of Merger, at any time prior to the effective
date of the merger, may be terminated and abandoned by the mutual consent of the
Board of Directors of each of the Constituent Corporations.
EIGHTH: Connecticut Registered Agent. The name and address of the registered
agent in the State of Connecticut of HVA-Connecticut are Michael S. Wilder, The
Hartford, Hartford Plaza, Hartford, Connecticut 06115. The principal office of
the Surviving Corporation shall be in the City of Hartford, County of Hartford,
State of Connecticut.
NINTH: Right to Amend Certificate of Incorporation. The Surviving Corporation
reserves the right to amend, alter, change or repeal its Certificate of
Incorporation in the manner now or hereafter prescribed by Connecticut law, and
all rights and powers conferred therein on stockholders, directors and officers
are subject to this reserved power.
TENTH: Expenses of Merger. The Surviving Corporation shall pay all expenses of
carrying the Agreement of Merger into effect and accomplishing the merger herein
provided for; provided, however, that in the event the merger herein provided
for shall not be effectuated for any reason, each of the Constituent
Corporations shall assume and bear all expenses incurred by or attributable to
it. No director or officer of either of the Constituent Corporations or of any
parent corporation or subsidiary insurer, shall receive any fee, commission,
other compensation or valuable consideration whatever other than regular salary,
directly or indirectly, for in any manner aiding, promoting or assisting in the
merger.
ELEVENTH: Service in South Carolina Upon Surviving Corporation. The Surviving
Corporation agrees that it may be served with process in the State of South
Carolina in any proceeding for enforcement of any obligation of HVA-South
Carolina as well as for any obligation of the Surviving Corporation arising from
the merger, including any suit or other proceeding to enforce the right of any
stockholder as determined in appraisal proceedings pursuant to the provisions of
South Carolina Business Corporation Act and hereby irrevocably appoints the
Secretary of State of the State of South Carolina as its agent to accept service
of process in any such suit or other proceeding. The address to which a copy of
such process shall be mailed by the Secretary of State of the State of South
Carolina is: Hartford Variable Annuity Life Insurance Company, Hartford Plaza,
Hartford, Connecticut 06115.
TWELFTH: Descriptive Headings. The descriptive headings of the several Articles
and paragraphs of the Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
THIRTEENTH: Counterparts. For the convenience of the parties and to facilitate
the filing or recording of the Agreement, any number of counterparts hereof may
be executed and each such executed counterpart shall be deemed to be an original
instrument.
IN WITNESS WHEREOF, the Constituent Corporations have caused this Agreement of
Merger to be signed in their respective corporate names by their respective
Presidents or Vice Presidents and their corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY
ATTEST:
/s/Michael S. Wilder By /s/George H. Rieger
Senior Vice President
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY
OF CONNECTICUT
ATTEST:
/s/Michael O'Halloran By /s/George H. Rieger
President
<PAGE>
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION
By action of ___INCORPORATORS
___BOARD OF DIRECTORS
XX BOARD OF DIRECTORS
AND SHAREHOLDERS
(Stock Corporation)
___BOARD OF DIRECTORS
AND MEMBERS
(Nonstock Corporation)
For office use only
Account No.
Initials
STATE OF CONNECTICUT
SECRETARY OF THE STATE
1. NAME OF CORPORATION DATE
Hartford Variable Annuity Life Insurance Company November 10, 1981
2. The Certificate of incorporation is A. AMENDED ONLY
XX B. AMENDED AND RESTATED
___C. RESTATED ONLY
by the following resolution
See attached Restated Certificate of Incorporation
3. (Omit if 2A is checked)
(a)The above resolution merely restates and does not change the provisions
of the original Certificate of Incorporation as supplemented and amended
to date, except as follows: (Indicate amendments made, if any, if none,
so indicate)
(b) Other than as indicated in Par. 3(a), there is no discrepancy between
the provisions of the original Certificate of Incorporation as supplemented to
date, and the provisions of this Certificate Restating the Certificate of
Incorporation.
BY ACTION OF INCORPORATORS
__4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote if any)
<TABLE>
<CAPTION>
We (at least two-thirds of the incorporators) hereby declare, under the penalties of false statement that the statements made in
the foregoing certificate are true.
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
APPROVED
<TABLE>
<CAPTION>
(All subscribers, or if nonstock corporation, all applicants for membership entitled to vote, if none, so indicate)
<S> <C> <C>
SIGNED SIGNED SIGNED
</TABLE>
<PAGE>
Continued
<TABLE>
<CAPTION>
BY ACTION OF BOARD OF DIRECTORS
<S> <C>
__4. (Omit if 2C is checked.) The above resolution was adopted by the board of directors acting alone,
__there being no shareholders or subscribers.
__the board of directors being so authorized pursuant to Section 33-341, Conn. G.S. as amended
__the corporation being a nonstock corporation and having no members and no applicants for membership entitled to vote on such
resolution.
</TABLE>
5. The number of affirmative votes required to adopt such resolution is:
6. The number of directors' votes in favor of the resolution was:
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (SECRETARY OR ASSISTANT SECRETARY)
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
X 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class) NUMBER OF
SHARES ENTITLED TO VOTE
100
TOTAL VOTING POWER
100
VOTE REQUIRED FOR ADOPTION
67
VOTE FAVORING ADOPTION
100
(b) (If shares of any class are entitled to vote as a class, indicate
the designation and number of outstanding shares of each such
class, the voting power thereof, and the vote of each such class
for the amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT Executive Vice President and Chief Operating
Officer(Print or Type)
Robert B. Goode, Jr. President
NAME OF SECRETARY OR ASSISTANT SECRETARY General Counsel and Secretary (Print or
Type)
SIGNED (President or Vice President)
/s/Robert B. Goode, Jr
SIGNED (SECRETARY OR ASSISTANT SECRETARY
/s/William A. McMahon, Secretary
BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
__ 4.The above resolution was adopted by the board of directors and by members.
5. Vote of members:
(a) (Use if no members are required to vote as a class.)
NUMBER OF MEMBERS VOTING
TOTAL VOTING POWER
VOTE REQURIED FOR ADOPTION
VOTE FAVORING ADOPTION
(b)(If the members of any class are entitled to vote as a class ,
indicate the designation and number of members of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
SIGNED (President or Vice President)
SIGNED (SECRETARY OR ASSISTANT SECRETARY)
FOR OFFICE USE ONLY
FILING FEE
$30.
