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File Nos. 333-45039
811-08619
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
INITIAL REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Pre-Effective Amendment No. 1 Post-Effective Amendment No.
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. __
(Check appropriate box or boxes.)
MASSACHUSETTS MUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT 4
(Exact Name of Registrant)
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
1295 State Street, Springfield, MA 01111
(Address of Depositor's Principal Executive Offices)(Zip Code)
Depositor's Telephone Number, including Area Code (413) 744-8411
Name and Address of Agent for Service:
Stephen R. Bosworth
Vice President and Associate General Counsel
Massachusetts Mutual Life Insurance Company
1295 State Street, H536
Springfield, Massachusetts 01111
Notices and Communications to:
James M. Rodolakis
Counsel
Massachusetts Mutual Life Insurance Company
1295 State Street, H536
Springfield, Massachusetts 01111
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this filing.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-4
<TABLE>
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N-4 Item Caption in Prospectus
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1................................................................... Cover Page
2................................................................... Definitions
3................................................................... Table of Fees and Expenses
4................................................................... Not Applicable
5................................................................... MassMutual, the Separate
Account and the Funds
6................................................................... Certificate Charges;
Distribution
7................................................................... Miscellaneous Provisions;
The Contract and Certificates; Reservation of
Rights; Participant's Voting Rights
8................................................................... The Annuity (Pay-Out)
Period
9................................................................... The Death Benefit
10.................................................................. The Accumulation (Pay-In)
Period; Distribution
11.................................................................. Right to Return Certificate;
Redemption Privilege
12.................................................................. Federal Tax Status
13.................................................................. None
14.................................................................. Additional Information
</TABLE>
2
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<TABLE>
<CAPTION>
Caption in Statement of
Additional Information
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<S> <C>
15.................................................................. Cover Page
16.................................................................. Table of Contents
17.................................................................. General Information
18.................................................................. Distribution
19.................................................................. Purchase of Securities Being Offered
20.................................................................. Distribution
21.................................................................. Performance Measures
22.................................................................. Annuity Provisions
23.................................................................. Reports of Independent
Accountants and Financial
Statements
</TABLE>
3
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
4
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MASSACHUSETTS MUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT 4 AND
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
PROSPECTUS - JULY 1, 1998
THE INDIVIDUAL CERTIFICATES UNDER A GROUP DEFERRED VARIABLE ANNUITY CONTRACT
WITH FLEXIBLE PURCHASE PAYMENTS (the "Certificates") described in this
Prospectus provide for accumulation of Certificate Values and payment of annuity
payments on a fixed and variable basis. The Certificates are designed for use by
individuals on a Qualified or Non-Qualified basis. The minimum initial Purchase
Payment for a Non-Qualified Certificate is $5,000 and $2,000 for a Qualified
Certificate.
Purchase Payments for the Certificates will be allocated as specified by the
Participant, to the Fixed Accounts and/or to a separate account designated
Massachusetts Mutual Variable Annuity Separate Account 4 (the "Separate
Account") of Massachusetts Mutual Life Insurance Company (the "Company"). The
Company may allocate initial Purchase Payments to the Money Market SubAccount of
the Separate Account during the Right to Examine Certificate Period. (See
Highlights.) The Separate Account invests in shares of Panorama Series Fund,
Inc. ("Panorama Fund"), Oppenheimer Variable Account Funds ("Oppenheimer
Funds"), and subject to state availability, Variable Insurance Products Fund II
("VIP Fund II"), American Century Variable Portfolios, Inc. ("American Century
VP"), T. Rowe Price Equity Series, Inc. ("T. Rowe Price Equity Series"), and MML
Series Investment Fund ("MML Trust"). The Panorama Fund is a series fund with
six (6) of its Portfolios currently available to Participants: LifeSpan
Diversified Income Portfolio, Total Return Portfolio, LifeSpan Balanced
Portfolio, LifeSpan Capital Appreciation Portfolio, Growth Portfolio, and
International Equity Portfolio. Oppenheimer Funds is a series fund with two (2)
of its Funds currently available to Participants: Oppenheimer Money Fund and
Oppenheimer Bond Fund. VIP Fund II is a series fund with one (1) of its
Portfolios available to Participants (subject to state availability): Contrafund
Portfolio. American Century VP is a series fund with one (1) of its Portfolios
available to Participants (subject to state availability): VP Income & Growth
Portfolio. T. Rowe Price Equity Series is a series fund with one (1) of its
Portfolios available to Participants (subject to state availability): Mid-Cap
Growth Portfolio. MML Trust is a series fund with one (1) of its Funds available
to Participants (subject to state availability): MML Small Cap Value Equity
Fund.
This Prospectus concisely sets forth the information a prospective investor
should know before investing and should be kept for future reference. Additional
information about the Certificates is contained in the Statement of Additional
Information which is available at no charge. The Statement of Additional
Information has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. For the Statement of Additional Information,
call (800) 569-6576 or write to: Panorama Premier, Annuity Products, H565, P.O.
Box 9067, Springfield, Massachusetts 01102-9067.
The Securities and Exchange Commission (the "SEC") maintains a Website
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference and other information regarding registrants
that is filed with the SEC electronically.
- --------------------------------------------------------------------------------
The Certificates are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution and are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
Investment in the Certificates is subject to risk that may cause the value of
the Participant's investment to fluctuate, and when the Certificates are
surrendered, the value may be higher or lower than the purchase payment.
- --------------------------------------------------------------------------------
ANY INQUIRIES CAN BE MADE BY TELEPHONE OR IN WRITING TO MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY AT ITS ANNUITY SERVICE CENTER.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALES OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
THIS PROSPECTUS IS ONLY VALID WHEN ACCOMPANIED BY THE PROSPECTUSES FOR PANORAMA
FUND, OPPENHEIMER FUNDS, VIP FUND II CONTRAFUND PORTFOLIO, AMERICAN CENTURY VP
INCOME & GROWTH PORTFOLIO, T. ROWE PRICE MID-CAP GROWTH PORTFOLIO AND MML SMALL
CAP VALUE EQUITY FUND.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
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Table of Contents
<TABLE>
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Page
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Definitions............................................................................. 4
Highlights.............................................................................. 6
Table of Fees and Expenses.............................................................. 8
The Company............................................................................. 10
The Separate Account.................................................................... 10
Eligible Investments............................................................... 11
Panorama Series Fund, Inc.......................................................... 11
Oppenheimer Variable Account Funds................................................. 12
Variable Insurance Products Fund II................................................ 12
American Century Variable Portfolios, Inc.......................................... 12
T. Rowe Price Equity Series, Inc................................................... 12
MML Series Investment Trust........................................................ 12
Voting Rights...................................................................... 13
Substitution of Securities......................................................... 13
The Fixed Accounts...................................................................... 13
DCA Fixed Account.................................................................. 14
The Fixed Account.................................................................. 14
Charges and Deductions.................................................................. 14
Deduction for Mortality and Expense Risk Charge.................................... 14
Deduction for Administrative Charge................................................ 15
Deduction for Annual Certificate Maintenance Charge................................ 15
Deduction for Premium and Other Taxes.............................................. 15
Deduction for Fund Expenses........................................................ 15
Deduction for Transfer Fee......................................................... 15
Deduction for Contingent Deferred Sales Charge..................................... 16
Free Withdrawals................................................................... 17
The Contract and Certificates........................................................... 17
Participant........................................................................ 17
Joint Participants................................................................. 17
Annuitant.......................................................................... 17
Assignment......................................................................... 17
Purchase Payments and Certificate Value................................................. 18
Purchase Payments.................................................................. 18
Allocation of Purchase Payments.................................................... 18
Certificate Value.................................................................. 18
Accumulation Units................................................................. 18
Accumulation Unit Value............................................................ 18
Transfers............................................................................... 19
Transfers During the Accumulation Period........................................... 19
Transfers During the Annuity Period................................................ 19
Dollar Cost Averaging.............................................................. 20
Rebalancing Program................................................................ 20
Withdrawals............................................................................. 21
Systematic Withdrawals............................................................. 22
Suspension or Deferral of Payments................................................. 22
Terminal Illness Benefit........................................................... 22
Proceeds Payable on Death............................................................... 22
Death of Participant During the Accumulation Period................................ 22
Death Benefit Amount During the Accumulation Period................................ 22
Death Benefit Options During the Accumulation Period............................... 23
Death of Participant During the Annuity Period..................................... 23
Death of Annuitant................................................................. 23
Payment of Death Benefit........................................................... 23
Beneficiary........................................................................ 23
Change of Beneficiary.............................................................. 24
Annuity Provisions...................................................................... 24
Annuity Guidelines................................................................. 24
Annuity Payments................................................................... 24
</TABLE>
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<TABLE>
<S> <C>
Fixed Annuity...................................................................... 24
Variable Annuity................................................................... 24
Annuity Units and Payments......................................................... 24
Annuity Unit Value................................................................. 25
Annuity Options.................................................................... 25
Distribution....................................................................... 25
Performance Measures.................................................................... 26
Standardized Average Annual Total Return........................................... 26
Additional Performance Measures.................................................... 26
Tax Status.............................................................................. 27
General............................................................................ 27
Diversification.................................................................... 27
Multiple Certificates.............................................................. 28
Tax Treatment of Assignments....................................................... 28
Income Tax Withholding............................................................. 28
Tax Treatment of Withdrawals- Non-Qualified Certificates........................... 28
Penalty Tax........................................................................ 28
Qualified Plans.................................................................... 29
H.R. 10 Plans.................................................................... 29
Individual Retirement Annuities.................................................. 29
Roth IRAs........................................................................ 29
Corporate Pension and Profit-Sharing Plans....................................... 30
Section 457 Deferred Compensation ("Section 457") Plans.......................... 30
Tax Treatment of Withdrawals-Qualified Certificates.............................. 30
Certificates Owned by Other Than Natural Persons................................... 31
IRA Disclosure Statement - Appendix A................................................... 32
Additional Information.................................................................. 35
</TABLE>
3
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Definitions
Accumulation Period: The period prior to the commencement of Annuity Payments
during which Purchase Payments may be made.
Accumulation Unit: A unit of measure used to determine the value of the
Participant's interest in a Sub-Account of the Separate Account during the
Accumulation Period.
Annuitant: The primary person upon whose life Annuity Payments are to be made.
For purposes of applicable Certificate provisions, on or after the Annuity
Date, reference to the Annuitant also includes any joint Annuitant.
Annuity Date: The date on which Annuity Payments begin.
Annuity Options: Options available for Annuity Payments.
Annuity Payments: The series of payments that will begin on the Annuity Date.
Annuity Period: The period which begins on the Annuity Date and ends with the
last Annuity Payment.
Annuity Reserve: The assets which support a variable Annuity Option during the
Annuity Period.
Annuity Service Center: The office at which the administration of the
Certificate occurs. Please direct all requests and/or inquiries to Annuity
Service Center, H565, P.O. Box 9067, Springfield, MA 01102-9067, (800) 569-6576.
Annuity Unit: A unit of measure used to determine the amount of each Variable
Annuity Payment after the Annuity Date.
Beneficiary: The person(s) or entity(ies) designated to receive the death
benefit provided by the Certificate.
Certificate: An ownership interest issued by the Company to a Participant (or
two participants jointly) under the Contract.
Certificate Anniversary: An anniversary of the Issue Date of the Certificate.
Certificate Value: The sum of the Participants interest in the Fixed Accounts
and/or the Sub-Accounts of the Separate Account during the Accumulation
Period.
Certificate Year: The first Certificate Year is the annual period which begins
on the Issue Date. Subsequent Certificate Years begin on each anniversary of
the Issue Date.
Contract: A group deferred variable annuity contract with flexible purchase
payments which is issued by the Company.
Eligible Investment: An investment entity into which assets of the Separate
Account will be invested.
Fixed Accounts: Investment options within the General Account which may be
selected during the Accumulation Period. Subject to state availability, the
following two Fixed Accounts are available to Participants: the Dollar Cost
Averaging Fixed Account (the "DCA Fixed Account") and the Fixed Account.
Fixed Annuity: A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company.
General Account: The Company's general investment account which contains all the
assets of the Company with the exception of the Separate Account and other
segregated asset accounts.
Issue Date: The date on which the Certificate became effective.
Non-Qualified Certificates: Certificates other than Qualified Certificates which
do not receive favorable tax treatment under Sections 401, 408 or 457 of the
Internal Revenue Code of 1986, as amended (the "Code").
Participant: The person(s) or entity(ies) entitled to the ownership rights
stated in the Certificate.
Premium Tax: A tax imposed by certain states and other jurisdictions when a
Purchase Payment is made, when Annuity Payments begin, or when a Certificate is
surrendered.
Purchase Payment: During the Accumulation Period, a payment made by or on behalf
of a Participant with respect to the Certificate.
Qualified Certificates: Certificates issued under Qualified Plans.
Qualified Plans: Plans which receive favorable tax treatment under Sections 401,
408, or 457 of the Code.
Separate Account: The Company's Separate Account designated as Massachusetts
Mutual Variable Annuity Separate Account 4.
Sub-Account: Separate Account assets are divided into Sub-Accounts. Assets of
each Sub-Account will be invested in shares of an available Eligible Investment
or a Portfolio or Fund of an Eligible Investment. Currently the Eligible
Investments are six Portfolios of Panorama Fund, two Funds of Oppenheimer Funds,
and subject to state availability, VIP Fund II Contrafund Portfolio, American
Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth Portfolio
and MML Small Cap Value Equity Fund.
4
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Valuation Date: Each day on which the Company, the New York Stock Exchange
("NYSE") and the Fund are open for business. See the Prospectuses for the
Panorama Fund, Oppenheimer Funds, VIP Fund II Contrafund Portfolio, American
Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth Portfolio and
MML Small Cap Value Equity Fund.
Valuation Period: The period of time beginning at the close of business of the
NYSE on each Valuation Date and ending at the close of business for the next
succeeding Valuation Date.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Separate
Account.
Written Request: A request or notice in writing, in a form satisfactory to the
Company, which is received by the Annuity Service Center.
5
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Highlights
General
A Participant may elect to have Purchase Payments allocated to a segregated
investment account of Massachusetts Mutual Life Insurance Company (the
"Company") which account has been designated Massachusetts Mutual Variable
Annuity Separate Account 4 (the "Separate Account") or to the Fixed Accounts of
the Company. The Company guarantees that it will credit a specified minimum
interest rate on amounts allocated to the Fixed Accounts. Under certain
circumstances, however, Purchase Payments may initially be allocated to the
Money Market Sub-Account of the Separate Account (see below). The Separate
Account invests in shares of certain Portfolios of the Panorama Fund, in shares
of certain Funds of Oppenheimer Funds, and subject to state availability, in
shares of one Portfolio of VIP Fund II, one Portfolio of American Century VP,
one Portfolio of T. Rowe Price Equity Series and one Fund of MML Trust. (See
Eligible Investments.) Participant(s) bear the investment risk for all amounts
allocated to the Separate Account.
Right to Examine Certificate
The Certificate may be returned to the Company for any reason within ten (10)
calendar days (or twenty (20) calendar days of the date of receipt with respect
to the circumstances described in (c) below) after its receipt by the
Participant ("Right to Examine Certificate"). It may be returned to the Company
at its Annuity Service Center. The Certificate must be accompanied by a written
request signed by the Participant that indicates the Participant wishes to
return the Certificate. When the Certificate is received at the Annuity Service
Center, it will be voided as if it had never been in force. Upon its return,
the Company will refund the Certificate Value next computed after receipt of the
Certificate by the Company at its Annuity Service Center except in the following
circumstances in which the Company will refund the greater of Purchase
Payments, less any withdrawals, or the Certificate Value: (a) where the
Certificate is purchased pursuant to an Individual Retirement Annuity; (b) in
those states which require the Company to refund Purchase Payments, less
withdrawals; or (c) in the case of Certificates (including Certificates
purchased pursuant to an Individual Retirement Annuity) which are deemed by
certain states to be replacing an existing annuity or insurance Certificate and
which require the Company to refund Purchase Payments, less withdrawals.
With respect to the circumstances described in (a) and (b) above, the Company
will allocate initial Purchase Payments to the Money Market Sub-Account until
the expiration of fifteen (15) days from the Issue Date. With respect to the
circumstances described in (c) above, the Company will allocate initial Purchase
Payments to the Money Market Sub-Account until the expiration of twenty-five
(25) days from the Issue Date. Upon the expiration of such fifteen (15) day
period (or twenty-five (25) day period respectively), the Sub-Account value of
the Money Market Sub-Account will be allocated to the Separate Account and/or
the Fixed Accounts in accordance with any previous election made by the
Participant.
Charges and Deductions
Mortality and Expense Risk Charge. Each Valuation Period, the Company deducts a
Mortality and Expense Risk Charge which is equal, on an annual basis, to 1.25%
of the average daily net asset value of the Separate Account. This charge
compensates the Company for assuming the mortality and expense risks under the
Certificates. (See Charges and Deductions - Deduction for Mortality and Expense
Risk Charge.)
Administrative Charge. Each Valuation Period, the Company deducts an
Administrative Charge which is currently equal, on an annual basis, to 0.15% of
the average daily net asset value of the Separate Account. This charge may be
increased but it cannot exceed 0.25% of the average daily net asset value of the
Separate Account. This charge compensates the Company for costs associated with
the administration of the Certificates and the Separate Account. (See Charges
and Deductions - Deduction for Administrative Charge.)
Withdrawals. During the Accumulation Period, the Participant may, upon Written
Request, make a total or partial withdrawal of Certificate Value. Withdrawals
may be subject to a Contingent Deferred Sales Charge. (See Withdrawals.)
Contingent Deferred Sales Charge. The Company does not deduct a sales charge
when it receives a Purchase Payment. However, if any part of Certificate Value
is withdrawn, a Contingent Deferred Sales Charge may be assessed by the
Company. Subject to the Free Withdrawal Amount and the Additional Free
Withdrawal Amount described below, Certificate withdrawals derived from a
Purchase Payment deposited with the Company for a period of seven years or less
will be subject to a Contingent Deferred Sale Charge ranging from 7% to 1%.
Free Withdrawal Amount. A Participant may withdraw, without incurring a
Contingent Deferred Sales Charge, the greater of:
(a) the portion of the Certificate Value attributable to positive investment
results, if any, on the date of withdrawal; or
(b) 10% of Purchase Payments remaining in the Certificate on the withdrawal
date reduced by any Free Withdrawal(s) previously taken during the
current Certificate Year.
Annual Certificate Maintenance Charge. Currently, there is an Annual Certificate
Maintenance Charge of $30 deducted on the last day of the Certificate Year. This
charge may be increased but it cannot exceed $60 per Certificate Year. In the
event of an increase, the Company will give Participants 90 days prior notice of
the increase. However, if the Certificate Value on the last day of the
Certificate Year is at least
6
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$100,000, then no Annual Certificate Maintenance Charge will be deducted. If a
total withdrawal is made on other than the last day of the Certificate Year and
the Certificate Value for the Valuation Period during which the total withdrawal
is made is less than $100,000, the full Annual Certificate Maintenance Charge
will be deducted at the time of the total withdrawal. Subject to the condition
set forth in the following sentence, the Annual Certificate Maintenance Charge
will be deducted from the Sub-Accounts and the Fixed Account in the same
proportion that the amount of the Certificate Value in each Sub-Account and the
Fixed Account bears to the total Certificate Value. In no event shall that
portion of the Annual Certificate Maintenance Charge deducted from the Fixed
Account exceed $30 during any Certificate Year. If the Annuity Date is not the
last day of the Certificate Year, then a pro-rata portion of the Annual
Certificate Maintenance Charge will be deducted on the Annuity Date. During the
Annuity Period, the Annual Certificate Maintenance Charge will be deducted
pro-rata from Annuity Payments regardless of Certificate size and will result in
a reduction of each Annuity Payment.
Premium Taxes. Premium Taxes may be charged against Purchase Payments or
Certificate Values. (See Charges and Deductions - Deduction for Premium and
Other Taxes.) The Company currently intends to advance any Premium Taxes that
may be due at the time Purchase Payments are made and then deduct a charge for
such Premium Taxes from a Participant's Certificate Value at the time Annuity
Payments begin or upon a total withdrawal if the Company is unable to obtain a
refund. Premium taxes generally range from 0% to 3.5%.
Transfer Fee. Under certain circumstances, a Transfer Fee may be assessed during
the Accumulation Period when a Participant makes a transfer from the Fixed
Accounts or any Sub-Account to another Sub-Account or the Fixed Account. In
addition, a Transfer Fee may be assessed during the Annuity Period when a
Participant makes a transfer from one Sub-Account to another Sub-Account or from
a Sub-Account to the Fixed Account. The Transfer Fee is the lesser of $20 or 2%
of the amount transferred. (See Charges and Deductions - Deduction for Transfer
Fee.)
Federal Income Tax Penalty. There is a ten percent (10%) federal income tax
penalty applied to the income portion of any distribution from Non-Qualified
Certificates. However, the penalty is not imposed on amounts received: (a) after
the taxpayer reaches age 59 1/2; (b) after the death of the Participant; (c) if
the taxpayer is totally disabled (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life expectancies) of
the taxpayer and his or her Beneficiary; (e) under an immediate annuity; or (f)
which are allocable to purchase payments made prior to August 14, 1982. For
federal income tax purposes, withdrawals are deemed to be on a last-in, first-
out basis. (See Tax Status - Tax Treatment of Withdrawals - Non-Qualified
Certificates.) Separate tax withdrawal penalties and restrictions apply to
Qualified Certificates. For a further discussion of the taxation of the
Certificates, see Tax Status.
See Tax Status - Diversification for a discussion of owner control of the
underlying investments in a variable annuity certificate.
The Certificate
Transfers. Subject to certain conditions, Participants may make unlimited
transfers between Sub-Accounts and/or the Fixed Account during the Accumulation
Period and 6 transfers per calendar year during the Annuity Period. A transfer
from the Fixed Account is limited each Certificate Year to the greater of thirty
percent (30%) of the Participant's Certificate Value determined as of the last
day of the previous Certificate Year allocated to the Fixed Account or $30,000.
In addition, a ninety (90) day restriction exists for certain types of transfers
involving the Fixed Account or the Money Market Sub-Account. The Company
reserves the right to further limit the number of transfers in the future. The
Certificate provides for twelve (12) free transfers per calendar year during
the Accumulation Period and six (6) free transfers per calendar year during the
Annuity Period. Transfers made in excess of the number of free transfers will
result in the imposition of the Transfer fee. During the Annuity Period, the
Participant may, once each Certificate Year, make a transfer from one or more
Sub-Accounts to the General Account. However, transfers cannot be made from the
General Account to the Separate Account during the Annuity Period. (See
Transfers.) The rules and restrictions related to transfers involving the Fixed
Account described in this provision do not apply to the DCA Fixed Account (see
DCA Fixed Account.)
Death Benefit. Prior to the Participant, or the oldest Joint Participant, or
the Annuitant, if the Participant is a non-natural person, attaining age 75, the
death benefit during the Accumulation Period will be at least equal to the
Purchase Payments, less any withdrawals including any applicable charges. (See
Proceeds Payable on Death for an additional discussion.)
Annuity Options. There are six (6) Annuity Options available for the Participant
to choose from. The Participant may elect to have the Certificate Value applied
to provide a Variable Annuity, a Fixed Annuity, or a combination Fixed and
Variable Annuity. (See Annuity Provisions for a further discussion.)
Maximum Issue Ages. The maximum issue age is Attained Age 85. This restriction
applies at the time of Certificate issue and upon any change in Participant or
Annuitant during the Accumulation Period and applies to both the Participant
and the Annuitant. For Joint Participants all provisions which are based upon
age, including the maximum issue age, are based on the age of the older of the
Joint Participants. If the Certificate is owned by a non-natural person, the
Participant shall mean Annuitant.
<PAGE>
Massachusetts Mutual Variable Annuity Separate Account 4
Table of Fees and Expenses
(see Note 1)
Participant Transaction Expenses
Transfer Fee No charge is imposed for the first 12 transfers
in a calendar year during the Accumulation
Period; thereafter the fee is the lesser of $20
or 2% of the amount transferred. Only 6
transfers in a calendar year are permitted
during the Annuity Period and there is no fee
for those 6 transfers.
Sales Load on Purchases 0%
Maximum Contingent Deferred
Sales Charge Computed on
Amounts Withdrawn (as a
percentage of Participant's
Purchase Payment) (see Note 2) 7%
Annual Certificate Maintenance
Charge (see Note 4) $30 per Certificate per Certificate Year.
Separate Account Annual
Expenses
(as a percentage of average
account value)
Mortality and Expense Risk Charge 1.25%
Administrative Charge (See Note 5) 0.15%
-----
Total Separate Account Annual Expenses 1.40%
ELIGIBLE INVESTMENTS' ANNUAL EXPENSES FOR 1997
(as a percentage of the average net assets of a Portfolio)
<TABLE>
<CAPTION>
Management Other Total Operating
Fees Expenses Expenses
<S> <C> <C> <C>
Oppenheimer Money Fund 0.44% 0.04% 0.48%
Oppenheimer Bond Fund 0.73% 0.05% 0.78%
Panorama LifeSpan Diversified Income
Portfolio 0.75% 0.09% 0.84%
Panorama Total Return Portfolio 0.54% 0.01% 0.55%
Panorama LifeSpan Balanced Portfolio 0.85% 0.12% 0.97%
Panorama LifeSpan Capital Appreciation
Portfolio 0.85% 0.14% 0.99%
Panorama Growth Portfolio 0.53% 0.01% 0.54%
Panorama International Equity Portfolio 1.00% 0.12% 1.12%
VIP Fund II Contrafund Portfolio* 0.60% 0.11% 0.71%
American Century VP Income & Growth
Portfolio* 0.70% -- 0.70%
T. Rowe Price Mid-Cap Growth Portfolio* 0.85% -- 0.85%
MML Small Cap Value Equity Fund* 0.65% 0.11%*** 0.76%**
</TABLE>
*Subject to state availability.
**The MML Small Cap Value Equity Fund had no operating expenses in 1997 since
it had not yet commenced operations. These figures represent MassMutual's
estimate of the total operating expenses for the MML Small Cap Value Equity Fund
in 1998.
***MassMutual has agreed to bear expenses of the MML Small Cap Value Equity
Fund (other than the management fee, interest, taxes, brokerage commissions and
extraordinary expenses) in excess of .11% of the average daily net asset value
through April 30, 1999.
(See the Prospectuses for Panorama Fund, Oppenheimer Funds, VIP Fund II
Contrafund Portfolio, American Century VP Income & Growth Portfolio, T. Rowe
Price Mid-Cap Growth Portfolio and MML Small Cap Value Equity Fund for more
information.)
8
<PAGE>
Examples (See Note 6)
A Participant would pay the following expenses on a $1,000 investment, assuming
the entire Certificate Value is allocated to the Separate Account, assuming a
5% annual return on assets, assuming that the same Portfolio expenses as shown
above remain the same for the periods shown in the examples, and assuming the
Certificate is fully surrendered at the end of each time period.
<TABLE>
<CAPTION>
Year 1 3 5 10
<S> <C> <C> <C> <C>
Oppenheimer Money Fund $85 $112 $137 $231
Oppenheimer Bond Fund 88 121 153 262
Panorama LifeSpan Diversified Income Portfolio 89 122 156 269
Panorama Total Return Portfolio 86 114 141 238
Panorama LifeSpan Balanced Portfolio 90 126 162 282
Panorama LifeSpan Capital Appreciation Portfolio 90 127 163 284
Panorama Growth Portfolio 86 114 140 237
Panorama International Equity Portfolio 91 131 170 297
VIP Fund II Contrafund Portfolio* 87 118 149 255
American Century VP Income & Growth Portfolio* 87 118 148 254
T. Rowe Price Mid-Cap Growth Portfolio* 89 123 156 270
MML Small Cap Value Equity Fund* 88 120 151 260
</TABLE>
* Subject to state availability.
A Participant would pay the following expenses assuming either 1) the
Certificate is not surrendered at the end of each time period, or 2) the
Certificate is annualized at the end of each time period.
<TABLE>
<CAPTION>
Year 1 3 5 10
<S> <C> <C> <C> <C>
Oppenheimer Money Fund $20 $62 $107 $231
Oppenheimer Bond Fund 23 72 123 262
Panorama LifeSpan Diversified Income Portfolio 24 73 126 269
Panorama Total Return Portfolio 21 64 111 238
Panorama LifeSpan Balanced Portfolio 25 77 132 282
Panorama LifeSpan Capital Appreciation Portfolio 25 78 133 284
Panorama Growth Portfolio 21 64 110 237
Panorama International Equity Portfolio 27 82 140 297
VIP Fund II Contrafund Portfolio* 23 69 119 255
American Century VP Income & Growth Portfolio* 22 69 118 254
T. Rowe Price Mid-Cap Growth Portfolio* 24 74 126 270
MML Small Cap Value Equity Fund* 23 71 121 260
</TABLE>
* Subject to state availability.
9
<PAGE>
Notes to Table Of Fees and Expenses and Examples
1. The purpose of the Fee Table is to assist Participants in understanding the
various costs and expenses that a Participant will incur directly or
indirectly. The Examples assume an average Certificate Value of $35,000. The
Fee Table reflects expenses of the Separate Account as well as Portfolios of
Panorama Fund, VIP Fund II, American Century VP and T. Rowe Price Equity
Series, and Funds of Oppenheimer Funds and MML Trust. For additional
information, see "Charges and Deductions" in this Prospectus and the
Prospectuses for Panorama Fund, VIP Fund II Contrafund Portfolio, American
Century VP Income & Growth Portfolio, Oppenheimer Funds, T. Rowe Price
Mid-Cap Growth Portfolio and MML Small Cap Value Equity Fund.
2. A portion of a Participant's Certificate Value may be withdrawn each
Certificate Year without the assessment of a Contingent Deferred Sales
Charge (see Free Withdrawal Amount). After a Purchase Payment has been held
by the Company for seven years, such Purchase Payment may be withdrawn
without assessment of the Contingent Deferred Sales Charge. Under certain
circumstances and in certain jurisdictions, in the event of a terminal
illness Certificate Value may be withdrawn without the assessment of a
Contingent Deferred Sales Charge (see Terminal Illness Benefit). In
addition, a Contingent Deferred Sales Charge is not assessed against the
payment of a death benefit.
3. Transfers made by the Company at the end of the Right to Examine Certificate
period will not be counted in determining the application of the Transfer
Fee. The Transfer Fee is the lesser of $20 or 2% of the amount transferred.
All transfers made during a Valuation Period are deemed to be one transfer.
Currently, transfers made under the following circumstances will not be
counted in determining the application of the Transfer Fee: (i) transfers
made in conjunction with an approved dollar cost averaging program and (ii)
transfers made in conjunction with the Rebalancing Program. (See Charges and
Deductions - Deduction for Transfer Fee and Dollar Cost Averaging and
Rebalancing Program.)
4. Currently, the Annual Certificate Maintenance Charge is $30 each Certificate
Year and is deducted on the last day of the Certificate Year. This charge
may be increased but it will not exceed $60 per Certificate Year. In the
event of an increase, the Company will give Participants 90 days prior
notice of the increase. However, if the Certificate Value on the last day
of the Certificate Year is at least $100,000, then no Annual Certificate
Maintenance Charge will be deducted. If a total withdrawal is made on other
than the last day of the Certificate Year and the Certificate Value for the
Valuation Period during which the total withdrawal is made is less than
$100,000, the full Annual Certificate Maintenance Charge will be deducted
at the time of the total withdrawal. Subject to the condition set forth in
the following sentence, the Annual Certificate Maintenance Charge will be
deducted from the Fixed Account and Sub-Accounts in the same proportion
that the amount of the Certificate Value in each Sub-Account and the Fixed
Account bears to the total Certificate Value. In no event shall that portion
of the Annual Certificate Maintenance Charge deducted from the Fixed Account
exceed $30 during any Certificate Year. If the Annuity Date is not the last
day of the Certificate Year and the Certificate Value on the Annuity Date
is less than $100,000, then a pro-rata portion of the Annual Certificate
Maintenance Charge will be deducted on the Annuity Date. During the Annuity
Period, the Annual Certificate Maintenance Charge will be deducted pro-rata
from Annuity Payments regardless of Certificate size and will result in a
reduction of each Annuity Payment. (See Charges and Deductions - Deduction
for Annual Certificate Maintenance Charge.) The examples reflect the $30
Annual Certificate Maintenance Fee as an annual charge of 0.09% of assets,
based on an anticipated average Certificate Value of $35,000.
5. The current Administrative Charge is equal on an annual basis to 0.15% of
the average daily net asset value of the Separate Account. The Company may
increase this charge to an amount not to exceed 0.25% of the average daily
net asset value of the Separate Account.
6. Premium Taxes are not reflected. Premium taxes may apply. (See Charges and
Deductions - Deduction for Premium and Other Taxes.)
7. The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
The Company
Massachusetts Mutual Life Insurance Company (the "Company") is a mutual life
insurance company chartered in 1851 under the laws of Massachusetts. The
Company's Home Office is located in Springfield, Massachusetts. The Company is
licensed to transact life, accident and health insurance business in all fifty
states of the United States, the District of Columbia, Puerto Rico and certain
provinces of Canada.
As of December 31, 1997, the Company had estimated unconsolidated statutory
assets in excess of $57 billion, and estimated total assets under management in
excess of $152 billion.
The Separate Account
The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to Massachusetts insurance law on July 9,
1997 designated as Massachusetts Mutual Variable Annuity Separate Account 4.
The Separate Account is registered with the Securities and Exchange
10
<PAGE>
Commission as a unit investment trust pursuant to the provisions of the
Investment Company Act of 1940, as amended.
The assets of the Separate Account are the property of the Company. However, the
assets of the Separate Account, equal to the reserves and other Certificate
liabilities with respect to the Separate Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Certificates, credited to or charged against the Separate Account without regard
to other income, gains or losses of the Company. The Company's obligations
arising under the Certificates are general obligations. The Separate Account
meets the definition of a "separate account" under federal securities laws.
The Separate Account is divided into Sub-Accounts, with the assets of each Sub-
Account invested in one Portfolio of Panorama Fund (LifeSpan Diversified Income
Portfolio, LifeSpan Capital Appreciation Portfolio, LifeSpan Balanced Portfolio,
Total Return Portfolio, Growth Portfolio, and International Equity Portfolio)
one Fund of Oppenheimer Funds (Money Fund and Bond Fund), and subject to state
availability, one Portfolio of VIP Fund II (Contrafund Portfolio), one Portfolio
of American Century VP (Income & Growth Portfolio), one Portfolio of T. Rowe
Price Equity Series (Mid-Cap Growth Portfolio) and one Fund of MML Trust (MML
Small Cap Value Equity Fund). There is no assurance that the investment
objectives of any of the investment options will be met. Participants bear the
complete investment risk for Purchase Payments allocated to a Sub-Account.
Certificate Values will fluctuate in accordance with the investment performance
of the Sub-Accounts to which Purchase Payments are allocated, and in accordance
with the imposition of the fees and charges assessed under the Certificates.
Eligible Investments
The following are the current Separate Account Eligible Investments that can be
selected as the underlying investments of the Certificate. While a brief
summary of the various investment options is set forth below, more
comprehensive information, including a discussion of potential risk, is found in
the current Prospectus for each of the Eligible Investments which are included
with this Prospectus.
Panorama Series Fund, Inc.
Panorama Series Fund, Inc. (the "Panorama Fund") is an open-end management
investment company. Oppenheimer-Funds, Inc. ("OFI"), an investment adviser
registered with the SEC under the Investment Advisers Act of 1940, as amended,
("Investment Advisers Act") is the investment adviser to the Panorama Fund, and
performs sales and administrative functions relative to the Panorama Fund,
including the keeping of all records not maintained by the custodian. OFI has
operated as an investment adviser since 1959 and, together with a subsidiary,
manages companies with $75 billion in assets and 3.5 million shareholder
accounts as of December 31, 1997. OFI is owned by Oppenheimer Acquisition
Corporation, a holding company that is owned in part by senior officers for OFI
and controlled by the Company. The address of OFI is Two World Trade Center, New
York, NY 10048-0203.
OFI has engaged three Subadvisers to assist in the selection of portfolio
investments for the International Equity Portfolio, the LifeSpan Diversified
Income Portfolio, the LifeSpan Balanced Portfolio, and the LifeSpan Capital
Appreciation Portfolio. Babson-Stewart Ivory International ("Babson-Stewart"),
One Memorial Drive, Cambridge, MA 02142, is the Subadviser to the International
Equity Portfolio and the international stock components of the LifeSpan Balanced
Portfolio and the LifeSpan Capital Appreciation Portfolio. Babson-Stewart is a
partnership formed in 1987 between David L. Babson & Co., Inc., a subsidiary of
the Company and Stewart Ivory & Co., Ltd., located in Edinburgh, Scotland. BEA
Associates, 599 Lexington Avenue, 36th Floor, New York, NY 10022, is the
Subadviser to the high yield bond components of the three LifeSpan Portfolios.
Pilgrim, Baxter & Associates ("Pilgrim Baxter"), 1255 Drummers Lane, Wayne, PA
19087, is the Subadviser to the small cap components of the LifeSpan Balanced
Portfolio and the LifeSpan Capital Appreciation Portfolio.
