<PAGE>
As filed with the Securities and Exchange Commission on September 20, 1999
File Nos. 333-80991
811-8698
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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.)
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C.M. MULTI-ACCOUNT A
(Exact Name of Registrant)
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C.M. LIFE INSURANCE COMPANY
(Name of Depositor)
----------------
140 Garden Street, Hartford, Connecticut 06154
(Address of Depositor's Principal Executive Offices)
(Zip Code)
Depositor's Telephone Number, including Area Code 1-800-234-5606
Name and Address of Agent for Service
Ann F. Lomeli, Secretary
C.M. Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
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Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this filing.
It is proposed that this filing will become effective
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[_] on pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a) of Rule 485
[_] on (date) pursuant to paragraph (a) of the Rule 485
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Individual or Group Variable Deferred
Annuity Contract with Flexible Purchase Payments
----------------
This 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 Section 8(a) may
determine.
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<PAGE>
CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 Item Caption in Prospectus
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<S> <C>
1........................................ Cover Page
2........................................ Definitions
3........................................ Table of Fees and Expenses
4........................................ (Not applicable)
5........................................ The Company; Investment Choices
6........................................ Expenses; Distribution
7........................................ Ownership; Purchasing a Contract;
Voting Rights; Reservation of Rights;
Contract Value; Cover Page
8........................................ The Income Phase
9........................................ Death Benefit
10........................................ The Accumulation Phase; Distributors
11........................................ Highlights; Withdrawals
12........................................ Taxes
13........................................ Legal Proceedings
14........................................ Additional Information
<CAPTION>
Caption in Statement of
Additional Information
-----------------------
<S> <C>
15........................................ Cover Page
16........................................ Table of Contents
17........................................ Company
16........................................ Experts; Distribution
19........................................ Purchase of Securities Being Offered
20........................................ Distribution
21........................................ Performance Measures
22........................................ Annuity Payments
23........................................ Financial Statements
</TABLE>
2
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
C.M. Life Insurance Company
C.M. Multi-Account A
Panorama Passage Variable Annuity
This prospectus describes the Panorama Passage contract offered by C.M. Life
Insurance Company. This contract is an individual or group variable deferred
annuity contract with flexible purchase payments, depending on the state where
we issue the contract. It provides for accumulation of contract value and
annuity payments on a fixed and variable basis.
You, the contract owner, have a number of investment choices in this contract.
These investment choices include three fixed account options as well as the
following twenty-eight funds which are offered through our separate account,
C.M. Multi-Account A.
Panorama Series Fund, Inc.
. Panorama Total Return Portfolio
. Panorama Growth Portfolio
. Oppenheimer International Growth Fund/VA
Oppenheimer Variable Account Funds
. Oppenheimer Money Fund/VA
. Oppenheimer Aggressive Growth Fund/VA
. Oppenheimer Strategic Bond Fund/VA
. Oppenheimer Main Street Growth & Income Fund/VA
. Oppenheimer High Income Fund/VA
. Oppenheimer Capital Appreciation Fund/VA
. Oppenheimer Global Securities Fund/VA
Fidelity Variable Insurance Products Fund
. VIP Growth Portfolio--Service Class
Fidelity Variable Insurance Products Fund II
. VIP II Contrafund(R) Portfolio--Initial Class
Fidelity Variable Insurance Products Fund III
. VIP III Growth Opportunities Portfolio--Service Class
American Century Variable Portfolios, Inc.
. American Century VP Income & Growth Fund
. American Century VP Value Fund
T. Rowe Price Equity Series, Inc.
. T. Rowe Price Mid-Cap Growth Portfolio
MML Series Investment Fund
. MML Equity Fund
. MML Blend Fund
. MML Equity Index Fund
. MML Small Cap Value Equity Fund
. MML Growth Equity Fund
. MML Small Cap Growth Equity Fund
. MML Managed Bond Fund
Janus Aspen Series
. Janus Aspen Worldwide Growth Portfolio
. Janus Aspen Capital Appreciation Portfolio
Templeton Variable Products Series Fund
. Templeton International Fund--Class 2 Shares
BT Insurance Funds Trust
. BT Small Cap Index Fund
MFS(R) Variable Insurance TrustSM
. MFS(R) Growth With Income Series
Please read this prospectus before investing. You should keep it for future
reference. It contains important information about the Panorama Passage
Variable Annuity.