CERTIFICATION FEE
$12.50
TOTAL FEES
$42.50
SIGNED (For secretary of the State)
12-14-81 L. M.
CERTIFIED COPY SENT ON (Date) INITIALS
REC
12/17
TO
Htfd Insurance Co.
Htfd Plaza, Htfd Ct. 06115
CARD
LIST
PROOF
FILED
STATE OF CONNCTICUT
DEC 9 1981
Barbara B. Kannelly
SECRETARY OF STATE
By /s/ LM Time 11:45 A.M.
<PAGE>
Question 3
1) Section 1 is amended to read "The name of the corporation is Hartford
Variable Annuity Life Insurance Company" and it shall have all the powers
granted by general statutes, as now enacted or hereinafter amended, to
corporations under the Stock Corporation Act.
2) The following sentence has been added to the end of Section 3:
"There shall be no preemptive right to additional shares. of stock issued by the
corporation."
3) Sections 3(b)-(d) are deleted.
4) Section 4 is deleted.
5) Section 5 is deleted.
6) Section 6 is deleted.
7) Section 7 is deleted.
8) Section 8 is deleted.
9) Section 9 is deleted.
10) Section 10 is deleted.
11) Section 11 is deleted.
12) Section 12 is deleted.
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY
This Restricted Certificate of Incorporation gives effect to amendments of
the Certificate of Incorporation and otherwise purports merely to restate those
provisions already in effect. This Restated Certificate of Incorporation has
been adopted by vote of the Board of Directors and Shareholders.
Section 1.The name of the corporation is Hartford Variable Annuity Life
Insurance Company and it shall have all the powers granted by general statutes,
as now enacted or hereinafter amended, to corporations under the Stock
Corporation Act.
Section 2.Said Corporation may make insurance upon lives, may grant and
issue annuities, either in connection with or separate from contracts of
insurance predicated upon life risks, may issue policies stipulated to be with
or without participation in profits, may issue policies or certificates of
insurance against loss of life or personal injury resulting from any cause, and
against loss resulting from disease or accident, and against any other casualty
or risk which may be subject to life, accident or health insurance. Said
Corporation in addition to the foregoing is authorized generally to do a life,
accident and health insurance business, and is authorized to insure against any
and all hazards against which life, accident and health insurance companies are
on the effective date of this act, or may thereafter at any time be, authorized
to insure by the laws of this state, or of any other state or territory of the
United States or foreign countries in which the company may be licensed to carry
on business. In addition to the foregoing powers, the purposes of said
Corporation are all those permitted by the Stock Corporation Act and other
applicable laws of this state.
Section 3.The capital with which said Corporation shall commence business
shall be not less than two hundred and fifty thousand dollars ($250,000) and
may, from time to time, be increased when authorized by the stockholders to any
sum not exceeding in the whole twenty million dollars ($20,000,000). The capital
stock of the Corporation shall consist of one hundred (100) shares of Common
Stock, eighty dollars ($80) par value per share, and twenty-four thousand nine
hundred (24,900) shares of Non-Voting Common Stock, eighty dollars ($80) par
value per share, which Non-Voting Common Stock shall be identical in all respect
to the Common Stock of the Corporation except that the Non-Voting Common Stock
shall have no voting power or right to notice of any meeting. There shall be no
preemptive right to additional shares of stock issued by the corporation.
We hereby declare, under the penalties of false statement that the statements
made in the foregoing Certificate are true.
Date: November 10, 1981 Hartford Variable Annuity Life
Insurance Company
By: Robert B. Goode, Jr.
Executive Vice President and
Chief Operating Officer
Attest:
William A. McMahon
General Counsel and Secretary
3453D/47D
<PAGE>
CERTIFICATE OF ORGANIZATION
OF HARTFORD INSURANCE GROUP LIFE INSURANCE COMPANY
THIS IS TO that at Hartford, Connecticut on the 23rd day of July, 1969,
H.V. Williams and [ ], being a majority of the persons authorized to [ ]
Hartford Insurance Group Life Insurance Company as a corporation under Special
Act No. 136 passed by the January, [ ] session of the General Assembly of the
State of Connecticut and approved May 21, 1969, incorporating the Hartford
Insurance Group Life Insurance Company located in the city of Hartford, took all
action required by the terms and provisions of [ ] Special Act and the General
Statutes of the State of Connecticut to duly effect the organization as a
corporation of Hartford Insurance Group Life Insurance Company.
We hereby declare, under the penalty of perjury, that the statements
made in the foregoing certificate are true. Dated at New York, N.Y., this 19th
day of August, 1969.