Panorama Fund Lifespan Diversified Income Portfolio
(Diversified Income Portfolio)
The Diversified Income Portfolio is designed for the investor with a relatively
low tolerance for risk who is seeking current income with some long-term
inflation protection. The Diversified Income Portfolio seeks high current
income, with opportunities for capital appreciation through a strategically
allocated portfolio consisting primarily of bonds.
Panorama Fund Total Return Portfolio
The investment objective of the Total Return Portfolio is to maximize the total
investment return (including capital appreciation and income) by allocating its
assets among stocks, corporate bonds, securities issued by the U.S. Government
and its instrumentalities, and money market instruments according to changing
market conditions.
Panorama Fund Lifespan Balanced Portfolio
(Balanced Portfolio)
The Balanced Portfolio is designed for the investor seeking a blend of capital
appreciation and income. The Balanced Portfolio seeks a blend of capital
appreciation and income through a strategically allocated portfolio of stocks
and bonds securities with a slightly stronger emphasis on stocks.
Panorama Fund Lifespan Capital Appreciation Portfolio
(Capital Appreciation Portfolio)
The Capital Appreciation Portfolio is designed for the investor seeking capital
appreciation. The Capital Appreciation Portfolio seeks long-term capital
appreciation through a strategically allocated portfolio consisting primarily of
stocks. Current income is not a primary consideration.
11
<PAGE>
Panorama Fund Growth Portfolio
The investment objective of the Growth Portfolio is to achieve long-term growth
of capital by investing primarily in common stocks with low price-earnings
ratios and better than anticipated earnings. Realization of current income is a
secondary consideration.
Panorama Fund International Equity Portfolio
The investment objective of the International Equity Portfolio is to achieve
long-term growth of capital by investing primarily in equity securities (such
as common stocks) of non-U.S. issuers trading for the most part in non-U.S.
markets.
Oppenheimer Variable Account Funds
Oppenheimer Variable Account Funds (the "Oppenheimer Funds") is an open-end
management investment company organized as a Massachusetts business trust in
1984. It currently consists of ten separate funds. The Funds' investment
adviser is OppenheimerFunds, Inc. ("OFI").
Oppenheimer Money Fund
The Money Fund seeks the maximum current income from investments in "money
market" securities consistent with low capital risk and the maintenance of
liquidity. Its shares are neither insured nor guaranteed by the U.S. government,
and there is no assurance that this Fund will be able to maintain a stable net
asset value of $1.00 per share.
Oppenheimer Bond Fund
The Bond Fund primarily seeks a high level of current income by investing
primarily in debt securities. Secondarily, this Fund seeks capital growth when
consistent with its primary objective.
Variable Insurance Product Fund II
Variable Insurance Product Fund II is an open-end management investment company
organized as a Massachusetts business trust on March 21, 1988. Fidelity
Management & Research Company ("FMR") is the investment adviser to VIP Fund II.
FMR is the management arm of Fidelity Investments which was established in
1946. Fidelity Investments has its principal business address at 82 Devonshire
Street, Boston, Massachusetts 02109. FMR has engaged two affiliates, Fidelity
Management & Research (U.K.) Inc and Fidelity Management & Research (Far East)
Inc., to serve as sub-advisers to the Contrafund Portfolio.
VIP Fund II Contrafund Portfolio*
The investment objective of the Contrafund Portfolio is to seek capital
appreciation by investing mainly in equity securities of companies that FMR
believes to be undervalued due to an overly pessimistic appraisal by the public.
The Portfolio usually invests primarily in common stock and securities
convertible into common stock, but it has the flexibility to invest in any type
of security that may produce capital appreciation.
* Subject to state availability.
American Century Variable Portfolios, Inc.
American Century Variable Portfolios, Inc. ("American Century VP") was organized
as a Maryland corporation in 1987 and is a diversified, open-end management
investment company. American Century Investment Management, Inc. ("American
Century") is the investment manager of American Century VP. American Century
has been providing investment advisory services to investment companies and
institutional investors since it was founded in 1958. American Century's
address is American Century Tower, 4500 Main Street, Kansas City, Missouri
64111.
American Century VP Income & Growth Portfolio*
American Century VP Income & Growth Portfolio seeks long-term growth of capital
as well as current income. The Fund pursues a total return and dividend yield
that exceeds those of the S&P 500 by investing in stocks of companies with
strong dividend growth potential.
* Subject to state availability.
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Series, Inc. ("T. Rowe Price Equity Series") was
incorporated in Maryland in 1994 and is a diversified, open-end investment
company. T. Rowe Price Associates, Inc. ("T. Rowe Price") is the investment
manager of T. Rowe Price Equity Series. T. Rowe Price and its affiliates managed
over $124 billion for more than six million individual and institutional
investor accounts as of December 31, 1997.
T. Rowe Price Mid-Cap Growth Portfolio*
The investment objective of the Mid-Cap Portfolio is to provide long-term
capital appreciation by investing primarily in common stocks of medium-sized
(mid-cap) growth companies. This Portfolio will focus on companies with superior
earnings growth potential that are no longer considered new or emerging but may
still be in the dynamic phase of their life cycles.
* Subject to state availability.
MML Series Investment Fund
MML Series Investment Fund ("MML Trust") is a no-load, open-end, management
investment company having six series of shares each of which has different
investment objectives designed to meet different investment needs. The Company
serves as the investment adviser to the MML
12
<PAGE>
Trust. The Company has entered into a subadvisory agreement with David L.
Babson and Company, Inc., ("Babson") a controlled subsidiary of the Company,
whereby Babson manages the investment of the assets of the MML Small Cap Value
Equity Fund.
MML Small Cap Value Equity Fund*
The investment objective of the MML Small Cap Value Equity Fund is to achieve
long-term growth of capital and income by investing primarily in a diversified
portfolio of equity securities of smaller companies. The Fund will invest
primarily in common stocks, securities convertible into common stocks and other
equity securities (such as warrants and stock rights) which are issued by
companies with a market capitalization, at the time of purchase, of $750 mil-
lion or less and which are listed on a national securities exchange or traded
in the over-the-counter market.
*Subject to state availability.
Some of the Portfolios/Funds available to Participants are substantially
identical to or are "clones" of mutual funds offered in the retail marketplace.
These "clone" funds have the same investment objectives, policies, and portfolio
managers as the retail mutual funds and usually were formed after the retail
mutual funds. For example, the Variable Product Insurance Funds' Contrafund is a
clone of Fidelity's Contrafund; American Century Variable Portfolios' Income &
Growth Portfolio is a clone of the American Century Income & Growth Fund and T.
Rowe Price Equity Series' Mid-Cap Growth Portfolio is a clone of the T. Rowe
Price Mid-Cap Growth Fund. While the clone funds generally have identical
investment objectives, policies and portfolio managers, they are separate and
distinct from the retail mutual funds. In fact, the performance of the clone
funds may be dramatically different from the performance of the retail mutual
funds due to differences in the funds' sizes, dates shares of stock are
purchased and sold, cash flows and expenses. Thus, while the performance of the
retail mutual funds may be informative, you should remember that such
performance is not the performance of the Portfolios/Funds that are available to
Participants and is not an indication of future performance of such
Portfolios/Funds.
THERE IS NO ASSURANCE THAT ANY PORTFOLIO/ FUND WILL ACHIEVE ITS STATED
OBJECTIVE. More detailed information, including a description of each Portfo-
lio's/Fund's investment objective and policies, and a description of risks
involved in investing in each of the Portfolios/Funds and each
Portfolio's/Fund's fees and expenses, is contained in the prospectuses for
Panorama Fund, Oppenheimer Funds, VIP Fund II Contrafund Portfolio, American
Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth Portfolio and
MML Small Cap Value Equity Fund, current copies of which are attached to this
Prospectus. Information contained in Panorama Fund, Oppenheimer Funds, VIP Fund
II Contrafund Portfolio, American Century VP Income & Growth Portfolio, T. Rowe
Price Mid-Cap Growth Portfolio and MML Small Cap Value Equity Fund prospectuses
should be read carefully before making allocation to any Sub-Account of the
Separate Account.
Voting Rights
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, the Participant during the lifetime of
the Annuitant, or the beneficiary after the Annuitant's death, will be entitled
to give instructions as to how the shares of the Funds held in the Separate
Account (or other securities held in lieu of such shares) deemed attributable to
the Certificate should be voted at meetings of shareholders of the Funds. Those
persons entitled to give voting instructions will be determined as of the
record date for the meeting.
The number of Fund shares held in the Separate Account deemed attributable to a
Certificate prior to its Maturity Date and during the lifetime of the Annuitant
will be determined by dividing the Certificate's value held in each Sub-Account
of the Separate Account, if any, by $100. Fractional votes are counted. After
the Maturity Date or after the death of Annuitant, the number of Fund shares
deemed attributable to the Certificate will be based on the liability for
future Variable Monthly Annuity payments under the Certificate as of the record
date and thus the voting rights will decrease as payments are made.
Participants or beneficiaries will receive proxy material and a form with which
voting instructions may be given. Fund shares held by the Separate Account as to
which no effective instructions have been received or which are attributable to
assets transferred from the Company's general account will be voted for or
against any proposition in the same proportion as the shares as to which
instructions have been received.
In situations where the Annuitant is not the Participant, the Annuitant will
have the right to instruct the Participant with respect to the votes
attributable to any vested interest the Participant has in the Certificate. The
Company's obligation in this instance will be to make available to the
Participant copies of the proxy material for distribution to the Annuitant.
Votes representing interests as to which the Participant is not instructed may,
in turn, be voted by the Participant in his discretion.
Substitution of Securities
If the shares of the Eligible Investments (or any Portfolio or Fund within an
Eligible Investment or any other funding vehicle made available under the
Certificates), are no longer available for investment by the Separate Account
or, if in the judgment of the Company's Board of Directors, further investment
in the shares should become inappropriate in view of the purpose of the
Certificates, the Company may limit further purchase of such shares or may
substitute shares of another funding vehicle for shares already purchased under
the Certificates. No substitution of securities may take place
13
<PAGE>
without prior approval of the Securities and Exchange Commission and under the
requirements it may impose.
The Fixed Accounts
Subject to state availability, two Fixed Accounts, the Fixed Account for Dollar
Cost Averaging (the "DCA Fixed Account") and the Fixed Account (collectively,
the "Fixed Accounts"), are available as investment options to Participants. The
Fixed Accounts are investment options within the General Account of the
Company. Because of applicable exemptive and exclusionary provisions, interests
in the Fixed Accounts have not been registered under the Securities Act of 1933
(the "1933 Act") nor have the Fixed Accounts been registered under the
Investment Company Act of 1940 (the "1940 Act"). Therefore, neither the Fixed
Accounts nor any interest therein are generally subject to regulation under the
provisions of the 1933 Act or the 1940 Act. Accordingly, the Company has been
advised that the staff of the Securities and Exchange Commission has not
reviewed the disclosure in this Prospectus related to the Fixed Accounts.
Assets supporting amounts allocated to the Fixed Accounts become part of the
Company's General Account assets and are available to fund the claims of all
creditors of the Company. All of the Company's General Account assets will be
available to fund benefits under the Certificates.
DCA Fixed Account
Subject to state availability, upon written request and during the Accumulation
Period, the Participant may elect to have net Purchase Payments allocated to the
DCA Fixed Account for a DCA Fixed Account term. For each DCA Fixed Account
term, the Company will only accept a purchase payment as of the beginning of
the DCA Fixed Account term. A purchase payment includes any purchase payment as-
signed to and accepted by the Company from a financial institution as of the
request for a DCA Fixed Account term. Purchase payments which originate from
annuity contracts issued by the Company or any of its affiliates are not eligi-
ble to be allocated to the DCA Fixed Account. The Company reserves the right to
reject purchase payments. Only a new net purchase payment may be designated for
allocation to the DCA Fixed Account at the beginning of a DCA Fixed Account
term. No transfers may be made to the DCA Fixed Account from any other account
or Sub-Account maintained under the Certificate.
Currently, the term for the DCA Fixed Account will be a period not to exceed 12
months beginning with receipt of a new purchase payment. To the extent permitted
by law, the Company reserves the right to change the duration of the DCA Fixed
Account term in the future. Only one DCA Fixed Account term may be operative at
a time. If a Participant elects to make an allocation to the DCA Fixed Account
at a time when the Participant's Annuity Date would be less than the currently
offered DCA Fixed Account term, the expiration of the DCA Fixed Account term
would be the Participant's Annuity Date. No amounts will remain under the DCA
Fixed Account after the expiration of the DCA Fixed Account term.
The interest rate credited to the DCA Fixed Account will be set periodically by
the Company and will never be less than 3%. The interest rate will be guaranteed
for the DCA Fixed Account term.
Scheduled monthly transfer payments will be made from the DCA Fixed Account
to Sub-Accounts in accordance with the Dollar Cost Averaging rules. (See Dollar
Cost Averaging.) Except for scheduled DCA Fixed Account transfer payments, no
transfers may be made from the DCA Fixed Account before the expiration of the
DCA Fixed Account term. DCA Fixed Account transfer payments will be made on the
scheduled transfer payment dates. If a scheduled transfer payment date is not a
Valuation Date, the transfer will be made on the next Valuation Date.
No partial withdrawals may be made from the DCA Fixed Account. If a total
withdrawal is made during a DCA Fixed Account term, such withdrawal will be made
in accordance with the withdrawal provisions of the Certificate.
The Company reserves the right to assess a fee or charge for processing
transactions under the DCA Fixed Account. The Company reserves the right to
postpone payments for a withdrawal or transfer from the DCA Fixed Account for a
period of up to six months. Unless specified otherwise, that portion of the
Certificate Value attributable to the DCA Fixed Account shall be used to provide
a Fixed Annuity to the Annuitant (Option B with 10 years of payments guaran-
teed) if no Annuity option has been chosen at least 30 calendar days before the
Annuity Date. If the amount applied under an Annuity option is less than $2,000,
the Company reserves the right to pay the amount in a lump sum.
The Fixed Account
Purchase Payments may be allocated to the Fixed Account to the extent elected by
the Participant at the time such payment is made. In addition, all or part of
the Participant's Certificate Value may be transferred to the Fixed Account as
described under "Transfers." The Participant does not participate in the
investment performance of the assets of the Company's Fixed Account. Instead, a
specified rate of interest, declared in advance, is credited to amounts
allocated to the Fixed Account. This rate is guaranteed to be at least 3% per
year ("Guaranteed Minimum Rate"). The Company may, at its sole discretion,
credit a higher rate of interest ("excess interest") for any period specified in
advance by the Company. However, the Company is not obligated to credit
interest in excess of the 3% Guaranteed Minimum Rate per year, and might not do
so. The Participant assumes the risk that interest credited may not exceed the
guaranteed minimum rate.
14
<PAGE>
Charges and Deductions
Various charges and deductions are made from the Certificate Value and the
Separate Account. These charges and deductions are:
Deduction for Mortality and
Expense Risk Charge
Each Valuation Period, the Company deducts a Mortality and Expense Risk Charge
which is equal, on an annual basis, to 1.25% of the average daily net asset
value of the Separate Account. The mortality risks assumed by the Company arise
from its contractual obligation to make Annuity Payments after the Annuity Date
(determined in accordance with the Annuity Option chosen by the Participant)
regardless of how long all Annuitants live. This assures that neither an
Annuitant's own longevity, nor an improvement in life expectancy greater than
expected, will have any adverse effect on the Annuity Payments the Annuitant
will receive under the Certificate. Further, the Company bears a mortality risk
in that it guarantees the annuity purchase rates for the Annuity Options under
the Certificate whether for a Fixed Annuity or a Variable Annuity. Also, there
is a mortality risk borne by the Company with respect to the death benefit and
to the waiver of the Contingent Deferred Sales Charge upon the death of the
Participant. The expense risk assumed by the Company is that all actual ex-
penses involved in administering the Certificates, including Certificate
maintenance costs, administrative costs, mailing costs, data processing costs,
legal fees, accounting fees, filing fees and the costs of other services may
exceed the amount recovered from the Annual Certificate Maintenance Charge and
the Administrative Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount
deducted proves more than sufficient, the excess will be a profit to the
Company. Mortality and Expense Risk Charge is guaranteed by the Company and
cannot be increased.
Deduction for Administrative Charge
Each Valuation Period, the Company deducts an Administrative Charge which is
currently equal, on an annual basis, to 0.15% of the average daily net asset
value of the Separate Account. This charge, together with the Annual Certificate
Maintenance Charge (see below), is to reimburse the Company for the expenses it
incurs in the establishment and maintenance of the Certificates and the Separate
Account. These expenses include but are not limited to: preparation of the
Certificates, confirmation statements, annual and periodic reports and
statements, maintenance of Participant records, maintenance of Separate Account
records, administrative personnel costs, mailing costs, data processing costs,
legal fees, accounting fees, filing fees, the costs of other services necessary
for Participant servicing and all accounting, valuation, regulatory and
reporting requirements. Since this charge is an asset-based charge, the amount
of the charge attributable to a particular Certificate may have no relationship
to the administrative costs actually incurred by that Certificate. Should this
charge prove to be insufficient, the Company may increase this charge but
guarantees that it will never exceed 0.25% of the average daily net asset value
of the Separate Account. If this Charge is increased, Participants will be
given 90 days prior notice.
Deduction for Annual Certificate
Maintenance Charge
Currently, the Annual Certificate Maintenance Charge is $30 each Certificate
Year and is deducted on the last day of the Certificate Year. This charge may be
increased but it will not exceed $60 per Certificate Year. However, if the
Certificate Value on the last day of the Certificate Year is at least $100,000,
then no Annual Certificate Maintenance Charge will be deducted. If a total
withdrawal is made on other than the last day of the Certificate Year and the
Certificate Value for the Valuation Period during which the total withdrawal is
made is less than $100,000, the full Annual Certificate Maintenance Charge will
be deducted at the time of the total withdrawal. Subject to the condition set
forth in the following sentence, the Annual Certificate Maintenance Charge will
be deducted from the Fixed Account and the Sub-Accounts in the same proportion
that the amount of the Certificate Value in each Sub-Account and the Fixed
Account bears to the total Certificate Value. In no event shall that portion of
the Annual Certificate Maintenance Charge deducted from the Fixed Account exceed
$30 during any Certificate Year. If the Annuity Date is not the last day of the
Certificate Year and the Certificate Value on the Annuity Date is less than
$100,000, then a pro-rata portion of the Annual Certificate Maintenance Charge
will be deducted on the Annuity Date. During the Annuity Period, the Annual
Certificate Maintenance Charge will be deducted pro-rata from Annuity Payments
regardless of Certificate size and will result in a reduction of each Annuity
Payment. If this Charge is increased, Participants will be given 90 days prior
notice.
Deduction for Premium and Other Taxes
Any Premium Taxes relating to the Certificates may be deducted from the
Purchase Payments or Certificate Value when incurred. The Company currently
intends to advance any Premium Taxes that may be due at the time Purchase
Payments are made but not deduct such Premium Taxes from Certificate Value until
the time Annuity Payments begin, or upon a total withdrawal if the Company is
unable to obtain a refund. The Company will, in its sole discretion, determine
when Premium Taxes have resulted from: the investment experience of the Separate
Account; receipt by the Company of the Purchase Payments; or commencement of
Annuity Payments. The Company may, at its sole discretion, pay such Premium
Taxes when due and deduct that amount from the Certificate Value at a later
date. Payment at an earlier date does not waive any right the Company may have
to deduct amounts at a later date. Premium
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Taxes generally range from 0% to 3.5%. The Company will deduct any withholding
taxes required by applicable law.
The Company reserves the right to establish a provision for federal income taxes
if it determines, in its sole discretion, that it will incur a tax as a result
of the operation of the Separate Account. The Company will deduct for any income
taxes incurred by it as a result of the operation of the Separate Account
whether or not there was a provision for taxes and whether or not it was
sufficient. The Company is not currently making any provision for federal income
taxes.
Deduction for Fund Expenses
There are other deductions from and expenses paid out of the assets of the
Panorama Fund, Oppenheimer Funds, VIP Fund II Contrafund Portfolio, and
American Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth
Portfolio, and MML Small Cap Value Equity Fund, including amounts paid for
advisery and management fees, which are described in the accompanying fund
prospectuses.
Deduction for Transfer Fee
Subject to certain conditions (see Transfers), Participants may transfer all or
part of the Participant's interests among the Sub-Accounts and/or the Fixed
Account during the Accumulation Period or during the Annuity Period transfer
interests from a Sub-Account to the General Account without the imposition of
any fee or charge if there have been no more than the number of free transfers
permitted. Participants are currently not limited to any number of transfers
during the Accumulation Period and are limited to six (6) transfers per calendar
year during the Annuity Period. If, during the Accumulation Period, more than
the number of free transfers per Certificate Year (currently 12 per year) have
been made, the Company will deduct a Transfer Fee for each subsequent transfer
permitted. The Transfer Fee is the lesser of $20 or 2% of the amount
transferred. The Transfer Fee will be deducted from the Sub-Account(s) and/or
Fixed Accounts (collectively "Account(s)") from which the transfer occurred. If
the entire Account balance is transferred, the Transfer Fee will be deducted
from the amount transferred. All transfers made during a Valuation Period are
deemed to be one transfer. Currently, transfers made under the following
circumstances will not be counted in determining the application of the Transfer
Fee: (i) transfers made by the Company at the end of the Right to Examine
Certificate period; (ii) transfers made in conjunction with an approved dollar
cost averaging program; (see Dollar Cost Averaging) and (iii) transfers made
under the Rebalancing Program. (See Rebalancing Program.)
Deduction for Contingent Deferred
Sales Charge
No deduction for sales charges is made from a Purchase Payment. However, if a
withdrawal is made, a Contingent Deferred Sales Charge may be assessed by the
Company. The length of time between the Company's acceptance of a Purchase
Payment and the making of a withdrawal determines the Contingent Deferred Sales
Charge, if any. Each Purchase Payment has its own time period for purposes of
assessing a Contingent Deferred Sales Charge. This Charge will be used to cover
certain expenses relating to the sale of the Certificates including commissions
paid to sales personnel, the costs of preparation of sales literature, other
promotional costs and acquisition expenses. A withdrawal shall be deemed to
first withdraw any positive investment results and thereafter Purchase Payments
on a first-in-first-out basis for purposes of computing the Contingent Deferred
Sales Charge.
Subject to the Free Withdrawal Amount described below, the following table shows
Contingent Deferred Sales Charges:
Contingent
Deferred
Sales Charge
Against
Amount
Withdrawn Year Applicable
- --------- ---------------
7% During 1st Year since Purchase Payment Accepted
6% During 2nd Year since Purchase Payment Accepted
5% During 3rd Year since Purchase Payment Accepted
4% During 4th Year since Purchase Payment Accepted
3% During 5th Year since Purchase Payment Accepted
2% During 6th Year since Purchase Payment Accepted
1% During 7th Year since Purchase Payment Accepted
0% Thereafter
The Contingent Deferred Sales Charge is assessed against the amounts remaining
in the Sub-Account from which the withdrawal occurred. If a withdrawal is made
from more than one Sub-Account, the Contingent Deferred Sales Charge is as-
sessed against the amounts remaining in such Accounts in the same proportion to
which the withdrawal amount bears to the total value of such Sub-Accounts. If a
withdrawal causes the entire Sub-Account value to be withdrawn, then the Contin-
gent Deferred Sales Charge will be assessed against the amounts remaining in the
Sub-Accounts in the same proportion in which their value bears to Certificate
Value. If a withdrawal causes the entire Certificate Value to be withdrawn,
then the Contingent Deferred Sales Charge will be assessed against the
Certificate Value withdrawn. The Contingent Deferred Sales Charge is not
imposed on a Purchase Payment after the end of the seventh year of the Company's
acceptance of such Purchase Payment, nor is the Contingent Deferred Sales Charge
imposed upon payment of the death benefit or upon amounts applied to purchase an
annuity.
Until April 30, 1999, no Contingent Deferred Sales Charge will be imposed upon
surrender of a Certificate where the proceeds of such surrender are applied to
the purchase of a new group annuity contract issued by the Company. This does
not eliminate charges under the particular group contract, and upon surrender of
the group contract, charges may apply.
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No Contingent Deferred Sales Charge will be imposed on the redemption of "excess
contributions" to a plan qualifying for special income tax treatment
("Qualified Plan"), TSAs or IRAs. "Excess Contributions" (including excess
aggregate contributions) will be defined as provided in the Internal Revenue
Code and applicable regulations.
Subject to state availability, owners of certain IRA or non-qualified Flex Extra
variable annuity contracts issued by the Company that are beyond the sales
charge period may exchange such contracts for a Certificate (the "Flex Extra Ex-
change Program"). When an eligible Flex Extra contract is exchanged for a
Certificate, no Contingent Deferred Sales Charge shall apply to initial purchase
payments made pursuant to the exchange but all subsequent purchase payments
shall be subject to the Contingent Deferred Sales Charges.
Owners of IRA or non-qualified Account A, Account B and Account E variable
annuity contracts previously issued by Connecticut Mutual Life Insurance
Company may exchange such contracts for a Certificate. When eligible Accounts A,
B and E contracts are exchanged for a Certificate, no Contingent Deferred Sales
Charge shall apply to initial purchase payments made pursuant to the exchange,
but any subsequent purchase payments will be subject to the Contingent Deferred
Sales Charge.
The Flex Extra exchange program and the Accounts A, B and E exchange programs
are subject to state availability. The Company may terminate these exchange
programs at any time at its sole discretion. See the Statement of Additional
Information for further information about the Flex Extra Exchange Program or
contact your registered representative or call the Service Center at (800) 569-
6576.
Free Withdrawals
The Participant may withdraw, without incurring a Contingent Deferred Sales
Charge, the greater of:
(a) the portion of the Certificate Value attributable to positive investment
results, if any, on the date of withdrawal; or
(b) 10% of Purchase Payments remaining in the Certificate on the withdrawal
date reduced by any Free Withdrawal(s) previously taken during the current
Certificate Year.
Withdrawals must be taken first from investment earnings, if any, and next from
Purchase Payments.
Withdrawals which are not attributable to investment earnings will reduce the
amount of Purchase Payments remaining in the Certificate on a first-in-first-out
basis for purposes of computing any remaining Contingent Deferred Sales Charge.
The Contract and Certificates
Contract Owner
The Contract Owner is the person(s) or entity(ies) entitled to ownership rights
stated in the Contract and not otherwise delegated to the Participant. The
Contract Owner is usually an employer, trustee or other sponsor of a group
consisting of the Participants. If the contract is purchased in connection with
an employee benefit plan, the plan may govern which ownership rights under the
Contract are delegated to the Participants and which are left with the Contract
Owner.
Participant
The Participant is the person(s) or entity(ies) entitled to ownership rights
stated in the Certificate. The Participant is the person designated as such on
the Issue Date, unless changed. The maximum issue age is Attained Age 85. If the
Certificate is proposed to be issued to Joint Participants, the Company will
apply the Maximum Issue Age to the eldest proposed Joint Participant.
The Participant may change owners at any time prior to the Annuity Date by
Written Request. A change of Participant will automatically revoke any prior
designation of Participant. The change will become effective as of the date the
Written Request is received. A new designation of Participant will not apply to
any payment made or action taken by the Company prior to the time it was re-
ceived. Any change of Participant is subject to the Company's underwriting
rules then in effect. A change in Participant may trigger income tax
consequences. (See Tax Status - General.)
Joint Participants
The Certificate can be owned by Joint Participants. If Joint Participants are
named, any Joint Participant must be the spouse of the other Participant unless
prohibited by applicable law or regulations. Upon the death of either
Participant, the surviving spouse will be the Primary Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
Contingent Beneficiary unless otherwise indicated in a Written Request. Unless
otherwise specified in the application for the Certificate, if there are Joint
Participants both signatures will be required for all Participant transactions
except telephone transfers. If the telephone transfer option is elected and
there are Joint Participants, either Joint Participant can give telephone
instructions.
Annuitant
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by the Participant at the Issue Date, unless
changed prior to the Annuity Date.
The Annuitant may not be changed in a Certificate which is owned by a non-
natural person. Any change of Annuitant is subject to the Company's
underwriting rules then in effect. In the case of certain Qualified
Certificates, the Participant must be the Annuitant. The maximum issue age is
Attained Age 85.
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Assignment
A Written Request specifying the terms of an assignment of the Certificate must
be provided to the Annuity Service Center. Until the Written Request is
received, the Company will not be required to take notice of or be responsible
for any transfer of interest in the Certificate by assignment, agreement, or
otherwise.
The Company will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with the Company's consent.
If the Certificate is assigned, the Participant's rights may only be exercised
with the consent of the assignee of record. The consent of any Irrevocable
Beneficiaries is required before assignment of proceeds can happen.
Purchase Payments and
Certificate Value
Purchase Payments
The initial Purchase Payment is due on the Issue Date. The minimum initial
Purchase Payment the Company will accept is $5,000 for Non-Qualified
Certificates and $2,000 for Qualified Certificates. The minimum subsequent
Purchase Payment the Company will accept is $250, unless the Participant has
elected the automatic investment plan option in which case the Company will
accept a minimum of $100. For Participants up to Age 75 on the Issue Date, the
maximum cumulative Purchase Payments without prior consent of the Company is $1
million. For Participants over Age 75 on the Issue Date, the maximum total
Purchase Payments, without prior consent of the Company, is $500,000. For
Certificates issued to non-natural persons, the maximum Purchase Payment limits
will apply to the Annuitant's age. Purchase Payments above these amounts must be
preapproved by the Company. For Joint Participants, Age refers to the oldest
Joint Participant. The Company reserves the right to reject any Application or
Purchase Payment.
Allocation of Purchase Payments
The allocation of the initial Purchase Payment is made in accordance with the
selection made by the Participant at the time the Certificate is issued, except
in the circumstances described under Right to Examine Certificate. In those
circumstances, the Company will allocate initial Purchase Payments to the Money
Market Sub-Account until the expiration of the Right to Examine Certificate
period. Upon expiration, the Certificate Value will be reallocated in accor-
dance with the Participant's selection. Unless otherwise changed by Written
Request by the Participant, subsequent Purchase Payments are allocated in
accordance with the same selection as the initial Purchase Payment. Allocation
changes can be made over the telephone if requested at the time of a telephone
transfer.
There are currently no limitations on the number of Sub-Accounts that can be
selected by a Participant. If allocations are made in percentages, whole numbers
must be used.
If the Purchase Payments and forms required to issue a Certificate are in good
order, the initial Purchase Payment will be credited to the Certificate within
two (2) business days after receipt at the Annuity Service Center. Additional
Purchase Payments will be credited to the Certificate as of the Valuation Period
when they are received. If the forms required to issue a Certificate are not in
good order the Company will attempt to get them in good order or the Company
will return the forms and the Purchase Payment within five (5) business days,
unless it has been authorized otherwise by the purchaser.
Certificate Value
The Certificate Value is the sum of the Participant's interest in the Fixed
Accounts and the Sub-Accounts of the Separate Account for any Valuation Date
during the Accumulation Period. It will fluctuate from one Valuation Period to
the next, and may be more or less than Purchase Payments made. The Participant's
interest in a Sub-Account is determined by multiplying the number of
Accumulation Units credited to the Certificate by the Accumulation Unit Value
for that Sub-Account as of the Valuation Date. The Participant's interest in the
Fixed Accounts, if any, for any Valuation Date is equal to the sum of the values
of all Fixed Account amounts credited to the Certificate on such Valuation
Date.
Accumulation Units
During the Accumulation Period, Accumulation Units shall be used to account for
all amounts allocated to or withdrawn from the Sub-Accounts of the Separate
Account as a result of Purchase Payments, withdrawals, transfers, or fees and
charges. The Company will determine the number of Accumulation Units of a Sub-
Account purchased or canceled. This will be done by dividing the amount
allocated to (or the amount withdrawn from) the Sub-Account by the dollar value
of one Accumulation Unit of the Sub-Account as of the end of the Valuation
Period during which the transaction is received at the Annuity Service Center.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-Account was set on the date such Sub-
Account became operative. Subsequent Accumulation Unit Values for each Sub-
Account are determined for each Valuation Period by multiplying the Accumulation
Unit Value for the immediately preceding Valuation Period by the Net Investment
Factor for the Sub-Account for the current Valuation Period.
The Net Investment Factor for each Sub-Account is determined by dividing A by
B and subtracting C where:
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<PAGE>
A is (i) the net asset value per share of the funding vehicle or portfolio of a
funding vehicle held by the Sub-Account for the current Valuation Period; plus
(ii) any dividend per share declared on behalf of such funding vehicle or
portfolio of a funding vehicle that has an ex-dividend date within the current
Valuation Period; less (iii) the cumulative charge or credit for taxes reserved
which is determined by the Company to have resulted from the operation or
maintenance of the Sub-Account.
B is the net asset value per share of the funding vehicle or portfolio held by
the Sub-Account for the immediately preceding Valuation Period.
C is the cumulative charge for the Mortality and Expense Risk Charge and for the
Administrative Charge.
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
Transfers
Transfers During the Accumulation Period
Subject to certain limitations, the Participant may transfer all or part of the
Participant's interest in a Sub-Account or the Fixed Account (each an "Account"
or collectively "Accounts") by Written Request. No fee or charge will be imposed
if there have been no more than the number of free transfers allowed (currently,
twelve (12) per calendar year). All transfers are subject to the following:
1. If more than the number of free transfers have been made, the Company will
deduct a Transfer Fee (see Charges and Deductions - Deduction for Transfer
Fee) for each subsequent transfer permitted. The Transfer Fee will be
deducted from the Participant's interest in the Account from which the
transfer is made. However, if the Participant's entire interest in an
Account is being transferred, the Transfer Fee will be deducted from the
amount which is transferred. If Certificate Values are being transferred
from more than one Account, any Transfer Fee will be allocated to those
Accounts on a pro-rata basis in proportion to the amount transferred from
each Account.
2. The minimum amount which can be transferred is $1,000 (from one or multiple
Accounts) or the Participant's entire interest in the Account, if less. This
requirement is waived if the transfer is made in connection with the
Rebalancing Program. The minimum amount which must remain in a Sub-Account
after a transfer is $1,000 or $0 if the entire amount in the Sub-Account is
transferred. The current minimum amount which may be transferred as part of
a Dollar Cost Averaging program is $250.
3. Transfers out of the Fixed Account during any Certificate Year are limited
in amount to the greater of $30,000 or thirty percent (30%) of the
Participant's Certificate Value allocated to the Fixed Account determined as
of the end of the previous Certificate Year. Transfers out of the Fixed
Account are done on a first-in first out basis; i.e., amounts attributed to
the oldest Purchase Payment are transferred first; then amounts attributed
to the next oldest Purchase Payment are transferred; and so on.
4. Transfers between Competing Accounts are not allowed. For purposes of
transfer, the Fixed Account and the Money Market Sub-Account are considered
"Competing Accounts."
5. Other transfers involving any Competing Account are restricted for certain
periods. For a period of ninety (90) days following a transfer out of a
Competing Account, no transfers (i.e., from any Account) may be made into
the other Competing Account. In addition, for a period of ninety (90) days
following a transfer into a Competing Account, no transfers (i.e. to any
Account) may be made out of the other Competing Account.
6. The Certificate provides that the Company reserves the right, at any time
and without prior notice to any party, to terminate, suspend or modify the
transfer privilege described above.
Participants can elect to make transfers by telephone (except if he/she is
participating in the Rebalancing Program). To do so, Participants must submit a
completed Written Request electing the telephone transfer privilege. The Company
will use reasonable procedures to confirm that instructions communicated by
telephone are genuine. If it does not, the Company may be liable for any losses
due to unauthorized or fraudulent instructions. The Company may tape record all
telephone instructions. The Company will not be liable for any loss, liability,
cost or expense incurred by the Participant for acting in accordance with such
telephone instructions believed to be genuine. The telephone transfer privilege
may be discontinued at any time by the Company.
If there are Joint Participants, unless the Company is informed to the
contrary, telephone instructions will be accepted from either of the Joint
Participants.
Transfers During the Annuity Period
During the Annuity Period, the Participant may make transfers (currently, six
(6) per calendar year), by Written Request, as follows:
1. The Participant may make transfers of Annuity Reserves between Sub-Accounts,
subject to any limitations imposed by the Company on the number of
transfers (currently, six (6) transfers per calendar year) that can be made
during the Annuity Period. Currently, six (6) transfers permitted per
calendar year during the Annuity Period are free (no Transfer Fee will be
imposed.) If Annuity Reserves are being transferred from more than one Sub-
Account, any Transfer Fee will be allocated to those Sub-Accounts on a pro-
rata basis in proportion to the amount transferred from each Sub-Account.
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<PAGE>
2. The Participant may, once each Certificate Year, make a transfer from one or
more Sub-Accounts to the General Account. The Participant may not make a
transfer from the General Account to the Separate Account.
3. Transfers of Annuity Reserves between Sub-Accounts will be made by
converting the number of Annuity Units attributable to the Annuity Reserves
being transferred to the number of Annuity Units of the Sub-Account to
which the transfer is made, so that the next Annuity Payment if it were made
at that time would be the same amount that it would have been without the
transfer. Thereafter, Annuity Payments will reflect changes in the value of
the new Annuity Units.
The amount transferred to the General Account from a Sub-Account will be
based on the Annuity Reserves for the Participant in that Sub-Account.