To learn more about the Panorama Passage contract, you can obtain a copy of the
Statement of Additional Information (SAI), dated September 30, 1999. We filed
the SAI with the Securities and Exchange Commission (SEC) and it is legally a
part of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information
regarding companies that file electronically with the SEC. The Table of
Contents of the SAI is on page 36 of this prospectus. For a free copy of the
SAI, or for general inquiries, call our Annuity Service Center at (800) 366-
8226 or write to: Panorama Passage, Annuity Products, W578, P.O. Box 9067,
Springfield, Massachusetts 01102-9067.
The contracts:
. are not bank deposits.
. are not federally insured.
. are not endorsed by any bank or governmental agency.
. are not guaranteed and may be subject to loss of principal.
The SEC has not approved these contracts or determined that this prospectus
is accurate or complete. Any representation that it has is a criminal
offense.
September 30, 1999.
1
<PAGE>
Table Of Contents
<TABLE>
<S> <C>
Highlights 4
C.M. Multi-Account A - Panorama Passage Segment
Table of Fees and Expenses 5
The Company 10
Panorama Passage Deferred Variable Annuity Contract - General Overview 10
Ownership of the Contact 12
Owner 12
Joint Owner 12
Annuitant 12
Beneficiary 12
Purchasing a Contract 13
Purchase Payments 13
Allocation of Purchase Payments 13
Investment Choices 14
The Separate Account 14
The Funds 14
The Fixed Accounts 19
DCA Fixed Accounts 19
The Fixed Account 19
Contract Value 20
Accumulation Units 20
Transfers 20
Transfers During the Accumulation Phase 20
Transfers During the Income Phase 21
Dollar Cost Averaging Program 21
Automatic Rebalancing Program 22
Withdrawals 22
Systematic Withdrawal Program 23
Expenses 24
Insurance Charges 24
Mortality and Expense Risk Charge 24
Administrative Charge 24
Annual Contract Maintenance Charge 24
Premium Taxes 24
Transfer Fee 25
Income Taxes 25
Fund Expenses 25
The Income Phase 26
Fixed Annuity Payments 26
Variable Annuity Payments 26
Annuity Unit Value 27
Annuity Options 27
Death Benefit 28
Death of Contract Owner During the Accumulation Phase 28
Death Benefit Amount During the Accumulation Phase 28
Basic Death Benefit 28
Reset Death Benefit 28
Ratchet Death Benefit 29
Death Benefit Payment Options During the Accumulation Phase 30
Death of Contract Owner During the Income Phase 30
Death of Annuitant 30
Taxes 31
Annuity Contracts in General 31
Qualified and Non-Qualified Contracts 31
Withdrawals - Non-Qualified Contracts 31
Withdrawals - Qualified Contracts 32
Withdrawals - Tax Sheltered Annuities 32
Other Information 34
Terminal Illness Benefit 34
Performance 34
Standardized Total Returns 34
Nonstandard Total Returns 34
Yield and Effective Yield 34
Related Performance 34
Year 2000 35
Distributors 35
Electronic Transmission of Application Information 35
Assignment 35
Voting Rights 35
Reservation of Rights 36
Suspension of Payments or Transfers 36
Legal Proceedings 36
Financial Statements 36
Additional Information 36
</TABLE>
Table Of Contents
2
<PAGE>
Index of Special Terms
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable. We have identified the following as some of these
words or terms. The page that is indicated here is where we believe you will
find the best explanation for the word or term.
<TABLE>
<CAPTION>
Page
<S> <C>
Accumulation Phase 10
Accumulation Unit 20
Annuitant 12
Annuity Date 26
Annuity Options 27
Annuity Payments 26
Annuity Service Center 1
Annuity Unit Value 27
Contract Anniversary 28
Income Phase 26
Non-Qualified 31
Purchase Payment 13
Qualified 31
Separate Account 14
Tax Deferral 10
</TABLE>
Index of Special Terms
3
<PAGE>
Highlights
This prospectus describes the general provisions of the contract. You may
review a copy of the contract upon request.
Free Look
You have a right to examine your contract. If you change your mind about owning
your contract, you can cancel it within 10 days after receiving it. However,
this time period may vary by state. You will receive your contract value as of
the business day we receive your contract and written request at our Annuity
Service Center.
If you purchase this contract as an IRA or your state requires it, we will
return the greater of your purchase payments less any withdrawals you took, or
the contract value.