/s/
Vice President
/s/
Assistant Secretary
BY-LAWS
OF
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
<PAGE>
TABLE OF CONTENTS
BY-LAWS
OF
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
<TABLE>
<CAPTION>
Page
<S> <C>
Article I - Offices ....................................................................1
Article II - Meetings and Action of Shareholders .......................................1
Section 1. Annual Meetings..............................................1
Section 2. Special Meetings.............................................2
Section 3. Place of Meetings............................................2
Section 4. Notice of Meetings...........................................2
Section 5. Quorum.......................................................3
Section 6. Proxies; Voting..............................................4
Section 7. Selection of Inspectors of Election..........................6
Section 8. Business Transacted..........................................6
Section 9. Action Without Meeting.......................................7
Section 10. Annual Statement.............................................7
Article III - Board of Directors........................................................8
Section 1. Number, Election, Qualification
and Term of Office........................................8
Section 2. Duties and Powers............................................8
Section 3. Annual and Regular Meeting; Notice...........................9
Section 4. Special Meetings; Notice.....................................10
Section 5. Chairman of the Board and
Chief Executive Officer...................................11
Section 6. Quorum and Adjournments......................................11
Section 7. Manner of Acting.............................................12
Section 8. Vacancies....................................................12
Section 9. Resignation..................................................13
Section 10. Removal......................................................13
Section 11. Compensation.................................................13
Section 12. Contracts....................................................14
Section 13. Committees...................................................15
Section 14. Subcommittees................................................16
Article IV - Waiver of Notice...........................................................17
Section 1. Waiver of Notice.............................................17
Article V - Certain Restrictions........................................................17
Section 1. Issuance of Shares...........................................17
Article VI - Officers .............................................................18
Section 1. Number, Qualifications, Election
and Term of Office........................................18
Section 2. Resignation..................................................19
Section 3. Removal......................................................19
Section 4. Vacancies....................................................19
Section 5. Chief Executive Officer......................................20
Section 6. President....................................................20
Section 7. Vice Presidents..............................................21
Section 8. Secretary....................................................22
Section 9. Treasurer....................................................22
Section 10. Controller...................................................23
Section 11. Actuary......................................................24
Section 12. Shares of Other Corporations.................................24
Article VII - Shares of Stock...........................................................24
Section 1. Certificate of Stock.........................................24
Section 2. Lost or Destroyed Certificates...............................25
Section 3. Transfers of Shares..........................................26
Section 4. Record Date..................................................27
Article VIII - Dividends .............................................................28
Section 1. When Declared................................................28
Section 2. Payment......................................................28
Article IX - Checks, Notes and Depositaries.............................................29
Section 1. Execution of Instruments.....................................29
Section 2. Instruments..................................................29
Section 3. Depositaries.................................................29
Article X - Fiscal Year .............................................................30
Article XI - Financial Statements and Audit.............................................30
Section 1. Annual Statement and Reports.................................30
Section 2. Independent Public Accounts..................................30
Article XII - Corporate Seal............................................................31
Article XIII - Indemnification..........................................................31
Section 1. Proceedings Other Than by or in
the Right of the Corporation..............................31
Section 2. Proceedings by or in the Right
of the Corporation........................................33
Section 3. Determination of the Right of
Indemnification...........................................34
Section 4. Advances of Expenses.........................................34
Section 5. Right to Indemnification Upon
Application; Procedure Upon
Application...............................................35
Section 6. Types of Indemnification
Consistent with Statutory
Rights and Remedies.......................................37
Section 7. Insurance....................................................37
Section 8. Constituent Corporations.....................................38
Section 9. Other Enterprises, Fines, and
Serving at Corporation's Request..........................39
Section 10. Savings Clause...............................................39
Article XIV - Amendments 40
Section 1. By Shareholders..............................................40
Section 2. By Directors.................................................40
Article XV - Effective Date of By-Laws..................................................41
</TABLE>
<PAGE>
BY - LAWS
OF
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
ARTICLE I - OFFICES
The principal office of Skandia Life American Corporation (the "Corporation")
shall be located in the State of Connecticut. The Corporation may also maintain
offices at such other places within or without the State as the Board of
Directors may determine from time to time.
ARTICLE II - MEETINGS AND ACTIONS
OF SHAREHOLDERS
SECTION 1. Annual Meetings.
The first annual meeting of the shareholders of the Corporation for the election
of directors and for the transaction of such other business as may properly come
before said meeting, being the annual meeting for the year 1988, shall be held
on the third Tuesday of February, 1988, and thereafter the annual meeting of
shareholders of the Corporation shall be held on the third Tuesday of February
of each succeeding year or on such other date as the Board of Directors may
determine, at such time and place as shall be designated by the Board of
Directors and stated in the notice of such annual meeting.
SECTION 2. Special Meetings.
Special Meetings of the shareholders may be called at any time by the Board of
Directors or by the Chief Executive Officer and shall be called by the President
or the Secretary at the written request of holders of not less than ten percent
(10%) of the shares then outstanding and entitled to vote thereat, or as
otherwise required under the provisions of the Connecticut Stock Corporation Act
and the Insurance Law.
SECTION 3. Place of Meetings.
All Meetings of shareholders shall be held at the principal office of the
Corporation, or at such other place within or without the State of Connecticut
as shall be established by resolution of the Board of Directors and designated
in the notices or waivers of any notice of such meetings.
SECTION 4. Notice of Meetings.
(A) Written notice of each meeting of shareholders, whether annual or special,
stating the time when and place where it is to be held, shall be served either
personally or by mail, not less than seven (7) or more than fifty (50) days
before the meeting, upon each shareholder of record entitled to vote at such
meeting, and to any other shareholder to whom the giving of notice may be
required by law. Notice of a special meeting shall also state the purpose for
which the meeting is called, and shall indicate that it is being issued by, or
at the direction of, the person or persons calling the meeting. If mailed, such
notice shall be directed to each such shareholder at his address, as it appears
on the records of the shareholders of the Corporation, unless he shall have
previously filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which case, it
shall be mailed to the address designated in such request.
(B) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by law.
SECTION 5. Quorum.
(A) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any shareholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(B) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called if a quorum
had been present.
SECTION 6. Proxies; Voting.
(A) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors, to be
taken by vote of the shareholders shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(B) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(C) Each shareholder entitled to vote or to express consent or dissent without a
meeting may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the persons executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
(D) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same force and effect as if the same had been duly
passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.
SECTION 7. Selection of Inspectors of Election.
In advance of any meeting of the shareholders, the Board of Directors may
appoint one or more inspectors to act at the meeting or any adjournment thereof.
If inspectors are not so appointed, the person presiding at a meeting of the
shareholders may, and on request of any shareholder shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy may
be filled by appointment made by the Board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at the meeting with strict impartiality and according to the
best of his ability.
SECTION 8. Business Transacted.
At the annual meeting, directors shall be elected and such other business
transacted as may be properly brought before the meeting. At any special
meeting, no business shall be transacted other than that specified in the notice
of such meeting unless all shareholders entitled to notice thereof consent to
the transaction of such business.
SECTION 9. Action Without Meeting.
Any action, including an election of directors, required or permitted to be
taken at a meeting of shareholders may be taken without a meeting if all the
shareholders consent thereto in writing.
Except in the election of directors, any action required or permitted to be
taken at a meeting of shareholders may be taken without a meeting upon the
written consent of less than all the shareholders entitled to vote thereon if
the shareholders who so consent would be entitled to cast at least the minimum
number of votes which would be required to take such action at a meeting of
shareholders. If such action by written consent of less than all shareholders is
proposed to be taken, as herein authorized, notice in writing of such proposed
action shall be given to each shareholder of the corporation. Such notice shall
be given in the manner of giving notice of a meeting of shareholders not less
than twenty days and not more than fifty days before the date that any such
consent is to become effective.
SECTION 10. Annual Statement.
The Board of Directors shall present at each annual meeting, and at any special
meeting of the shareholders when called for by a vote of the shareholders a full
and clear statement of the business and financial condition of the Corporation.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. Number, Election, Qualification and Term of Office.