Transfers to the General Account will be made by converting the Annuity
Units being transferred to purchase fixed Annuity Payments under the Annuity
Option in effect and based on the Age of the Annuitant at the time of the
transfer.
4. The minimum amount which can be transferred is $1,000 or the Participant's
entire interest in the Sub-Account, if less. The minimum amount which must
remain in a Sub-Account after a transfer is $1,000 or $0 if the entire
amount in the Sub-Account is transferred.
5. The Certificate provides that the Company reserves the right, at any time
and without prior notice to any party, to terminate, suspend or modify the
transfer privilege described above.
Participants can elect to make transfers by telephone. To do so, Participants
must complete a prior Written Request electing the telephone transfer privilege.
The Company will use reasonable procedures to confirm that instructions
communicated by telephone are genuine. If it does not, the Company may be liable
for any losses due to unauthorized or fraudulent instructions. The Company may
tape record all telephone instructions. The Company will not be liable for any
loss, liability, cost or expense incurred by the Participant for acting in
accordance with such telephone instructions believed to be genuine. The
telephone transfer privilege may be discontinued at any time by the Company.
If there are Joint Participants, unless the Company is informed to the
contrary, telephone instructions will be accepted from either of the Joint
Participants.
Dollar Cost Averaging
Dollar Cost Averaging is a program which, if elected, permits a Participant to
systematically transfer on a periodic basis amounts from a selected Sub-Account
or the DCA Fixed Account to any of the other Sub-Accounts. By allocating amounts
on a regularly scheduled basis as opposed to allocating the total amount at one
particular time, a Participant may be less susceptible to the impact of market
fluctuations. The current minimum amount which may be transferred is $250. The
minimum duration of participation in any Dollar Cost Averaging program is
currently six (6) months. In order to participate in the Dollar Cost Averaging
program, a Participant must have Certificate Value of at least $5,000 to
complete the Participant's designated program. Dollar Cost Averaging is subject
to all Certificate restrictions regarding transfers.
If the Participant is participating in the Dollar Cost Averaging program, such
transfers are not currently taken into account in determining any Transfer Fee.
However, the Company reserves the right in the future to count Dollar Cost
Averaging transfers when determining the number of transfers in a year and
impose any applicable Transfer Fees. A Participant participating in the Dollar
Cost Averaging program may not also be participating in the Rebalancing Program.
(See Rebalancing Program below.) A Participant participating in the Dollar Cost
Averaging program may not also make withdrawals pursuant to the Systematic
Withdrawal Plan. (See Withdrawal - Systematic Withdrawals.)
Participants can choose the frequency at which the Dollar Cost Averaging
transfers will be made, i.e. monthly, quarterly, semi-annually or annually.
Participants will also choose the specific date when the first Dollar Cost Aver-
aging transfer will be made. If the date selected is less than five (5) business
days from the date the election form is received at the Annuity Service Center,
the Company may defer the first Dollar Cost Averaging transfer for one month. If
no start date has been selected, the Company will automatically start Dollar
Cost Averaging within five (5) business days after the Written Request is
received. Changes to the selections made by the Participant may be made by
Written Request. The Dollar Cost Averaging option will terminate if: (i) the
total Certificate Value is withdrawn; (ii) the last transfer as selected by the
Participant has been made; (iii) there is insufficient Certificate Value to
make the transfer; or (iv) except for the DCA Fixed Account, a Written Request
from the Participant to terminate the option has been received at the Annuity
Service Center at least five (5) business days prior to the next transfer date.
Except as otherwise provided, Dollar Cost Averaging is subject to the transfer
provisions of the Certificate.
Dollar Cost Averaging does not assure a profit and does not protect against loss
in declining markets. Since Dollar Cost Averaging involves continuous investment
in securities regardless of fluctuating price levels of such securities,
Participants should consider their financial ability to continue a Dollar Cost
Averaging program through periods of fluctuating price levels.
There is currently no charge for participating in the Dollar Cost Averaging
program. However, the Company reserves the right to charge for this option in
the future.
<PAGE>
Dollar Cost Averaging is not available to or from Competing Accounts.
The Company considers the DCA Fixed Account to be a Dollar Cost Averaging
program. A Participant may participate in only one Dollar Cost Averaging program
at a time.
Rebalancing Program
From time-to-time the Company may make available a program during the
Accumulation Period which provides for periodic pre-authorized automatic
transfers among certain Sub-Accounts pursuant to written allocation instructions
from the Owner. Participants may not participate in the Rebalancing Program if
they currently have any Purchase Payments allocated to the Fixed Accounts.
Transfers can be scheduled on a monthly, quarterly, semi-annual or annual basis.
All transfers must be expressed in whole percentages. Participants in the
Dollar Cost Averaging program cannot participate in the Rebalancing Program.
The Participant can terminate the Rebalancing Program at anytime by Written
Notice to the Company. Any unscheduled transfer request will automatically
terminate the Rebalancing Program election.
Withdrawals
During the Accumulation Period, the Participant may, upon a Written Request,
make a total or partial withdrawal of the Certificate Withdrawal Value. The
Certificate Withdrawal Value is:
1. The Certificate Value as of the end of the Valuation Period during which a
Written Request for a withdrawal is received; less
2. Any applicable Premium Taxes not previously deducted; less
3. The Annual Certificate Maintenance Charge, if any; less
4. Any Purchase Payments credited to the Certificate when based upon checks
that have not cleared the drawer bank; less
5. Any applicable Contingent Deferred Sales Charge.
A withdrawal will result in the cancellation of Accumulation Units from each
applicable Sub-Account and/or cancellation of values in the Fixed Account. The
amount will be withdrawn proportionately from the Fixed Account and each Sub-
Account held under the Certificate unless otherwise directed by the Participant.
A Participant may not make a partial withdrawal from the DCA Fixed Account. (See
DCA Fixed Account.) If the Participant makes a total withdrawal, all of the
Participant's rights and interests in the Certificate will terminate.
The Company will pay the amount of any withdrawal within seven (7) days of
receipt of a request in good order unless the Suspension or Deferral of Payments
provision is in effect (or unless a shorter period is required under applicable
law or regulation).
Each partial withdrawal must be for at least $250 or the Participant's entire
interest in the Fixed Account or applicable Sub-Account, if less. The minimum
Certificate Value which must remain in the Certificate after a partial with-
drawal is $5,000 for Non-Qualified Certificates and $2,000 for Qualified
Certificates. The Company reserves the right to limit the number of partial
withdrawals that can be made from a Certificate. Currently, there are no
limitations on the number of partial withdrawals. Certain tax penalties and
restrictions may apply to withdrawals from Certificates. (See Tax Status.)
Systematic Withdrawals
The Company permits a Systematic Withdrawal Plan which enables a Participant to
pre-authorize a periodic exercise of the contractual withdrawal rights.
Systematic withdrawals are made on any monthly date specified by the Participant
(or the next following Valuation Date if the monthly date is not a Valuation
Date). If no start date is selected, the Company will automatically begin
systematic withdrawals within five (5) business days after the Written Request
is received. Participants must have a Certificate Value of at least $25,000 upon
the activation of the withdrawal plan, in order to participate in the program.
Certain tax penalties and restrictions may apply to withdrawals from the
Certificates (see Tax Status). Participants can choose the frequency at which
withdrawals will be made, i.e., monthly, quarterly, semi-annually or annually.
Changes to selections made by the Participant may be made by Written Request.
The Systematic Withdrawal Option will terminate if: (i) the total Certificate
Value is withdrawn; (ii) the last withdrawal as selected by the Participant has
been made; (iii) there is insufficient Certificate Value in the Fixed Account
and/or Sub-Account to complete the withdrawal; (iv) Annuity Payments have
commenced; or (v) a Written Request from the Participant to terminate the option
has been received at the Annuity Service Center at least five (5) business days
prior to the next withdrawal request.
All the provisions relating to withdrawals contained in the Certificate are
applicable to the Systematic Withdrawal Plan, including the minimum withdrawal
amount of $250. The Systematic Withdrawal Plan is not available to Participants
who are currently utilizing the Automatic Investment Plan Option, the
Rebalancing Program or a Dollar Cost Averaging Program. If a Participant
terminates a Systematic Withdrawal Plan from the Fixed Account, a new Plan
involving withdrawals from the Fixed Account may not be elected during the six
(6) month period immediately following such election.
Suspension or Deferral of Payments
The Company reserves the right to suspend or postpone payments for a withdrawal
or transfer for any period when:
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1. The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. Trading on the New York Stock Exchange is restricted;
3. An emergency exists as a result of which disposal of securities held in the
Separate Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets;
or
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Participants; provided that
applicable rules and regulations of the Securities and Exchange Commission
will govern as to whether the conditions described in (2) and (3) exist.
The Company reserves the right to defer the payment of amounts withdrawn from
the Fixed Account for a period not to exceed six (6) months from the date
written request for such withdrawal is received by the Company.
Terminal Illness Benefit
If the Endorsement for Terminal Illness has been attached to the Certificate,
upon Written Request, the Participant may elect a Terminal Illness Benefit. The
Company will require proof that the Participant is terminally ill and not
expected to live more than 12 months. This proof will include, but is not
limited to, certification by a licensed medical practitioner performing within
the scope of his/her license. The licensed medical practitioner must not be the
Participant, or the parent, spouse or child of the Participant.
The Terminal Illness Benefit will be paid only to the Participant upon Written
Request. Payment of the Terminal Illness Benefit is determined as of the end of
the Valuation Period during which the Company receives at its Annuity Service
Center the Written Request. Prior to the Participant, or Joint Participant
reaching age 75, the Terminal Illness Benefit shall be the greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Certificate Value determined as of the end of the Valuation Period
during which the Company receives at its Annuity Service Center the Written
Request; or
3. The Certificate Value on the most recent three (3) year Certificate
Anniversary plus any subsequent Purchase Payments less any subsequent
withdrawals and any applicable charges.
After the Participant or oldest Joint Participant attains age 75, the Terminal
Illness Benefit shall be the greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Certificate Value determined as of the end of the Valuation Period
during which the Company receives at its Annuity Service Center the Written
Request; or
3. The Certificate Value on the most recent three (3) year Certificate
Anniversary prior to the Participant, or the oldest Joint Participant
reaching age 75, plus any subsequent Purchase Payments less any subsequent
withdrawals, including any applicable charges.
No Contingent Deferred Sales Charge shall apply with respect to any Terminal
Illness Benefit. Payment of the Terminal Illness Benefit is in full settlement
of the Company's liability under the Certificate and the Certificate will
terminate.
If Joint Participants are named, the Age of the oldest will be used to determine
the Terminal Illness Benefit. If the Certificate is owned by a non-natural
person, then Participant shall mean Annuitant.
Proceeds Payable on Death
Death of Participant During the Accumulation Period
Upon the death of the Participant or a Joint Participant during the Accumulation
Period, the death benefit will be paid to the Primary Beneficiary designated by
the Participant. Upon the death of a Joint Participant, the surviving Joint
Participant, if any, will be treated as the Primary Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
Contingent Beneficiary unless previously changed by Written Request.
A Beneficiary may request that the death benefit be paid under one of the Death
Benefit Options below. If the Beneficiary is the spouse of the Participant he or
she may elect to continue the Certificate at the then current Certificate Value
(which may be less than the Death Benefit) in his or her own name and exercise
all the Participant's rights under the Certificate. In the event of the
simultaneous death of Joint Participants, death benefits will become payable.
Death Benefit Amount During the Accumulation Period
Prior to the Participant, the oldest Joint Participant or the Annuitant
attaining age 75, the death benefit during the Accumulation Period will be the
greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Certificate Value determined as of the end of the Valuation Period
during which the Company receives at its Annuity Service Center both due
proof of death and an election of the payment method; or
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3. The Certificate Value on the most recent three (3) year Certificate
Anniversary plus any subsequent Purchase Payments less any subsequent
withdrawals including any applicable charges.
After the Participant, the oldest Joint Participant, or the Annuitant attains
age 75, the death benefit during the Accumulation Period will be the greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Certificate Value determined as of the end of the Valuation Period
during which the Company receives at its Annuity Service Center both due
proof of death and an election of the payment method; or
3. The Certificate Value on the most recent three (3) year Certificate
Anniversary prior to the Participant, or the oldest Joint Participant, or
the Annuitant reaching age 75, plus any subsequent Purchase Payments less
any subsequent withdrawals, including any applicable charges.
In certain states, the death benefit during the Accumulation Period will be the
Certificate Value determined and paid as of the end of the Valuation Period
during which the Company receives both due proof of death and an election of the
payment method.
Participants should consult their Certificate for the applicable death benefit
provision.
Death Benefit Options During the Accumulation Period
A Beneficiary who is not the surviving spouse of the Participant must elect the
death benefit to be paid under one of the following options in the event of the
death of the Participant during the Accumulation Period:
Option 1 - lump sum payment of the death benefit; or
Option 2 - the payment of the entire death benefit within five (5) years of the
date of the death of the Participant; or
Option 3 - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one (1) year of
the date of death of the Participant or any Joint Participant.
Any portion of the death benefit not applied under Option 3 within one (1) year
of the date of the Participant's death, must be distributed within five (5)
years of the date of death.
A Beneficiary who is the surviving spouse of the Participant may elect to
continue the Certificate in his or her own name, elect a lump sum payment of the
death benefit or apply the death benefit to an Annuity Option.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, in any form other than a lump sum, may only be
elected during the sixty-day period beginning with the date of receipt by the
Company of proof of death.
Death of Participant During the Annuity Period
If the Participant or a Joint Participant, who is not the Annuitant, dies during
the Annuity Period, any remaining payments under the Annuity Option elected will
continue to be made at least as rapidly as under the method of distribution in
effect at such Participant's death. Upon the death of a Participant during the
Annuity Period, the Beneficiary becomes the Participant.
Death of Annuitant
Upon the death of the Annuitant, who is not a Participant, during the
Accumulation Period, the Participant may designate a new Annuitant, subject to
the Company's underwriting rules then in effect. If no designation is made
within 30 days of the death of the Annuitant, the Participant will become the
Annuitant. If the Participant is a non-natural person, the death of the
Annuitant will be treated as the death of the Participant and a new Annuitant
may not be designated. (See Death of Participant During the Accumulation
Period.)
Upon the death of the Annuitant on or after the Annuity Date, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits will
be paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
Payment of Death Benefit
The Company will require due proof of death before any death benefit is paid.
Due proof of death will be:
1. a certified death certificate;
2. a certified decree of a court of competent jurisdiction as to the finding of
death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
Beneficiary
The Beneficiary designation in effect on the Issue Date will remain in effect
until changed. Unless the Participant provides otherwise, the death benefit will
be paid in equal shares to the Beneficiary(ies) as follows:
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1. to the Primary Beneficiary(ies) who survive the Participant's and/or the
Annuitant's death, as applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Participant's and/or the
Annuitant's death, as applicable; or if there are none
3. to the estate of the Participant.
Beneficiaries may be named irrevocably. In that case a change of Beneficiary
requires the consent of any irrevocable Beneficiary. If an irrevocable
Beneficiary is named, the Participant retains all other contractual rights.
Change of Beneficiary
Subject to the rights of any irrevocable Beneficiary(ies), the Participant may
change the Primary Beneficiary(ies) or Contingent Beneficiary(ies). A change
must be made by Written Request. The change will take effect as of the date the
notice is signed. The Company will not be liable for any payment made or action
taken before it records the change.
Annuity Provisions
Annuity Guidelines
Once the Certificate reaches the Annuity Date, the following guidelines apply:
1. The Participant may elect to have the Certificate Value applied to provide a
Variable Annuity, a Fixed Annuity, or a combination Fixed and Variable
Annuity. If a combination is elected, the Participant must specify what part
of the Certificate Value is to be applied to the Fixed and Variable options.
2. The amount applied to an Annuity Option on the Annuity Date, excluding any
death benefit proceeds applied to an Annuity Option, is equal to the
Certificate Value minus any applicable Premium Tax and Annual Certificate
Maintenance Charge.
3. If the amount to be applied under an Annuity Option is less than $2,000, the
Company reserves the right to pay the amount in a lump sum. If any Annuity
Payment is less than $100, the Company reserves the right to change the
payment basis to equivalent quarterly, semi-annual or annual payments.
4. Participants select an Annuity Date at the Issue Date. Participants may
change the Annuity Date at any time prior to the Annuity Date by Written
Request 30 days prior to the new Annuity Date. The Annuity Date must be the
first day of a calendar month. The Annuity Date cannot be earlier than five
years after the Issue Date. The latest permitted Annuity Date is the earlier
of: (i) the 90th birthday of the Annuitant or the oldest Joint Annuitant;
(ii) the 90th birthday of the Participant or the oldest Joint Participant,
or (iii) the latest date permitted under state law.
5. If no Annuity Option has been chosen at least thirty (30) calendar days
before the Annuity Date, the Company will make payments to the Annuitant
under Option B, with ten (10) years of payments guaranteed. Unless specified
otherwise, the then current Certificate Value allocation shall determine
whether a Fixed Annuity or Variable Annuity, or combination Fixed and
Variable Annuity will be provided. Therefore, any amounts in the Separate
Account will be applied to a Variable Annuity, and any amounts in the Fixed
Account will be applied to a Fixed Annuity. Variable Annuity payments will
be based on the Sub-Account(s) selected by the Participant, or on the then
current allocation of Certificate Value among the Sub-Accounts.
Annuity Payments
The Company will make Annuity Payments beginning on the Annuity Date, provided
no death benefit has become payable and the Participant has by Written Request
selected an available Annuity Option and payment schedule. Except as otherwise
agreed to by the Participant and the Company, Annuity Payments will be payable
monthly. The Annuity Option and frequency of Annuity Payments may not be changed
by the Participant after Annuity Payments begin. Unless the Participant
specifies otherwise, the payee of the Annuity Payments shall be the Annuitant.
If the amount of the Annuity Payment will depend on the Age and/or sex of the
Annuitant, the Company reserves the right to ask for satisfactory proof of the
Annuitant's (or Joint Annuitant's, if any) Age and sex unless prohibited by
applicable law. The Company reserves the right to delay Annuity Payments until
acceptable proof is received.
The Mortality and Expense Risk Charge is assessed during both the Accumulation
Period and the Annuity Period. The Company will continue to assess the Mortality
and Expense Risk Charge during payment of an Annuity Option that does not
involve life contingency even though the Company no longer bears any mortality
risk on such payment obligation.
Fixed Annuity
A Fixed Annuity provides for payments which do not fluctuate based on
investment performance.
Fixed Annuity payments shall be determined by applying the guaranteed Annuity
Purchase Rates set forth in the Fixed Annuity Rate Tables contained in the
Certificate to the portion of the Certificate Value allocated to the Fixed
Annuity Option selected by the Participant.
Variable Annuity
A Variable Annuity provides for payments which may fluctuate based on the
investment performance of the Sub-
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Accounts of the Separate Account. Variable Annuity Payments will be based on the
Sub-Accounts Annuity Units credited to the Variable Annuity Option.
Annuity Units and Payments
1. The dollar amount of each Variable Annuity payment depends on the number of
Annuity Units credited to that Annuity Option, and the value of those Units.
The number of Annuity Units is determined as follows:
2. The number of Annuity Units credited in each Sub-Account will be determined
by dividing the product of the portion of the Certificate Value to be
applied to the Sub-Account and the Annuity Purchase Rate by the value of one
Annuity Unit in that Sub-Account on the Annuity Date. The purchase rates are
set forth in the Variable Annuity Rate Tables in the Certificate.
3. For each Sub-Account, the amount of each Annuity Payment equals the product
of the Annuitant's number of Annuity Units and the Annuity Unit Value on the
payment date. The amount of each payment may vary.
Annuity Unit Value
The value of any Annuity Unit for each Sub-Account of the Separate Account was
set on the date such Sub-Account became operative.
The Sub-Account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
1. The Net Investment Factor for the current Valuation Period is multiplied by
the value of the Annuity Unit for the Sub-Account for the immediately
preceding Valuation Period.
2. The result in (1) is then divided by an assumed investment rate factor. The
assumed investment rate factor equals 1.00 plus the assumed investment rate
for the number of days since the preceding Valuation Date. The assumed
investment rate is based on an effective annual rate of 4%.
The value of an Annuity Unit may increase or decrease from Valuation Period to
Valuation Period.
Annuity Options
The Participant may choose periodic Fixed and/or Variable Annuity Payments under
any one of the Annuity Options described below. The Company may consent to other
plans of payment before the Annuity Date.
The following Annuity Options are available:
Annuity Option A - Life Income.
Periodic payments will be made as long as the Annuitant lives. Under this option
it would be possible for only one (1) Annuity Payment to be made if the
Annuitant were to die before the due date of the second Annuity Payment; only
two (2) Annuity Payments if the Annuitant were to die before the due date of
the third Annuity Payment; and so forth.
Annuity Option B - Life Income with Period Certain.
Periodic payments will be made for a guaranteed period, or as long as the
Annuitant lives, whichever is longer. The guaranteed period may be five (5), ten
(10) or twenty (20) years. If the Beneficiary does not desire payments to
continue for the remainder of the guaranteed period, he/she may elect to have
the present value of the guaranteed Annuity Payments remaining commuted and paid
in a lump sum.
Annuity Option C - Joint and Last Survivor Payments.
Periodic payments will be made during the joint lifetime of two Annuitants
continuing in the same amount during the lifetime of the surviving Annuitant.
Under this option it would be possible for only one (1) Annuity Payment to be
made if both Annuitants were to die before the due date of the second Annuity
Payment; only two (2) Annuity Payments if both Annuitants were to die before the
due date of the third Annuity Payment; and so forth.
Annuity Option D - Joint and 2/3 Survivor Annuity.
Periodic payments will be made during the joint lifetime of two Annuitants.
Payments will continue during the lifetime of the surviving Annuitant and will
be computed on the basis of two-thirds of the Annuity Payment (or Units) in
effect during the joint lifetime. Under this option it would be possible for
only one (1) Annuity Payment to be made if both Annuitants were to die before
the due date of the second Annuity Payment; only two (2) Annuity Payments if
both Annuitants were to die before the due date of the third Annuity Payment;
and so forth.
Annuity Option E - Period Certain.
Periodic payments will be made for a specified period. The specified period must
be at least five (5) years and cannot be more than thirty (30) years. If the
Participant does not desire payments to continue for the remainder of the
guaranteed period, he/she may elect to have the present value of the remaining
payments commuted and paid in a lump sum or as an Annuity Option purchased at
the date of such election.
Annuity Option F - Special Income Settlement Agreement.
The Company will pay the proceeds in accordance with terms agreed upon in
writing by the Participant and the Company.
Distribution
The Certificates will be sold by licensed insurance agents in those states where
the Certificates may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
and who have entered into distribution agreements with
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the Company and the principal underwriter for the Certificate. MML Distributors,
LLC ("MML Distributors"), an ultimate subsidiary of MassMutual serves as a
principal underwriter for the Certificates. MML Distributors is located at 1414
Main Street, Springfield, MA 01144-1013. MML Investors Services, Inc.
("MMLISI"), an ultimate subsidiary of Massachusetts Mutual Life Insurance
Company serves as a co-underwriter for the Certificates. MMLISI is located at
1414 Main Street, Springfield, MA 01144-1013. The principal underwriter and the
co-underwriter are registered with the Securities and Exchange Commission as
broker-dealers and are members of the National Association of Securities Dealer,
Inc. Commissions and other distribution compensation will be paid by the Company
on behalf of the Distributor to selling broker-dealers up to an amount currently
equal to 7.00% of Purchase Payments. The Company may, by agreement with the
broker/dealer, pay commissions as a trail commission (up to 1.20% of Certificate
Values beginning in the first Certificate Year) or as a combination of
commission at the time of the sale and a trail commission. These alternatives
could ultimately exceed 7.0% of the Purchase Payments over time.
The Company will accept, by agreement with a limited number of broker-dealers,
electronic data transmissions of Application information, along with wire
transmittals of initial Purchase Payments from the broker-dealers to the Annuity
Service Center for purchase of the Certificate. Please contact your broker-
dealer representative to receive more information about electronic data
transmission of Application information.
It is anticipated that the offering of the Certificates will be continuous.
Performance Measures
The Company may show the performance under the Certificates in the following
ways:
Standardized Average Annual Total Return
The Company will show the Standardized Average Annual Total Return for the Sub-
Accounts of the Separate Account which have been in existence for more than one
year. As prescribed by the rules of the SEC, the Standardized Average Annual
Total Return is the effective annual compounded rate of return that would have
produced the Certificate Withdrawal Value over the stated period had the
performance remained constant throughout. The Standardized Average Annual Total
Return assumes a single $1000 payment made at the beginning of the period and
full redemption at the end of the period. It reflects a deduction for the
contingent deferred sales charge, the annual Certificate maintenance charge and
all other Fund, Separate Account, and Certificate level charges except premium
taxes, if any. The annual Certificate maintenance charge is apportioned among
the Sub-Accounts based upon the percentages of inforce Certificates investing in
each of the Sub-Accounts.
For sub-accounts of the Separate Account which have been in existence for less
than one year, the Company will show the aggregate total return as permitted by
the SEC. The aggregate total return assumes a single one thousand dollar payment
made at the beginning of the period and full redemption at the end of the
period. It reflects the change in unit value and a deduction of the contingent
deferred sales charge.
Additional Performance Measures
The Company may choose to show Average Annual Total Returns based on the
inception of the underlying Fund. The performance figures discussed in this
section are calculated on the basis of the historical performance of the Funds,
and may assume the Certificates were in existence prior to their inception date
(which they were not). The difference between the first set of additional
performance measures, PERCENTAGE CHANGE and ANNUALIZED RETURNS on Accumulation
Unit Values, and the second set, the NON-STANDARDIZED ANNUAL and AVERAGE ANNUAL
TOTAL RETURNS, is that the second set includes the deduction of the Annual
Certificate Maintenance Charge, the first set does not. Additional details
follow.
ACCUMULATION UNIT VALUES; PERCENTAGE CHANGE AND ANNUALIZED RETURNS. The Company
will show the PERCENTAGE CHANGE in the value of an Accumulation Unit for a Sub-
Account with respect to one or more periods. The ANNUALIZED RETURN, or average
annual change in Accumulation Unit Values, may also be shown with respect to one
or more periods. For a one year period, the PERCENTAGE CHANGE and the ANNUALIZED
RETURN are effective annual rates of return and are equal. For periods greater
than one year, the ANNUALIZED RETURN is the effective annual compounded rate of
return for the periods stated. Since the value of an Accumulation Unit reflects
the Separate Account, the Panorama Series Fund expenses and the Oppenheimer Fund
expenses (See Table of Fees and Expenses), the PERCENTAGE CHANGE and ANNUALIZED
RETURN also reflect these expenses. These percentages, however, do not reflect
the Certificate Maintenance Charge and the contingent deferred sales charge or
premium taxes (if any), which if included would reduce the percentages reported.
The NON-STANDARDIZED ANNUAL TOTAL RETURN for a Sub-Account is the effective
annual rate of return that would have produced the ending Accumulated Value of
the stated one year period.
The NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN for a Sub-Account is the
effective annual compounded rate of return that would have produced the ending
Accumulated Value over the stated period had the performance remained constant
throughout.
Note: The NON-STANDARDIZED ANNUAL TOTAL RETURN will be less than the NON-
STANDARDIZED ANNUALIZED RETURN on Accumulation Unit values for the same period
due to the effect of the Annual Certificate Maintenance Charge. Additionally,
the magnitude of this difference
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will depend on the size of the Accumulated Value from which the Annual
Certificate Maintenance Charge is deducted.
YIELD AND EFFECTIVE YIELD. The Company may also show yield and effective yield
figures for the Money Market Sub-Account over a seven-day period, which is then
"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Money
Market Sub-Account is assumed to be reinvested. Therefore the effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. These figures do not reflect the contingent deferred sales
charge or premium taxes (if any), which if included would reduce the yields
reported.
The performance measures discussed above reflect results of the Funds and are
not intended to indicate or predict future performance. For more detailed
information see the Statement of Additional Information.
Performance information for the Separate Account Sub-Accounts may be compared to
other variable annuity separate accounts or other investment products surveyed
by Lipper Analytical Services, a nationally recognized independent reporting
service or similar service that rank mutual funds and other investment products
on overall performance or other criteria. Performance figures will be calculated
in accordance with standardized methods established by each reporting service.
The Company may also show the application of general mathematical principles in
connection with the Certificates.
Tax Status
General
Note: the following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. This discussion is based upon the Company's understanding of
the present Federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of the
continuation of the present Federal income tax laws, or of the current
interpretation by the Internal Revenue Service. It should be further understood
that the following discussion is not exhaustive and that special rules not
described in this prospectus may be applicable in certain situations. Moreover,
no attempt has been made to consider any applicable state or other tax laws.
Section 72 of the Code governs taxation of annuities in general. A Participant
is generally not taxed on increases in the value of a Certificate until
distribution occurs, either in the form of a lump sum payment or other non-
periodic distribution or as Annuity Payments under the Annuity Option selected.
For a lump sum payment received as a total withdrawal (total surrender), the
recipient is taxed on the portion of the payment that exceeds the cost basis of
the Certificate. For Non-Qualified Certificates, this cost basis is generally
the Purchase Payments, while for Qualified Certificates there may be no cost
basis. The taxable portion of the lump sum payment is taxed at ordinary income
tax rates.
For Annuity Payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed Annuity Option is determined by multiplying the payment by the ratio that
the cost basis of the Certificate (adjusted for any period certain or refund
feature) bears to the expected return under the Certificate. The exclusion
amount for payments based on a variable Annuity Option is determined by dividing
the cost basis of the Certificate (adjusted for any period certain or refund
guarantee) by the number of years over which the annuity is expected to be paid.
Payments received after the investment in the Certificate has been recovered
(i.e., when the total of the excludable amounts received equal the investment in
the Certificate) are fully taxable. The taxable portion is taxed at ordinary
income tax rates. For certain types of Qualified Plans there may be no cost
basis in the Certificate within the meaning of Section 72 of the Code.
Participants, Annuitants, and Beneficiaries under the Certificates should seek
competent financial advice about the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company and its operations form a part of the Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity certificates. The Code provides that a
variable annuity certificate will not be treated as an annuity certificate for
any period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Certificate as an annuity contract would result in the imposition of federal
income tax to the Participant with respect to earnings allocable to the
Certificate prior to the receipt of payments under the Certificate. The Code
contains a safe harbor provision which provides that annuity contracts such as
the Certificate meet the diversification requirements if, as of the end of each
quarter, the underlying assets meet the diversification standards for a
regulated investment company and no more than 55% of the total assets consist of
cash, cash items, U.S. Government securities and securities of other regulated
investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg. 1.817-
5), which established diversification requirements for the investment portfolios
underlying
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variable contracts such as the Certificate. The Regulations amplify the
diversification requirements for variable contracts set forth in the Code and
provide an alternative to the safe harbor provision described above. Under the
Regulations, an investment portfolio will be deemed adequately diversified if:
(1) no more than 55% of the value of the total assets of the portfolio is
represented by any one investment; (2) no more than 70% of the value of the
total assets of the portfolio is represented by any two investments; (3) no more
than 80% of the value of the total assets of the portfolio is represented by any
three investments; and (4) no more than 90% of the value of the total assets of
the portfolio is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States Government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all Portfolios of the Funds underlying the Certificates
will be managed by the Investment Adviser for the Funds in such a manner as to
comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Participant control of
the investments of the Separate Account will cause the Participant to be treated
as the owner of the assets of the Separate Account, thereby resulting in the
loss of favorable tax treatment for the Certificate. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Participant control which may be exercised under the Certificate
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Participant's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Participant to be considered as the owner of the assets of the
Separate Account resulting in the imposition of federal income tax to the
Participant with respect to earnings allocable to the Certificate prior to
receipt of payments under the Certificate.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling would generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Participant being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Certificate in an attempt to maintain favorable tax treatment.
Multiple Certificates or Contracts
The Code provides that multiple Non-Qualified annuity certificates or contracts
which are issued within a calendar year to the same Participant by one company
or its affiliates are treated as one annuity certificate for purposes of
determining the tax consequences of any distribution. Such treatment may result
in adverse tax consequences including more rapid taxation of the distributed
amounts from such combination of certificates or contracts. Participants should
consult a tax adviser prior to purchasing more than one Non-Qualified annuity
certificate or contract in any calendar year.
Tax Treatment of Assignments
A transfer of ownership, assignment or pledge of a Certificate may be a taxable
event. Participants should therefore consult competent tax advisers should they
wish to transfer, assign or pledge their Certificates.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of a payee are subject to federal income tax withholding. Generally, amounts are
withheld from periodic payments at the same rate as wages and at the rate of 10%
from non-periodic payments. However, the payee, in most cases, may elect not to
have taxes withheld or to have withholding done at a different rate. Special
rules limit the ability of a payee to elect no withholding where the payee fails
to provide a U.S. residence address or federal taxpayer identification number.
Effective January 1, 1993, certain distributions from Qualified Plans under
Section 401, which are not directly rolled over to another eligible retirement
plan or individual retirement account or individual retirement annuity, are
subject to a mandatory 20% withholding for federal income tax. The 20%
withholding requirement does not apply to: a) distributions for the life or life
expectancy of the participant or joint lives or joint life expectancies of the
participant and a designated beneficiary; or b) distributions for a specified
period of ten (10) years or more; or c) distributions which are required minimum
distributions. Payments that are not eligible for rollover remain subject to the
withholding rules described in the preceding paragraph.
Tax Treatment of Withdrawals - Non-Qualified Certificates
Section 72 of the Code governs treatment of distributions from annuity contracts
such as the Certificate. It provides that if the Certificate Value exceeds the
aggregate purchase payments made, any amount withdrawn will be treated as coming
first from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are includible in gross income.
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Penalty Tax
A 10% penalty will apply to the income portion of any distribution. However, the
penalty is not imposed on amounts received: (a) after the taxpayer reaches age
59 1/2; (b) after the death of the Participant; (c) if the taxpayer has become
totally disabled (for this purpose disability is as defined in Section 72(m)(7)
of the Code); (d) in a series of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the taxpayer
or for the joint lives (or joint life expectancies) of the taxpayer and his or
her Beneficiary; (e) under an immediate annuity; or (f) which are allocable to
purchase payments made prior to August 14, 1982.
The above information does not apply to Qualified Certificates. However,
separate tax withdrawal penalties and restrictions may apply to such Qualified
Certificates. (See Tax Treatment of Withdrawals - Qualified Certificates.)
Qualified Plans
The Certificates offered by this Prospectus are designed to be suitable for use
under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Participants, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan regardless of the terms and conditions of the Certificates issued
pursuant to the plan. Some retirement plans are subject to distribution and
other requirements that are not incorporated into the Certificate's
administrative procedures. Owners, participants and Beneficiaries are
responsible for determining that contributions, distributions and other transac-
tions with respect to the Certificates comply with applicable law. Following are
general descriptions of the types of Qualified Plans with which the
Certificates may be used (subject to state availability). Such descriptions are
not exhaustive and are for general informational purposes only. The tax rules
regarding Qualified Plans are very complex and will have differing applications
depending on individual facts and circumstances. Each purchaser should obtain
competent tax advice prior to purchasing a Certificate issued under a Qualified
Plan.
Certificates issued pursuant to Qualified Plans include special provisions
restricting Certificate rights that may otherwise be available as described in
this Prospectus. Generally, Certificates issued pursuant to Qualified Plans are
not transferable except upon surrender or annuitization. Various penalty and
excise taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Certificates. (See Tax
Treatment of Withdrawals - Qualified Certificates.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Certificates sold by the Company in connection
with certain Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish Qualified
Plans for themselves and their employees, commonly referred to as "H.R. 10" or
"Keogh" plans. Contributions made to the Plan for the benefit of the employees
will not be included in the gross income of the employees until distributed from
the Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See Tax Treatment of Withdrawals - Qualified Certificates.) These
retirement plans may permit the purchase of the Certificates to accumulate
retirement savings under the plans. Adverse tax or other legal consequences to
the Plan, to the participant or to both may result if the Certificate is
assigned or transferred to any individual as a means to provide benefit
payments, unless the Plan complies with all legal requirements applicable to
such benefits prior to the transfer of the Certificate. Purchasers of
Certificates for use with an H.R. 10 Plan should obtain competent tax advice as
to the tax treatment and suitability of such an investment.
Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See Tax Treatment of Withdrawals - Qualified Certificates.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Certificates for use with IRAs are subject to special requirements
imposed by the Code, including the requirement that certain informational
disclosure be given to persons desiring to establish an IRA. The Internal
Revenue Service has not reviewed the Certificate for qualification as an IRA,
and has not addressed in a ruling of general applicability whether a death
benefit provision such as the provision in the Certificate comports with IRA
qualification requirements. Purchasers of Certificates to be qualified as
Individual Retirement Annuities should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
Roth IRAs
Section 408A of the Code establishes the specially designated Roth IRA to which
eligible individuals may contribute. Con-
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tributions to a Roth IRA are not deductible and are limited based on modified
adjusted gross income. Qualified distributions from Roth IRAs are not included
in income. Distributions that are not qualified distributions are treated first
as a return of investment to the extent of the individual's contributions to
Roth IRAs and as a taxable distribution to the ex-tent of any excess. An
individual (other than a married individual filing separately) with an adjusted
gross income of $100,000 or less may roll over distributions within 60 days from
a regular IRA to a Roth IRA or may convert a regular IRA into a Roth IRA. The
rollover would be subject to tax; however, it would not be subject to the 10%
premature distribution penalty tax. If the rollover occurs during 1998, the
income will be spread out over four tax years.
Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the Certificates to provide benefits under the Plan.
Contributions to the Plan for the benefit of employees will not be includible
in the gross income of the employees until distributed from the Plan. The tax
consequences to participants may vary depending upon the particular plan design.
However, the Code places limitations and restrictions on all plans including on
such items as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and nonforfeitability of
interests; nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. (See Tax Treatment of
Withdrawals - Qualified Certificates.) These retirement plans may permit the
purchaser of the Certificates to accumulate retirement savings under the plans.
Adverse tax or other legal consequences to the plan, to the participant, or to
both may result if the Certificate is assigned or transferred to any individual
as a means to provide benefit payments, unless the plan complies with all legal
requirements applicable to such benefits prior to transfer of the Certificate.
Purchasers of Certificates for use with Corporate Pension or Profit-Sharing
Plans should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
Section 457 Deferred Compensation ("Section 457") Plans
Under Section 457 of the Code, employees of (and independent contractors who
perform services for) certain state and local governmental units, or certain
tax-exempt employers, may participate in a Section 457 plan of the employer,
allowing them to defer part of their salary or other compensations. The amount
deferred, and any income on such amount, will not be taxable until paid or
otherwise made available to the employee.
The maximum amount that can be deferred under a Section 457 plan in any tax year
is ordinarily one-third of the employee's includible compensation, up to
$7,500. Includible compensation means earnings for services rendered to the
employer which is includible in the employee's gross income, but excluding any
contributions under the Section 457 plan, or a Tax-Sheltered Annuity. During the
last three (3) years before an individual attains normal retirement age,
additional "catch-up" deferrals are permitted. The deferred amounts will be used
by the employer to purchase the Certificate. The Certificate will be issued to
the employer, but all Certificate Values must be held for the exclusive benefit
of the employees under it. The employee has no rights or vested interest in the
Certificate, and is only entitled to payment in accordance with the Section 457
plan provisions. Present federal income tax law does not allow tax-free
transfers or rollovers for amounts accumulated in a Section 457 plan, except for
transfers to other Section 457 plans in certain limited cases.
Tax Treatment of Withdrawals - Qualified Certificates
In the case of a withdrawal under a Qualified Certificate, a ratable portion of
the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Certificate. Section 72(t) of the Code imposes a 10% penalty
tax on the taxable portion of any distribution from qualified retirement plans,
including Certificates issued and qualified under Code Sections 401 (H.R. 10
and Corporate Pension and Profit-Sharing Plans) and 408(b) (Individual
Retirement Annuities) and 408A (Roth IRAs). To the extent amounts are not
includible in gross income because they have been rolled over to an IRA or to
another eligible Qualified Plan, no tax penalty will be imposed. The penalty tax
will not apply to a rollover from a conversion of a traditional IRA into a Roth
IRA. The tax penalty will not apply to the following distributions: (a) if
distribution is made on or after the date on which the Participant or Annuitant
(as applicable) reaches age 59 1/2; (b) distributions following the death or
disability of the Participant or Annuitant (as applicable) (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (c) after separation
from service, distributions that are part of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the Participant or Annuitant (as applicable) or the joint lives
(or joint life expectancies) of such Participant or Annuitant (as applicable)
and his or her designated Beneficiary; (d) distributions to a Participant or
Annuitant (as applicable) who has separated from service after he/she has
attained age 55; (e) distributions made to the Participant or Annuitant (as
applicable) to the extent such distributions do not exceed the amount allowable
as a deduction under Code Section 213 to the Participant or Annuitant (as
applicable) for amounts paid during the taxable year for medical care; (f)
distributions made to an alternate payee pursuant to a qualified domestic rela-
tions order; (g) beginning in 1998, distributions made for qualified higher
education expenses, and (h) beginning in 1998, distributions made for a
qualified "first-home" purchase, subject to a $10,000 lifetime cap. The
exceptions stated in (d) and (f) above do not apply in the case of an Individual
Retirement Annuity. The exceptions stated in (g) and (h) above apply to
Individual Retirement Annuities. The exception stated in (c) above applies to an
Individual Retirement Annuity without the requirement that there be a
separation from service. In addition, for calendar years beginning January 1,
1997, withdrawals from IRAs by certain
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unemployed persons for payment of health insurance premiums are not subject to
the tax penalty. Exceptions applicable to an IRA are applicable to a Roth IRA.
Qualified distributions from Roth IRAs are not subject to the penalty tax.
Generally, distributions from a Qualified Plan of a 5% owner or from an IRA must
commence no later than April 1 of the calendar year, following the year in which
the employee attains age 70 1/2, and from all others in Qualified Plans at the
later of age 70 1/2 or when the employee retires. Required distributions must be
over a period not exceeding the life expectancy of the individual or the joint
lives or life expectancies of the individual and his or her designated
beneficiary. If the required minimum distributions are not made, a 50% penalty
tax is imposed as to the amount not distributed. There are no required minimum
distributions for a Roth IRA.
Certificates Owned By Other Than
Natural Persons
Generally, investment earnings on premiums for Certificates will be taxed
currently to the Participant if the Participant is a non-natural person, e.g., a
corporation, or certain other entities other than tax-qualified trusts. Such
Certificates generally will not be treated as annuities for federal income tax
purposes.
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APPENDIX A
IRA DISCLOSURE
STATEMENT
This statement is designed to assist you in understanding the requirements of
Federal tax law which apply to your Individual Retirement Annuity ("IRA"),
Spousal IRA, Roth IRA, or your Simplified Employee Pension IRA ("SEP-IRA") for
employer contributions. If you desire further information regarding your IRA,
it may be obtained either from your registered representative or from any
district office of the Internal Revenue Service.
The growth in value of the annuity is neither guaranteed nor projected.
Seven-Day Review Period
You have seven (7) days after you sign your application to review this statement
and the Prospectus without obligation. If you notify the company either orally
or in writing within this seven-day period that you do not wish to keep your
contract, your entire Purchase Payment will be refunded to you.
Annuity Service Center
H565
P.O. Box 9067
Springfield, MA 01102-9067
Eligibility Requirements
All persons with earned compensation are eligible for Individual Retirement
Annuities ("IRAs"). Additionally, if you have a spouse who has earned no
compensation (and you file a joint tax return), you may establish an IRA on
behalf of your spouse. Of course, if you have a working spouse who has earned
compensation, that spouse may establish his or her own IRA. Lastly, a divorced
or legally separated spouse may treat taxable alimony or separate maintenance
payments as compensation for purposes of establishing an IRA.
The Annuity as an IRA
When this Annuity is issued as an IRA, the contract is amended to provide that
the contract is both non-transferable and non-forfeitable.
Contributions and Deductions
As a result of significant changes made by the Tax Reform Act of 1986,
contributions to your IRA are limited at two levels. First, there are limits on
the amount of contributions which may be deducted for income tax purposes.
Second, there is a limit with respect to the amount of nondeductible
contributions which can be made. The Small Business Job Protection Act of 1996
and The Taxpayer Relief Act of 1997 may also affect IRA contributions and
withdrawals.
For tax years beginning after 1997, an individual who is not an active
participant in an employer-maintained retirement plan is eligible to make
deductible contributions to an IRA equal to the lesser of 100% of compensation
or $2,000. A spouse who is not an active participant in an employer-maintained
retirement plan during any part of a year but whose spouse is a plan participant
may made a deductible IRA contribution, subject to phase-out at adjusted gross
income between $150,000 and $160,000. Furthermore, an individual who files a
joint return and who has less taxable compensation than his spouse may
contribute to a spousal IRA and deduct the lesser of $2,000 or the sum of (a)
that individual's includable compensation for the tax year plus (b) includable
compensation of the individual's spouse reduced by the spouse's allowable IRA
deduction and Roth IRA contribution for the tax year.
However, if you or your spouse (if you file a joint return) is an active
participant in an employer-maintained retirement plan, your IRA deduction may be
reduced or eliminated entirely at certain levels of adjusted gross income. For
tax years beginning after 1997, phase-out ranges for deductible IRA
contributions increase annually until 2005 or 2007. Specifically, the adjusted
gross income phase-out range in 1998 for individuals with a single or head of
household filing status is $30,000 to $40,000, increasing annually to $50,000 to
$60,000 in 2005. For married individuals filing a joint return, the phase-out
range in 1998 is $50,000 to $60,000, increasing annually to $80,000 to $100,000
in 2007. The phase-out range in any year for a married individual filing
separately is $0 to $10,000. In all cases, the IRA deduction will be phased out
ratably within the respective ranges.
Nevertheless, you may still make designated nondeductible IRA contributions to
the extent of the excess of (1) the lesser of $2,000 ($4,000 in the case of a
Spousal IRA), or 100% of compensation annually, over (2) the applicable IRA
deduction limit. You may also choose to make a contribution non-deductible even
if you could have deducted part or all of the contribution. Interest or other
earnings on your IRA contribution, whether from deductible or nondeductible
contributions, will not be taxed until distributed to you.
For purposes of the above discussion, you are an "active participant" in an
employer-maintained retirement plan, if you are covered by such plan, even if
you are not yet vested in your retirement benefit. However, an individual who is
a participant in an eligible state deferred compensation plan, as defined in
Code section 457(b), is not considered to be an "active participant".
In order to qualify for a particular tax year, IRA contributions must be made
during such tax year or by the deadline for filing your income tax return for
that year (not including extensions). For calendar year taxpayers the deadline
is generally April 15.
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If you make contributions to an IRA, Roth IRA or Education IRA in excess of the
combined deductible and nondeductible limits, you may be liable for a
nondeductible excise tax of 6% of the amount of the excess. You may withdraw an
excess contribution together with the net income attributable to the excess, on
or before the due date (including extensions of time) for filing your Federal
income tax return and the excess amount will be treated as if you never con-
tributed it, regardless of the size of the contribution. The accompanying
distribution of the net income, however, is includable in income for the year in
which the excess contribution is made. Excess amounts which are not withdrawn
by this method are subject to the 6% excise tax in the year of contribution and
are carried over and taxed each year until the year the excess is reduced.
No contribution may be made by you to your IRA during or after the tax year in
which you attain age 70 1/2, other than rollover distributions.
Special tax rules apply in the case of Roth IRAs.
Spousal IRAs
If your spouse has no compensation for the year and you file a joint return, you
may set up and make contributions to an IRA for your spouse, as well as for
yourself. Subject to the active participant rules discussed above, the maximum
amount that you can deduct for contributions to both IRAs is the lesser of
$4,000, or 100% of compensation reduced by the spouse's allowable IRA deduction
and Roth IRA contribution for the tax year. You may not deduct, however, more
than $2,000 to either IRA for any year.
SEP-IRAs
Under a SEP-IRA agreement, your employer may contribute 15% of your
compensation, up to $30,000, to your IRA each year. The contribution and
interest earned is excludable from your income until such time as it is
distributed to you.
You must withdraw any excess contribution made to your SEP-IRA by your employer
before the date for filing your return. If you do not, you are liable for the 6%
excise tax discussed above. SEP-IRAs are also generally subject to the other
requirements applicable to IRAs.
Roth IRAs
Roth IRAs are specially designated IRAs. Roth IRAs are subject to the same rules
as traditional IRAs except for certain special rules. Contributions to Roth
IRAs are not deductible and are limited based on modified adjusted gross
income. You may make a contribution to a Roth IRA even if you are an active
participant in an employer-maintained retirement plan. You may also make
contributions to a Roth IRA after age 70 1/2.
You may contribute a maximum of $2,000 per year to all IRAs (deductible, non
deductible and Roth IRAs). This $2,000 annual limit does not include rollover
contributions. The $2,000 maximum annual contribution to a Roth IRA phases out
for individuals with a single or head of household filing status with modified
adjusted gross income between $95,000 and $110,000. For married individuals
filing a joint return, the maximum annual contribution to a Roth IRA phases out
with modified adjusted gross income between $150,000 and $160,000.
Qualified distributions from Roth IRAs are not included in income and are not
subject to the 10% tax on premature distributions. To be qualified, a
distribution must not be made before the end of the five year tax period
beginning with the first tax year a contribution to a Roth IRA is made, and the
distribution must be made: (a) on or after the date on which you attain age
59 1/2; or (b) to your beneficiary or your estate after your death; or (c) as a
result of your being disabled; or (d) to pay for qualified first-time homebuyer
expenses.
Distributions that are not qualified distributions are treated first as a return
of investment to the extent of your contributions to Roth IRAs and as a taxable
distribution to the extent of any excess. Roth IRAs are not subject to required
minimum distribution rules or to incidental death benefit rules.
If you are not married filing separately and if your adjusted gross income for a
tax year does not exceed $100,000, you may roll over distributions within 60
days from a traditional IRA to a Roth IRA or you may convert a traditional IRA
into a Roth IRA. While the rollover would be subject to tax, it would not be
subject to the 10% premature distribution penalty tax. If the rollover occurs
during 1998, the taxable amount is included in gross income ratably over four
tax years.
Rollover Contributions and Transfers
You are permitted to withdraw any portion of the value of your IRA and reinvest
it in another individual retirement annuity or account, but not more frequently
than once in any one-year period. Such withdrawals may also be made from other
IRAs and contributed to this contract. Such a withdrawal of funds from one IRA
and subsequent reinvestment in another IRA is called a "rollover contribution".
In order to qualify as a tax-free rollover contribution, the entire portion of
the withdrawal must be reinvested in another IRA within 60 days after the date
it is received. Of course, you will not be allowed a tax deduction for the
amount of any rollover contribution.
A similar type of rollover contribution can be made with the proceeds of an
eligible rollover distribution or a lump-sum distribution from a qualified
retirement plan. Such a distribution must also be invested in the IRA within 60
days of receipt. A lump sum distribution is one made from a Qualified Plan: (1)
because of your death; (2) after you reached age 59 1/2 ; (3) because you left
your job (unless you are self-
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employed); or (4) after you become permanently disabled (but only if you are
self-employed). To be considered a lump sum, the distribution must also be made
entirely in a single tax year and must represent the entire value of your
account in the retirement plan (and in all plans of a similar type sponsored by
the same employer). Properly made, such a distribution will not be taxable until
you receive payments from the IRA created with it. Unless you were a self-
employed participant in the distributing plan, you may later roll over such a
contribution to another qualified retirement plan as long as you have not mixed
it with any IRA contributions you have deducted from your income.
Eligible rollover distributions are generally all taxable distributions from
Qualified Plans and Section 403(b) annuities except for: (1) amounts paid over
your life or life expectancy; or (2) installments for periods of years spanning
ten (10) years or more; or (3) required minimum distributions.
Also, if you receive a distribution on account of a plan termination you may
make a rollover contribution to an IRA.
In addition to rollover contributions, you may also have the assets of one IRA
directly transferred (without any distribution to you) to another IRA. Direct
IRA to IRA transfers are not subject to the one-year waiting period applicable
to IRA rollover contributions.
Special tax rules apply to rollover contributions to a Roth IRA.
Withdrawals
If you withdraw an amount from an IRA during a tax year and you have made both
deductible and nondeductible IRA contributions, the part of the withdrawal that
is from nondeductible contributions (not including interest) is excludable from
income. The amount excludable from income for the tax year is the portion of the
amount withdrawn that has the same ratio to the amount withdrawn as your total
nondeductible IRA contributions (of all your IRAs) have to the total balance of
all your IRAs, including rollover IRAs. The remaining portion of the amount
withdrawn for the tax year is includable in income. For purposes of this
calculation, all your IRAs are treated as one contract and all withdrawals you
make during a tax year are treated as one distribution and the value of the
contract (after adding back distributions made during the year), income on the
contract and investment in the contract are computed at the end of the year.
Special tax rules apply to distributions from Roth IRAs.
Premature Distributions
Premature distributions are amounts you withdraw from your IRA before you are
age 59 1/2 Premature distributions which do not qualify for rollover treatment
are subject to a penalty tax equal to 10% of the amount of the distribution
includable in gross income in the tax year, unless you are totally disabled or
receive the distributions in substantially equal payments (at least annually)
for your life or life expectancy or the joint lives or life expectancies of you
and your beneficiary or unless the distributions are made to your beneficiary on
account of your death. In addition, beginning January 1, 1997, withdrawals from
IRAs for payment of certain medical expenses and withdrawals by certain unem-
ployed persons for payment of health insurance premiums are not subject to the
10% penalty tax. Furthermore, for calendar years beginning January 1, 1998,
withdrawals from IRAs for payment of certain qualified higher education ex-
penses and withdrawals for certain first time homebuyer expenses are not subject
to the penalty tax.
The penalty tax is also applicable to income taxable distributions deemed to
have been made upon disqualification of your IRA as a result of a prohibited
transaction (including, in general, the sale or assignment of your interest in
your IRA to anyone), or as a result of borrowing on your IRA, or using your IRA
as security for a loan.
Special tax rules apply to distributions from Roth IRAs.
Inadequate or Under distribution - 50% Tax
Your IRA is intended to provide retirement benefits over your lifetime. Thus,
Federal law requires that you either (1) receive a lump sum distribution from
your IRA not later than April 1st of the year after the year in which you attain
age 70 1/2 or (2) start to receive periodic payments by that date. If you elect
to receive periodic payments, those payments must be sufficient to pay out the
entire value of your IRA during your life or life expectancy (or over the life
or life expectancies of you and your beneficiary). If the payments are not
sufficient to meet these requirements, an excise tax of 50% will be imposed on
the amount of any underpayment.
Death Benefits
If you should die before receiving any benefits from your IRA, your beneficiary
must either elect (1) to receive the balance of your account in a lump sum
within five (5) years of your death, or (2) have the balance applied to purchase
an immediate annuity payable over the life or life expectancy of the
beneficiary. Such annuity must commence within one year of your death. If your
spouse is your beneficiary, however, distributions are not required to be
distributed until the date you would have attained age 70 1/2, and if your
spouse dies before any distribution to him or her commences, your spouse is
treated as the owner of your IRA for purposes of any required distributions.
If you should die after benefits have commenced to you, the remaining portion of
your account must be distributed to your beneficiary as rapidly as under the
method of distribution in effect on the date of your death.
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Prohibited Transactions
If you engage in certain prohibited transactions with your IRA, the IRA will
lose its exemption from taxation. Depending on the type of prohibited
transaction, you must include in income all or a portion of the fair market
value of the IRA account. Examples of prohibited transactions are: (1) any
borrowing from the account; (2) use of the account as security for a loan; (3)
receipt by you or certain family members of unreasonable compensation for
managing the IRA.
Prototype Status
The Internal Revenue Service currently has not been asked to review the format
of your Massachusetts Mutual Life Insurance Company ("MassMutual") Prototype IRA
or issue a determination letter regarding the qualification of the prototype
IRA. However, an opinion letter is a determination only as to the form of the
IRA, and does not represent a determination as to its merits.
Reporting to the IRS
If you make a designated nondeductible contribution to an IRA for a taxable year
or receive a distribution from an IRA during a taxable year, you are required to
provide such information as the IRS may prescribe on your tax return for the
taxable year, and, to the extent required, for succeeding taxable years. The
information that may be required includes, but is not limited to: (1) the
amount of designated nondeductible contributions for the taxable year; (2) the
total amount of designated nondeductible contributions for all preceding taxable
years that have not previously been withdrawn; (3) the total balance of all your
IRAs as of the close of the calendar year with or within which the taxable year
ends; and (4) the amount of distributions from your IRAs during the taxable
year. If the required information is not shown on your return, all traditional
IRA contributions are presumed to have been deductible. Therefore, they will be
taxable upon withdrawal from the IRA, unless it can be shown, with satisfactory
evidence, that the contributions were nondeductible when they were made.
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions, or 50% for
underpayments), you must file Form 5329 with the Internal Revenue Service. The
form is to be attached to your income tax return (Form 1040) for the tax year in
which the penalty applies.
Financial Disclosure
The charges which may be made against a contribution to your IRA include the
Custodian's fees (set forth in the Adoption Agreement), and the mortality and
expense risk fee, and other fees for the Separate Account contained in the Fee
Table of the Account Prospectus. The charges which may be made against a
withdrawal are also described in the Prospectus, and you should read the
Panorama Account Prospectus carefully and retain it for your future reference.
Additional Information
For further information about the Certificate, you may obtain a Statement of
Additional Information prepared by the Company.
The Table of Contents of this Statement is as follows:
1. Company
2. Independent Accountant and Custodian
3. Assignment of Certificate
4. Distribution
5. Purchase of Securities Being Offered
6. Performance Measures
7. Yield and Effective Yield
8. Annuity Provisions
9. Financial Statements
35
<PAGE>
This Prospectus sets forth the information about Massachusetts Mutual Variable
Annuity Separate Account 4 that a prospective investor ought to know before
investing. Certain additional information about the Separate Account is
contained in a Statement of Additional Information dated July 1, 1998 which has
been filed with the SEC and is incorporated herein by reference. The Table of
Contents for the Statement of Additional Information appears on the last page of
this Prospectus. To obtain a copy, return this request form to the address shown
below or telephone 1-800-569-6576.
- --------------------------------------------------------------------------------
To: Massachusetts Mutual Life Insurance Company
Annuity Products, H565
P.O. Box 9067
Springfield, Massachusetts 01102-9067
Please send me a Statement of Additional Information for MassMutual's Panorama
Premier
Name
-------------------------------------------
Address
----------------------------------------
- -----------------------------------------------
City State Zip
-------------------------------------------
Telephone
--------------------------------------
36
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
6
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL CERTIFICATES UNDER A GROUP DEFERRED ANNUITY CONTRACT
WITH FLEXIBLE PURCHASE PAYMENTS
issued by
MASSACHUSETTS MUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT 4 AND
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
July 1, 1998
This is not a prospectus. This Statement of Additional Information should be
read in conjunction with the prospectus dated July 1, 1998, for the individual
certificates under a group deferred annuity contract with flexible purchase
payments which are referred to herein.
For a copy of the prospectus call 1-800-569-6576 or write: Massachusetts Mutual
Life Insurance Company, Panorama Premier, Annuity Products, H565, P.O. Box 9067,
Springfield, MA 01101.
TABLE OF CONTENTS
Company...................................................................2
Independent Accountant and Custodian......................................2
Assignment of Certificate.................................................2
Distribution..............................................................3
Purchase of Securities Being Offered......................................3
Performance Measures......................................................4
Yield and Effective Yield.................................................5
Annuity Provisions........................................................6
Reports of Independent Accountants and Financial Statements.....final pages
1
<PAGE>
COMPANY
Massachusetts Mutual Life Insurance Company ("MassMutual" or the "Company") is a
mutual life insurance company specially chartered by the Commonwealth of
Massachusetts on May 14, 1851. It is currently licensed to transact life,
accident, and health insurance business in all states, the District of Columbia,
Puerto Rico and certain provinces of Canada. MassMutual had estimated
unconsolidated statutory assets in excess of $57 billion, and estimated total
assets under management in excess of $152 billion as of December 31, 1997.
INDEPENDENT ACCOUNTANT AND CUSTODIAN
The audited statement of statutory financial position of the Company as of
December 31, 1997 and 1996 and the related statutory statements of income,
changes in policyholders' contingency reserves and cash flows for the three
years ended December 31, 1997, 1996 and 1995 included in this Statement of
Additional Information have been so included in reliance on the report, which
includes explanatory paragraphs relating to the use of statutory accounting
practices rather than generally accepted accounting principles, of Coopers &
Lybrand L.L.P., Springfield, MA 01101, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
No financial statements for the Separate Account have been included herein,
because, as of the date of this Statement of Additional Information, the Sub-
Accounts available under the Certificates had no assets.
The shares of the underlying funds purchased by the Sub-Accounts are held by
MassMutual as custodian of the Separate Account.
ASSIGNMENT OF CERTIFICATE
The Company will not be charged with notice of any assignment of a Certificate
or of the interest of any beneficiary or of any other person unless the
assignment is in writing and the Company receives the original or a true copy
thereof at its Home Office. The Company assumes no responsibility for the
validity of any assignment.
While the Certificates are generally assignable, all non-tax qualified
Certificates must carry a non-transferability endorsement which precludes their
assignment. For qualified Certificates, the following exceptions and provisions
should be noted:
(1) No person entitled to receive annuity payments under a Certificate or
part or all of the Certificate's value will be permitted to commute, anticipate,
encumber, alienate or assign such amounts, except upon the written authority of
the Participant given during the Annuitant's lifetime and received in good order
by the Company at its Home Office. To the extent permitted by law, no
Certificate nor any proceeds or interest payable thereunder will be subject to
the Annuitant's or any other person's debts, contracts or engagements, nor to
any levy or attachment for payment thereof;
(2) If an assignment of a Certificate is in effect on the maturity date,
the Company reserves the right to pay to the assignee in one sum the amount of
the Certificate's maturity value to which he is entitled, and to pay any balance
of such value in one sum to the Participant, regardless of any payment options
which the Participant may have elected. Moreover, if an assignment of a
Certificate is in effect at the death of the Annuitant prior to the maturity
date, the Company will pay to the assignee in one sum, to the extent that he is
entitled, the greater of (a) the total of all purchase payments, less the net
amount of all partial redemptions, and (b) the Accumulated Value of the
Certificate, and any balance of such value will be paid to the beneficiary in
one sum or applied under one or more of the payment options elected;
(3) Certificates used in connection with a tax-qualified retirement plan
must be endorsed to provide that they may not be sold, assigned or pledged for
any purpose unless they are owned by the trustee of a trust described in Section
401(a) or by the administrator of an annuity plan described under Section 403(a)
of the Code; and
(4) Certificates issued under a plan for an Individual Retirement Annuity
pursuant to Section 408 of the Code must be endorsed to provide that they are
non-transferable. Such Certificates may not be sold, assigned, discounted, or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose by the
2
<PAGE>
Annuitant to any person or party other than the Company, except to a former
spouse of the Annuitant in accordance with the terms of a divorce decree or
other written instrument incident to a divorce.
Assignments may be subject to federal income tax.
DISTRIBUTION
MML Distributors, LLC ("MML Distributors") is the principal underwriter of the
Contract and Certificates. MML Distributors is a limited liability corporation.
MML Investors Services, Inc. ("MMLISI") is the co-underwriter of the Contract
and Certificates. Both MML Distributors and MMLISI are broker-dealers registered
with the Securities and Exchange Commission and members of the National
Association of Securities Dealers, Inc. MML Distributors and MMLISI are indirect
wholly owned subsidiaries of Massachusetts Mutual Life Insurance Company.
Pursuant to the Underwriting and Servicing Agreement, both MML Distributors and
MMLISI will receive compensation for their activities as underwriters for the
Separate Account. Commissions will be paid through MMLISI and MML Distributors
to agents and selling brokers for selling the Contract and Certificates. MML
Distributors may enter into selling agreements with other broker-dealers which
are registered with the Securities and Exchange Commission and are members of
the National Association of Securities Dealers, Inc. ("selling brokers"). The
Contract and Certificates are sold through agents who are licensed by state
insurance officials to sell the Contract and Certificates. These agents are also
registered representatives of selling brokers or of MMLISI.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota, and Washington, and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio, and West Virginia.
The offering is on a continuous basis.
PURCHASE OF SECURITIES BEING OFFERED
Interests in the Separate Account are sold to Participants as accumulation
units. Charges associated with such securities are discussed in the Charges and
Deductions section of the prospectus for the Certificate. The Certificate does
not offer any special purchase plan or exchange program not discussed in the
prospectus. (For a discussion of instances when sales charges will be waived,
see Free Withdrawals section of the prospectus.)
PERFORMANCE MEASURES
The Company may show the performance for the Sub Accounts of the Separate
Account in the following ways:
Standardized Average Annual Total Return
The Company will show the "Standardized Average Annual Total Return," formulated
as prescribed by the rules of the SEC, for each Sub-Account. The Standardized
Average Annual Total Return is the effective annual compounded rate of return
that would have produced the Certificate Withdrawal Value over the stated period
had the performance remained constant throughout. The calculation assumes a
single $1,000 payment made at the beginning of the period and full redemption at
the end of the period. It reflects a deduction for the contingent deferred sales
charge, the Annual Certificate Maintenance charge and all other Fund, Separate
Account and Contract level charges except premium taxes, if any. The Annual
Certificate Maintenance charge is apportioned among the Sub-Accounts based upon
the percentages of in force Certificates investing in each of the Sub-Accounts.
For Sub-Accounts of the Separate Account which have been in existence for less
than one year, the Company will show the aggregate total return as permitted by
the SEC. The aggregate total return assumes a single one thousand dollar payment
made at the beginning of the period and full redemption at the end of the
period. It reflects the change in unit value and a reduction of the contingent
deferred sales charge.
3
<PAGE>
Additional Performance Measures
-------------------------------
Accumulation Unit Values: Annualized Returns.
---------------------------------------------
The Company will show the ANNUALIZED RETURN, or average annual change in
Accumulation Unit values, for one or more periods. For one year, the Annualized
Return is the effective annual rate of return. For periods greater than one
year, the Annualized Return is the effective annual compounded rate of return
for the periods stated. Since the value of an Accumulation Unit reflects the
Separate Account and Fund expenses (See Table of Fees and Expenses in the
Prospectus), the Annualized Returns also reflect these expenses. However, these
percentages do not reflect the Annual Certificate Maintenance Charge and the
contingent deferred sales charge or premium taxes (if any), which if included
would reduce the percentages reported by the Company
The performance figures discussed below, NON-STANDARDIZED ANNUAL TOTAL RETURN
and NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN, will be calculated on the
basis of historical performance of the Funds, and may assume the Certificates
were in existence prior to their inception date (which they were not). Beginning
as of the date the Certificates are available, actual Accumulation Unit values
will be used for the calculations. These returns are based on specified premium
patterns which produce the resulting Accumulated Values. They reflect a
deduction for the Separate Account expenses, underlying fund expenses, and the
annual Administrative Charge. They do not include contingent deferred sales
charges or premium taxes (if any), which if included would reduce the
percentages reported.
The NON-STANDARDIZED ANNUAL TOTAL RETURN for a Sub-Account is the effective
annual rate of return that would have produced the ending Accumulated Value of
the stated one-year period.
The NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN for a Sub-Account is the
effective annual compounded rate of return that would have produced the ending
Accumulated Value over the stated period had the performance remained constant
throughout.
Note: The NON-STANDARDIZED ANNUAL TOTAL RETURN will be less than the NON-
STANDARDIZED ANNUALIZED RETURN on Accumulation Unit values for the same period
due to the effect of the Annual Certificate Maintenance Charge. Additionally,
the magnitude of this difference will depend on the size of the Accumulated
Value from which the annual Administrative Charge is deducted.
Performance information for the Sub-Accounts may be: (a) compared to other
variable annuity separate accounts or other investment products surveyed by
Lipper Analytical Services, a nationally recognized independent reporting
service or similar service that rank mutual funds and other investment companies
by overall performance, investment objectives and assets; (b) tracked by other
ratings services, companies, publications or persons who rank separate accounts
or other investment products on overall performance or other criteria; and (c)
included in data bases that can be used to produce reports and illustrations by
organizations such as CDA Wiesenberger. Performance figures will be calculated
in accordance with standardized methods established by each reporting
service.
YIELD AND EFFECTIVE YIELD
The Company may show yield and effective yield figures for the Money Market Sub-
Account. "Yield" refers to the income generated by an investment in the Money
Market Sub-Account over a seven-day period, which is then "annualized." That is,
the amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective" yield is calculated similarly but, when annualized,
the income earned by an investment in the Money Market Sub-Account is assumed to
be re-invested. Therefore the effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
4
<PAGE>
These figures will reflect a deduction for all Fund, Separate Account, and
Certificate level charges, assuming the Certificate remains in force. The
figures do not reflect the contingent deferred sales charge or premium tax
deductions (if any), which if included would reduce the percentages reported.
ANNUITY PROVISIONS
A Variable Annuity is an annuity with payments which; (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Sub-Accounts of the Separate Account. Annuity Payments also
depend upon the Age of the Annuitant and any Joint Annuitant and the assumed
interest factor utilized. The Annuity Table used will depend upon the Annuity
Option chosen. The dollar amount of annuity payments after the first is
determined as follows;
1. The dollar amount of the first Annuity Payment is divided by the
value of an Annuity Unit as of the Annuity Date. This establishes the
number of Annuity Units for each Annuity Payment. The number of
Annuity Units remains fixed during the Annuity Period.
2. For each Sub-Account, the fixed number of Annuity Units is multiplied
by the Annuity Unit value on each subsequent Annuity Payment date.
3. The total dollar amount of each Variable Annuity Payment is the sum
of all Sub-Account Variable Annuity Payments.
(See "Annuity Provisions" in the Prospectus.)
5
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statutory statements of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1997 and 1996,
and the related statutory statements of income, changes in policyholders'
contingency reserves, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the statutory
financial statements of Connecticut Mutual Life Insurance Company ("Connecticut
Mutual") for the year ended December 31, 1995, which statements reflect total
revenue and net gain from operations constituting 26% and 22% of the related
Company totals after restatement for the merger of the two companies. Those
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for Connecticut
Mutual, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
As described more fully in Note 1, these financial statements were prepared in
conformity with statutory accounting practices of the National Association of
Insurance Commissioners and the accounting practices prescribed or permitted by
the Division of Insurance of the Commonwealth of Massachusetts and, for the
pre-merger balances of Connecticut Mutual, the Department of Insurance of the
State of Connecticut (collectively "statutory accounting practices"), which
practices differ from generally accepted accounting principles. The effects on
the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not reasonably
determinable at this time, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Massachusetts Mutual Life Insurance Company at December 31, 1997 and 1996, or
the results of its operations or its cash flows for each of the three years in
the period ended December 31, 1997.
In our opinion, based upon our audits and the report of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Massachusetts Mutual Life Insurance Company at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, on the
statutory basis of accounting described in Note 1.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 6, 1998
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1997 1996
---- ----
(In Millions)
Assets:
Bonds............................................. $23,890.3 $24,299.3
Common stocks..................................... 354.7 336.6
Mortgage loans.................................... 4,863.7 4,852.8
Real estate....................................... 1,697.7 1,840.9
Other investments................................. 1,963.8 1,425.6
Policy loans...................................... 4,950.4 4,752.3
Cash and short-term investments................... 1,941.2 1,075.4
--------- ---------
39,661.8 38,582.9
Investment and insurance amounts receivable....... 1,064.9 1,102.4
Other assets...................................... 104.8 97.9
--------- ---------
40,831.5 39,783.2
Separate account assets........................... 16,803.1 13,563.5
--------- ---------
$57,634.6 $53,346.7
========= =========
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1997 1996
---- ----
(In Millions)
Liabilities:
Policyholders' reserves and funds................. $33,783.2 $33,341.5
Policyholders' dividends.......................... 954.1 885.3
Policyholders' claims and other benefits.......... 353.4 373.8
Federal income taxes.............................. 436.5 440.7
Asset valuation reserve........................... 840.6 689.2
Investment reserves............................... 132.8 208.4
Amounts due on investments puchased and
other liabilities................................ 1,457.9 1,206.1
--------- ---------
37,958.5 37,145.0
Separate account reserves and liabilities......... 16,802.8 13,563.1
--------- ---------
54,761.3 50,708.1
Policyholders' contingency reserves............... 2,873.3 2,638.6
--------- ---------
$57,634.6 $53,346.7
========= =========
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
<S> <C> <C> <C>
Revenue:
Premium income............................................ $6,764.8 $6,328.6 $5,727.7
Net investment and other income........................... 2,904.4 2,861.1 2,898.4
-------- -------- --------
9,669.2 9,189.7 8,626.1
-------- -------- --------
Benefits and expenses:
Policy benefits and payments.............................. 6,597.3 6,048.2 5,152.2
Addition to policyholder's reserves and funds............. 720.8 854.7 1,205.4
Commissions and operating expenses........................ 766.1 763.5 833.7
State taxes, licenses and fees............................ 81.5 96.4 89.4
Merger restructuring costs................................ - 66.1 44.0
-------- -------- --------
8,165.7 7,828.9 7,324.7
-------- -------- --------
Net gain before federal income taxes and dividends........ 1,503.5 1,360.8 1,301.4
Federal income taxes...................................... 284.4 276.7 206.2
-------- -------- --------
Net gain from operations before dividends................. 1,219.1 1,084.1 1,095.2
Dividends to policyholders................................ 919.5 859.9 819.0
-------- -------- --------
Net gain from operations.................................. 299.6 224.2 276.2
Net realized capital gain (loss).......................... (42.5) 40.3 (85.8)
-------- -------- --------
Net income................................................ $ 257.1 $ 264.5 $ 190.4
======== ======== ========
</TABLE>
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
<S> <C> <C> <C>
Policyholder's contingency reserves, beginning of year.... $2,638.6 $2,600.9 $2,569.1
-------- -------- --------
Increases (decreases) due to:
Net income............................................... 257.1 264.5 190.4
Net unrealized capital gain (loss)....................... 119.1 (1.7) 88.7
Merger restructuring costs, net of fax................... - - (45.4)
Change in asset valuation and investment reserves........ (76.0) (142.4) (75.6)
Change in prior year policyholders' reserves............. (55.4) (72.2) (108.2)
Change in non-admitted assets and other.................. (10.1) (10.5) (18.1)
-------- -------- --------
234.7 37.7 31.8
-------- -------- --------
Policyholders' contingency reserves, end of year.......... $2,873.3 $2,638.6 $2,600.9
======== ======== ========
</TABLE>
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
<S> <C> <C> <C>
Operating acitivites:
Net income............................................... $ 257.1 $ 264.5 $ 190.4
Addition to policyholders' reserves and funds,
net of transfers to separate accounts................... 421.3 426.7 575.8
Net realized capital (gain) loss......................... 42.5 (40.3) 85.8
Other changes............................................ (58.1) (232.8) (25.2)
--------- --------- ---------
Net cash provided by operating activities................ 662.8 418.1 826.8
--------- --------- ---------
Investing activities:
Purchases of investments and loans....................... (12,292.7) (10,171.5) (10,364.2)
Sales or maturities of investments and receipts
from repayment of loans................................. 12,545.7 8,539.3 9,671.1
--------- --------- ---------
Net cash provided by (used in) investing activities...... 253.0 (1,632.2) (693.1)
--------- --------- ---------
Financing activities:
Repayments of long-term debt............................. (50.0) (53.3) (46.4)
--------- --------- ---------
Net cash used by financing activities.................... (50.0) (53.3) (46.4)
--------- --------- ---------
Increase (decrease) in cash and short-term investments... 865.8 (1,267.4) 87.3
Cash and short-term investments, beginning of year....... 1,075.4 2,342.8 2,255.5
--------- --------- ---------
Cash and short-term investments, end of year............. $ 1,941.2 $ 1,075.4 $ 2,342.8
========= ========= =========
</TABLE>
See Notes to Statutory Financial Statements.