Sales Charge
We do not assess a sales charge when you make a purchase payment or if you
withdraw all or any part of your contract value.
Federal Income Tax Penalty
If you withdraw any of the contract value from your non-qualified contract, a
10% federal income tax penalty may be applied to the amount of the withdrawal
that is includible in your gross income for tax purposes. Some withdrawals may
be exempt from the penalty tax. They include any amounts:
. paid on or after you reach age 59 1/2;
. paid to your beneficiary after you die;
. paid if you become totally disabled as that term is defined in the Internal
Revenue Code;
. paid in a series of substantially equal payments made annually or more
frequently, for life or your life expectancy or for the joint life
expectancies of you and your designated beneficiary;
. paid under an immediate annuity; or
. which come from purchase payments made before August 14, 1982.
The Internal Revenue Code (the Code) treats any withdrawals (1) allocable to
purchase payments made after August 13, 1982 in an annuity contract entered
into prior to August 14, 1982 and (2) from an annuity contract entered into
after August 14, 1982, as first coming from earnings and then from your
purchase payments. Separate tax penalties and restrictions apply to withdrawals
under qualified contracts. Please refer to the Taxes section of this prospectus
for more information.
Highlights
4
<PAGE>
C.M. Multi-Account A - Panorama Passage Segment
Table Of Fees And Expenses
Contract Owner Transaction Expenses
Transfer Fee:
During Accumulation Phase: We will not charge for the first 12
transfers in a calendar year;
thereafter we reserve the right to
assess a fee which is the lesser of
$20 or 2% of the amount transferred.
During Income Phase: We allow only 6 transfers in a
calendar year and we will not assess
a fee for these 6 transfers.
Sales Load on Purchase Payments: None
Contingent Deferred Sales Charge: None
Annual Contract Maintenance Charge:
$40 per Contract Year*; waived if
contract value is $100,000 or
greater.
Separate Account Annual Expenses
(as a percentage of the average account value)
Mortality and Expense Risk Charge:
Contract Years 1 through 10: 1.34%**
Contract Years 11+: 1.09%**
Administrative Charge:
0.15% per Contract Year.***
Total Separate Account Annual Expenses:
Contract Years 1 through 10: 1.49%
Contract Years 11+: 1.24%
*We may increase this charge, but it will not exceed $60.
** We may increase this charge, but it will not exceed 1.50% in contract years
1 through 10, or 1.35% in contract years 11 and after.
***We may increase this charge, but it will not exceed 0.25%.
Table of Fees And Expenses
5
<PAGE>
Annual Fund Expenses
(as a percentage of average net assets as of December 31, 1998)
<TABLE>
<CAPTION>
Total
Management Other Operating
Fees After Expenses After Expenses After
Expense Expense 12b-1 Expense
Reimbursements Reimbursements Fees Reimbursements
<S> <C> <C> <C> <C>
Oppenheimer Money
Fund/VA 0.45% 0.05% -- 0.50%
Oppenheimer Aggressive
Growth Fund/VA 0.69% 0.02% -- 0.71%
Oppenheimer Strategic
Bond Fund/VA 0.74% 0.06% -- 0.80%
Oppenheimer Main Street
Growth & Income Fund/VA 0.74% 0.05% -- 0.79%
Oppenheimer High Income
Fund/VA 0.74% 0.04% -- 0.78%
Oppenheimer Capital
Appreciation Fund/VA 0.72% 0.03% -- 0.75%
Oppenheimer Global
Securities Fund/VA 0.68% 0.06% -- 0.74%
Panorama Growth
Portfolio 0.52% 0.01% -- 0.53%
Oppenheimer
International Growth
Fund/VA 1.00% 0.09% -- 1.09%
Panorama Total Return
Portfolio 0.53% 0.02% -- 0.55%
Fidelity's VIP Growth
Portfolio--Service Class 0.59% 0.11% 0.10% 0.80%/3/
Fidelity's VIP II
Contrafund(R)
Portfolio--Initial Class 0.59% 0.11% -- 0.70%/3/
Fidelity's VIP III
Growth Opportunities
Portfolio--Service Class 0.59% 0.11% 0.10% 0.80%/3/
American Century VP
Income & Growth Fund 0.70% 0.00% -- 0.70%
American Century VP
Value Fund 1.00% 0.00% -- 1.00%
T. Rowe Price Mid-Cap
Growth Portfolio 0.85% 0.00% -- 0.85%
MML Managed Bond Fund 0.45% 0.03%/2/ -- 0.48%