(A) The members of the Board of Directors of the Corporation need not be
shareholders and shall be elected to their terms as set forth herein by a
majority of the votes cast at a shareholder's meeting by the holders of shares
entitled to vote in such election. The Board of Directors shall consist of not
less than three (3) persons nor more than fifteen (15) persons as may be decided
from time to time by vote of the shareholder(s). No decrease in said Board of
Directors shall shorten the term of any incumbent director. Each director shall
be at least eighteen (18) years of age.
(B) At each annual meeting, the successors to the directors whose terms expire
in that year shall be elected for the term of one (1) year.
SECTION 2. Duties and Powers.
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.
SECTION 3. Annual and Regular Meetings; Notice.
(A) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.
(B) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.
(C) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such an
action was taken within the time limited, and in the manner set forth, in
paragraph (B) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (C) of such Section 4.
SECTION 4. Special Meetings; Notice.
(A) Special meetings of the Board of Directors may be called by the Chairman of
the Board, or the President, and shall be called by the Secretary when directed
to do so by a writing signed by at least a majority of the directors, at such
time and place as may be specified in the respective notices or waivers of
notice thereof.
(B) Notice of special meetings shall be mailed directly to each director,
addressed to him at his residence or usual place of business, at least two (2)
days before the day on which the meeting is to be held, or shall be sent to him
at such place by telegram, telex, telefax radio or cable, or shall be delivered
to him personally or given to him orally, not later than the day before the day
on which the meeting is to be held. A notice, or waiver of notice, except as
required by Article IV, need not specify the purpose of the meeting.
(C) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting, prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
SECTION 5. Chairman of the Board and Chief Executive Officer.
The Chairman of the Board may be elected from among the members of the Board of
Directors. The Chairman of the Board shall also be the Chief Executive Officer.
At all meetings of the Board of Directors, the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
SECTION 6. Quorum and Adjournments.
(A) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws. Participation of any one or more members
of the Board by means of a conference telephone or similar communications
equipment, allowing all persons participating in the meeting to hear each other
at the same time, shall constitute presence in person at any such meeting.
(B) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.
SECTION 7. Manner of Acting.
(A) At meetings of the Board of Directors, each director present shall have one
vote, irrespective of the number of shares of stock, if any, which he may hold.
(B) Except as otherwise provided by statute, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors. If all the directors severally or collectively consent in writing
to any action taken or to be taken by the Corporation, and the number of
directors constitutes a quorum for such action, such action shall be as valid
corporate action as though it had been authorized at a meeting of the Board of
Directors.
SECTION 8. Vacancies.
Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless a vacancy created by the removal of a director by the
shareholders shall be filled by the shareholders at the meeting at which the
removal had been effected) or inability to act of any director, or otherwise,
shall be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
SECTION 9. Resignation.
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such written resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 10. Removal.
Any director may be removed with or without cause at any time by the
shareholders, at a special meeting of the shareholders called for that purpose,
and may be removed for cause by action of the Board of Directors.
SECTION 11. Compensation.
No stated compensation shall be paid to directors, as such, for their services,
but by resolution of the Board of Directors, a fixed sum and expense of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board of Directors or a Committee thereof; provided, however,
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 12. Contracts.
(A) No contract or other transaction between the Corporation and any other
corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way be reason of the fact that any one or more of the directors
of the Corporation is or are interested in, or is a director of officer or are
directors or officers of, such other corporation, provided that such facts are
disclosed or made known to the Board of Directors and the contract is not unfair
as to the Corporation.
(B) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of the Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest is disclosed or made known to the Board of Directors and the
contract or transaction is not unfair as to the Corporation, and provided that
the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
be construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
(C) All contracts and transactions under this Section 12 shall be governed by
Section 33-323 of the Connecticut Stock Corporation Act.
SECTION 13. Committees.
(A) The Board of Directors, by resolution adopted by a majority of the entire
Board, may from time to time designate from among its members an Executive
Committee and such other Committees, and alternate members thereof, as they deem
advisable, each consisting of two or more members with such powers and authority
(to the extent permitted by law) as may be provided in such resolution. Each
such Committee shall serve at the pleasure of the Board. At all meetings of a
Committee, a majority of the members shall constitute a quorum for the
transaction of business, except as otherwise provided by such said resolution or
by these By-laws. Participation of any one or more members of the Committee by
means of a conference telephone or similar communications equipment allowing all
the persons participating in the meeting to hear each other at the same time
shall constitute presence in person at any such meeting. Any action authorized
in writing by all of the members of a Committee entitled to vote thereon and
filed with the minutes of the Committee shall be the act of the Committee with
the same force and effect as if the same had been passed by unanimous vote at a
duly called meeting of the Committee. Each Committee shall be composed of at
least three (3) directors.
(B) The Board of Directors may designate two or more directors to constitute an
audit committee. The audit committee shall perform such functions as the By-Laws
or a resolution of the Board of Directors of the Corporation may provide, except
that if the Corporation engages or proposes to engage an independent public
accountant to review the preparation of and render reports on the financial
statements of the corporation, notwithstanding any provisions of the By-Laws or
such resolution, the audit committee shall review, evaluate and advise the Board
of Directors with respect to (A) the proposed engagement and any succeeding
engagement of the accountant or any successor, and (B) the functions performed
by the accountant pursuant to the terms of the accountant's engagement.
SECTION 14. Subcommittees
Any Committee may appoint one or more subcommittees from its members. Any such
subcommittee may consist of two or more members and may be charged with the duty
of considering and reporting to the appointing Committee on any matter within
the responsibility of the Committee appointing such subcommittee.
ARTICLE IV - WAIVER OF NOTICE
SECTION 1. Waiver of Notice.
Whenever any notice of time, place, purpose or any other matter, including any
special notice or form of notice, is required or permitted to be given to any
person by law or under the provisions of the Certificate of Incorporation or
By-Laws of the Corporation, or of a resolution of the shareholders or directors,
a written waiver of notice signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be equivalent to
the giving of such notice. The Secretary of the Corporation shall cause any such
waiver to be filed with or entered upon the records of the Corporation or, in
the case of a waiver of notice of a meeting, the records of the meeting. The
attendance of any person at a meeting without protesting, prior to or at the
commencement of the meeting, the lack of proper notice shall be deemed to be a
waiver by him of notice of such meeting.