<PAGE>
Notes To Statutory Financial Statements
Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life
insurance company and as such has no shareholders. The Company's primary
business is individual life insurance, annuity and disability income products
distributed primarily through career agents. The Company also provides a wide
range of pension products and services, as well as investment services to
individuals, corporations and institutions in all 50 states and the District of
Columbia.
On March 1, 1996, the operations of the former Connecticut Mutual Life Insurance
Company ("Connecticut Mutual") were merged into the Company. This merger was
accounted for under the pooling of interests method of accounting. For the
purposes of this presentation, these financial statements reflect historical
amounts giving retroactive effect as if the merger had occurred on January 1,
1995 in conformity with the practices of the National Association of Insurance
Commissioners and the accounting practices prescribed or permitted by the
Division of Insurance of the Commonwealth of Massachusetts. In 1996,
merger-related expenses totaling $66.1 million were recorded in the Statutory
Statement of Income. In 1995, merger-related expenses incurred by Massachusetts
Mutual (the Company prior to the merger) of $44.0 million, were recorded in the
Statutory Statement of Income and the expenses incurred by Connecticut Mutual of
$45.4 million, net of tax, were recorded as a component of changes in
policyholders' contingency reserves, as permitted by each company's regulatory
authority. On the merger date, policyholders' reserves attributable to
disability income contracts were strengthened by $75.0 million, investment
reserves for real estate were increased by $49.8 million and net prepaid pension
assets were increased by $10.4 million with all adjustments reflected as a
change to policyholders' contingency reserves. The separate results of each
company prior to the merger for the year ended December 31, 1995, were as
follows: (a) revenue was $6,443.8 million for Massachusetts Mutual and $2,182.3
million for Connecticut Mutual; (b) net income was $160.7 million for
Massachusetts Mutual and $29.6 million for Connecticut Mutual and (c)
policyholders' contingency reserves increased by $143.7 million for
Massachusetts Mutual and decreased by $112.0 million for Connecticut Mutual.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life Insurance
Company (formerly the MML Pension Insurance Company; currently doing business as
"UniCARE"), which comprised the Company's group life and health business, to
WellPoint Health Networks, Inc. The Company received total consideration of
$402.2 million ($340.0 million in cash and $62.2 million in notes receivable)
and recognized a before tax gain of $187.9 million. The Company, pursuant to a
1994 reinsurance agreement, cedes its group life, accident and health business
to UniCARE. The Company's investment in MassMutual Holding Company Two, Inc.
amounted to $187.8 million at December 31, 1995; its gain from operations
included a $41.0 million dividend received from MIRUS in 1995. Additionally,
this investment produced an unrealized gain of $13.9 million in 1995.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, except as to form, have been
prepared in conformity with the statutory accounting practices of the National
Association of Insurance Commissioners ("NAIC") and the accounting practices
prescribed or permitted by the Division of Insurance of the Commonwealth of
Massachusetts and, for the pre-merger balances of Connecticut Mutual, the
Department of Insurance of the State of Connecticut (collectively "statutory
accounting practices"), which practices were at one time also considered to be
in conformity with generally accepted accounting principles ("GAAP").
The accompanying statutory financial statements are different in some respects
from GAAP financial statements. The more significant differences are as follows:
(a) acquisition costs, such as commissions and other costs directly related to
acquiring new business, are charged to current operations as incurred, whereas
GAAP would require these expenses to be capitalized and recognized over the life
of the policies; (b) policy reserves are based upon statutory mortality and
interest requirements without consideration of withdrawals, whereas GAAP
reserves would be based upon reasonably conservative estimates of mortality,
morbidity, interest and withdrawals; (c) bonds are generally carried at
amortized cost whereas GAAP generally requests they be valued at fair value; (d)
deferred income taxes are not provided for book-tax timing differences as would
be required by GAAP, and (e) payments received for universal and variable life
products, variable annuities and investment related products are reported as
premium revenue, whereas under GAAP, these payments would be recorded as
deposits to policyholders' account balances.
The NAIC is currently engaged in an extensive project ("Codification") to codify
statutory accounting principles with a goal of providing a comprehensive guide
of statutory accounting principles for use by insurers in all states. This
comprehensive guide, which has not been approved by the NAIC or any state
insurance department, includes seventy-two Statements of Statutory Accounting
Principles ("SSAPs") and is expected to be effective no earlier than January 1,
1999. The effect of adopting these SSAPs shall be reported as an adjustment to
surplus on the effective date. Management is currently reviewing the impact of
Codification. However, since the SSAPs have not been finalized, the ultimate
impact cannot be determined at this time.
<PAGE>
Notes To Statutory Financial Statements (Continued)
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as disclosures of contingent assets and liabilities at the date of the
financial statements. Management must also make estimates and assumptions that
affect the amounts of revenues and expenses during the reporting period. Future
events, including changes in the levels of mortality, morbidity, interest rates
and asset valuations, could cause actual results to differ from the estimates
used in these financial statements.
The following is a description of the Company's principal accounting policies
and practices.
A. Investments
Bonds and stocks are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at amortized
cost, preferred stocks in good standing at cost, and common stocks, except for
unconsolidated subsidiaries, at fair value.
Mortgage loans are valued at unpaid principal less unamortized discount. Real
estate is valued at cost less accumulated depreciation, impairment allowances
and mortgage encumbrances. Encumbrances totaled $14.2 million in 1997 and $27.3
million in 1996. Depreciation on investment real estate is calculated using the
straight-line and constant yield methods.
Policy loans are carried at the outstanding loan balance less amounts unsecured
by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates fair
value.
Investments in unconsolidated subsidiaries and affiliates, joint ventures and
other forms of partnerships are included in other investments on the Statutory
Statement of Financial Position and are accounted for using the equity method.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve and other investment reserves stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines in the
value of bonds, mortgage loans and real estate investments.
The Interest Maintenance Reserve captures after-tax realized capital gains and
losses which result from changes in the overall level of interest rates for all
types of fixed income investments, as well as other financial instruments,
including financial futures, U.S. Treasury purchase commitments, options,
interest rate swaps, interest rate caps and interest rate floors. These interest
rate related gains and losses are amortized into income using the grouped method
over the remaining life of the investment sold or over the remaining life of the
underlying asset. Net realized after tax capital gains of $95.4 million in 1997,
$73.1 million in 1996, and net realized after tax capital losses of $130.7
million in 1995 were charged to the Interest Maintenance Reserve. Amortization
of the Interest Maintenance Reserve into net investment income amounted to $31.0
million in 1997, $26.9 million in 1996, and $5.0 million in 1995.
Realized capital gains and losses, less taxes, not includable in the Interest
Maintenance Reserve, are recognized in net income. Realized capital gains and
losses are determined using the specific identification method. Unrealized
capital gains and losses are included in policyholders' contingency reserves.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the benefit of pension, variable annuity and
variable life insurance contract holders. Assets consist principally of
marketable securities reported at fair value. Premiums, benefits and expenses of
the separate accounts are reported in the Statutory Statement of Income. The
Company receives administrative and investment advisory fees from these
accounts.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally certain fixed assets,
receivables and Interest Maintenance Reserve, when in a net loss deferral
position) are excluded from the Statutory Statement of Financial Position by an
adjustment to policyholders' contingency reserves.
<PAGE>
Notes To Statutory Financial Statements (Continued)
D. Policyholders' Reserves and Funds
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience and
the 1941, 1958 and 1980 Commissioners' Standard Ordinary mortality tables with
assumed interest rates ranging from 2.5 to 6.0 percent.
Reserves for individual annuities, guaranteed investment contracts and deposit
administration and immediate participation guarantee funds are based on accepted
actuarial methods principally at interest rates ranging from 2.25 to 11.25
percent. Reserves for policies and contracts considered investment contracts
have a carrying value of $8,077.9 million and $9,073.8 million at December 31,
1997 and 1996, respectively (fair value of $8,250.0 million and $9,324.6 million
at December 31, 1997 and 1996, respectively as determined by discounted cash
flow projections). Accident and health policy reserves are generally calculated
using the two-year preliminary term, net level premium and fixed net premium
methods and various morbidity tables.
The Company made certain changes in the valuation of policyholders' reserves of
$55.4 million in 1997 and $72.2 million in 1996. The effects of these changes
were recorded as a decrease to policyholders' contingency reserves.
E. Premium and Related Expense Recognition
Life insurance premium revenue is recognized annually on the anniversary date of
the policy. Annuity premium is recognized when received. Accident and health
premiums are recognized as revenue when due. Commissions and other costs related
to issuance of new policies, maintenance and settlement costs are charged to
current operations when incurred.
F. Policyholders' Dividends
The Board of Directors annually approves dividends to be paid in the following
year. These dividends are allocated to reflect the relative contribution of each
group of policies to policyholders' contingency reserves and consider investment
and mortality experience, expenses and federal income tax charges. The liability
for policyholders' dividends is equal to the estimated amount of dividends to be
paid in the following calendar year.
G. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers all
highly liquid investments purchased with a maturity of twelve months or less to
be cash and short-term investments.
2. POLICYHOLDERS' CONTINGENCY RESERVES
Policyholders' contingency reserves represent surplus of the Company as reported
to regulatory authorities and are intended to protect policyholders against
possible adverse experience.
The Company issued surplus notes of $100.0 million at 7 1/2 percent and $250.0
million at 7 5/8 percent in 1994 and 1993, respectively. These notes are
unsecured and subordinate to all present and future indebtedness of the Company,
policy claims and prior claims against the Company as provided by the
Massachusetts General Laws. Issuance was approved by the Commissioner of
Insurance of the Commonwealth of Massachusetts ("the Commissioner").
All payments of interest and principal are subject to the prior approval of the
Commissioner. Sinking fund payments are due as follows: $62.5 million in 2021,
$87.5 million in 2022, $150.0 million in 2023 and $50.0 million in 2024.
Interest on the notes issued in 1994 is scheduled to be paid on March 1 and
September 1 of each year, to holders of record on the preceding February 15 or
August 15, respectively. Interest on the notes issued in 1993 is scheduled to be
paid on May 15 and November 15 of each year, to holders of record on the
preceding May 1 or November 1, respectively. Interest expense is not recorded
until approval for payment is received from the Commissioner. Interest of $26.6
million was approved and paid in 1997, 1996 and 1995.
<PAGE>
Notes To Statutory Financial Statements (Continued)
The proceeds of the notes, less a $28.3 million reserve in 1997, and a $32.2
million reserve in 1996 for contingencies associated with the issuance of the
notes, are recorded as a component of the Company's policyholders' contingency
reserves as approved by the Commissioner. These reserves, as permitted by the
Division of Insurance, are included in investment reserves on the Statutory
Statement of Financial Position.
3. EMPLOYEE BENEFIT PLANS
The Company's employee benefit plans include plans in place for the employees of
Massachusetts Mutual and Connecticut Mutual prior to the merger. Employees
previously covered by the Connecticut Mutual pension plans will continue
coverage under these plans. All other employees, including employees hired after
the merger date, will be covered by the Massachusetts Mutual benefit plans.
A. Pension
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes employees previously
employed by Connecticut Mutual; the other includes all other eligible employees.
Benefits are based on the employees' years of service, compensation during the
last five years of employment and estimated social security retirement benefits.
The Company accounts for these plans following Financial Accounting Standards
Board Statement No. 87, "Employers' Accounting for Pensions." Accordingly, as
permitted by the Massachusetts Division of Insurance, the Company has recognized
a pension asset of $157.4 million and $97.2 million at December 31, 1997 and
1996, respectively. On the merger date, the accounting for Connecticut Mutual
pension plans was conformed to the Company's policy of recording pension plan
assets and liabilities, resulting in a $10.4 million increase in policyholders'
contingency reserves. Company policy is to fund pension costs in accordance with
the requirements of the Employee Retirement Income Security Act of 1974 and,
based on such requirements, no funding was required for the years ended December
31, 1997, 1996 and 1995. The assets of the plans are invested in the Company's
general account and separate accounts.
The benefit status of the defined benefit plans as of December 31 is as follows:
1997 1996
---- ----
(In Millions)
Accumulated benefit obligation $ 663.1 $ 611.5
Vested benefit obligation 653.8 606.5
Projected benefit obligation 713.9 665.5
Plan assets at fair value 1,154.2 1,201.7
The following assumptions were used in determining the actuarial present value
of both the accumulated and projected benefit obligations.
MassMutual Connecticut Mutual
Plan Plan
---- ----
Discount rate - 1997 7.25% 7.25%
Discount rate - 1996 7.75 7.75
Increase in future compensation levels 4.00 5.00
Long-term rate of return on assets 10.00 9.00
In 1997, there was a significant reduction in plan participants in the
Connecticut Mutual Plan which resulted in recognition of a pension plan
curtailment gain of $10.7 million.
As a result of the sale of Mirus Life Insurance Company, there was a significant
reduction in plan participants which resulted in recognition of a pension plan
curtailment gain of $15.3 million in 1996.
The Company also has defined contribution plans for employees and agents. The
expense credited to operations for all pension plans is $38.9 million in 1997,
$32.7 million in 1996 and $10.9 million in 1995.
<PAGE>
Notes To Statutory Financial Statements (Continued)
B. Life and Health
Certain life and health insurance benefits are provided to retired employees and
agents through group insurance contracts. Substantially all of the Company's
employees may become eligible for these benefits if they reach retirement age
while working for the Company. The Company adopted the National Association of
Insurance Commissioners' accounting standard for post-retirement life and health
benefit costs, requiring these benefits to be accounted for using the accrual
method for employees and agents eligible to retire and current retirees.
The following assumptions were used in determining the accumulated
postretirement benefit liability.
MassMutual Connecticut Mutual
Plan Plan
---- ----
Discount - 1997 7.25% 7.25%
Discount - 1996 7.75 7.75
Assumed increases in medical cost
rates in the first year 6.25 - 6.75 9.50
declining to 4.75 5.00
within 5 years 5 years
The initial transition obligation of $137.9 million is being amortized over
twenty years through 2012. At December 31, 1997 and 1996, the net unfunded
accumulated benefit obligation was $124.2 million and $124.1 million,
respectively, for employees and agents eligible to retire or currently retired
and $34.7 million and $33.8 million, respectively, for participants not eligible
to retire. A Retired Lives Reserve Trust was funded to pay life insurance
premiums for certain retired employees. Trust assets available for benefits were
$21.7 million and $23.0 million at December 31, 1997 and 1996, respectively.
As a result of the sale of Mirus Life Insurance Company, there was a significant
reduction in plan participants which resulted in recognition of a life and
health plan curtailment loss of $13.9 million in 1996.
The expense for 1997, 1996 and 1995 was $16.5 million, $17.6 million, and $22.9
million, respectively. A one percent increase in the annual assumed increase in
medical cost rates would increase the 1997 accumulated postretirement benefit
liability and benefit expense by $10.9 million and $1.4 million, respectively.
4. RELATED PARTY TRANSACTIONS
Pursuant to two 1994 reinsurance agreements with Mirus Life Insurance Company
(Mirus) whereby the Company assumed all of the single premium immediate annuity
business written by Mirus and ceded all of its group life, accident and health
business to Mirus. A gain from operations of this business was reflected in 1995
as a $41.0 million dividend received from Mirus, which was recorded as net
investment income on the Statutory Statement of Income. As previously discussed,
on March 31, 1996, the Company sold MassMutual Holding Company Two, Inc. a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life Insurance
Company to WellPoint Health Networks, Inc.
The Company has a modified coinsurance quota-share reinsurance agreement with a
wholly-owned subsidiary, C.M. Life Insurance Company, whereby the Company
assumes 75% of the premiums on certain universal life policies issued by C.M.
Life. The Company pays a stipulated expense allowance, death and surrender
benefits, and a modified coinsurance adjustment. Reserves for payment of future
benefits are retained by C.M. Life.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's best estimate of
its current tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of equity tax (essentially a reduction in the
deduction for policyholder dividends) and miscellaneous temporary differences,
such as reserves, acquisition costs and restructuring costs, resulted in
effective tax rates which differ from the statutory tax rate.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1991 for Connecticut
Mutual, and is currently examining Massachusetts Mutual for the years 1993 and
1994, and Connecticut Mutual for the years 1992 through 1995. The Company
believes any adjustments resulting from such examinations will not materially
affect its financial statements.
<PAGE>
Notes to Statutory Financial Statements (Continued)
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for 1997
or 1996. The Company records the estimated effects of anticipated revisions in
the Statutory Statement of Income.
The Company plans to file its 1997 federal income tax return on a consolidated
basis with its life and non-life affiliates with the exception of C.M. Life
Insurance Company. The Company and its eligible life and non-life affiliates
are subject to a written tax allocation agreement, which allocates the group's
consolidated tax liability for payment purposes. Generally, the agreement
provides that members with losses shall be compensated for the use of their
losses and credits by other members.
The Company made federal tax payments of $353.4 million in 1997, $330.7 million
in 1996 and $147.3 million in 1995.
6. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment. In the
normal course of business, the Company enters into commitments to purchase
privately placed bonds and to issue mortgage loans.
A. Bonds
The carrying value and estimated fair value of bonds are as follows:
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(In Millions)
U.S. Treasury securities $ 6,241.0 $ 470.5 $10.3 $ 6,701.2
and obligations of U.S.
government corporations
and agencies
Debt securities issued by
foreign governments 83.5 4.4 3.0 84.9
Mortgage-backed securities 3,390.8 187.9 9.0 3,569.7
State and local governments 361.9 23.9 .6 385.2
Corporate debt securities 12,148.9 765.2 46.9 12,867.2
Utilities 871.8 100.1 2.2 969.7
Affiliates 792.4 2.8 1.0 794.2
--------- -------- ----- ---------
TOTAL $23,890.3 $1,554.8 $73.0 $25,372.1
========= ======== ===== =========
December 31, 1996
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(In Millions)
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 8,042.6 $ 344.0 $ 56.3 $ 8,330.3
Debt securities issued by 95.2 10.2 .5 104.9
foreign governments
Mortgage-backed securities 3,014.0 119.0 43.3 3,089.6
State and local governments 173.2 13.1 2.1 184.2
Corporate debt securities 11,675.2 528.0 133.3 12,069.9
Utilities 975.0 87.0 18.5 1,043.5
Affiliates 324.1 4.3 3.5 324.9
--------- -------- ------ ---------
TOTAL $24,299.3 $1,105.6 $257.5 $25,147.3
========= ======== ====== =========
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1997 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
Estimated
Carrying Fair
Value Value
----- -----
(In Millions)
Due in one year or less $ 519.7 $ 523.0
Due after one year through five years 3,972.1 4,104.6
Due after five years through ten years 7,423.3 7,838.1
Due after ten years 5,254.9 5,888.1
--------- ---------
17,170.0 18,353.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 6,720.3 7,018.3
--------- ---------
TOTAL $23,890.3 $25,372.1
========= =========
Proceeds from sales of investments in bonds were $11,427.8 million during 1997,
$6,390.7 million during 1996 and $8,068.8 million during 1995. Gross capital
gains of $200.7 million in 1997, $188.8 million in 1996 and $255.5 million in
1995 and gross capital losses of $68.8 million in 1997, $255.5 million in 1996
and $67.1 million in 1995 were realized on those sales, portions of which were
included in the Interest Maintenance Reserve. The estimated fair value of
non-publicly traded bonds is determined by the Company using a pricing matrix.
B. Stocks
Preferred stocks in good standing had fair values of $145.5 million in 1997 and
$150.8 million in 1996, using a pricing matrix for non-publicly traded stocks
and quoted market prices for publicly traded stocks. Common stocks, except for
unconsolidated subsidiaries, had a cost of $250.3 million in 1997 and $249.2
million in 1996.
C. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for
non-performing loans, approximated carrying value.
The Company had restructured loans with book values of $202.3 million, and
$383.5 million at December 31, 1997 and 1996, respectively. These loans
typically have been modified to defer a portion of the contracted interest
payments to future periods. Interest deferred to future periods totaled $5.1
million in 1997, $2.2 million in 1996 and $2.5 million in 1995.
D. Other
The carrying value of investments which were non-income producing for the
preceding twelve months was $5.7 million and $23.1 million at December 31, 1997
and 1996, respectively. The Company made voluntary contributions to the Asset
Valuation Reserve of $6.8 million 1996. No additional voluntary contribution to
the Asset Valuation Reserve was made in 1997.
It is not practicable to determine the fair value of policy loans as they do not
have a stated maturity.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks, primarily to reduce interest rate and
duration imbalances determined in asset/liability analyses. The fair values of
these instruments, described below, which are not recorded in the financial
statements, are based upon market prices or prices obtained from brokers. The
Company does not hold or issue these financial instruments for trading purposes.
<PAGE>
Notes To Statutory Financial Statements (Continued)
The notional amounts described do not represent amounts exchanged by the parties
and, thus, are not a measure of the exposure of the Company. The amounts
exchanged are calculated on the basis of the notional amounts and the other
terms of the instruments, which relate to interest rates, exchange rates,
security prices or financial or other indexes.
The Company enters into financial futures contracts for the purpose of managing
interest rate exposure. Margin requirements are met with the deposit of
securities. Futures contracts are generally settled with offsetting
transactions. Gains and losses on financial futures contracts are recorded when
the contract is closed and amortized through the Interest Maintenance Reserve
over the remaining life of the underlying asset. As of December 31, 1997 and
1996, the Company did not have any open financial futures contracts.
The Company utilizes interest rate swap agreements, options, and purchased caps
and floors to reduce interest rate exposures arising from mismatches between
assets and liabilities and to modify portfolio profiles to manage other risks
identified. Under interest rate swaps, the Company agrees to an exchange, at
specified intervals, between streams of variable rate and fixed rate interest
payments calculated by reference to an agreed-upon notional principal amount.
Net amounts receivable and payable are accrued as adjustments to interest income
and included in investment and insurance amounts receivable on the Statutory
Statement of Financial Position. Gains and losses realized on the termination of
contracts are amortized through the Interest Maintenance Reserve over the
remaining life of the associated contract. At December 31, 1997 and 1996, the
Company had swaps with notional amounts of $3,220.2 million and $2,090.3
million, respectively. The fair values of these instruments were $20.9 million
at December 31, 1997 and $14.8 million at December 31, 1996.
Options grant the purchaser the right to buy or sell a security or enter into a
derivative transaction at a stated price within a stated period. The Company's
option contracts have terms of up to fifteen years. The amounts paid for options
purchased are included in other investments on the Statutory Statement of
Financial Position. Gains and losses on these contracts are recorded at the
expiration or termination date and are amortized through the Interest
Maintenance Reserve over the remaining life of the option contract. At December
31, 1997 and 1996, the Company had option contracts with notional amounts of
$5,388.2 million and $1,928.4 million, respectively. The Company's credit risk
exposure was limited to the unamortized costs of $59.0 million and $18.1
million, which had fair values of $99.6 million and $19.2 million at December
31, 1997 and 1996, respectively.
Interest rate cap agreements grant the purchaser the right to receive the excess
of a referenced interest rate over a given rate calculated by reference to an
agreed upon notional amount. Interest rate floor agreements grant the purchaser
the right to receive the excess of a given rate over a referenced interest rate
calculated by reference to an agreed upon notional amount. Amounts paid for
interest rate caps and floors are amortized into interest income over the life
of the asset on a straight-line basis. Unamortized costs are included in other
investments on the Statutory Statement of Financial Position. Amounts receivable
and payable are accrued as adjustments to interest income and included in the
Statutory Statement of Financial Position as investment and insurance amounts
receivable. Gains and losses on these contracts, including any unamortized cost,
are recognized upon termination and are amortized through the Interest
Maintenance Reserve over the remaining life of the associated cap or floor
agreement. At December 31, 1997 and 1996, the company had agreements with
notional amounts of $3,348.6 million and $3,859.6 million, respectively. The
Company's credit risk exposure on these agreements is limited to the unamortized
costs of $18.2 million and $22.0 million at December 31, 1997 and 1996,
respectively. The fair values of these instruments were $23.4 million and $15.2
million at December 31, 1997 and 1996, respectively.
The Company utilizes asset swap agreements to reduce exposures, such as currency
risk and prepayment risk, built into certain assets acquired. Cross-currency
interest rate swaps allow investment in foreign currencies, increasing access to
additional investment opportunities, while limiting foreign exchange risk. The
net cash flows from asset and currency swaps are recognized as adjustments to
the underlying assets' interest income. Gains and losses realized on the
termination of these contracts adjusts the bases of the underlying asset.
Notional amounts relating to asset and currency swaps totaled $225.6 million and
$364.7 million at December 31, 1997 and 1996, respectively. The fair values of
these instruments were an unrecognized loss of $1.7 million at December 31, 1997
and an unrecognized gain of $7.8 million at December 31, 1996.
<PAGE>
Notes To Statutory Financial Statements (Continued)
Equity swap agreements are utilized to hedge exposure to market risk on public
and private equity positions held in the Company's investment portfolio. Under
equity swaps, the Company agrees to an exchange, at points in time specified in
each contract, between streams of variable or fixed rate interest payments and
the change in an underlying index, equity or basket of equities. The change in
the underlying item is calculated by reference to the level of such item
specified in the agreement. Net amounts receivable and payable are accrued as
adjustments to interest income and included in investment and insurance amounts
receivable on the Statutory Statement of Financial Position. Changes in the
value of these contracts are recorded as realized gains and losses in the
Statutory Statement of Income when contracts are closed. At December 31, 1997
and 1996, the Company had equity swap contracts with notional amounts of $160.0
million and $149.2 million, respectively. The fair values of these instruments
were an unrealized loss of $5.1 million at December 31, 1997 and an unrealized
gain of $11.9 million at December 31, 1996.
The Company enters into forward U.S. Treasury commitments for the purpose of
managing interest rate exposure. The Company generally does not take delivery on
forward commitments. These commitments are instead settled with offsetting
transactions. Gains and losses on forward commitments are recorded when the
commitment is closed and amortized through the Interest Maintenance Reserve over
the remaining life of the asset. At December 31, 1997 and 1996, the Company had
U. S. Treasury purchase commitments which will settle during the following year
with contractual amounts of $1,100.7 million and $1,639.4 million with fair
values of $1,117.6 million and $1,627.4 million, respectively including net
unrealized gains of $16.9 million at December 31, 1997 and net unrealized losses
of $12.0 million at December 31, 1996.
The Company is exposed to credit-related losses in the event of nonperformance
by counterparties to derivative financial instruments. This exposure is limited
to contracts with a positive fair value. The amounts at risk in a net gain
position were $146.7 million and $53.9 million at December 31, 1997 and 1996,
respectively. The Company monitors exposure to ensure counterparties are credit
worthy and concentration of exposure is minimized. Additionally, contingent
collateral positions have been obtained with counterparties when considered
prudent.
8. REINSURANCE
The Company cedes all of its group life and health business to UniCARE and has
other reinsurance agreements with other insurance companies in the normal course
of business. Premiums, benefits to policyholders and provisions for future
benefits are stated net of reinsurance. The Company remains liable to the
insured for the payment of benefits if the reinsurer cannot meet its obligations
under the reinsurance agreements. Premiums ceded were $294.6 million in 1997,
$793.5 million in 1996 and $904.1 million in 1995.
9. LIQUIDITY
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1997 are illustrated below:
(In Millions)
Total policyholders' reserves and funds and
separate account liabilities $50,804.2
Not subject to discretionary withdrawal (5,283.7)
Policy loans (4,950.4)
---------
Subject to discretionary withdrawal $40,570.1
=========
Total invested assets, including separate $56,464.7
Policy loans and other invested assets (14,823.3)
---------
Marketable investments $41,641.4
=========
10. BUSINESS RISKS AND CONTINGENCIES
The Company is subject to insurance guaranty fund laws in the states in which it
does business. These laws assess insurance companies amounts to be used to pay
benefits to policyholders and claimants of insolvent insurance companies. Many
states allow these assessments to be credited against future premium taxes. The
Company believes such assessments in excess of amounts accrued will not
materially affect its financial position, results of operations or liquidity. In
1997 and 1996, the Company elected not to admit $21.4 million and $15.3 million,
respectively, of guaranty fund premium tax offset receivables relating to prior
assessments.
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company is involved in litigation arising in and out of the normal course of
its business. Management intends to defend these actions vigorously. While the
outcome of litigation cannot be foreseen with certainty, it is the opinion of
management, after consultation with legal counsel, that the ultimate resolution
of these matters will not materially affect its financial position, results of
operations or liquidity.
11. RECLASSIFICATIONS
Certain 1996 and 1995 amounts have been reclassified to conform with the current
year presentation.
12. SUBSIDIARIES AND AFFILIATED COMPANIES
A summary of ownership and relationship of the Company and its subsidiaries and
affiliated companies as of December 31, 1997 is illustrated below. The Company
provides management or advisory services to these companies. Subsidiaries are
wholly-owned, except as noted.
Parent
- ------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
- -----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investor Services, Inc.
State House One (Liquidated in December 1996)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation -- 98.5%
Charter Oak Capital Management, Inc. -- 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation -- 84.8%
Oppenheimer Acquisition Corporation -- 88.55%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc. -- (Liquidated in December 1997)
CM International, Inc.
CM Property Management, Inc. -- (Liquidated in December 1997)
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual International
----------------------------------------
Compensa de Seguros de Vida S.A. -- 33.5%
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A. -- 33.5%
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
MassMutual/Carlson CBO N. V. -- 100%
MassMutual Corporate Value Limited -- 46%
9048 -- 5434 Quebec, Inc.
Affiliates of Massachusetts Mutual Life Insurance Company
- ---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
<PAGE>
PART C
OTHER INFORMATION
7
<PAGE>
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
Financial Statements Included in Part A
---------------------------------------
None.
-----
Financial Statements Included in Part B
---------------------------------------
The Registrant
--------------
No financial statements for the Separate Account have been included,
because, as of the date of this Registration Statement, the Sub-
Accounts available under the Certificates had no assets.
The Depositor
-------------
Reports of Independent Accountants
Statutory Statements of Financial Position as of December 31, 1997
and 1996
Statutory Statements of Income for the years ended December 31, 1997,
1996 and 1995
Statutory Statements of Changes in Policyholders' Contingency
Reserves for the years ended
December 31, 1996, 1995 and 1994
December 31, 1997, 1996 and 1995
Statutory Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995
Notes to Statutory Financial Statements
(b) EXHIBITS
Exhibit 1 Resolution of Board of Directors of the Company
authorizing the establishment of the Separate
Account.*
Exhibit 2 Not Applicable.
Exhibit 3 (i) Principal Underwriting Agreement.***
(ii) Underwriting and Servicing Agreement.***
Exhibit 4 (i) Form of Group Annuity Contract.*
(ii) Form of Individual Certificate.*
Exhibit 5 (i) Form of Group Annuity Application.*
(ii) Form of Individual Certificate Application.*
Exhibit 6 (i) Copy of Articles of Incorporation of the
Company.*
(ii) Copy of the Bylaws of the Company.*
1
<PAGE>
Exhibit 7 Not Applicable.
Exhibit 8 (i) Form of Participation Agreement between the
Company, Oppenheimer Variable Account Funds,
Inc. and OppenheimerFunds, Inc.**
(ii) Form of Participating Agreement between the
Company, Panorama Series Fund, Inc. and
OppenheimerFunds, Inc.**
(iii) Form of Participation Agreement between
MassMutual, C.M. Life Insurance Company and
American Century Investment Management,
Inc.***
(iv) Form of Participation Agreement between
MassMutual Variable Insurance Products Fund II
and Fidelity Distributors Corporation.***
(v) Form of Participation Agreement between
MassMutual and T. Rowe Price Investment
Services, Inc.***
Exhibit 9 Opinion and Consent of Counsel.***
Exhibit 10 (i) Consent of Coopers & Lybrand, L.L.P.,
Independent Accountants.***
(ii) Powers of Attorney.*
(iii) Power of Attorney for Roger Ackerman.***
Exhibit 11 Not Applicable.
Exhibit 12 Not Applicable.
Exhibit 13 Not Applicable.
Exhibit 14 None.
* Incorporated by reference to Registrant's initial Registration Statement
(No. 333-45039) filed on January 28, 1998.
** Incorporated by reference to Registration Statement No. 333-22557, filed
on February 28, 1997.
*** Filed herewith.
2
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Name and Position Principal Occupation(s) During Past Five Years
- --------------------------------------------------------------------------------
Roger G. Ackerman, Director Chairman and Chief Executive Officer, since
One Riverfront Plaza, HQE 2 1996, President and Chief Operating Officer,
Corning, NY 14831 1990-1996, Corning, Inc.
- --------------------------------------------------------------------------------
James R. Birle, Director Chairman, since 1997, and Founder, since 1994,
2 Soundview Drive President, 1994-1997, Resolute Partners, LLC;
Greenwich, CT 06836 General Partner, Blackstone Group, 1988-1994
- --------------------------------------------------------------------------------
Gene Chao, Director Chairman, President and CEO, Computer
733 SW Vista Avenue Projections, Inc., since 1991
Portland, OR 97205
- --------------------------------------------------------------------------------
Patricia Diaz Dennis, Director Senior Vice President and Assistant General
175 East Houston, Room 4-A-70 Counsel, SBC Communications Inc., since
San Antonio, TX 78205 1995; Special Counsel, Sullivan & Cromwell,
1993-1995; Assistant Secretary of State for
Human Rights and Humanitarian Affairs, U.S.