MML Small Cap Value
Equity Fund 0.39% 0.05%/2/ -- 0.44%
MML Equity Fund 0.37% 0.00%/2/ -- 0.37%
MML Blend Fund 0.37% 0.00%/2/ -- 0.37%
MML Equity Index Fund 0.30% 0.20% -- 0.50%
MML Growth Equity Fund 0.80% 0.11%/2/ -- 0.91%/1/
MML Small Cap Growth
Equity Fund 1.08% 0.11%/2/ -- 1.19%/1/
Janus Aspen Worldwide
Growth Portfolio 0.65% 0.07% -- 0.72%/4/
Janus Aspen Capital
Appreciation Portfolio 0.70% 0.22% -- 0.92%/4/
Templeton International
Fund--Class 2 Shares/6/ 0.69% 0.17% 0.25% 1.11%
BT Small Cap Index Fund 0.35% 0.10% -- 0.45%/5/
MFS(R) Growth With
Income Series 0.75% 0.13% -- 0.88%
</TABLE>
Table Of Fees And Expenses
6
<PAGE>
/1/The MML Growth Equity Fund and the MML Small Cap Growth Equity Fund began
operations in 1999 and therefore had no operating expenses as of December 31,
1998. The investment manager estimates that the total operating expenses for
these Funds in 1999 will be as shown.
/2/The adviser agreed to bear expenses of the MML Equity Fund, MML Blend Fund,
MML Managed Bond Fund, MML Small Cap Value Equity Fund, MML Growth Equity Fund,
MML Managed Bond and MML Small Cap Growth Equity Fund (other than the
management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of 0.11% of the average daily net asset value of the Funds
through April 30, 2000. The expenses shown for the MML Growth Equity Fund and
MML Small Cap Growth Equity Fund include this reimbursement. If not included,
the other expenses for these Funds in 1999 are estimated to be 0.25%, for the
MML Growth Equity Fund, increasing the MML Growth Equity Fund's total fund
expenses to 1.05% and 0.25% for the MML Small Cap Growth Equity Fund,
increasing the MML Small Cap Growth Equity Fund's total fund expenses to 1.33%.
The adviser does not expect that we will be required to reimburse any expenses
of the MML Equity Fund, MML Blend Fund, MML Managed Bond Fund and MML Small Cap
Value Equity Fund in 1999.
/3/A portion of the brokerage commissions that the VIP Growth Portfolio, the
VIP II Contrafund(R) Portfolio, and the VIP III Growth Opportunities Portfolio
pay was used to reduce the other expenses for the Portfolios. In addition,
these Portfolios have entered into arrangements with their custodian whereby
credits realized as a result of uninvested cash balances were used to reduce
custodian expenses. Including these reductions, the other expenses for the VIP
Growth Portfolio would have been 0.06%, decreasing the VIP Growth Portfolio's
total fund expenses to 0.75%; the other expenses for the VIP II Contrafund(R)
Portfolio would have been 0.07%, decreasing the VIP II Contrafund(R)
Portfolio's total fund expenses to 0.66%; and the other expenses for the VIP
III Growth Opportunities Portfolio would have been 0.10%, decreasing the VIP
III Growth Opportunities Portfolio's total fund expenses to 0.79%.
/4/Janus Capital has agreed to reduce the management fee of the Janus Aspen
Woldwide Growth Portfolio and the Janus Aspen Capital Appreciation Portfolio to
the level of their corresponding Janus retail funds. Other waivers, if
applicable, are first applied against the management fee and then against other
expenses. Janus Capital has agreed to continue the waivers and fee reductions
until at least the next annual renewal of the advisory agreement. Without such
reductions, the total fund expenses for the Janus Aspen Worldwide Growth
Portfolio and the Janus Aspen Capital Appreciation Portfolio would have been
0.74% and 0.97%, respectively.
/5/Bankers Trust Company has voluntarily undertaken to waive its management fee
and reimburse the BT Small Cap Index Fund certain expenses so that the total
fund expenses for the BT Small Cap Index Fund will not exceed 0.45%. Bankers
Trust Company may not recoup any of its waived investment advisory fees. Such
waivers by Bankers Trust Company should stay in effect for at least 12 months.
Without such waivers and reimbursements, the total fund expenses for the BT
Small Cap Index Fund would have been 1.58%.