ARTICLE V - CERTAIN RESTRICTIONS
SECTION 1. Issuance of Shares.
The Corporation may issue or agree to issue shares of common stock of the
Corporation, such as (but not limited to) options or warrants to acquire common
stock, or securities convertible into common stock, only by action of its
Shareholder(s), and not by action of its Board of Directors.
ARTICLE VI - OFFICERS
SECTION 1. Number, Qualifications, Election and Term of Office.
(A) The Officers of the Corporation shall be a Chief Executive Officer, a
President, one or more Vice-Presidents, a Secretary, a Treasurer, a Controller,
and an Actuary and such other officers, including a Chairman of the Board of
Directors, as the Board of Directors may from time to time deem advisable. Any
officer other than the Chairman of the Board of Directors may be, but is not
required to be, a director of the Corporation. Any two or more offices may be
held by the same person, except that the same person may not hold the offices of
both President and Secretary.
(B) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(C) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
SECTION 2. Resignation.
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or by such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
SECTION 3. Removal.
Any officer may be removed, either with our without cause, and a successor
elected, by the Board of Directors at any time. Removal of officers is without
prejudice to their contract rights; however, the appointment or election of an
officer for a given term, or a general provision in the By-Laws or Certificate
of Incorporation with respect to the term of the office, shall not of itself
create contract rights.
SECTION 4. Vacancies.
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors.
SECTION 5. Chief Executive Officer.
The Chief Executive Officer shall oversee all operations of the Corporation and
the Board of Directors, and shall be responsible for overseeing the
implementation of all orders and resolutions of the Board. As Chairman of the
Board of Directors and Chief Executive Officer, he shall preside at all meetings
of the Board and at all meetings of the shareholders. He may execute all
authorized conveyances, contracts, certificates representing shares of the
Corporation, or other instruments except in cases where the signing and
execution shall be required by law to be otherwise signed or executed.
SECTION 6. President.
The President shall be the Chief Operating Officer of the Corporation and,
subject to the control of the Board of Directors and the Chief Executive
Officer, shall in general supervise and control all of the business and affairs
of the Corporation. He shall, when present, preside at all meetings of the
shareholders in the absence of the Chief Executive Officer and, if there shall
be no Chairman or the Chairman shall be absent, at all meetings of the Board of
Directors. He may sign, with the Secretary or any other proper officer of the
Corporation thereunto authorized by the Board of Directors, certificates
representing shares of the Corporation, any deeds, mortgages, bonds, contracts,
or other instruments which the Board of Directors has authorized to be executed,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these By-Laws to some other officer or
agent of the Corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board of Directors
from time to time.
SECTION 7. Vice Presidents.
In the absence of the President or in the event of his death, inability or
refusal to act, the Vice Presidents, in the order designated at the time of
their election, or in the absence of any designation, then in the order of their
election, shall perform the duties of the President, and when so acting, shall
have the authority of and be subject to all the restrictions upon the President.
Any Vice President may sign, with the Secretary or any other proper officer of
the Corporation thereunto authorized by the Board of Directors, certificates
representing shares of the Corporation; and shall perform such other duties as
are commensurate with his title and as from time to time may be assigned to him
by the President or by the Board of Directors.
SECTION 8. Secretary.
The Secretary shall: (1) keep the minutes of the proceedings of the
shareholders, Board of Directors, and committees, if any, in one or more books
provided for that purpose; (2) see that all notices are duly given in accordance
with the provisions of these By-Laws or as required by law; (3) be custodian of
the corporate records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized; (4) file each written
request by a shareholder that notices to him be mailed to some address other
than his address as it appears on the record of shareholders; (5) sign, with the
President or a Vice President, certificates representing shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (6) have general charge of the record of shareholders of
the Corporation; and (7) in general perform all duties incident to the office of
the Secretary and such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
SECTION 9. Treasurer.
If required by the Board of Directors, the Treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine. He shall: (1) have charge and custody of
and be responsible for all funds and securities of the Corporation, receive and
give receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with the provisions of these By-Laws; (2) have charge and custody of and be
responsible for the keeping of correct and complete books and records of account
of the corporation; sign, with the President or a Vice President, certificates
representing shares of the Corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors; and (3) in general perform
all of the duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the President or by the Board of
Directors.
SECTION 10. Controller.
The Controller shall be responsible for keeping and maintaining the books of
account of the Company, subject to the control of the Board of Directors and the
President. The Controller shall exercise such powers and perform such other
duties as relate to the office of the Controller, and also such powers and
duties as may be delegated or assigned to or required of him by these By-Laws or
by or pursuant to authorization of the Board or the President.
SECTION 11. Actuary.
The Actuary shall be responsible for all actuarial calculations and the
preparation of all policy forms to be issued by the Corporation, subject to the
control of the Board of Directors and the President. The Actuary shall exercise
such powers and perform such other duties as relate to the offices of the
Actuary, and also such powers and duties as may be delegated or assigned to or
required of him by the By-Laws or by or pursuant to the authorization of the
Board of President.
SECTION 12. Shares of Other Corporations.
Whenever the Corporation is the holder of shares of any other corporation, any
right or power of the Corporation as such shareholder (including the attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies, or other instruments) may be exercised on behalf of the Corporation
only as authorized by resolution of the Board of Directors.
ARTICLE VII - SHARES OF STOCK
SECTION 1. Certificate of Stock.
(A) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the Board of Directors, and shall be numbered and
registered in the order issued. They shall bear the holder's name, the number of
shares, a statement that the Corporation is organized under the laws of
Connecticut, and shall be signed by (i) the Chairman of the Board or the
President or a Vice President, and (ii) the Secretary or the Treasurer, or any
Assistant Secretary or Assistant Treasurer, and may bear the corporate seal.
(B) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
(C) The Board of Directors may authorize the issuance of certificates for which
shall entitle the holder to exercise voting rights, receive dividends and
participate in any liquidating distributions, or it may authorize the payment in
cash of the fair value of shares as of the time when those entitled to receive
such payments are determined; or it may authorize the issuance, subject to such
conditions as may be permitted by law, of scrip in registered or bearer form
over the signature of an officer or agent of the Corporation, exchangeable as
therein provided for full shares, but such scrip shall not entitle the holder to
any rights of a shareholder, except as therein provided.