Department of State, 1992-1993
- --------------------------------------------------------------------------------
Anthony Downs, Director Senior Fellow, The Brookings Institution,
1775 Massachusetts Ave., N.W. since 1977
Washington, DC 20036-2188
- --------------------------------------------------------------------------------
James L. Dunlap, Director President and Chief Operating Officer,
1201 Louisiana, Suite 1400 United Meridian Corporation, since 1996;
Houston, TX 77002-5603 Senior Vice President, Texaco, Inc. 1987-1996
- --------------------------------------------------------------------------------
William B. Ellis, Director Senior Fellow, Yale University School of
31 Pound Foolish Lane Forestry and Environmental Studies, since
Glastonbury, CT 06033 1995; Chairman and Chief Executive Officer,
Northeast Utilities, 1983-1995
- --------------------------------------------------------------------------------
Robert M. Furek, Director Chairman, State Board of Trustees for the
1 State Street, Suite 2310 Hartford School System, since 1997; President
Hartford, CT 06103 and Chief Executive Officer, Heublein, Inc.,
1987-1996
- --------------------------------------------------------------------------------
Charles K. Gifford, Director Chairman and Chief Executive Officer, since
100 Federal Street 1995, and President, 1989-1995, BankBoston,
Boston, MA 02110 N.A. and Chairman, since 1998, and Chief
Executive Officer, since 1985, BankBoston
Corporation
- --------------------------------------------------------------------------------
William N. Griggs, Director Managing Director, Griggs & Santow, Inc.,
75 Wall Street, 20/th/ Floor since 1983
New York, NY 10005
- --------------------------------------------------------------------------------
George B. Harvey, Director Retired Chairman, President and CEO, Pitney
One Landmark Square Bowes, since 1996
Suite 1905, 19/th/ Floor
Stamford, CT 06901
- --------------------------------------------------------------------------------
Barbara B. Hauptfuhrer, Director of various corporations, since 1972
Director
1700 Old Welsh Road
Huntingdon Valley, PA 19006
- --------------------------------------------------------------------------------
Sheldon B. Lubar, Director Chairman, Lubar & Co. Incorporated, since 1977
700 North Water Street,
Suite 1200
Milwaukee, WI 53202
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
William B. Marx, Jr., Director Retired Senior Executive Vice President
5 Peacock Lane Lucent Technologies, since 1996; Executive
Village of Golf, FL 33436-5299 Vice President and CEO Multimedia Products
Group, AT&T, 1994-1996; Executive Vice
President and CEO, Network Systems Group,
1993-1994; Group Executive and President, AT&T
Network Systems, 1989-1993
- --------------------------------------------------------------------------------
John F. Maypole, Director Managing Partner, Peach State Real Estate
55 Sandy Hook Road - North Holding Company, since 1984
Sarasota, FL 34242
- --------------------------------------------------------------------------------
John J. Pajak, Director, President and Chief Operating Officer,
President and Chief Operating since 1996, Vice Chairman and Chief
Officer Administrative Officer, 1996-1996, Executive
1295 State Street Vice President, 1987-1996, MassMutual
Springfield, MA 01111
- --------------------------------------------------------------------------------
Thomas B. Wheeler, Director, Chairman and Chief Executive Officer,
Chairman and Chief Executive since 1996, President and Chief
Officer Executive Officer, 1988-1996, MassMutual
1295 State Street
Springfield, MA 01111
- --------------------------------------------------------------------------------
Alfred M. Zeien, Director Chairman and Chief Executive Officer,
Prudential Tower The Gillette Company, since 1991
Boston, MA 02199
- --------------------------------------------------------------------------------
Executive Vice Presidents:
- --------------------------------------------------------------------------------
Lawrence V. Burkett, Jr. Executive Vice President and General Counsel
1295 State Street since 1993, Senior Vice President and Deputy
Springfield, MA 01111 General Counsel, 1992-1993, MassMutual
- --------------------------------------------------------------------------------
Peter J. Daboul Executive Vice President and Chief Information
1295 State Street Officer, since 1997, Senior Vice President
Springfield, MA 01111 1990-1997, MassMutual
- --------------------------------------------------------------------------------
John B. Davies Executive Vice President, since 1994, Associate
1295 State Street Executive Vice President, 1994-1994, General
Springfield, MA 01111 Agent, 1982-1993, MassMutual
- --------------------------------------------------------------------------------
Daniel J. Fitzgerald Executive Vice President, since 1994, Corporate
1295 State Street Financial Operations, 1994-1997, Senior Vice
Springfield, MA 01111 President, 1991-1994
- --------------------------------------------------------------------------------
James E. Miller Executive Vice President, since 1997 and
1295 State Street 1987-1996, MassMutual; Senior Vice President
Springfield, MA 01111 UniCare Life and Health Insurance Company,
1996-1997
- --------------------------------------------------------------------------------
John V. Murphy Executive Vice President, since 1997,
1295 State Street MassMutual; Executive Vice President and Chief
Springfield, MA 01111 Operating Officer, David L. Babson & Co., Inc.,
1995-1997; Chief Operating Officer, Concert
Capital Management, Inc., 1993-1995; Senior
Vice President and Chief Financial Officer,
Liberty Financial Companies, 1977-1993
- --------------------------------------------------------------------------------
Gary E. Wendlandt Executive Vice President and Chief Investment
1295 State Street Officer, since 1993, Executive Vice President,
Springfield, MA 01111 1992-1993, MassMutual
- --------------------------------------------------------------------------------
Joseph M. Zubretsky Executive Vice President and Chief Financial
1295 State Street Officer, since 1997, MassMutual; Chief Financial
Springfield, MA 01111 Officer, 1996, HealthSource; Coopers & Lybrand,
1990-1996
- --------------------------------------------------------------------------------
4
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The assets of the Registrant, under state law, are assets of MassMutual.
The registrant may also be deemed to be under common control with other separate
accounts established by MassMutual and its life insurance subsidiaries, C.M.
Life Insurance Company and MML Bay State Life Insurance Company, which are
registered as unit investment trusts under the Investment Company Act of 1940.
The discussion that follows indicates those entities owned directly or
indirectly by Massachusetts Mutual Life Insurance Company:
LIST OF SUBSIDIARIES AND AFFILIATES
1. MassMutual Holding Company, a Delaware corporation, all the stock of
which is owned by MassMutual.
2. MML Series Investment Fund, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares of which
are owned by separate accounts of MassMutual and companies controlled by
MassMutual.
3. MassMutual Institutional Funds, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares are owned
by MassMutual.
4. MML Bay State Life Insurance Company, a Missouri corporation, all the
stock of which is owned by MassMutual.
5. MassMutual of Ireland, Ltd., incorporated in the Republic of Ireland, to
operate a group life and health claim office for MassMutual, all of the
stock of which is owned by MassMutual.
6. CM Assurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.
7. CM Benefit Insurance Company, a Connecticut life, accident, disability
and health insurer, all the stock of which is owned by MassMutual.
8. C.M. Life Insurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.
9. MML Distributors, LLC, formerly known as Connecticut Mutual Financial
Services, LLC, a registered broker-dealer incorporated as a limited
liability company in Connecticut. MassMutual has a 99% ownership interest
and G.R. Phelps & Co. has a 1% ownership interest.
10. Panorama Series Fund, Inc., a registered open-end investment company
organized as a Maryland corporation. Shares of the fund are sold only to
MassMutual and its affiliates.
11. MassMutual Holding Trust I, a Massachusetts business trust, which acts as
a holding company for certain MassMutual subsidiaries and affiliates, all
of the stock of which is owned by MassMutual Holding Company.
12. MassMutual Holding Trust II, a Massachusetts business trust, which acts as
a holding company for certain MassMutual subsidiaries and affiliates, all
of the stock of which is owned by MassMutual Holding Company.
5
<PAGE>
13. MassMutual Holding MSC, Inc., a Massachusetts corporation, which acts as a
holding company for certain MassMutual subsidiaries and affiliates, all of
the stock of which is owned by MassMutual Holding Company.
14. MML Investors Services, Inc., registered broker-dealer incorporated in
Massachusetts, all the stock of which is owned by MassMutual Holding
Company.
15. G.R. Phelps & Company, Inc., Connecticut corporation which formerly
operated as a securities broker-dealer, all the stock of which is owned by
MassMutual Holding Company.
16. MassMutual International, Inc., a Delaware corporation that acts as a
holding company of and provides services to international insurance
companies, all of the stock of which is owned by MassMutual Holding
Company.
17. MassLife Seguros de Vida S.A. (Argentina), a life insurance company
incorporated in Argentina. MassMutual International Inc. owns 99.99% of
the outstanding capital stock of MassLife Seguros de Vida S.A.
18. Cornerstone Real Estate Advisers, Inc., a Massachusetts equity real estate
advisory corporation, all the stock of which is owned by MassMutual
Holding Trust I.
19. DLB Acquisition Corporation ("DLB") is a Delaware corporation, which
serves as a holding company for certain investment advisory subsidiaries
of MassMutual. MassMutual Holding Trust I owns 83.7% of the outstanding
capital stock of DLB.
20. Oppenheimer Acquisition Corporation ("OAC") is a Delaware corporation,
which serves as a holding company for OppenheimerFunds, Inc. MassMutual
Holding Trust I owns 86% of the capital stock of OAC.
21. Antares Leveraged Capital Corp., a Delaware corporation that operates as a
finance company, all of the stock of which is owned by MassMutual Holding
Trust I.
22. Charter Oak Capital Management, Inc., a Delaware corporation that operates
as an investment manager. MassMutual Holding Trust I owns 80% of the
capital stock of Charter Oak.
23. MML Realty Management Corporation, a property manager incorporated in
Massachusetts, all the stock of which is owned by MassMutual Holding Trust
II.
24. Westheimer 335 Suites, Inc., was incorporated in Delaware to serve as a
general partner of the Westheimer 335 Suites Limited Partnership.
MassMutual Holding Trust II owns all the stock of Westheimer 335 Suites,
Inc.
25. CM Advantage, Inc., a Connecticut corporation that acts as a general
partner in real estate limited partnerships. MassMutual Holding Trust II
owns all of the outstanding stock.
26. CM International, Inc., a Delaware corporation that holds a mortgage pool
and issues collateralized bond obligations. MassMutual Holding Trust II
owns all the outstanding stock of CM International, Inc.
27. CM Property Management, Inc., a Connecticut real estate holding company,
all the stock of which is owned by MassMutual Holding Trust II.
28. Urban Properties, Inc., a Delaware real estate holding and development
company, all the stock of which is owned by MassMutual Holding Trust II.
6
<PAGE>
29. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual High Yield Partners LLC. MassMutual Holding Trust II owns
all the outstanding stock of MMHC Investment, Inc.
30. HYP Management, Inc., a Delaware corporation which is the LLC Manager for
MassMutual High Yield Partners LLC and owns 1.28% of the LLC units of such
entity. MassMutual Holding Trust II owns all the outstanding stock of HYP
Management, Inc.
31. MassMutual Corporate Value Limited, a Cayman Islands corporation that owns
approximately 90% of MassMutual Corporate Value Partners Limited.
MassMutual Holding MSC, Inc. owns 46.19% of the outstanding capital stock
of MassMutual Corporate Value Limited.
32. MassMutual International (Bermuda) Ltd., a Bermuda life insurance company,
all of the stock of which is owned by MassMutual International Inc.
33. MassMutual Internacional (Chile) S.A. a Chilean corporation, which
operates as a holding company. MassMutual International Inc. owns 99% of
the outstanding shares and MassMutual Holding Company owns the remaining
1% of the shares.
34. MassMutual International (Luxembourg) S.A. a Luxembourg corporation, which
operates as an insurance company. MassMutual International Inc. owns 99%
of the outstanding shares and MassMutual Holding Company owns the
remaining 1% of the shares.
35. Mass Seguros de Vida S.A., a life insurance company incorporated in Chile.
MassMutual Holding Company owns 33.5% of the outstanding capital stock of
Mass Seguros de Vida S.A.
36. MML Insurance Agency, Inc., a licensed insurance broker incorporated in
Massachusetts, all of the stock of which is owned by MML Investors
Services, Inc.
37. MML Securities Corporation, a Massachusetts securities corporation, all of
the stock of which is owned by MML Investors Services, Inc.
38. OppenheimerFunds, Inc., a registered investment adviser incorporated in
Colorado, all of the stock of which is owned by Oppenheimer Acquisition
Corporation
39. David L. Babson and Company, Incorporated, a registered investment adviser
incorporated in Massachusetts, all of the stock of which is owned by DLB
Acquisition Corporation.
40. Cornerstone Office Management, LLC, a Delaware limited liability company
that is 50% owned by Cornerstone Real Estate Advisers, Inc. and 50% owned
by MML Realty Management Corporation.
41. Westheimer 335 Suites Limited Partnership, a Texas limited partnership of
which Westheimer 335 Suites, Inc. is the general partner.
42. MassMutual High Yield Partners LLC, a Delaware limited liability company,
that operates as a high yield bond fund. MassMutual holds 5.28%, MMHC
Investment Inc. holds 35.99%, and HYP Management, Inc. hold 1.28% for a
total of 42.55% of the ownership interest in this company.
43. MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
that operates as a high yield bond fund. MassMutual Corporate Value
Limited holds an approximately 90% ownership interest in this company.
7
<PAGE>
44. 9048-5434 Quebec, Inc., a Quebec corporation, which operates as the owner
of hotel property in Montreal, Quebec, Canada. MassMutual Holding MSC,
Inc. owns all the shares of 9048-5434 Quebec, Inc.
45. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation which
operates a collateralized bond obligation fund. MassMutual Holding MSC,
Inc. and Carlson Investment Management Co. each own 50% of the outstanding
shares.
46. Oppenheimer Real Asset Management, Inc., a commodity pool operator
incorporated in Delaware, all the stock of which is owned by
OppenheimerFunds, Inc.
47. Diversified Insurance Services Agency of America, Inc. (Alabama), a
licensed insurance broker incorporated in Alabama. MML Insurance Agency,
Inc. owns all the shares of outstanding stock.
48. Diversified Insurance Services Agency of America, Inc. (Hawaii), a
licensed insurance broker incorporated in Hawaii. MML Insurance Agency,
Inc. owns all the shares of outstanding stock.
49. MML Insurance Agency of Nevada, Inc., a Nevada corporation that operates
as an insurance broker, all of the stock of which is owned by MML
Insurance Agency, Inc.
50. MML Insurance Agency of Ohio, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Ohio that operates as an insurance
broker. The outstanding capital stock is controlled by MML Insurance
Agency, Inc. by means of a voting trust.
51. MML Insurance Agency of Texas, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Texas that operates as an insurance
broker. The outstanding capital stock is controlled by MML Insurance
Agency, Inc. by means of a voting trust.
52. MML Insurance Agency of Mississippi, P.C., a Mississippi professional
corporation that operates as an insurance broker, all of the stock of
which is owned by MML Insurance Agency, Inc.
53. Origen Inversiones S.A., a Chilean corporation which operates as a holding
company. MassMutual Internacional (Chile) S.A. holds a 33.5% ownership
interest in this corporation.
54. Babson Securities Corporation, a registered broker-dealer incorporated in
Massachusetts, all of the stock of which is owned by David L. Babson and
Company, Incorporated.
55. Potomac Babson Incorporated, a Massachusetts corporation, is a registered
investment adviser. David L. Babson and Company Incorporated owns 60% of
the outstanding shares of Potomac Babson Incorporated.
56. Babson-Stewart-Ivory International, a Massachusetts general partnership,
which operates as a registered investment adviser. David L. Babson and
Company Incorporated holds a 50% ownership interest in the partnership.
57. Oppenheimer Value Stock Fund ("OVSF") is a series of Oppenheimer Integrity
Funds, a Massachusetts business trust. OVSF is a registered open-end
investment company of which MassMutual owns 40% of the outstanding shares
of beneficial interest.
58. Oppenheimer Series Fund I Inc., a Maryland corporation and a registered
open-end investment company of which MassMutual and its affiliates own
approximately 27% of the outstanding shares of beneficial interest.
8
<PAGE>
59. Centennial Asset Management Corporation, a Delaware corporation that
serves as the investment adviser and general distributor of the Centennial
Funds. OppenheimerFunds, Inc. owns all the stock of Centennial Asset
Management Corporation.
60. HarbourView Asset Management Corporation, a registered investment adviser
incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.
61. MassMutual Internacional (Argentina) S.A., an Argentine corporation, which
operates as a holding company. MassMutual International Inc. owns 99.9% of
the outstanding shares and MassMutual Holding Company owns the remaining
0.1% of the shares.
62. OppenheimerFunds Distributor, Inc., a registered broker-dealer
incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.
63. Oppenheimer Partnership Holdings, Inc., a Delaware holding company, all
the stock of which is owned by OppenheimerFunds, Inc.
64. Shareholder Financial Services, Inc., a transfer agent incorporated in
Colorado, all the stock of which is owned by OppenheimerFunds, Inc.
65. Shareholder Services, Inc., a transfer agent incorporated in Colorado, all
the stock of which is owned by OppenheimerFunds, Inc.
66. MultiSource Service, Inc., a Colorado corporation that operates as a
clearing broker, all of the stock of which is owned by OppenheimerFunds,
Inc.
67. Centennial Capital Corporation, a former sponsor of unit investment trust
incorporated in Delaware, all the stock of which is owned by Centennial
Asset Management Corporation.
68. Compensa Compania Seguros De Vida, a Chilean insurance company. Origen
Inversiones S.A. owns 99% of the outstanding shares of this company.
69. Cornerstone Suburban Office Investors, LP, a Delaware limited partnership,
which operates as a real estate operating company. Cornerstone Office
Management, LLC holds a 1% general partnership interest in this fund and
MassMutual holds a 99% limited partnership interest.
70. 505 Waterford Park Limited Partnership, a Delaware limited partnership,
which holds title to an office building in Minneapolis, Minnesota. MML
Realty Management Corporation holds a 1% general partnership interest in
this partnership and MassMutual holds a 99% limited partnership interest.
71. The DLB Fund Group, an open-end management investment company, of which
MassMutual owns at least 25% of each series.
72. MassMutual Services, S.A., an Argentine corporation, which operates as a
service company. MassMutual Internacional (Aregentina) S.A. owns 99% of
the outstanding shares and MassMutual International, Inc. owns 1% of the
shares.
9
<PAGE>
MassMutual is the investment adviser to each of the following investment
companies, and as such may be deemed to control them.
1. MassMutual Corporate Investors, a registered closed-end Massachusetts
business trust.
2. MassMutual Participation Investors, a registered closed-end Massachusetts
business trust.
3. MML Series Investment Fund, a registered open-end Massachusetts business
trust, all of the shares are owned by separate accounts of MassMutual and
companies controlled by MassMutual.
4. MassMutual Institutional Funds, a registered open-end Massachusetts
business trust, all of the shares are owned by MassMutual.
5. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation that issued
Collateralized Bond Obligations on or about May 1, 1991, which is owned
equally by MassMutual interests (MassMutual and MassMutual Holding MSC,
Inc.) and Carlson Investment Management Co.
6. MassMutual Corporate Value Partners, Limited, an off-shore unregistered
investment company.
7. MassMutual High Yield Partners LLC, a high yield bond fund organized as
Delaware limited liability company.
8. MassMutual/Darby CBO, LLC, a Delaware limited liability company that
operates as a fund investing in high yield debt securities of U.S. and
emerging market issuers. MassMutual owns 1.79%, MMHL, Inc. owns 44.91% and
MassMutual High Yield Partners, LLC owns 2.39% of the ownership interest in
this Company.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not applicable because no contracts have been sold as of the date of this
initial Registration Statement.
ITEM 28. INDEMNIFICATION
The Bylaws of the Company provide that:
MassMutual directors and officers are indemnified under its by-laws. No
indemnification is provided with respect to any liability to any entity which is
registered as an investment company under the Investment Company Act of 1940 or
to the security holders thereof, where the basis for such liability is willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
MassMutual pursuant to the foregoing provisions, or otherwise, MassMutual has
been advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by MassMutual
of expenses incurred or paid by a director, officer or controlling person of
MassMutual 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, MassMutual will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of
10
<PAGE>
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) MML Distributors, LLC, a wholly-owned subsidiary of MassMutual, acts as
principal underwriter for registered separate accounts of MassMutual, C.M. Life
and MML Bay State.
(b)(1) MML Distributors, LLC is the principal underwriter of the Certificates.
The following people are officers and member representatives of the principal
underwriter.
OFFICERS AND MEMBER REPRESENTATIVES
MML DISTRIBUTORS, LLC
Name and Position
with Principal Underwriter Principal Business Address
- -------------------------- --------------------------
Kenneth M. Rickson One Monarch Place
Member Representative 1414 Main Street
G.R. Phelps & Co., Inc. Springfield, MA 01144-1013
Margaret Sperry 1295 State Street
Member Representative Springfield, MA 01111-0001
Massachusetts Mutual
Life Insurance Co.
Kenneth M. Rickson One Monarch Place
President 1414 Main Street
Springfield, MA 01144-1013
John E. Forrest One Monarch Place
Vice President 1414 Main Street
Springfield, MA 01144-1013
Ronald E. Thomson One Monarch Place
Vice President 1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley One Monarch Place
Vice President 1414 Main Street
Assistant Secretary Springfield, MA 01144-1013
James T. Bagley 1295 State Street
Treasurer Springfield, MA 01111-0001
Bruce C. Frisbie 1295 State Street
Assistant Treasurer Springfield, MA 01111-0001
Raymond W. Anderson 140 Garden Street
Assistant Treasurer Hartford, CT 01654
Ann F. Lomeli 1295 State Street
Secretary Springfield, MA 01111-0001
11
<PAGE>
Eileen D. Leo One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
Marilyn A. Spanzo One Monarch Place
Chief Legal Officer 1414 Main Street
Springfield, MA 01144-1013
Robert Rosenthal One Monarch Place
Compliance Officer 1414 Main Street
Springfield, MA 01144-1013
Melissa Thompson One Monarch Place
Registration Manager 1414 Main Street
Springfield, MA 01144-1013
Ruth B. Howe One Monarch Place
Director of Continuing Education 1414 Main Street
Springfield, MA 01144-1013
Peter D. Cuozzo 140 Garden Street
Variable Life Supervisor and Hartford, CT 06154
Hartford OSJ Supervisor
Maureen Ford 140 Garden Street
Variable Annuity Supervisor Hartford, CT 06154
Anne Melissa Dowling 140 Garden Street
Large Corporate Market Supervisor Hartford, CT 06154
(b)(2) MML Investors Services, Inc. is the co-underwriter of the Contracts. The
following people are the officers and directors of the co-underwriter.
MML INVESTORS SERVICES, INC.
OFFICERS AND DIRECTORS
Name and Position
with Co-Underwriter Principal Business Address
- ------------------- --------------------------
Kenneth M. Rickson One Monarch Place
President 1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley One Monarch Place
Vice President 1414 Main Street
Chief Compliance Officer Springfield, MA 01144-1013
Chief Legal Officer
Assistant Secretary
Ronald E. Thomson One Monarch Place
Treasurer and Second 1414 Main Street
Vice President Springfield, MA 01144-1013
12
<PAGE>
Ann F. Lomeli 1295 State Street
Secretary Springfield, MA 01111
John E. Forrest One Monarch Place
Vice President 1414 Main Street
National Sales Director Springfield, MA 01144-1013
Eileen D. Leo One Monarch Place
Assistant Treasurer 1414 Main Street
Assistant Secretary Springfield, MA 01103-1013
David Deonarine One Monarch Place
Sr. Registered Options Principal 1414 Main Street
Springfield, MA 01144-1013
Nicholas J. Orphan 245 Peach Tree Center Ave.
Regional Supervisor/South Suite 2330
Atlanta, GA 30303
Name and Position
with Co-Underwriter Principal Business Address
- ------------------- --------------------------
Burvin E. Pugh 1295 State Street
Chief Agency Field Springfield, MA 01111
Force Supervisor
John P. McCloskey 1295 State Street
Regional Supervisor/East Springfield, MA 01111
Robert W. Kumming 1295 State Street
Regional Pension Management Springfield, MA 01111
Supervisor (East/Central)
Peter J. Zummo 1295 State Street
Regional Pension Management Springfield, MA 01111
Supervisor (South/West)
Bruce Lukowiak 6263 North Scottsdale Rd.
Regional Supervisor/West Suite 222
Scottsdale, AZ 85250
Gary L. Greenfield One Lincoln Centre
Regional Supervisor/Central Suite 1490
Oak Brook Terrace, IL
60181-4271
Lawrence V. Burkett 1295 State Street
Chairman of the Board Springfield, MA 01111
of Directors
Peter Cuozzo, CLU, ChFC 1295 State Street
Director Springfield, MA 01111
John B. Davies 1295 State Street
Director Springfield, MA 01111
Maureen R. Ford 140 Garden Street
13
<PAGE>
Director Hartford, CT 01654
Gary T. Huffman 1295 State Street
Director Springfield, MA 01111
Susan Alfano 1295 State Street
Director Springfield, MA 01111
Anne Melissa Dowling 140 Garden Street
Director Hartford, CT 01654
Douglas J. Jangraw 140 Garden Street
Director Hartford, CT 06154
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books, or other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder
are maintained by the Registrant at 140 Garden Street, Hartford, CT.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
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 sixteen (16) months old for so long as payment under the variable
annuity contracts may be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a postcard 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 statement required to be made available under
this Form promptly upon written or oral request.
d. Massachusetts Mutual Life Insurance Company hereby represents that the
fees and charges deducted under the individual certificates under the group
deferred variable annuity contract with flexible purchase payments
described in this Registration Statement in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by Massachusetts Mutual Life Insurance Company.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
caused this Pre-Effective Amendment No. 1 to Registration Statement No. 333-
45039 to be signed on its behalf by the undersigned thereunto duly authorized,
all in the city of Springfield and the Commonwealth of Massachusetts, on the
18th day of May, 1998.
MASSACHUSETTS MUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT 4
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY (Depositor)
By: /s/ Thomas B. Wheeler*
-----------------------
Thomas B. Wheeler, Chief Executive Officer
Massachusetts Mutual Life Insurance Company
/s/ Richard M. Howe On May 18, 1998, as Attorney-in-Fact pursuant to
- --------------------- powers of attorney.
*Richard M. Howe
As required by the Securities Act of 1933, this Pre-Effective Amendment No. 1 to
Registration Statement No. 333-45039 has been signed by the following persons in
the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas B. Wheeler* Chief Executive Officer and May 18, 1998
- ------------------------------- Chairman of the Board
Thomas B. Wheeler
/s/ John J. Pajak* President, Chief Operating Officer May 18, 1998
- ------------------------------- and Director
John J. Pajak
/s/ Joseph M. Zubretsky* Executive Vice President, May 18, 1998
- ------------------------------- Chief Financial Officer &
Joseph M. Zubretsky Chief Accounting Officer
/s/ Roger G. Ackerman* Director May 18, 1998
- -------------------------------
Roger G. Ackerman
/s/ James R. Birle* Director May 18, 1998
- -------------------------------
James R. Birle
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Gene Chao* Director May 18, 1998
- -------------------------------
Gene Chao, Ph.D.
/s/ Patricia Diaz Dennis* Director May 18, 1998
- -------------------------------
Patricia Diaz Dennis
/s/ Anthony Downs* Director May 18, 1998
- -------------------------------
Anthony Downs
/s/ James L. Dunlap* Director May 18, 1998
- -------------------------------
James L. Dunlap
/s/ William B. Ellis* Director May 18, 1998
- -------------------------------
William B. Ellis, Ph.D.
/s/ Robert M. Furek* Director May 18, 1998
- -------------------------------
Robert M. Furek
/s/ Charles K. Gifford* Director May 18, 1998
- -------------------------------
Charles K. Gifford
/s/ William N. Griggs* Director May 18, 1998
- -------------------------------
William N. Griggs
/s/ George B. Harvey* Director May 18, 1998
- -------------------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director May 18, 1998
- -------------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director May 18, 1998
- -------------------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director May 18, 1998
- -------------------------------
William B. Marx, Jr.
</TABLE>
16
<PAGE>
<TABLE>
<S> <C> <C>
/s/ John F. Maypole* Director May 18, 1998
- -------------------------------
John F. Maypole
/s/ Alfred M. Zeien* Director May 18, 1998
- -------------------------------
Alfred M. Zeien
/s/ Richard M. Howe On May 18, 1998, as Attorney-in-Fact pursuant to
- ------------------------------- powers of attorney.
*Richard M. Howe
</TABLE>
17
<PAGE>
INDEX TO EXHIBITS
3(i) Principal Underwriting Agreement
(ii) Underwriting and Servicing Agreement
8(iii) American Century Participation Agreement
8(iv) Variable Insurance Products Fund II Participation Agreement
8(v) T. Rowe Price Participation Agreement
9 Opinion and Consent of Counsel
10(i) Consent of Coopers & Lybrand LLP
10(iii) Power of Attorney for Roger Ackerman
18
<PAGE>
Exhibit 3(i)
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this day of
July, 1998, by and between MML Distributors, LLC ("MML Distributors") and
Massachusetts Mutual Life Insurance Company ("MassMutual"), on its own behalf
and on behalf of Massachusetts Mutual Variable Annuity Separate Account 4 (the
"Separate Account"), a separate account of MassMutual, as follows:
WHEREAS, the Separate Account was established under authority of
resolutions of the Board of Directors of MassMutual in order to set aside and
invest assets attributable to certain variable annuity contracts (the
"Contracts") issued by MassMutual; and
WHEREAS, MassMutual has registered the Separate Account under the
Investment Company Act of 1940, as amended, (the "1940 Act") and has registered
the Contracts under the Securities Act of 1933, as amended, (the "1933 Act");
and
WHEREAS, MassMutual will continue the effectiveness of the
registration of the Separate Account under the 1940 Act and the Contracts under
the 1933 Act; and
WHEREAS, MassMutual intends for the Contracts to be sold by agents
and brokers who are required to be registered representatives of a broker-dealer
that is registered with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, MassMutual desires to engage MML Distributors, a
broker-dealer registered with the SEC under the 1934 Act and a member of the
NASD, to act as the principal underwriter ("Underwriter") of the Contracts, and
to otherwise perform certain duties and functions that are necessary and proper
for the distribution of the Contracts as required under applicable federal and
state securities laws and NASD regulations, and MML Distributors desires to act
as Underwriter for the sale of the Contracts and to assume such
responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. MassMutual hereby appoints MML Distributors as, and MML
Distributors agrees to serve as, Underwriter of the Contracts during the term of
this Agreement for purposes of federal and state securities laws. MassMutual
reserves the right, however, to refuse at any time or times to sell any
Contracts hereunder for any reason, and MassMutual maintains ultimate
responsibility for the sales of the Contracts.
MML Distributors shall use reasonable efforts to sell the Contracts but does not
agree hereby to sell any specific number of Contracts and shall be free to act
as underwriter of other securities. MML Distributors agrees to offer the
Contracts for sale in accordance with the prospectus then in effect for the
Contracts.
2. Services. MML Distributors agrees, on behalf of MassMutual and the Separate
Account, and in its capacity as Underwriter, to undertake at its own expense
except as otherwise provided herein, to provide certain sales, administrative
and supervisory services relative to the Contracts as described below, and
19
<PAGE>
otherwise to perform all duties that are necessary and proper for the
distribution of the Contracts as required under applicable federal and state
securities laws and NASD regulations.
3. Selling Group. MML Distributors may enter into sales agreements for the sale
of the Contracts with independent broker-dealer firms ("Independent Brokers")
whose registered representatives have been or shall be licensed and appointed as
life insurance agents of MassMutual. All such agreements shall be in a form
agreed to by MassMutual. All such agreements shall provide that the Independent
Brokers must assume full responsibility for continued compliance by itself and
its associated persons with the NASD Rules (the "Rules") and all applicable
federal and state securities and insurance laws. All associated persons of such
Independent Brokers soliciting applications for the Contracts shall be duly and
appropriately licensed and appointed for the sale of the Contracts under the
Rules and applicable federal and state securities and insurance laws.
4. Compliance and Supervision. All persons who are engaged directly or
indirectly in the operations of MML Distributors and MassMutual in connection
with the offer or sale of the Contracts shall be considered a "person
associated" with MML Distributors as defined in Section 3(a)(18) of the 1934
Act. MML Distributors shall have full responsibility for the securities
activities of each such person as contemplated by Section 15 of the 1934 Act.
MML Distributors shall be fully responsible for carrying out all
compliance, supervisory and other obligations hereunder with respect to the
activities of its registered representatives as required by the Rules and
applicable federal and state securities laws. Without limiting the generality of
the foregoing, MML Distributors agrees that it shall be fully responsible for:
(a) ensuring that no representative of MML Distributors shall offer
or sell the Contracts until such person is appropriately licensed, registered,
or otherwise qualified to offer and sell such Contracts under the federal
securities laws and any applicable securities laws of each state or other
jurisdiction in which such Contracts may be lawfully sold, in which MassMutual
is licensed to sell the Contracts, and in which such person shall offer or sell
the Contracts; and
(b) training and supervising MassMutual's agents and brokers who are
also registered representatives of MML Distributors for purposes of complying on
a continuous basis with the Rules and with federal and state securities laws
applicable in connection with the offering and sale of the Contracts. In this
connection, MML Distributors shall:
(i) jointly conduct with MassMutual such training (including the
preparation and utilization of training materials) as in the opinion of MML
Distributors and MassMutual is necessary to accomplish the purposes of this
Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of MML Distributors
who sell the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the responsibilities as
set forth herein;
(iv) take reasonable steps to ensure that MassMutual agents and
brokers who are also registered representatives of MML Distributors recommend
the purchase of the Contracts only upon reasonable grounds to believe that the
purchase of the Contracts is suitable for such applicant; and
20
<PAGE>
(v) impose disciplinary measures on agents of MassMutual who are
also registered representatives of MML Distributors as required.
The parties hereto recognize that any registered representative of
MML Distributors or Independent Broker selling the Contracts as contemplated by
this Agreement shall also be acting as an insurance agent of MassMutual or as an
insurance broker, and that the rights of MML Distributors and Independent Broker
to supervise such persons shall be limited to the extent specifically described
herein or required under applicable federal or state securities laws or NASD
regulations.
5. Registration and Qualification of Contracts. MassMutual has prepared or
caused to be prepared a registration statement describing the Contracts,
together with exhibits thereto (hereinafter referred to as the "Registration
Statement"). The Registration Statement includes a prospectus (the "Prospectus")
for the Contracts.
MassMutual agrees to execute such papers and to do such acts and things as shall
from time-to-time be reasonably requested by MML Distributors for the purpose of
qualifying and maintaining qualification of the Contracts for sale under
applicable state law and for maintaining the registration of the Separate
Account and interests therein under the 1933 Act and the 1940 Act, to the end
that there will be available for sale from time-to-time such amounts of the
Contracts as MML Distributors may reasonably request. MassMutual shall advise
MML Distributors promptly of any action of the SEC or any authorities of any
state or territory, of which it is aware, affecting registration or
qualification of the Separate Account, or rights to offer the Contracts for
sale.
If any event shall occur as a result of which it is necessary to
amend or supplement the Registration Statement in order to make the statements
therein, in light of the circumstances under which they were or are made, true,
complete or not misleading, MassMutual will forthwith prepare and furnish to MML
Distributors, without charge, amendments or supplements to the Registration
Statement sufficient to make the statements made in the Registration Statement
as so amended or supplemented true, complete and not misleading in light of the
circumstances under which they were made.
6. Representations of MassMutual. MassMutual represents and warrants to MML
Distributors and to the Independent Brokers as follows:
(a) MassMutual is an insurance company duly organized under the
laws of the Commonwealth of Massachusetts and is in good standing and is
authorized to conduct business under the laws of each state in which the
Contracts are sold, that the Separate Account was legally and validly
established as a segregated asset account under the Insurance Code of
Massachusetts, and that the Separate Account has been properly registered as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as segregated investment accounts for the Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts will
be authorized insurance agents of MassMutual.
(c) The Registration Statement does not and will not contain any misstatements
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were or are made, not materially misleading.
21
<PAGE>
(d) MassMutual shall make available to MML Distributors copies of all financial
statements that MML Distributors reasonably requests for use in connection with
the offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or
suspending the offer of the Contracts or the use of the Registration Statement,
or of any part thereof, with respect to the sale of the Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or if
necessary, is registered, under the Blue Sky laws of the states in which the
Contracts will be offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable state
insurance laws in those states in which the Contracts shall be offered for sale.
In each state where such qualification is effected, MassMutual shall file and
make such statements or reports as are or may be required by the laws of such
state.
(h) This Agreement has been duly authorized, executed and delivered by
MassMutual and constitutes the valid and legally binding obligation of
MassMutual. Neither the execution and delivery of this Agreement by MassMutual
nor the consummation of the transactions contemplated herein will result in a
breach or violation of any provision of the state insurance laws applicable to
MassMutual, any judicial or administrative orders in which it is named or any
material agreement or instrument to which it is a party or by which it is bound.
7. Representations of MML Distributors. MML Distributors represents and warrants
to MassMutual as follows:
(a) MML Distributors is duly registered as a broker-dealer under the 1934 Act
and is a member in good standing of the NASD and, to the extent necessary to
perform the activities contemplated hereunder, is duly registered, or otherwise
qualified, under the applicable securities laws of every state or other
jurisdiction in which the Contracts are available for sale.
(b) This Agreement has been duly authorized, executed and delivered by MML
Distributors and constitutes the valid and legally binding obligation of MML
Distributors. Neither the execution and delivery of this Agreement by MML
Distributors nor the consummation of the transactions contemplated herein will
result in a breach or violation of any provision of the federal or state
securities laws or the Rules, applicable to MML Distributors, or any judicial or
administrative orders in which it is named or any material agreement or
instrument to which it is a party or by which it is bound.
(c) MML Distributors shall comply with the Rules and the securities laws of any
jurisdiction in which it sells, directly or indirectly, any Contracts.
8. Expenses. MML Distributors shall be responsible for all expenses incurred in
connection with its provision of services and the performance of its obligations
hereunder, except as otherwise provided herein.
MassMutual shall be responsible for all expenses of printing and
distributing the Prospectuses, and all other expenses of preparing, printing and
distributing all other sales literature or material for use in connection with
offering the Contracts for sale.
9. Sales Literature and Advertising. MML Distributors will use and distribute
only the Prospectus, statements of additional information, or other applicable
and authorized sales literature then in effect in selling the Contracts. MML
Distributors is not authorized to give any information or to make any
22
<PAGE>
representations concerning the Contracts other than those contained in the
current Registration Statement filed with the SEC or in such sales literature as
may be authorized by MassMutual.
MML Distributors agrees to make timely filings with the SEC, the NASD, and such
other regulatory authorities as may be required of any sales literature or
advertising materials relating to the Contracts and intended for distribution to
prospective investors. MassMutual shall review and approve all advertising and
sales literature concerning the Contracts utilized by MML Distributors. MML
Distributors also agrees to furnish to MassMutual copies of all agreements and
plans it intends to use in connection with any sales of the Contracts.