SECTION 2. Lost or Destroyed Certificates.
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it alleged to have been lost or
destroyed upon production of such evidence of loss or destruction as the Board
of Directors in its discretion may require. The Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate may
be issued without requiring any such evidence or bond when, in the judgment of
the Board, it is proper to do so.
SECTION 3. Transfer of Shares.
(A) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon the surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.
(B) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
SECTION 4. Record Date.
In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty (50) days, nor less than ten
(10) days, as the record date for the determination of shareholders entitled to
receive notice of, or to vote at, any meeting of shareholders, or to consent to
any proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividends, or allotment of any rights, or for
the purpose of any other action. If no record date is fixed, the record date for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the Board of Directors relating thereto is adopted. When a determination of
shareholders of record entitled to notice of or to vote at any meeting of
shareholders has been made as provided for herein, such determination shall
apply to any adjournment thereof, unless the directors fix a new record date for
the adjourned meeting.
ARTICLE VIII - DIVIDENDS
SECTION 1. When Declared.
The Board of Directors may declare dividends in cash, in other property, or in
shares of the Corporation from the earned surplus of the Corporation subject to
all of the provisions and restrictions of Connecticut Stock Corporation Act and
other applicable statutes, whenever, in its opinion, the condition of the
Corporation's affairs renders it advisable that such dividends be declared.
SECTION 2. Payment.
The Board of Directors, in declaring any dividend, may determine the
shareholders entitled to receive such dividend by fixing a record date for the
determination of shareholders and making any such dividend payable only to those
persons who are shareholders of record as of such date. The Board may also
determine the date when payment of any such dividend is to be made.
ARTICLE IX - CHECKS, NOTES AND DEPOSITARIES
SECTION 1. Execution of Instruments.
All checks or other orders for the payment of money and all notes or other
instruments evidencing indebtedness of the Corporation shall be signed by such
officer or officers or such other person or persons as the Board of Directors
may from time to time designate.
SECTION 2. Instruments.
As used in Article IV and in this Article VII, the term "instrument" includes,
but is not limited to, contracts and agreements, checks, drafts and other orders
for payment of money, transfers of bonds, stocks, notes and other securitie, and
powers of attorney, deeds, leases, releases of mortgages, satisfactions and all
other instruments entitled to be recorded in any jurisdiction.
SECTION 3. Depositaries.
The Board of Directors shall designate the trust company, or trust companies,
bank or banks, in which shall be deposited money or securities of the
Corporation.
ARTICLE X - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.
ARTICLE XI - FINANCIAL STATEMENTS AND AUDIT
SECTION 1. Annual Statement and Reports.
At the meeting of the Board of Directors following the annual meeting of the
Stockholders, the Annual Statement of the Company for the preceding year,
together with a certificate of verification thereof by such independent Public
Accountants as may have been selected by the Board of Directors, shall be
submitted to the Board. Interim quarterly reports, certified by the Actuary and
the Controller on the financial condition of the Company shall also be submitted
to the Board. The Annual Statement and interim reports shall be filed with the
records of the Board and a note of such submission shall be included in the
minutes. The Controller shall also report from time to time to the Board or any
committee any other matters coming to his attention in the course of his duties
which in his judgment should be brought to their attention.
SECTION 2. Independent Public Accountants.
The books and accounts of the Company shall be audited throughout each year by
such independent Public Accountants as shall be selected by the Board of
Directors.
ARTICLE XII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE XIII - INDEMNIFICATION
SECTION 1. Proceedings Other Than by or in the Right of the Corporation.
The Corporation shall indemnify 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 investigate
(other than an action by or in the right of the Corporation) by reason of the
fact that he, or the person whose representative he is, is or was a shareholder,
director, officer, employee or agent of the Corporation, or is or was serving
solely at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if the person is
successful on the merits in the defense of the proceeding or as provided in
Section 3 hereof, 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 corporation, and
with respect to any criminal action or proceeding, the person had no reasonable
cause to believe his conduct was unlawful or if upon application to the court as
provided in Section 5 hereof, the court shall have determined that in view of
all the circumstances such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine; except that,
in connection with an alleged claim based upon his purchase or sale of
securities of the Corporation or of another enterprise, which he serves or
served at the request of the Corporation, the Corporation shall only indemnify
such person after the court shall have determined, on application as provided in
Section 5 hereof, that in view of all the circumstances such person is fairly
and reasonably entitled to be indemnified, and then for such amount as the court
shall determine. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendre or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation or of the participants and
beneficiaries of such employee benefit plan or trust and consistent with the
provisions of such employee benefit plan or trust, or, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
SECTION 2. Proceedings by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, by or in the right of the Corporation, to procure a judgment in its
favor by reason of the fact that he, or the person whose legal representative he
is, is or was a shareholder, director, officer, employee or agent of the
Corporation, or is or was serving solely at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or enterprise, against expenses (including attorney fees)
actually and reasonably incurred by him in connection with such proceeding in
relation to matters as to which such person, or the person whose legal
representative his is, is finally adjudged not to have breached his duty to the
Corporation, or where the court, on application as provided in Section 6 hereof,
shall have determined that in view or all the circumstances such person is
fairly and reasonably entitled to be indemnified, and then for such amount as
the court shall determine. The Corporation shall not so indemnify any such
person for amounts paid to the Corporation, to a plaintiff or to counsel for a
plaintiff in settling or otherwise disposing of a proceeding, with or without
court approval; or for expenses incurred in defending a proceeding which is
settled or otherwise disposed of without court approval.
SECTION 3. Determination of Right of Indemnification
The conclusion provided for in Section 1 hereof may be reached by any of the
following: (1) The Board of Directors of the Corporation by a consent in writing
signed by a majority of those directors who were not parties to such proceeding;
(2) independent legal counsel selected by a consent in writing signed by a
majority of those directors who were not parties to such proceeding; (3) in the
case of any employee or agent who is not an officer or director of the
Corporation, the Corporation's general counsel; or (4) the shareholders of the
Corporation by the affirmative vote of at least a majority of the voting power
of shares not owned by parties to such proceeding, represented at an annual or
special meeting of shareholders, duly called with notice of such purpose stated.
Such person shall also be entitled to apply to a court for such conclusion, upon
application as provided in Section 5 hereof, even though the conclusion reached
by any of the foregoing shall have been adverse to him or to the person whose
legal representative he is.