10. Applications. All applications for Contracts shall be made on application
forms supplied by MassMutual, and shall be remitted by MML Distributors or
Independent Brokers promptly, together with such forms and any other required
documentation, directly to MassMutual at the address indicated on such
application or to such other address as MassMutual may, from time to time,
designate in writing. All applications are subject to acceptance or rejection by
MassMutual at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts, whether
as premiums, purchase payments or otherwise, and whether paid by, or on behalf
of any applicant or Contract owner, is the property of MassMutual and shall be
transmitted immediately in accordance with the administrative procedures of
MassMutual without any deduction or offset for any reason, including by example
but not limitation, any deduction or offset for compensation claimed by MML
Distributors. Checks or money orders as payment on any Contract shall be drawn
to the order of "Massachusetts Mutual Life Insurance Company." No cash payments
shall be accepted by MML Distributors in connection with the Contracts. Unless
otherwise agreed to by MassMutual in writing, neither MML Distributors nor any
of MassMutual's agents nor any broker shall have an interest in any surrender
charges, deductions or other fees payable to MassMutual as set forth herein.
12. Insurance Licenses. MassMutual shall apply for and maintain the proper
insurance licenses and appointments for each of the agents and brokers selling
the Contracts in all states or jurisdictions in which the Contracts are offered
for sale by such person. MassMutual reserves the right to refuse to appoint any
proposed agent or broker, and to terminate an agent or broker once appointed.
MassMutual agrees to be responsible for all licensing or other fees required
under pertinent state insurance laws to properly authorize agents or brokers for
the sale of the Contracts; however, the foregoing shall not limit MassMutual's
right to collect such amount from any person or entity other than MML
Distributors.
13. Agent/Broker Compensation. Commissions or other fees due all brokers and
agents in connection with the sale of Contracts shall be paid by MassMutual, on
behalf of MML Distributors, to the persons entitled thereto in accordance with
the applicable agreement between each such broker or agent and MassMutual or a
general agent thereof. MML Distributors shall assist MassMutual in the payment
of such amounts as MassMutual shall reasonably request, provided that MML
Distributors shall not be required to perform any acts that would subject it to
registration under the insurance laws of any state. The responsibility of MML
Distributors shall include the performance of all activities by MML Distributors
necessary in order that the payment of such amounts fully complies with all
applicable federal and state securities laws. Unless applicable federal or state
securities law shall require, MassMutual retains the ultimate right to determine
the commission rate paid to its agents.
14. MML Distributors' Compensation. As payment for its services hereunder, MML
Distributors shall receive an annual fee in the amount of $ per year.
Payments shall commence and be made no later than December 31 of each year.
23
<PAGE>
15. Books and Records. MML Distributors and MassMutual shall each cause to be
maintained and preserved for the period prescribed such accounts, books, and
other documents as are required of it by the 1934 Act and any other applicable
laws and regulations. In particular, without limiting the foregoing, MML
Distributors shall cause all the books and records in connection with the offer
and sale of the Contracts by its registered representatives to be maintained and
preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under the
1934 Act, to the extent that such requirements are applicable to the Contracts.
The books, accounts, and records of MML Distributors and MassMutual as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. The payment of premiums,
purchase payments, commissions and other fees and payments in connection with
the Contracts by its registered representatives shall be reflected on the books
and records of MML Distributors as required under applicable NASD regulations
and federal and state securities laws requirements.
MML Distributors and MassMutual, from time to time during the term
of this Agreement, shall divide the administrative responsibility for
maintaining and preserving the books, records and accounts kept in connection
with the Contracts; provided, however, in the case of books, records and
accounts kept pursuant to a requirement of applicable law or regulation, the
ultimate and legal responsibility for maintaining and preserving such books,
records and accounts shall be that of the party which is required to maintain or
preserve such books, records and accounts under the applicable law or
regulation, and such books, records and accounts shall be maintained and
preserved under the supervision of that party. MML Distributors and MassMutual
shall each cause the other to be furnished with such reports as it may
reasonably request for the purpose of meeting its reporting and recordkeeping
requirements under such regulations and laws, and under the insurance laws of
the Commonwealth of Massachusetts and any other applicable states or
jurisdictions.
MML Distributors and MassMutual each agree and understand that all
documents, reports, records, books, files and other materials required under
applicable Rules and federal and state securities laws shall be the property of
MML Distributors, unless such documents, reports, records, books, files and
other materials are required by applicable regulation or law to be also
maintained by MassMutual, in which case such material shall be the joint
property of MML Distributors and MassMutual. All other documents, reports,
records, books, files and other materials maintained relative to this Agreement
shall be the property of MassMutual. Upon termination of this Agreement, all
said material shall be returned to the applicable party.
MML Distributors and MassMutual shall establish and maintain
facilities and procedures for the safekeeping of all books, accounts, records,
files, and other materials related to this Agreement. Such books, accounts,
records, files, and other materials shall remain confidential and shall not be
voluntarily disclosed to any other person or entity except as described below in
section 16.
16. Availability of Records. MML Distributors and MassMutual shall each submit
to all regulatory and administrative bodies having jurisdiction over the sales
of the Contracts, present or future, any information, reports, or other material
that any such body by reason of this Agreement may request or require pursuant
to applicable laws or regulations. In particular, without limiting the
foregoing, MassMutual agrees that any books and records it maintains pursuant to
paragraph 15 of this Agreement which are required to be maintained under Rule
17a-3 or 17a-4 of the 1934 Act shall be subject to inspection by the SEC in
accordance with Section 17(a) of the 1934 Act and Sections 30 and 31 of the 1940
Act.
17. Confirmations. MassMutual agrees to prepare and mail a confirmation for each
transaction in connection with the Contracts at or before the completion thereof
as required by the 1934 Act and applicable interpretations thereof, including
Rule 10b-10 thereunder. Each such confirmation shall reflect the facts of
24
<PAGE>
the transaction, and the form thereof will show that it is being sent on behalf
of MML Distributors or Independent Broker acting in the capacity of agent for
MassMutual.
18. Indemnification. MassMutual shall indemnify MML Distributors, Independent
Brokers, their registered representatives, officers, directors, employees,
agents and controlling persons and hold such persons harmless, from and against
any and all losses, damages, liabilities, claims, demands, judgments,
settlements, costs and expenses of any nature whatsoever (including reasonable
attorneys' fees and disbursements) resulting or arising out of or based upon an
allegation or finding that: (i) the Registration Statement or any application or
other document or written information provided by or on behalf of MassMutual
includes any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, unless such statement or omission was
made in reliance upon, and in conformity with, written information furnished to
MassMutual by MML Distributors, Independent Brokers, or their registered
representatives specifically for use in the preparation thereof, or (ii) there
is a misrepresentation, breach of warranty or failure to fulfill any covenant or
warranty made or undertaken by MassMutual hereunder.
MML Distributors will indemnify MassMutual, its officers, directors,
employees, agents and controlling persons and hold such persons harmless, from
and against any and all losses, damages, liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever (including
reasonable attorneys' fees and disbursements) resulting or arising out of or
based upon an allegation or finding that: (i) MML Distributors or its registered
representatives offered or sold or engaged in any activity relating to the offer
and sale of the Contracts which was in violation of any provision of the federal
securities laws or, (ii) there is a material misrepresentation, material breach
of warranty or material failure to fulfill any covenant or warranty made or
undertaken by MML Distributors hereunder.
Promptly after receipt by an indemnified party under this paragraph
18 of notice of the commencement of any action by a third party, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 18, notify the indemnifying party of the
commencement thereof; but the omission to notify the indemnifying party will not
relieve the indemnifying party from liability which the indemnifying party may
have to any indemnified party otherwise than under this paragraph. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, to assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this paragraph for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
19. Independent Contractor. MML Distributors shall be an independent contractor.
MML Distributors is responsible for its own conduct and the employment, control
and conduct of its agents and employees and for injury to such agents or
employees or to others through its agents or employees. MML Distributors assumes
full responsibility for its agents and employees under applicable statutes and
agrees to pay all employer taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this Agreement
shall remain in full force and effect for the initial term of the Agreement,
which shall be for a two year period commencing on the date first above written,
and this Agreement shall continue in full force and effect from year to year
thereafter, until terminated as herein provided.
25
<PAGE>
This Agreement may be terminated by either party hereto upon 30 days
written notice to the other party, or at any time upon the mutual written
consent of the parties hereto. This Agreement shall automatically be terminated
in the event of its assignment. Subject to MassMutual's approval, however, MML
Distributors may delegate any duty or function assigned to it in this agreement
provided that such delegation is permissible under applicable law. Upon
termination of this Agreement, all authorizations, rights and obligations shall
cease except the obligations to settle accounts hereunder, including the
settlement of monies due in connection with the Contracts in effect at the time
of termination or issued pursuant to applications received by MassMutual prior
to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. 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. This Agreement shall
be interpreted in accordance with the laws of the Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MML Distributors and MassMutual to the
Separate Account hereunder are not to be deemed exclusive and MML Distributors
and MassMutual shall be free to render similar services to others so long as
their services hereunder are not impaired or interfered with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument executed
by all parties hereto.
24. Interests in and of MML Distributors. It is understood that any of the
policyholders, directors, officers, employees and agents of MassMutual may be a
shareholder, director, officer, employee, or agent of, or be otherwise
interested in, MML Distributors, any affiliated person of MML Distributors, any
organization in which MML Distributors may have an interest, or any organization
which may have an interest in MML Distributors; that MML Distributors, any such
affiliated person or any such organization may have an interest in MassMutual;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transaction hereunder except as otherwise provided in the
Charter, Articles of Incorporation, or By-Laws of MassMutual and MML
Distributors, respectively, or by specific provision of applicable law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officials thereunto duly authorized and seals to
be affixed, as of the day and year first above written.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, on its behalf and on behalf of
MASSACHUSETTS MUTUAL VARIABLE ANNUITY SEPARATE ACCOUNT 4
ATTEST:
MML DISTRIBUTORS, LLC
ATTEST:
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Exhibit 3(ii)
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this __ day of
July, 1998, by and between MML Investors Services, Inc. ("MMLISI") and
Massachusetts Mutual Life Insurance Company ("MassMutual"), on its own behalf
and on behalf of Massachusetts Mutual Variable Annuity Separate Account 4 (the
"Separate Account"), a separate account of MassMutual, as follows:
WHEREAS, the Separate Account was established on ____________, 1998
pursuant to authority of MassMutual's Board of Directors in order to set aside
and invest assets attributable to certain variable annuity contracts (the
"Contracts") issued by MassMutual; and
WHEREAS, MassMutual has registered the Separate Account under the
Investment Company Act of 1940, as amended, (the "1940 Act") and has registered
the Contracts under the Securities Act of 1933, as amended, (the "1933 Act");
and
WHEREAS, MassMutual will continue the effectiveness of the
registrations of the Separate Account under the 1940 Act and the Contracts under
the 1933 Act; and
WHEREAS, MassMutual intends for the Contracts to be sold by its
agents and brokers who are required to be registered representatives of a
broker-dealer that is registered with the Securities and Exchange Commission
(the "SEC") under the Securities Exchange Act of 1934 ("1934 Act") and a member
of the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, MassMutual desires to engage MMLISI, a broker-dealer
registered with the SEC under the 1934 Act and a member of the NASD, to act as a
co-underwriter ("Co-underwriter") in connection with the distribution of the
Contracts by the full-time career contracted agents of MassMutual ("Agents") and
certain other brokers, and in connection therewith, to provide certain services
and supervision to such Agents and brokers who are also registered
representatives of MMLISI and who sell the Contracts, and to otherwise perform
certain duties and functions that are necessary and proper for the distribution
of the Contracts as required under applicable federal and state securities laws
and NASD regulations, and MMLISI desires to act as Co-underwriter for the sale
of the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. MassMutual hereby appoints MMLISI as, and MMLISI agrees to serve
as, Co-underwriter of the Contracts during the term of this Agreement for
purposes of federal and state securities laws. MassMutual reserves the right,
however, to refuse at any time or times to sell any Contracts hereunder for any
reason, and MassMutual maintains ultimate responsibility for the sales of the
Contracts.
2. Services. MMLISI agrees, on behalf of MassMutual and in its capacity as
Co-underwriter, to undertake at its own expense except as otherwise provided
herein, to provide certain sales, administrative and supervisory services
relative to the Contracts as described below, and otherwise to perform all
duties that are necessary and proper for the distribution of the Contracts as
required under applicable federal and state securities laws and NASD
regulations.
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3. Best Efforts. MMLISI shall use reasonable efforts to sell the Contracts but
does not agree hereby to sell any specific number of Contracts and shall be free
to act as underwriter of other securities. MMLISI agrees to offer the Contracts
for sale in accordance with the prospectus then in effect for the Contracts.
4. Compliance and Supervision. All persons who are engaged directly or
indirectly in the operations of MMLISI and MassMutual in connection with the
offer or sale of the Contracts shall be considered a "person associated" with
MMLISI as defined in Section 3(a)(18) of the 1934 Act. MMLISI shall have full
responsibility for the securities activities of each such person as contemplated
by Section 15 of the 1934 Act.
MMLISI shall be fully responsible for carrying out all compliance,
supervisory and other obligations hereunder with respect to the activities of
its registered representatives as required by the NASD Rules (the "Rules") and
applicable federal and state securities laws. Without limiting the generality of
the foregoing, MMLISI agrees that it shall be fully responsible for:
(a) ensuring that no representative of MMLISI shall offer or sell
the Contracts until such person is appropriately licensed, registered, or
otherwise qualified to offer and sell such Contracts under the federal
securities laws and any applicable securities laws of each state or other
jurisdiction in which such Contracts may be lawfully sold, in which MassMutual
is licensed to sell the Contracts, and in which such person shall offer or sell
the Contracts; and
(b) training and supervising MassMutual's Agents and brokers who are
also registered representatives of MMLISI for purposes of complying on a
continuous basis with the Rules and with federal and state securities laws
applicable in connection with the offering and sale of the Contracts. In this
connection, MMLISI shall:
(i) jointly conduct with MassMutual such training (including the
preparation and utilization of training materials) as in the opinion of MMLISI
and MassMutual is necessary to accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of MMLISI who sell
the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the responsibilities as
set forth herein;
(iv) take reasonable steps to ensure that MassMutual Agents and
brokers who are also registered representatives of MMLISI recommend the purchase
of the Contracts only upon reasonable grounds to believe that the purchase of
the Contracts is suitable for such applicant; and
(v) impose disciplinary measures on agents of MassMutual who are
also registered representatives of MMLISI as required.
The parties hereto recognize that any registered representative of
MMLISI selling the Contracts as contemplated by this Agreement shall also be
acting as an insurance agent of MassMutual or as an insurance broker, and that
the rights of MMLISI to supervise such persons shall be limited to the extent
specifically described herein or required under applicable federal or state
securities laws or NASD regulations. Such persons shall not be considered
employees of MMLISI and shall be considered agents of MMLISI only as and to the
extent required by such laws and regulations. Further, it is intended by the
parties hereto that such
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persons are and shall continue to be considered to have common law independent
contractor relationship with MassMutual and not to be common law employees of
MassMutual.
5. Registration and Qualification of Contracts. MassMutual has prepared or
caused to be prepared a registration statement describing the Contracts,
together with exhibits thereto (hereinafter referred to as the "Registration
Statement"). The Registration Statement includes a prospectus (the "Prospectus")
for the Contracts.
MassMutual agrees to execute such papers and to do such acts and things as shall
from time-to-time be reasonably requested by MMLISI for the purpose of
qualifying and maintaining qualification of the Contracts for sale under
applicable state law and for maintaining the registration of the Separate
Account and interests therein under the 1933 Act and the 1940 Act, to the end
that there will be available for sale from time-to-time such amounts of the
Contracts as MMLISI may reasonably be expected to sell. MassMutual shall advise
MMLISI promptly of any action of the SEC or any authorities of any state or
territory, of which it is aware, affecting registration or qualification of the
Separate Account, or rights to offer the Contracts for sale.
If any event shall occur as a result of which it is necessary to
amend or supplement the Registration Statement in order to make the statements
therein, in light of the circumstances under which they were or are made, true,
complete or not misleading, MassMutual will forthwith prepare and furnish to
MMLISI, without charge, amendments or supplements to the Registration Statement
sufficient to make the statements made in the Registration Statement as so
amended or supplemented true, complete and not misleading in light of the
circumstances under which they were made.
6. Representations of MassMutual. MassMutual represents and warrants to MMLISI
as follows:
(a) MassMutual is an insurance company duly organized under the laws
of the Commonwealth of Massachusetts and is in good standing and is authorized
to conduct business under the laws of each state in which the Contracts are
sold, that the Separate Account was legally and validly established as a
segregated asset account under the Insurance Code of Massachusetts, and that the
Separate Account has been properly registered as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts will
be authorized insurance agents of MassMutual.
(c) The Registration Statement does not and will not contain any misstatements
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were or are made, not materially misleading.
(d) MassMutual shall make available to MMLISI copies of all financial statements
that MMLISI reasonably requests for use in connection with the offer and sale of
the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or
suspending the offer of the Contracts or the use of the Registration Statement,
or of any part thereof, with respect to the sale of the Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or if
necessary, is registered, under the Blue Sky laws of the states in which the
Contracts will be offered and sold.
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(g) The Contracts are qualified for offer and sale under the applicable state
insurance laws in those states in which the Contracts shall be offered for sale.
In each state where such qualification is effected, MassMutual shall file and
make such statements or reports as are or may be required by the laws of such
state.
(h) This Agreement has been duly authorized, executed and delivered by
MassMutual and constitutes the valid and legally binding obligation of
MassMutual. Neither the execution and delivery of this Agreement by MassMutual
nor the consummation of the transactions contemplated herein will result in a
breach or violation of any provision of the state insurance laws applicable to
MassMutual, any judicial or administrative orders in which it is named or any
material agreement or instrument to which it is a party or by which it is
bound.
7. Representations of MMLISI. MMLISI represents and warrants to MassMutual as
follows:
(a) MMLISI is duly registered as a broker-dealer under the 1934 Act and is a
member in good standing of the NASD and, to the extent necessary to perform the
activities contemplated hereunder, is duly registered, or otherwise qualified,
under the applicable securities laws of every state or other jurisdiction in
which the Contracts are available for sale.
(b) This Agreement has been duly authorized, executed and delivered by MMLISI
and constitutes the valid and legally binding obligation of MMLISI. Neither the
execution and delivery of this Agreement by MMLISI nor the consummation of the
transactions contemplated herein will result in a breach or violation of any
provision of the federal or state securities laws or the Rules, applicable to
MMLISI, or any judicial or administrative orders in which it is named or any
material agreement or instrument to which it is a party or by which it is
bound.
(c) MMLISI shall comply with the Rules and the securities laws of any
jurisdiction in which it sells, directly or indirectly, any Contracts.
8. Expenses. MMLISI shall be responsible for all expenses incurred in connection
with its provision of services and the performance of its obligations hereunder,
except as otherwise provided herein.
MassMutual shall be responsible for all expenses of printing and distributing
the Prospectuses, and all other expenses of preparing, printing and distributing
all other sales literature or material for use in connection with offering the
Contracts for sale.
9. Sales Literature and Advertising. MMLISI agrees to ensure that its registered
representatives use only the Prospectus, statements of additional information,
or other applicable and authorized sales literature then in effect in selling
the Contracts. MMLISI is not authorized to give any information or to make any
representations concerning the Contracts other than those contained in the
current Registration Statement filed with the SEC or in such sales literature as
may be authorized by MassMutual.
MMLISI agrees to make timely filings with the SEC, the NASD, and such other
regulatory authorities as may be required of any sales literature or advertising
materials relating to the Contracts and intended for distribution to prospective
investors. MassMutual shall review and approve all advertising and sales
literature concerning the Contracts utilized by MMLISI. MMLISI also agrees to
furnish to MassMutual copies of all agreements and plans it intends to use in
connection with any sales of the Contracts.
10. Applications. All applications for Contracts shall be made on application
forms supplied by MassMutual, and shall be remitted by MMLISI promptly, together
with such forms and any other required
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documentation, directly to MassMutual at the address indicated on such
application or to such other address as MassMutual may, from time to time,
designate in writing. All applications are subject to acceptance or rejection by
MassMutual at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts, whether
as premiums, purchase payments or otherwise, and whether paid by, or on behalf
of any applicant or Contract owner, is the property of MassMutual and shall be
transmitted immediately in accordance with the administrative procedures of
MassMutual without any deduction or offset for any reason, including by example
but not limitation, any deduction or offset for compensation claimed by MMLISI.
Checks or money orders as payment on any Contract shall be drawn to the order of
"Massachusetts Mutual Insurance Company." No cash payments shall be accepted by
MMLISI in connection with the Contracts. Unless otherwise agreed to by
MassMutual in writing, neither MMLISI nor any of MassMutual's Agents nor any
broker shall have an interest in any surrender charges, deductions or other fees
payable to MassMutual as set forth herein.
12. Insurance Licenses. MassMutual shall apply for and maintain the proper
insurance licenses and appointments for each of the Agents and brokers selling
the Contracts in all states or jurisdictions in which the Contracts are offered
for sale by such person. MassMutual reserves the right to refuse to appoint any
proposed Agent or broker, and to terminate an Agent or broker once appointed.
MassMutual agrees to be responsible for all licensing or other fees required
under pertinent state insurance laws to properly authorize Agents or brokers for
the sale of the Contracts; however, the foregoing shall not limit MassMutual's
right to collect such amount from any person or entity other than MMLISI.
13. Agent/Broker Compensation. Commissions or other fees due all brokers and
Agents in connection with the sale of Contracts shall be paid by MassMutual, on
behalf of MMLISI, to the persons entitled thereto in accordance with the
applicable agreement between each such broker or Agent and MassMutual or a
general agent thereof. MMLISI shall assist MassMutual in the payment of such
amounts as MassMutual shall reasonably request, provided that MMLISI shall not
be required to perform any acts that would subject it to registration under the
insurance laws of any state. The responsibility of MMLISI shall include the
performance of all activities by MMLISI necessary in order that the payment of
such amounts fully complies with all applicable federal and state securities
laws. Unless applicable federal or state securities law shall require,
MassMutual retains the ultimate right to determine the commission rate paid to
its Agents.
14. MMLISI Compensation. As payment for its services hereunder, MMLISI shall
receive an annual fee in the amount of $ per year. The fee shall be renegotiated
annually commencing in 1999. The last agreed-to fee shall remain in effect until
the new fee is mutually agreed upon and is set forth in a schedule attached
hereto.
15. Books and Records. MMLISI and MassMutual shall each cause to be maintained
and preserved for the period prescribed such accounts, books, and other
documents as are required of it by the 1934 Act and any other applicable laws
and regulations. In particular, without limiting the foregoing, MMLISI shall
cause all the books and records in connection with the offer and sale of the
Contracts by its registered representatives to be maintained and preserved in
conformity with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act, to
the extent that such requirements are applicable to the Contracts. The books,
accounts, and records of MMLISI and MassMutual as to all transactions hereunder
shall be maintained so as to disclose clearly and accurately the nature and
details of the transactions. The payment of premiums, purchase payments,
commissions and other fees and payments in connection with the Contracts by its
registered representatives shall be reflected on the books and records of MMLISI
as required under applicable NASD regulations and federal and state securities
laws requirements.
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MMLISI and MassMutual, from time to time during the term of this
Agreement, shall divide the administrative responsibility for maintaining and
preserving the books, records and accounts kept in connection with the
Contracts; provided, however, in the case of books, records and accounts kept
pursuant to a requirement of applicable law or regulation, the ultimate and
legal responsibility for maintaining and preserving such books, records and
accounts shall be that of the party which is required to maintain or preserve
such books, records and accounts under the applicable law or regulation, and
such books, records and accounts shall be maintained and preserved under the
supervision of that party. MMLISI and MassMutual shall each cause the other to
be furnished with such reports as it may reasonably request for the purpose of
meeting its reporting and recordkeeping requirements under such regulations and
laws, and under the insurance laws of the Commonwealth of Massachusetts and any
other applicable states or jurisdictions.
MMLISI and MassMutual each agree and understand that all documents,
reports, records, books, files and other materials required under applicable
Rules and federal and state securities laws shall be the property of MMLISI,
unless such documents, reports, records, books, files and other materials are
required by applicable regulation or law to be also maintained by MassMutual, in
which case such material shall be the joint property of MMLISI and MassMutual.
All other documents, reports, records, books, files and other materials
maintained relative to this Agreement shall be the property of MassMutual. Upon
termination of this Agreement, all said material shall be returned to the
applicable party.
MMLISI and MassMutual shall establish and maintain facilities and
procedures for the safekeeping of all books, accounts, records, files, and other
materials related to this Agreement. Such books, accounts, records, files, and
other materials shall remain confidential and shall not be voluntarily disclosed
to any other person or entity except as described below in section 16..
16. Availability of Records. MMLISI and MassMutual shall each submit to all
regulatory and administrative bodies having jurisdiction over the sales of the
Contracts, present or future, any information, reports, or other material that
any such body by reason of this Agreement may request or require pursuant to
applicable laws or regulations. In particular, without limiting the foregoing,
MassMutual agrees that any books and records it maintains pursuant to paragraph
15 of this Agreement which are required to be maintained under Rule 17a-3 or
17a-4 of the 1934 Act shall be subject to inspection by the SEC in accordance
with Section 17(a) of the 1934 Act and Sections 30 and 31 of the 1940 Act.
17. Confirmations. MassMutual agrees to prepare and mail a confirmation for each
transaction in connection with the Contracts at or before the completion thereof
as required by the 1934 Act and applicable interpretations thereof, including
Rule 10b-10 thereunder. Each such confirmation shall reflect the facts of the
transaction, and the form thereof will show that it is being sent on behalf of
MMLISI acting in the capacity of agent for MassMutual.
18. Indemnification. MassMutual shall indemnify MMLISI, its registered
representatives, officers, directors, employees, agents and controlling persons
and hold such persons harmless, from and against any and all losses, damages,
liabilities, claims, demands, judgments, settlements, costs and expenses of any
nature whatsoever (including reasonable attorneys' fees and disbursements)
resulting or arising out of or based upon an allegation or finding that: (i) the
Registration Statement or any application or other document or written
information provided by or on behalf of MassMutual includes any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, written
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information furnished to MassMutual by MMLISI or its registered representatives
specifically for use in the preparation thereof, or (ii) there is a
misrepresentation, breach of warranty or failure to fulfill any covenant or
warranty made or undertaken by MassMutual hereunder.
MMLISI will indemnify MassMutual, its officers, directors,
employees, agents and controlling persons and hold such persons harmless, from
and against any and all losses, damages, liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever (including
reasonable attorneys' fees and disbursements) resulting or arising out of or
based upon an allegation or finding that: (i) MMLISI or its registered
representatives offered or sold or engaged in any activity relating to the offer
and sale of the Contracts which was in violation of any provision of the federal
securities laws or, (ii) there is a material misrepresentation, material breach
of warranty or material failure to fulfill any covenant or warranty made or
undertaken by MMLISI hereunder.
Promptly after receipt by an indemnified party under this paragraph
18 of notice of the commencement of any action by a third party, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 18, notify the indemnifying party of the
commencement thereof; but the omission to notify the indemnifying party will not
relieve the indemnifying party from liability which the indemnifying party may
have to any indemnified party otherwise than under this paragraph. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, to assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this paragraph for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
19. Independent Contractor. MMLISI shall be an independent contractor. MMLISI is
responsible for its own conduct and the employment, control and conduct of its
agents and employees and for injury to such agents or employees or to others
through its agents or employees. MMLISI assumes full responsibility for its
agents and employees under applicable statutes and agrees to pay all employer
taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this Agreement
shall remain in full force and effect for the initial term of the Agreement,
which shall be for a two year period commencing on the date first above written,
and this Agreement shall continue in full force and effect from year to year
thereafter, until terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days
written notice to the other party, or at any time upon the mutual written
consent of the parties hereto. This Agreement shall automatically be terminated
in the event of its assignment. Subject to MassMutual's approval, however,
MMLISI may delegate any duty or function assigned to it in this agreement
provided that such delegation is permissible under applicable law. Upon
termination of this Agreement, all authorizations, rights and obligations shall
cease except the obligations to settle accounts hereunder, including the
settlement of monies due in connection with the Contracts in effect at the time
of termination or issued pursuant to applications received by MassMutual prior
to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. If any provision of this Agreement shall be
held or made invalid by a court
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decision, statute, rule, or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be interpreted in accordance with the
laws of the Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MMLISI and MassMutual to the Separate
Account hereunder are not to be deemed exclusive and MMLISI and MassMutual shall
be free to render similar services to others so long as their services hereunder
are not impaired or interfered with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument executed
by all parties hereto.
24. Interests in and of MMLISI. It is understood that any of the policyholders,
directors, officers, employees and agents of MassMutual may be a shareholder,
director, officer, employee, or agent of, or be otherwise interested in, MMLISI,
any affiliated person of MMLISI, any organization in which MMLISI may have an
interest, or any organization which may have an interest in MMLISI; that MMLISI,
any such affiliated person or any such organization may have an interest in
MassMutual; and that the existence of any such dual interest shall not affect
the validity hereof or of any transaction hereunder except as otherwise provided
in the Charter, Articles of Incorporation, or By-Laws of MassMutual and MMLISI,
respectively, or by specific provision of applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officials thereunto duly authorized and seals to
be affixed, as of the day and year first above written.
ATTEST: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, on
its behalf and on behalf of MASSACHUSETTS MUTUAL VARIABLE ANNUITY SEPARATE
ACCOUNT 4
By:
Its:
ATTEST: MML INVESTORS SERVICES, INC.
By:
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Exhibit 8(iii)
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of
, 1998 by and among MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
("Mass Mutual") and C.M. LIFE INSURANCE COMPANY ("C.M. Life," and collectively
with Mass Mutual, the "Company") on behalf of the separate accounts listed on
EXHIBIT A hereto (the "Accounts"), and AMERICAN CENTURY INVESTMENT MANAGEMENT,
INC. ("ACIM").
WHEREAS, the Company offers to the public certain group and
individual variable annuity and variable life insurance contracts (the
"Contracts"); and
WHEREAS, the Company wishes to make available as investment options
under the Contracts, one or more of the funds identified in EXHIBIT B attached
hereto (the "Funds"), each of which is a series of mutual fund shares registered
under the Investment Company Act of 1940, as amended, and issued by American
Century Variable Portfolios, Inc. (the "Issuer"); and
WHEREAS, on the terms and conditions hereinafter set forth, ACIM
desires to make shares of the Funds available as investment options under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds, and the Company is willing and able to furnish such
services;
NOW, THEREFORE, the Company and ACIM agree as follows:
1. Transactions in the Funds. Subject to the terms and conditions
of this Agreement, ACIM will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Accounts through a single account per Fund at the net asset value applicable to
each order. The Funds' shares shall be purchased and redeemed on a net basis in
such quantity and at such time as determined by the Company to satisfy the
requirements of the Contracts for which the Funds serve as underlying investment
media. Dividends and capital gains distributions will be automatically
reinvested in full and fractional shares of the Funds.
2. Administrative Services. The Company agrees to provide all
administrative services for the Contract owners, including but not limited to
those services specified in EXHIBIT C (the "Administrative Services"). Neither
ACIM nor the Issuer shall be required to provide Administrative Services for the
benefit of Contract owners. The Company agrees that it will maintain and
preserve all records as required by law to be maintained and preserved in
connection with providing the Administrative Services, and will otherwise comply
with all laws, rules and regulations applicable to the marketing of the
Contracts and the provision of the Administrative Services. Upon request, the
Company will provide ACIM or its representatives reasonable information
regarding the quality of the Administrative Services being provided and its
compliance with the terms of this Agreement.
3. Timing of Transactions. ACIM hereby appoints the Company as
agent for the Funds for the limited purpose of accepting purchase and redemption
orders for Fund shares from the Contract owners. On each day the New York Stock
Exchange (the "Exchange") is open for business (each, a "Business Day"), the
Company may receive instructions from the Contract owners for the purchase or
redemption of shares of the Funds ("Orders"). Orders received and accepted by
the Company prior to the close of regular trading on the Exchange (the "Close of
Trading") on any given Business Day (currently, 4:00 p.m. Eastern time) and
transmitted to the
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Funds' transfer agent by 10:00 p.m. Eastern time on such Business Day will be
executed at the net asset value determined as of the Close of Trading on such
Business Day. Any Orders received by the Company on such day but after the Close
of Trading, and all Orders that are transmitted to the Funds' transfer agent
after 10:00 p.m. Eastern time on such Business Day, will be executed at the net
asset value determined as of the Close of Trading on the next Business Day
following the day of receipt of such Order. The day as of which an Order is
executed by the Funds' transfer agent pursuant to the provisions set forth above
is referred to herein as the "Trade Date".
4. Processing of Transactions.
(a) If transactions in Fund shares are to be settled through the
National Securities Clearing Corporation's Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the terms of the FUND/SERV
AGREEMENT, between Company and American Century Services Corporation, shall
apply.
(b) If transactions in Fund shares are to be settled directly
with the Funds' transfer agent, the following provisions shall apply:
(1) By 6:30 p.m. Eastern time on each Business Day, ACIM
(or one of its affiliates) will provide to the Company via facsimile or other
electronic transmission acceptable to the Company the Funds' net asset value,
dividend and capital gain information and, in the case of income funds, the
daily accrual for interest rate factor (mil rate), determined at the Close of
Trading.
(2) By 10:00 p.m. Eastern time on each Business Day, the
Company will provide to ACIM via facsimile or other electronic transmission
acceptable to ACIM a report stating whether the instructions received by the
Company from Contract owners by the Close of Trading on such Business Day
resulted in the Accounts being a net purchaser or net seller of shares of the
Funds. As used in this Agreement, the phrase "other electronic transmission
acceptable to ACIM" includes the use of remote computer terminals located at the
premises of the Company, its agents or affiliates, which terminals may be linked
electronically to the computer system of ACIM, its agents or affiliates
(hereinafter, "Remote Computer Terminals").
(3) Upon the timely receipt from the Company of the report
described in (2) above, the Funds' transfer agent will execute the purchase or
redemption transactions (as the case may be) at the net asset value computed as
of the Close of Trading on the Trade Date. Payment for net purchase transactions
shall be made by wire transfer to the applicable Fund custodial account
designated by the Funds on the Business Day next following the Trade Date. Such
wire transfers shall be initiated by the Company's bank prior to 4:00 p.m.
Eastern time and received by the Funds prior to 6:00 p.m. Eastern time on the
Business Day next following the Trade Date ("T+1"). If payment for a purchase
Order is not timely received, such Order will be executed at the net asset value
next computed following receipt of payment. Payments for net redemption
transactions shall be made by wire transfer by the Issuer to the account(s)
designated by the Company on T+1; provided, however, the Issuer reserves the
right to settle redemption transactions within the time period set forth in the
applicable Fund's then-current prospectus. On any Business Day when the Federal
Reserve Wire Transfer System is closed, all communication and processing rules
will be suspended for the settlement of Orders. Orders will be settled on the
next Business Day on which the Federal Reserve Wire Transfer System is open and
the original Trade Date will apply.
(4) ACIM shall provide to the Company by 10:00 a.m. Eastern
Time on each Business Day a confirmation of outstanding Fund shares owned by the
Accounts as of the prior Business Day. Such confirmation shall be provided by
facsimile or other electronic transmission.
5. Prospectus and Proxy Materials.
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(a) ACIM shall provide the Company with copies of the Issuer's
proxy materials, periodic fund reports to shareholders and other materials that
are required by law to be sent to the Issuer's shareholders. In addition, ACIM
shall provide the Company with a sufficient quantity of prospectuses of the
Funds to be used in conjunction with the transactions contemplated by this
Agreement, together with such additional copies of the Issuer's prospectuses as
may be reasonably requested by Company. If the Company provides for pass-through
voting by the Contract owners, or if the Company determines that pass-through
voting is required by law, ACIM will provide the Company with a sufficient
quantity of proxy materials for each, as directed by the Company. If requested
by the Company, ACIM shall provide each Fund's prospectus and statement of
additional information in PDF or camera-ready format.
(b) The cost of preparing, printing and shipping of the
prospectuses, proxy materials, periodic fund reports and other materials of the
Issuer to the Company shall be paid by ACIM or its agents or affiliates;
provided, however, that if at any time ACIM or its agent reasonably deems the
usage by the Company of such items to be excessive, it may, prior to the
delivery of any quantity of materials in excess of what is deemed reasonable,
request that the Company demonstrate the reasonableness of such usage. If ACIM
believes the reasonableness of such usage has not been adequately demonstrated,
it may request that the party responsible for such excess usage pay the cost of
printing (including press time) and delivery of any excess copies of such
materials. Unless the Company agrees to make such payments, ACIM may refuse to
supply such additional materials and ACIM shall be deemed in compliance with
this Section 5 if it delivers to the Company at least the number of prospectuses
and other materials as may be required by the Issuer under applicable law.
(c) The cost of any distribution of prospectuses, periodic fund
reports and other materials of the Issuer to the Contract owners shall be paid
by the Company and shall not be the responsibility of ACIM or the Issuer. ACIM
shall be responsible for the cost of any distribution of proxy materials for any
Fund.
(d) ACIM shall notify the Company of any proxy proposals for any
Fund as soon as reasonably practicable.
6. Compensation and Expenses.
(a) The Accounts shall be the sole shareholder of Fund shares
purchased for the Contract owners pursuant to this Agreement (the "Record
Owner"). The Record Owner shall properly complete any applications or other
forms required by ACIM or the Issuer from time to time.