SECTION 4. Advances of Expenses.
Expenses which may be indemnifiable incurred in defending a proceeding may be
paid by the corporation in advance of the final disposition of such proceeding
as authorized by the board of directors upon agreement by or on behalf of the
shareholder, director, officer, employee, agent or his legal representative, to
repay such amount if he is later found not entitled to be indemnified by the
Corporation as authorized. Notwithstanding the foregoing, no advance shall be
made by the Corporation if a determination is reasonably and promptly made by
the board of directors by a majority vote of a quorum of disinterested
directors, of (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs) by independent legal counsel in a
written opinion, that, based upon the facts known to the board or counsel at the
time such determination is made, such person acted in bad faith and in a manner
that such person did not believe to be in or not opposed to the best interest of
the Corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the board or independent
legal counsel reasonably determines that such person deliberately breached his
duty to the Corporation or its shareholders.
SECTION 5. Right to Indemnification Upon Application;
Procedure Upon Application.
Where an application for indemnification or for a conclusion is made to a court,
it shall be made to the court in which the proceeding is pending or to the
superior court for the judicial district where the principal office of the
Corporation is located. The application shall be made in such manner and form as
may be required by the applicable rules of the court or, in the absence thereof,
by direction of the court. The court may also direct that notice be given in
such manner as it may require at the expense of the Corporation to the
shareholders of the Corporation and to such other persons as the court may
designate. In the case of an application to a court in which a proceeding is
pending in which the person seeking indemnification is a party by reason of the
fact that he, or the person whose legal representative he is, is or was serving
at the request of the Corporation as a director, partner, trustee, officer,
employee or agent of another enterprise, or as a fiduciary of an employee
benefit plan or trust maintained for the benefit of employees of any other
enterprise, timely notice of such application shall be given by such person to
the Corporation.
Any indemnification or advance under this Article, shall be made promptly, and
in any event within ninety days, upon the written request of the agent, unless
with respect to applications under this Article, a determination is reasonably
and promptly made by the board of directors by a majority vote of a quorum of
disinterested directors that such agent acted in a manner set forth under this
Article as to justify the Corporation's not indemnifying or making an advance to
the agent. In the event no quorum of disinterested directors is obtainable, the
board of directors shall promptly direct that independent legal counsel shall
decide whether the agent acted in the manner set forth in this Article as to
justify the Corporation's not indemnifying or making an advance to the agent.
The right to indemnification or advances as granted by this Article shall be
enforceable by the agent in any court of competent jurisdiction, if the board of
independent legal counsel denies the claim, in whole or in part, or if no
disposition of such claim is made within ninety days. The agent's expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or part, in any such proceeding shall also be
indemnified by the Corporation.
SECTION 6. Types of Indemnification Consistent with Statutory
Rights and Remedies.
All rights to indemnification under this Article shall be deemed to be provided
by a contract between the Corporation and the director, officer, employee or
agent who serves in such capacity at any time while this Article and other
relevant provisions of the Connecticut Stock Corporation Act and other
applicable law, if any, are in effect. Any repeal or modification thereof shall
not affect any rights or obligations then existing.
SECTION 7. Insurance.
Upon resolution passed by the board, the Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such. The corporation may procure insurance providing greater indemnification
and may share the premium cost with any shareholder, director, officer,
employee, agent or eligible outside party as may be agreed upon.
SECTION 8. Constituent Corporations.
For the purposes of this Article, references to "the Corporation" include the
domestic and foreign corporations and all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving corporation, so
that any person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as he would if he had served the resulting or surviving
corporation in the same capacity.
SECTION 9. Other Enterprises, Fines, and Serving at
Corporation's Request.
For purposes of this Article, references to "other enterprises" shall include
any other foreign or domestic corporation, partnership, joint venture, trust or
other enterprise; reference to "fines" shall include any excise taxes assessed
on a person with respect to any employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to any employee benefit plan or trusts maintained for the benefit of employees
of the corporation or employees of any other enterprise, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit shall be deemed to have acted in a manner "not opposed to
the best interests of the Corporation" as referred to in this Article.
SECTION 10. Savings Clause.
If this Article or any portion thereof shall be invalidated on any ground by any
court of competent jurisdiction, then the Corporation shall nevertheless
indemnify each agent of the Corporation as to expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including a grand jury proceeding and an action by the
Corporation, to the full extent permitted by any applicable portion of this
Article that shall not have been invalidated or by any other applicable law.
All payments of indemnification, advancement, or allowance shall be subject to
the notice provisions of the Connecticut Stock Corporation Act.
ARTICLE XIV - AMENDMENTS
SECTION 1. By Shareholders.
The By-Laws of the Corporation are subject to alteration of repeal, and new
By-Laws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of directors.
SECTION 2. By Directors.
The Board of Directors shall not make, adopt, alter, amend or repeal the By-Laws
of the Corporation; and further provided the Board of Directors shall have no
power to change the quorum for meetings of shareholders or the Board of
Directors, or to change any provision of the By-Laws with respect to the removal
of any directors or the filling of vacancies in the Board resulting from the
removal of directors by the shareholders.
ARTICLE XV - EFFECTIVE DATE OF BY-LAWS
The By-Laws shall become effective upon their adoption by the Corporation as set
forth in the Statement of Organization.
SALES AGREEMENT
THIS AGREEMENT is made by and between The Alger American Fund
("ALGER"), a Massachusetts business trust and American Skandia Life Assurance
Corporation ("SKANDIA"), a life insurance company organized under the laws of
the State of Connecticut.
WHEREAS, ALGER is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 ("'40 Act") as an open-end
diversified investment management company; and
WHEREAS, ALGER is organized as a series fund, currently with
five Portfolios: The Alger American Money Market Portfolio, the Alger American
Income and Growth Portfolio, the Alger American Small Capitalization Portfolio,
the Alger American Growth Portfolio and the Alger American Fixed Income
Portfolio, and may establish others; and
WHEREAS, ALGER was organized as a funding vehicle for variable
contracts offered by life insurance companies through separate accounts of such
life insurance companies; and
WHEREAS, SKANDIA has established a separate account to offer
variable contracts and may establish others, and is desirous of having ALGER
serve as one of the funding vehicles for at least one such variable contract,
and possibly others in the future.
NOW, THEREFORE, and in consideration of the mutual covenants
herein contained, it is hereby agreed by and between ALGER and SKANDIA as
follows:
1. ALGER will make available to the designated separate accounts of SKANDIA
shares of the selected portfolios for investment of purchase payments of
variable contracts allocated to the designated separate accounts.
2. ALGER will make the shares available to such separate accounts at net
asset value.
3. Orders shall be placed for such shares with ALGER's designated agent
pursuant to procedures which are then in effect and which may be modified from
time to time. ALGER will provide SKANDIA with documentation of all procedures
now in effect and will undertake to inform SKANDIA of any modifications to such
procedures.
4. ALGER will provide SKANDIA camera ready copy of the current ALGER
prospectus and any supplements thereto for printing by SKANDIA. ALGER will
provide SKANDIA a copy of the statement of additional information for
duplication. ALGER will provide SKANDIA copies of its proxy material suitable
for printing. ALGER will provide SKANDIA annual and semi-annual reports and any
supplements thereto, in camera-ready form.
5. Any materials utilized by SKANDIA which describe ALGER, its shares, or
service providers, including its adviser, shall be submitted to ALGER and be
approved by it prior to use.
6. (a) SKANDIA shall be solely responsible for its actions in connection
with its use of ALGER and its shares and shall indemnify and hold harmless
ALGER, Fred Alger Management, Inc., Fred Alger & Company, Incorporated, its
officers, directors and trustees from any liability, including reasonable
attorney's fees, arising from SKANDIA's use of ALGER or its shares. SKANDIA
shall exonerate ALGER, Fred Alger Management, Inc., Fred Alger & Company,
Incorporated, its officers, directors and trustees for any use by SKANDIA of
ALGER or its shares.
(b) ALGER shall be solely responsible for its actions in connection with
its operations and shall indemnify and hold harmless SKANDIA, it's officers and
directors from any liability, including reasonable attorneys' fees, for its
negligent or wrongful acts or failures to act with respect thereto.
7. SKANDIA agrees to inform the Board of Trustees of ALGER of the existence
of or any potential for a material irreconcilable conflict of interest between
the interests of owners of contracts using the separate accounts of SKANDIA
which invest in ALGER and/or the interests of owners of contracts using any
other separate account of any other insurance company which invests in ALGER.
Any material irreconcilable conflict may arise for a variety
of reasons, including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or securities
laws or regulations, or a public ruling, private letter ruling, or any similar
action by insurance, tax or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any portfolio are being managed;
(e) a difference in voting instructions given by variable annuity contract
owners and variable life insurance contract owners or by contract owners of
different life insurance companies utilizing ALGER; or
(f) a decision by SKANDIA to disregard the voting instructions of contract
owners.
SKANDIA will be responsible for assisting the Board of
Trustees of ALGER in carrying out its responsibilities by providing the Board
with all information reasonably necessary for the Board to consider any issue
raised including information as to a decision by SKANDIA to disregard voting
instructions of contract owners.
It is agreed that if it is determined by a majority of the
members of the Board of Trustees of ALGER or a majority of its disinterested
Trustees that a material irreconcilable conflict exists affecting SKANDIA,
SKANDIA shall, at its own expense, take whatever steps are necessary to remedy
or eliminate the irreconcilable material conflict, which steps may include, but
are not limited to;
(a) withdrawing the assets allocable to some or all of the separate
accounts of SKANDIA from ALGER or any Portfolio and reinvesting such assets in a
different investment medium, including another Portfolio of ALGER, or submitting
to a vote of all affected contract owners the questions of whether (i)
withdrawal of assets from ALGER or (ii) segregation of assets should be
implemented and, as appropriate, withdrawing or segregating the assets of any
particular group (i.e. annuity contract owners, life insurance contract owners
or qualified contract owners) that votes in favor of such withdrawal or
segregation, or offering to the affected contract owners\the option of making
such a change;
(b) establishing a new registered management investment company or managed
separate account.
If a material irreconcilable conflict arises because of
SKANDIA's decisions to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
SKANDIA may be required, at ALGER's election, to withdraw its separate account's
investment in ALGER. No charge or penalty will be imposed against a separate
account as a result of such a withdrawal. SKANDIA agrees that any remedial
action taken by it in resolving any material conflicts of interest will be
carried out with a view only to the interest of contract owners.
For purposes hereof, a majority of the disinterested members
of the Board of Trustees of ALGER shall determine whether or not any proposed
action adequately remedies any material irreconcilable conflict. In no event
will ALGER be required to establish a new funding medium for any variable
contracts. SKANDIA shall not be required by the terms hereof to establish a new
funding medium for any variable contracts if an offer to do so has been declined
by vote of a majority of affected contract owners.
ALGER will undertake to promptly make known to SKANDIA the
Board of Trustees' determination of the existence of a material irreconcilable
conflict and its implications.
8. SKANDIA shall provide pass-through voting privileges to all variable
contract owners so long as the Securities and Exchange Commission continues to
interpret the `40 Act to require such pass-through voting privileges for
variable contract owners. SKANDIA shall be responsible for assuring that each of
its separate accounts participating in ALGER calculates voting privileges in a
manner consistent with other life companies utilizing ALGER. It is a condition
of the Agreement that SKANDIA will vote shares, for which it has not received
voting instructions as well as shares attributable to it, in the same proportion
as it votes shares for which it has received instructions.
9. SKANDIA shall at least annually submit to ALGER's Board of Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the obligations imposed upon them by any order of
the Securities and Exchange Commission exempting any of the parties to this
Agreement from any of the provisions of the 1940 Act and the rules and
regulations thereunder. Said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Trustees.
10. The Agreement shall terminate automatically in the event of its
assignment.
11. This Agreement may be terminated at any time on sixty (60) days'
written notice to the other party hereto, without the payment of any penalty.
12. This Agreement shall be subject to the provisions of the `40 Act and
the rules and regulations thereunder, including any exemptive relief therefrom
and the orders of the Securities and Exchange Commission setting forth such
relief.
13. It is understood by the parties that this Agreement is not to be deemed
an exclusive arrangement.
Executed this 22nd day of July 1988.
THE ALGER AMERICAN FUND
ATTEST: /s/ By: /s/ George J. Boggio
Treasurer - Secretary
AMERICAN SKANDIA LIFE ASSURANCE
CORPORATION
ATTEST: /s/ By: Robert B. Goode, President