(b) ACIM acknowledges that it will derive a substantial savings
in administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company, ACIM
will pay the Company a fee (the "Administrative Services Fee") equal to 15 basis
points (0.15%) per annum of the average aggregate amount invested by the Company
and any of its affiliates in any series of mutual fund shares issued by the
Issuer and used by any line of business of the Company or its affiliates
(hereinafter "Aggregate Funds"), commencing with the month in which the average
aggregate market value of investments by the Company and any of its affiliates
in the Aggregate Funds exceeds $10 million. With respect to any month in which
the average aggregate market value of investments by the Company and any of its
affiliates in the Aggregate Funds exceeds $25 million, ACIM will pay the Company
20 basis points (0.20%) per annum on the excess amount. With respect to any
month in which the average aggregate market value of investments by the Company
and any of
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<PAGE>
its affiliates in the Aggregate Funds exceeds $50 million, ACIM will pay the
Company 25 basis points (0.25%) per annum on the average of such excess
amount.
(c) The payments received by the Company under this Agreement are
for administrative and shareholder services only and do not constitute payment
in any manner for investment advisory services or for costs of
distribution.
(d) For the purposes of computing the payment to the Company
contemplated by this Section 6, the average aggregate amount invested by the
Company on behalf of the Accounts in the Aggregate Funds over a one month period
shall be computed by totaling the Company's aggregate investment (share net
asset value multiplied by total number of shares of the Aggregate Funds held by
the Company) on each Business Day during the month and dividing by the total
number of Business Days during such month.
(e) ACIM will calculate the amount of the payment to be made
pursuant to this Section 6 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by ACIM for the relevant months and such other supporting
data as may be reasonably requested by the Company and shall be mailed to:
Massachusetts Mutual Life Ins. Co.
1295 State Street
Springfield, MA 01111-0001
Attention: Treasurer's Dept.
Phone No.: (413) 744-8702
Fax No.: (413) 711-6038
7. Representations.
(a) The Company represents and warrants that (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
Accounts, each of which is a duly authorized and established separate account
under, Section 38a-433 of the Connecticut General Statutes (for C.M.
Multi-Account A and C.M. Life Variable Life Separate Account I) and Section 132G
of Chapter 175 of the Massachusetts General Laws (for Massachusetts Mutual
Variable Life Separate Account I), and has registered each Account as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act") to
serve as an investment vehicle for the Contracts; (iii) each Contract provides
for the allocation of net amounts received by the Company to an Account for
investment in the shares of one or more specified investment companies selected
among those companies available through the Account to act as underlying
investment media; (iv) selection of a particular investment company is made by
the Contract owner under a particular Contract, who may change such selection
from time to time in accordance with the terms of the applicable Contract; and
(v) the activities of the Company contemplated by this Agreement comply in all
material respects with all provisions of federal and state securities laws
applicable to such activities.
(b) ACIM represents that (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and delivered,
shall constitute the legal, valid and binding obligation of ACIM, enforceable in
accordance with its terms; (ii) the prospectus of each Fund complies in all
material respects with federal and state securities laws, and (iii) shares of
the Issuer are registered and authorized for sale in accordance with all federal
and state securities laws.
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8. Additional Covenants and Agreements.
(a) Each party shall comply with all provisions of federal and
state laws applicable to its respective activities under this Agreement. All
obligations of each party under this Agreement are subject to compliance with
applicable federal and state laws.
(b) Each party shall promptly notify the other parties in the event
that it is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners, in
proper form prior to the Close of Trading of the Exchange on that Business Day.
The Company shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with Section 8(c) hereof.
(d) The Company covenants and agrees that all Orders transmitted to
the Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to ACIM, shall be sent by or under the authority and direction of a
person designated by the Company as being duly authorized to act on behalf of
the owner of the Accounts. ACIM shall be entitled to rely on the existence of
such authority and to assume that any person transmitting Orders for the
purchase, redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefor. The Company further
agrees to be responsible for the accuracy, propriety and consequences of all
data transmitted to ACIM by the Company by telephone, telecopy or other
electronic transmission acceptable to ACIM.
(e) The Company agrees that, to the extent it is able to do so, it
will use its best efforts to give equal emphasis and promotion to shares of the
Funds as is given to other underlying investments of the Accounts, subject to
applicable Securities and Exchange Commission rules. In addition, the Company
shall not impose any fee, condition, or requirement for the use of the Funds as
investment options for the Contracts that operates to the specific prejudice of
the Funds vis-a-vis the other investment media made available for the Contracts
by the Company.
(f) The Company shall not, without the written consent of ACIM,
make representations concerning the Issuer or the shares of the Funds except
those contained in the then-current prospectus and in current printed sales
literature approved by ACIM or the Issuer.
(g) Advertising and sales literature with respect to the Issuer or
the Funds prepared by the Company or its agents, if any, for use in marketing
shares of the Funds as underlying investment media to Contract owners shall be
submitted to ACIM for review and approval before such material is used. ACIM
shall use its best efforts to conduct all such reviews within 5 business days of
its receipt of the materials. If the Company has not received approval of a
submitted piece within the 5 business day time frame, a representative of the
Company may call the Advertising Compliance Manager at ACIM and that individual,
or his or her designated representative, shall provide to the Company
representative the status of the review process for that piece and a good faith
estimate of the additional time the review may take. In no event shall ACIM take
more that 10 business days to conduct a review of such materials under normal
circumstances. This subsection shall not apply to any advertising or sales
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<PAGE>
literature produced by the Company if all references in such literature to the
Issuer or the Funds are identical to those that appear in the Funds'
prospectus(es) or Statement of Additional Information.
9. Use of Names. Except as otherwise expressly provided for in this
Agreement, neither ACIM nor any of its affiliates or the Funds shall use any
trademark, trade name, service mark or logo of the Company, or any variation of
any such trademark, trade name, service mark or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service mark or logo of the
Issuer, ACIM or any of its affiliates or any variation of any such trademarks,
trade names, service marks, or logos, without the prior written consent of
either the Issuer or ACIM, as appropriate, the granting of which shall be at the
sole option of ACIM and/or the Issuer.
10. Proxy Voting.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in Section 12(a) below) participating in any Fund calculate voting
privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy
material furnished by ACIM and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for which
no voting instructions are received in the same proportion as shares for which
such instructions have been received. The Company and its agents shall not
oppose or interfere with the solicitation of proxies for Fund shares held for
such Contract owners.
11. Indemnity.
(a) ACIM agrees to indemnify and hold harmless the Company and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Company within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 11(a))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses result from a breach by ACIM of a material
provision of this Agreement, including, but not limited to, any incorrect
calculation or any incorrect report by ACIM to the Company of the net asset
value. ACIM will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. ACIM shall not be liable for indemnification hereunder if such Losses
are attributable to the negligence or misconduct of the Company in performing
its obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless ACIM and the
Issuer, and their respective officers, directors, employees, agents, affiliates
and each person, if any, who controls Issuer or ACIM within the meaning of the
Securities Act of 1933 (collectively, the "Indemnified Parties" for purposes of
this Section 11(b)) against any Losses to which the Indemnified Parties may
become subject, insofar as such Losses result from a breach by the Company of a
material provision of this Agreement or the use by any person of the Remote
Computer Terminals. The Company will reimburse any legal or other expenses
reasonably incurred by the Indemnified Parties in connection with investigating
or defending any such Losses. The Company shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence or
misconduct of ACIM or the Issuer in performing their obligations under this
Agreement.
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(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 11. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 11 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such
action, the indemnifying party shall not, without the prior written consent of
the indemnified parties in such action, settle or compromise the liability of
the indemnified parties in such action, or permit a default or consent to the
entry of any judgment in respect thereof, unless in connection with such
settlement, compromise or consent, each indemnified party receives from such
claimant an unconditional release from all liability in respect of such claim.
12. Potential Conflicts
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Issuer on December 21, 1987, with the SEC and
the order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will monitor the
Issuer for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts ("Participating
Companies") investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the manner
in which the investments of any portfolio are being managed; (v) a difference in
voting instructions given by variable annuity contract owners and variable life
insurance contract owners; or (vi) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
(b) The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the Company
is responsible for causing or creating said conflict, the Company shall at its
sole cost and expense, and to the extent reasonably practicable (as determined
by a majority of the disinterested Board members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
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(i) withdrawing the assets allocable to the Accounts
from the Fund and reinvesting such assets in a different
investment medium or submitting the question of whether such
segregation should be implemented to a vote of all affected
contract owners and as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life
insurance contract owners, or variable contract owners of one
or more Participating Companies) that votes in favor of such
segregation, or offering to the affected contract owners the
option of making such a change; and/or
(ii) establishing a new registered management
investment company or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions and
said decision represents a minority position or would preclude a majority vote
by all of its contract owners having an interest in the Issuer, the Company at
its sole cost, may be required, at the Board's election, to withdraw an
Account's investment in the Issuer and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
(e) For the purpose of this Section 12, a majority of the
disinterested Board members shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Issuer be required to establish a new funding medium for any Contract. The
Company shall not be required by this Section 12 to establish a new funding
medium for any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners materially adversely affected by the
irreconcilable material conflict.
13. Termination; Withdrawal of Offering. This Agreement may be
terminated by either party upon 180 days' prior written notice to the other
parties. Notwithstanding the above, the Issuer reserves the right, without prior
notice, to suspend sales of shares of any Fund, in whole or in part, or to make
a limited offering of shares of any of the Funds in the event that (A) any
regulatory body commences formal proceedings against the Company, ACIM,
affiliates of ACIM, or the Issuer, which proceedings ACIM reasonably believes
may have a material adverse impact on the ability of ACIM, the Issuer or the
Company to perform its obligations under this Agreement or (B) in the judgment
of ACIM, declining to accept any additional instructions for the purchase or
sale of shares of any such Fund is warranted by market, economic or political
conditions. Notwithstanding the foregoing, this Agreement may be terminated
immediately (i) by any party as a result of any other breach of this Agreement
by another party, which breach is not cured within 30 days after receipt of
notice from the other party, or (ii) by any party upon a determination that
continuing to perform under this Agreement would, in the reasonable opinion of
the terminating party's counsel, violate any applicable federal or state law,
rule, regulation or judicial order. Termination of this Agreement shall not
affect the obligations of the parties to make payments under Section 4 for
Orders received by the Company prior to such termination and shall not affect
the Issuer's obligation to maintain the Accounts as set forth by this Agreement.
Following termination, ACIM shall not have any Administrative Services payment
obligation to the Company (except for payment obligations accrued but not yet
paid as of the termination date).
14. Non-Exclusivity. Each of the parties acknowledges and agrees
that this Agreement and the arrangement described herein are intended to be
non-exclusive and that each of the parties is free to enter into similar
agreements and arrangements with other entities.
15. Survival. The provisions of Section 9 (use of names) and
Section 11 (indemnity) of this Agreement shall survive termination of this
Agreement.
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16. Amendment. Neither this Agreement, nor any provision hereof,
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all of the parties hereto.
17. Notices. All notices and other communications hereunder shall
be given or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
Massachusetts Mutual Life Ins. Co.
1295 State Street
Springfield, MA 01111-0001
Attn: Office of General Counsel
(413) 744-6053 (office number)
(413) 744-6279 (telecopy number)
To the Issuer or ACIM:
American Century Investment Management, Inc.
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4051 (office number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section 17 shall be deemed to have been delivered on receipt.
18. Successors and Assigns. This Agreement may not be assigned
without the written consent of all parties to the Agreement at the time of such
assignment. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
19. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
20. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
21. Entire Agreement. This Agreement, including the attachments
hereto, constitutes the entire agreement between the parties with respect to the
matters dealt with herein, and supersedes all previous agreements, written or
oral, with respect to such matters.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date set forth above.
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MASSACHUSETTS MUTUAL AMERICAN CENTURY INVESTMENT
LIFE INSURANCE COMPANY MANAGEMENT, INC.
By: By:
Name: William M. Lyons
Title: Executive Vice President
C.M. LIFE INSURANCE COMPANY
By:
Name:
Title:
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Exhibit 8(iv)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 1st day of May, 1998
by and among MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a Massachusetts corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
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WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Variable Insurance Products and
the Underwriter is authorized to sell such shares to unit investment trusts such
as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the Fund receives notice of such order by 9:00 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole
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discretion of the Board acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available under the Variable Insurance Products with the form
number(s) which are listed on Schedule A attached hereto and incorporated herein
by this reference, as such Schedule A may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's general
account, provided that such amounts may also be invested in an investment
company other than the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of all the Portfolios of the Fund;
or (b) the Company gives the Fund and the Underwriter 45 days written notice of
its intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was available as
a funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a list of such funds appearing on Schedule C to this Agreement); or
(d) the Fund or Underwriter consents to the use of such other investment
company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (via electronic
transmission and/or facsimile, concurrent with the transmission of the net asset
value per share information set forth in Section 1.10) to the Company of any
income, dividends or capital gain distributions payable on the Fund's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the
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Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.10 The fund shall make the net asset value per share for each
Portfolio available to the Company on each Business Day on a daily basis as soon
as reasonably practical after the net asset value per share is calculated each
Business Day (normally by 6:30 p.m. Boston time) via electronic transmission
and/or facsimile and shall use its best efforts to make such net asset value per
share available by 7 p.m. Boston time. The Underwriter shall provide the Company
each Business Day with same day notice of Fund shares held by the Accounts by
3:00 p.m. Boston time via electronic transmission and/or facsimile.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 132G of Chapter 175 of the Massachusetts Insurance
Code and has registered or, prior to any issuance or sale of the Contracts, will
register each Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the Commonwealth of
Massachusetts and all applicable federal and state securities laws and that the
Fund is and shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated
as life insurance or annuity contracts, under applicable provisions of the Code
and that it will make every effort to maintain such treatment and that it will
notify the Fund and the Underwriter immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so treated or that they might
not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund currently does
not intend to make any payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments
in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan
under which it makes no payments for distribution expenses. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have a board of trustees, a majority of
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whom are not interested persons of the Fund, formulate and approve any plan
under Rule 12b-1 to finance distribution expenses.
(b) With respect to Service Class shares, the Fund has adopted a
Rule 12b-1 Plan under which it makes payments to finance distribution expenses.
The Fund represents and warrants that it has a board of trustees, a majority of
whom are not interested persons of the Fund, which has formulated and approved
the Fund's Rule 12b-1 Plan to finance distribution expenses of the Fund and that
any changes to the Fund's Rule 12b-1 Plan will be approved by a similarly
constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
Commonwealth of Massachusetts and the Fund and the Underwriter represent that
their respective operations are and shall at all times remain in material
compliance with the laws of the Commonwealth of Massachusetts to the extent
required to perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the Commonwealth of Massachusetts and all
applicable state and federal securities laws, including without limitation the
1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the Commonwealth of Massachusetts and any applicable state and federal
securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
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ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts
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participating in the Fund calculates voting privileges in a manner consistent
with the standards set forth on Schedule B attached hereto and incorporated
herein by this reference, which standards will also be provided to the other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
3.6 The Fund shall use its best efforts to notify the Company of any
proxy proposals for shareholders 60 (sixty) days prior to the appropriate Board
vote for such proposals.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least five Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within five
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least five Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects to
such use within five Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and
all
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amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder.
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Without limiting the scope of the foregoing, the Fund will at all times comply
with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund
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shall continue to accept and implement orders by the Company for the purchase
(and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
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(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not
supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the
Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such
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action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation .
8.1(d). The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the Registration Statement or prospectus or sales
literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of
the Company for use in the Registration Statement or
prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration Statement,
prospectus or sales literature for the Contracts not
supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or
Underwriter or persons under their control, with respect
to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein
or
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necessary to make the statement or statements therein
not misleading, if such statement or omission was made
in reliance upon information furnished to the Company by
or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any
other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or
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actions in respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of the Board or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement (including a failure to comply with
the diversification requirements specified in Article VI
of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and
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regulations as the Securities and Exchange Commission may grant (including, but
not limited to, the Shared Funding Exemptive Order) and the terms hereof shall
be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by one hundred eighty
(180) days advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any
of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or
the Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the
Underwriter the written notice specified in Section 1.6(b)
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision of
this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective one hundred eighty (180)
days after the notice specified in Section 1.6(b) was
given.
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10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111-0001
Attention: Office of General Counsel
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
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12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 90
days after the end of each fiscal year;
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(b) the Company's quarterly statements (statutory) (and
GAAP, if any), as soon as practical and in any event
within 45 days after the end of each quarterly period:
(c) any financial statement, proxy statement, notice or
report of the Company sent policyholders, as soon as
commercially reasonable after the delivery thereof to
stockholders;
(d) any registration statement (without exhibits) filed on
behalf of the Company pursuant to any securities
offering related to a reorganization of the Company and
any associated financial reports of the Company filed
with the Securities and Exchange Commission or any
extraordinary financial reports filed with any state
insurance regulator, as soon as commercially reasonable
after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or
special audit made by them of the books of the Company,
as soon as practical after the receipt thereof, but
nothing in this subsection (e) shall require the Company
to disclose any information not otherwise available to
the public.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:
Name:
Title:
VARIABLE INSURANCE PRODUCTS FUND II
By:
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By:
Kevin J. Kelly
Vice President
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Exhibit 8(v)
PARTICIPATION AGREEMENT
Among
T. ROWE PRICE EQUITY SERIES, INC.,
T. ROWE PRICE INVESTMENT SERVICES, INC.,
and
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this day of ,
1998 by and among Massachusetts Mutual Life Insurance Company (hereinafter, the
"Company"), a Massachusetts insurance company, on its own behalf and on behalf
of each segregated asset account of the Company set forth on Schedule A hereto
as may be amended from time to time (each account hereinafter referred to as the
"Account" or "Accounts", as applicable), and the undersigned fund, a
corporation organized under the laws of Maryland (each hereinafter referred to
as the "Fund") and T. Rowe Price Investment Services, Inc. (hereinafter the
"Underwriter"), a Maryland corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is or will be available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T) (b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, T. Rowe Price Associates, Inc. and Rowe Price-Fleming
International, Inc. (each hereinafter referred to as the "Adviser") are each
duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and any applicable state securities laws; and
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WHEREAS, the Company has registered or will register certain variable life
insurance or variable annuity contracts supported wholly or partially by the
Account (the "Contracts") under the 1933 Act, and said Contracts are listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios which the Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of the Designated Portfolios available
for purchase at the applicable net asset value per share by the Company and the
Account on those days on which the Fund calculates its net asset value pursuant
to rules of the SEC, and the Fund shall use its best efforts to calculate such
net asset value on each day which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Board of Directors of the Fund
(hereinafter the "Board") may refuse to sell shares of any Designated Portfolio
to any person, or suspend or terminate the offering of shares of any Designated
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction, or is, in the sole discretion of the Board acting in good faith
and in light of their fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such Designated
Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Designated Portfolios will be sold to the general public. The Fund
and the Underwriter will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I, III and VII of this Agreement is in effect to govern such
sales.
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1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption, except that
the Fund reserves the right to suspend the right of redemption or postpone the
date of payment or satisfaction upon redemption consistent with Section 22(e) of
the 1940 Act and any sales thereunder, and in accordance with the procedures and
policies of the Fund as described in the then current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Account, and receipt by such designee shall constitute receipt by the Fund;
provided that the Company receives the order by 4:00 p.m. Eastern time and the
Fund receives notice of such order by 9:30 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of each
Designated Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus.
1.7 The Company shall pay for Fund shares one Business Day after receipt
of an order to purchase Fund shares is made in accordance with the provisions of
Section 1.5 hereof. Payment shall be in federal funds transmitted by wire by
3:00 p.m. Eastern time. If payment in Federal Funds for any purchase is not
received or is received by the Fund after 3:00 p.m. Eastern time on such
Business Day, the Company shall promptly, upon the Fund's request, reimburse the
Fund for any charges, costs, fees, interest or other expenses incurred by the
Fund in connection with any advances to, or borrowings or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. For purposes
of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the federal funds so
wired, such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by electronic transmission
and/or facsimile as outlined in Section 1.10 hereof) to the Company of any
income, dividends or capital gain distributions payable on the Designated
Portfolios' shares. The Company hereby elects to receive all such income,
dividends, and capital gain distributions as are payable on Designated Portfolio
shares in additional shares of that Portfolio. The Company reserves the right to
revoke this election and to receive all such income dividends and capital gain
distributions in cash. The Fund shall notify the Company of the number of shares
so issued as payment of such dividends and distributions.
1.10 The Fund shall make the net asset value per share, including total
shares outstanding, for each Designated Portfolio available to the Company on a
daily basis as soon as reasonably practical after the net asset value per share
is calculated (normally each business day by 6:30 p.m. Eastern time via
electronic transmission and/or facsimile) and shall use its best efforts to make
such net asset value per share available by 7 p.m. Eastern time. If the net
asset value is materially incorrect through no fault of the Company, the Company
on behalf of each Account, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct net asset value in
accordance with Fund procedures, and the Company shall not bear the cost of such
correction. Any material error in the net asset value shall be reported to the
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Company promptly upon discovery (via telephone followed by written documentation
of the error).
1.11 The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.3 and Article VI hereof) and the cash
value of the Contracts may be invested in other investment companies.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws,
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established the Account
prior to any issuance or sale thereof as a segregated asset account under the
Massachusetts insurance laws and has registered or, prior to any issuance or
sale of the Contracts, will register the Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Massachusetts and
all applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may
make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have
the Board, a majority of whom are not interested persons of the Fund, formulate
and approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4 The Fund makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the laws
of the State of Massachusetts to the extent required to perform this
Agreement.
2.5 The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Massachusetts and any applicable
state and federal securities laws.
2.7 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered under all applicable federal and state securities
laws and that the Adviser shall perform its obligations for the
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Fund in compliance in all material respects with the laws of the State of
Massachusetts and any applicable state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other individuals
or entities dealing with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimum
coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9 The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Fund are covered by
a blanket fidelity bond or similar coverage in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company. The Company agrees that any amounts
received under such bond in connection with claims that arise from the
arrangements described in this Agreement will be held by the Company for the
benefit of the Fund. The Company agrees to make all reasonable efforts to see
that this bond or another bond containing these provisions is always in effect,
and agrees to notify the Fund and the Underwriter in the event that such
coverage no longer applies. The Company agrees to exercise its best efforts to
ensure that other individuals/entities not employed or controlled by the Company
and dealing with the money and/or securities of the Fund maintain a similar bond
or coverage in a reasonable amount.
ARTICLE III. Prospectuses, Statements of Additional Information, and Proxy
Statements; Voting
3.1 The Underwriter shall provide the Company with as many copies of
the Fund's current prospectus (describing only the Designated Portfolios listed
on Schedule A) as the Company may reasonably request for distribution to
existing owners of the Contracts. If requested by the Company, the Fund shall
provide the Company with, at the Company's option, camera ready or pdf files, of
fund prospectuses, Statements of Additional Information, proxy material, annual
reports and any similar material that is to be distributed to Contract owners
and other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the Fund prospectus is amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense). The Fund will use its
best efforts to provide such Fund prospectus or Statement of Additional
Information, in the format (camera ready or pdf files) selected by the Company,
within a reasonable period of the preparation of such material to ensure that
they can be integrated into Company material also being distributed to Contract
owners. The Company will give the Fund reasonable advance notice of the date
when such material is being prepared.
3.2 The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available from the Company (or,
in the Fund's discretion, from the Fund), and the Underwriter (or the Fund), at
its expense, shall print, or otherwise reproduce, and provide a copy of such SAI
free of charge to the Company for itself and for any owner of a Contract who
requests such SAI.
3.3 The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners in the Fund. The Underwriter (at the Company's
expense) shall provide the Company with copies of the Fund's annual and semi-
annual reports to shareholders in such quantity as the Company shall reasonably
request for use in connection with offering the Variable Contracts
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issued by the Company. If requested by the Company in lieu thereof, the
Underwriter shall provide such documentation to the Company with, at the
Company's option, camera ready or pfd files and other assistance as is
reasonably necessary in order for the Company (at the Company's expense) to
print such shareholder communications for distribution to Contract owners. The
Underwriter shall use its best efforts to notify the Company of any proxy
proposals for shareholders as soon as Underwriter is aware of such proposals and
provided that such notice is permissible under applicable state and federal
securities laws.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received
in the same proportion as Fund shares of such Designated
Portfolio for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law.
3.5 Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors or trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material that the Company develops or uses and in which the Fund (or a Portfolio
thereof) or the Adviser or the Underwriter is named, at least five business days
prior to its use. No such material shall be used if the Fund or its designee
reasonably object to such use within five business days after receipt of such
material. The Fund or its designee reserves the right to reasonably object to
the continued use of such material, and no such material shall be used if the
Fund or its designee so object. The review procedures of this paragraph shall
not apply to any advertising or sales literature produced by the Company if all
references in such literature regarding the Fund are identical to those that
appear in the Fund's prospectus or Statement of Additional Information.
4.2 The Company shall not give any information or make any
representations or statements on
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behalf of the Fund or concerning the Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or prospectus or SAI for the Fund shares, as such
registration statement and prospectus or SAI may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee or
by the Underwriter, except with the permission of the Fund or the Underwriter or
the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company, each piece of sales literature or other
promotional material in which the Company, and/or its Account, is named at least
five business days prior to its use. No such material shall be used if the
Company reasonably objects to such use within five business days after receipt
of such material. The Company reserves the right to reasonably object to the
continued use of such material and no such material shall be used if the Company
so objects.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus, or SAI for the Contracts, as
such registration statement, prospectus or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at the Company's request, at
least one complete copy of all registration statements, prospectuses, SAIs,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, within a reasonable
time after the filing of such document(s) with the SEC or other regulatory
authorities.
4.6 The Company will provide to the Fund, at the Fund's request, at
least one complete copy of all registration statements, prospectuses, SAIs,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts or
the Account, within a reasonable time after the filing of such document(s) with
the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund; advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Funds.
ARTICLE V. Fees and Expenses
5.1 The Fund and the Underwriter shall pay no fee or other compensation
to the Company under
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this Agreement, except that if the Fund or any Portfolio adopts and implements a
plan pursuant to Rule 12b-1 to finance distribution expenses, then the
Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing, and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter, or other resources available to the
Underwriter. No such payments shall be made directly by the Fund. Currently, no
such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund, except as otherwise provided herein. The
Fund shall see to it that all its shares are registered and authorized for
issuance in accordance with applicable federal law and, if and to the extent
deemed advisable by the Fund, in accordance with applicable state laws prior to
their sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, proxy materials and reports, setting the
prospectus in type, setting in type and printing the proxy materials and reports
to shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the Fund's
shares.
5.3 The Company shall bear the expenses of printing the Fund's
prospectus (in accordance with 3.1) and of distributing the Fund's prospectus,
proxy materials, and reports to Contract owners and prospective Contract
owners.
ARTICLE VI. Diversification and Qualification
6.1 The Fund will invest the assets of each Designated Portfolio in
such a manner as to ensure that the Contracts will be treated as annuity,
endowment, or life insurance contracts, whichever is appropriate, under the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder (or any successor provisions). Without limiting the scope of
the foregoing, each Designated Portfolio of the Fund will comply with Section
817(h) of the Code and Treasury Regulation (S)1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments or
other modifications or successor provisions to such Section or Regulations. In
the event of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation (S)1.817-5.
6.2 The Fund represents that each Designated Portfolio is or will be
qualified as a Regulated Investment Company under Subchapter M of the Code, and
that it will make every effort to maintain such qualification (under Subchapter
M or any successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
6.3 The Company represents that the Contracts are currently, and at the
time of issuance shall be, treated as life insurance, endowment contracts, or
annuity insurance contracts, under applicable provisions of the Code, and that
it will make every effort to maintain such treatment, and that it will notify
the Fund and the Underwriter immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future. The Company agrees that any prospectus offering a
contract that is a "modified endowment contract" as that term is defined in
Section 7702A of the Code (or any successor or similar provision), shall
identify such contract as a modified endowment contract.
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ARTICLE VII. Potential Conflicts.
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
provided, however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as
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determined by a majority of the disinterested members of the Board. Until the
end of the foregoing six month period, the Fund shall continue to accept and
implement orders by the company for the purchase (and redemption) of shares of
the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contract if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and the Underwriter and each of their officers and directors and each person, if
any, who controls the Fund or the Underwriter within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement, prospectus, or statement of
additional information ("SAI") for the Contracts or
contained in the Contracts or sales literature or other
promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon
and in conformity
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with information furnished to the Company by or on behalf of
the Fund for use in the Registration Statement, prospectus
or SAI for the Contracts or in the Contracts or sales
literature or other promotional material (or any amendment
or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature or
other promotional material of the Fund not supplied by the
Company or persons under its control) or wrongful conduct of
the Company or persons under its authorization or control,
with respect to the sale or distribution of the Contracts or
Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, SAI, or sales literature or other
promotional material of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading
if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the
terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with
the qualification requirements specified in Article VI of
this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action and to settle the claim at its own expense; provided,
however, that no such settlement shall, without the Indemnified Parties' written
consent, include any factual
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stipulation referring to the Indemnified Parties or their conduct. After notice
from the Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of it directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts; and
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or SAI or sales literature or other promotional
material of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein
or necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to the Underwriter or Fund
by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or
in sales literature or other promotional material (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature or other
promotional material for the Contracts not supplied by
the Underwriter or persons under its control) or
wrongful conduct of the Fund or Underwriter or persons
under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, SAI, or sales
literature or other promotional material of the
Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein
or necessary to make the statement
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or statements therein not misleading, if such statement
or omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund;
or
(iv) arise as a result of any material failure by the Fund
to provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any
other material breach of this Agreement by the
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action and to settle the claim at its own expense; provided,
however, that no such settlement shall, without the Indemnified Parties' written
consent, include any factual stipulation referring to the Indemnified Parties or
their conduct. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3 Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of
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the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
litigation (including legal and other expenses) to which the Indemnified Parties
may be required to pay or may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, expenses, damages,
liabilities or expenses (or actions in respect thereof) or settlements, are
related to the operations of the Fund and:
(i) arise as a result of any material failure by the Fund
to provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the expense thereof, with counsel satisfactory to the party named in the
action and to settle the claim at its own expense; provided, however, that no
such settlement shall, without the Indemnified Parties' written consent, include
any factual stipulation referring to the Indemnified Parties or their conduct.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
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ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, any Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to some
or all Designated Portfolios, by six (6) months' advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Designated Portfolio based
upon the Company's determination that shares of the Fund are
not reasonably available to meet the requirements of the
Contracts; provided that such termination shall apply only to
the Designated Portfolio not reasonably available; or
(c) termination by the Company by written notice to the Fund and
the Underwriter in the event any of the Designated Portfolio's
shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Fund or Underwriter in the event that
formal administrative proceedings are instituted against the
Company by the NASD, the SEC, the Insurance Commissioner or
like official of any state or any other regulatory body
regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the operation of any Account, or
the purchase of the Fund shares; provided, however, that the
Fund or Underwriter determines in its sole judgment exercised
in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Company
to perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; provided,
however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Fund or Underwriter to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Designated Portfolio in
the event that such Designated Portfolio ceases to qualify as
a Regulated Investment Company under Subchapter M or fails to
comply
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with the Section 817(h) diversification requirements specified
in Article VI hereof, or if the Company reasonably believes
that such Designated Portfolio may fail to so qualify or
comply; or
(g) termination by the Fund or Underwriter by written notice to
the Company in the event that the Contracts fail to meet the
qualifications specified in Section 6.3 hereof; or if the Fund
or Underwriter reasonably believes that such Contracts may
fail to so qualify; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or
the Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company has
suffered a material adverse change in its business,
operations, financial condition, or prospects since the date
of this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity.
10.2 Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, the owners of the Existing Contracts may be permitted
to reallocate investments in the Fund, redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.2 shall not apply to
any termination under Article VII and the effect of such Article VII termination
shall be governed by Article VII of this Agreement. The parties further agree
that this Section 10.2 shall not apply to any termination under Section 10.1(g)
of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) pursuant
to the terms of a substitution order issued by the SEC pursuant to Section 26(b)
of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and
the Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Underwriter 90 days notice of its intention to do so.
10.4 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. Notices
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Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
If to the Company:
Massachusetts Mutual Life Insurance Company
Office of the General Counsel
1295 State Street
Springfield, MA 01111- 0001
If to Underwriter:
T. Rowe Price Investment Services
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
ARTICLE XII. Miscellaneous
12.1 All references herein to the Fund are to each of the undersigned
Funds as if this agreement were between such individual Fund and the Underwriter
and the Company. All references herein to the Adviser relate solely to the
Adviser of such individual Fund, as appropriate. All persons dealing with a Fund
must look solely to the property of such Fund, and in the case of a series
company, the respective Designated Portfolio listed on Schedule A hereto as
though such Designated Portfolio had separately contracted with the Company and
the Underwriter for the enforcement of any claims against the Fund. The parties
agree that neither the Board, officers, agents or shareholders assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which
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taken together shall constitute one and the same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Massachusetts Insurance Commissioner with any information
or reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with
Massachusetts variable annuity laws and regulations and any other applicable law
or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9 The Company shall furnish or cause to be furnished, to the Fund or
its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in
any event within 90 days after the end of each fiscal year.
(b) the Company's quarterly statements (statutory) (and GAAP, if any),
as soon as practical and in any event within 45 days after the end
of each quarterly period.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY: MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By its authorized officer
By:
Title:
Date:
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FUND: T. ROWE PRICE EQUITY SERIES, INC.
By its authorized officer
By:
Title: Vice President
Date:
UNDERWRITER: T. ROWE PRICE INVESTMENT SERVICES, INC.
By its authorized officer
By:
Title: Vice President
Date:
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EXHIBIT 9 Opinion of and Consent of Counsel
May, 1998
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Re: Pre-Effective Amendment No. 1 to Registration Statement
No. 333-45039 filed on Form N-4
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Pre-Effective
Amendment No. 1 to Registration Statement No. 333-45039 on Form N-4 under the
Securities Act of 1933 for Massachusetts Mutual Life Insurance Company's
("MassMutual") individual certificates issued under a group deferred variable
annuity contract (the "Certificate"). Massachusetts Mutual Variable Annuity
Separate Account 4 issues the Certificate.
As Attorney for MassMutual, I provide legal advice to MassMutual in connection
with the operation of its variable products. In such role I am familiar with the
Pre-Effective Amendment for the Certificate. In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. MassMutual is a valid and subsisting corporation, organized and operated
under the laws of the Commonwealth of Massachusetts and is subject to regulation
by the Massachusetts Commissioner of Insurance.
2. Massachusetts Mutual Variable Annuity Separate Account 4 is a separate
account validly established and maintained by MassMutual in accordance with
Massachusetts law.
3. All of the prescribed corporate procedures for the issuance of the
Certificate have been followed, and all applicable state laws have been complied
with.
I hereby consent to the use of this opinion as an exhibit to this Pre-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
James M. Rodolakis
Counsel
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EXHIBIT 10(i) CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in this Pre-Effective Amendment No. 1 to the
Registration Statement of Massachusetts Mutual Variable Annuity Separate Account
4 on Form N-4 (Registration No. 333-45039), of our report dated February 6,
1998, on our audits of the statutory financial statements of Massachusetts
Mutual Life Insurance Company, which includes explanatory paragraphs relating to
the use of statutory accounting practices, which differ from generally accepted
accounting principles. We also consent to the reference to our Firm under the
caption "Independent Accountants" in the Statement of Additional Information.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
June 2, 1998
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Exhibit 10(iii)
POWER OF ATTORNEY: FEDERAL SECURITIES LAWS
The Undersigned, Roger G. Ackerman, Member of the Board of Directors of
Massachusetts Mutual Life Insurance Company ("MassMutual"), does hereby
constitute and appoint Lawrence V. Burkett, Jr., Thomas F. English, Richard M.
Howe, Stephen R. Bosworth, and Michael Berenson, and each of them individually,
as his true and lawful attorneys and agents.
Such attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Member of the Board of Directors of MassMutual that said attorneys and agents
may deem necessary or advisable to enable MassMutual to comply with the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the Investment Company Act of 1940, as amended, (collectively, the
"Acts") and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This Power of
Attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as Member of the Board of Directors of MassMutual to any and all
registration statements and/or amendments thereto, reports, instruments or
documents filed or to be to be filed with the Commission under the Acts. Without
limiting the scope of this Power of Attorney, it shall apply to filings by or on
behalf of MassMutual separate investment accounts currently in existence or
established in the future, including but not limited to those listed below.
Massachusetts Mutual Variable Annuity Fund 1
Massachusetts Mutual Variable Annuity Fund 2
Massachusetts Mutual Variable Annuity Separate Account 1
Massachusetts Mutual Variable Annuity Separate Account 2
Massachusetts Mutual Variable Annuity Separate Account 3
Massachusetts Mutual Variable Annuity Separate Account 4
Massachusetts Mutual Variable Life Separate Account I
Massachusetts Mutual Variable Life Separate Account II
Panorama Separate Account
CML Variable Annuity Account A
CML Variable Annuity Account B
CML Accumulation Annuity Account E
Connecticut Mutual Variable Life Separate Account I
CML/OFFITBANK Separate Account
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 24th day of
April, 1998
/s/ Roger G. Ackerman
Roger G. Ackerman Witness
Member, Board of Directors
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