/6/The Fund's Class 2 distribution plan or "Rule 12b-1 plan" is described in
the Fund's prospectus.
(See the funds' prospectuses for more information.)
Table Of Fees And Expenses
7
<PAGE>
Example
The following example is designed to help you understand the expenses in the
contract. The example shows the cumulative expenses you would pay assuming you
invested $1,000 in a contract and allocated all of it to a fund which earned 5%
each year. The example assumes that you withdrew all your money or decided to
begin the income phase at the end of each year shown. (Currently, the income
phase is not available until the end of your 1st contract year.) All the
expenses shown in the table of fees and expenses, including the annual fund
expenses, are assumed to apply.
<TABLE>
<CAPTION>
Sub-Account Year 1 3 5 10
<S> <C> <C> <C> <C> <C>
Oppenheimer Money $21 $66 $112 $242
Oppenheimer Aggressive Growth 23 72 123 264
Oppenheimer Strategic Bond 24 75 128 273
Oppenheimer Main Street Growth & Income 24 74 127 272
Oppenheimer High Income 24 74 127 271
Oppenheimer Capital Appreciation 24 73 125 268
Oppenheimer Global Securities 24 73 125 267
Panorama Growth 22 66 114 245
Oppenheimer International Growth 27 84 143 302
Panorama Total Return 22 67 115 247
Fidelity's VIP Growth 24 75 128 273
Fidelity's VIP II Contrafund(R) 23 72 123 263
Fidelity's VIP III Growth Opportunities 24 75 128 273
American Century VP Income & Growth 23 72 123 263
American Century VP Value 26 81 138 293
T. Rowe Price Mid-Cap Growth 25 76 130 278
MML Managed Bond 21 65 111 240
MML Small Cap Value Equity 21 64 109 236
MML Equity 20 61 106 228
MML Blend 20 61 106 228
MML Equity Index 21 65 112 242
MML Growth Equity 25 78 134 284
MML Small Cap Growth Equity 28 87 148 312
Janus Aspen Worldwide Growth 23 72 124 265
Janus Aspen Capital Appreciation 26 78 134 285
Templeton International 27 84 144 304
BT Small Cap Index 21 64 110 237
MFS(R) Growth With Income 25 77 132 281
</TABLE>
Table Of Fees And Expenses
8
<PAGE>
The purpose of the Table of Fees and Expenses is to assist you in understanding
the various costs and expenses that you will incur. The table reflects expenses
of the separate account and the funds.
The examples reflect the $40 annual contract maintenance charge as an annual
charge of 0.08% of the assets. This charge is based on an anticipated average
contract value of $50,000.
The examples do not reflect any premium taxes. However, premium taxes may
apply.
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
Table Of Fees And Expenses
9
<PAGE>
The Company
C.M. Life Insurance Company, 140 Garden Street, Hartford, Connecticut 06154, is
a stock life insurance company. It was chartered by a special Act of the
Connecticut General Assembly on April 25, 1980. It is principally engaged in
the sale of life insurance and annuities, and is licensed in all states except
New York. The Company is a wholly-owned subsidiary of Massachusetts Mutual Life
Insurance Company ("MassMutual").
MassMutual 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 consolidated statutory assets in excess of $67 billion and estimated total
assets under management of $176.8 billion as of December 31, 1998.
Panorama Passage Variable Annuity Contract
General Overview
This annuity is a contract between you, the owner and us, C.M. Life Insurance
Company. The contract is intended for retirement savings or other long-term
investment purposes. We do not assess a sales charge when you make a purchase
payment or if you withdraw any part of your contract value.
In exchange for your purchase payments, we agree to pay you an income when you
choose to receive it. You select the income period beginning on a date you
designate. According to your contract, this date must be at least 5 years from
when you purchase the contract. However, we currently allow you to select a
date that is at least 1 year from when you purchase the contract.
The contract, like all deferred annuity contracts, has two phases--the
accumulation phase and the income phase. Your contract is in the accumulation
phase until you decide to begin receiving annuity payments. During the
accumulation phase we provide a death benefit. You can choose from three death
benefit choices. Once you begin receiving annuity payments, your contract
enters the income phase.
You are not taxed on contract earnings until you take money from your contract.
This is known as tax deferral.
The contract is called a flexible premium annuity because you may select the
timing, amount and number of purchase payments.
The contract is called a variable annuity because you can choose to allocate
your purchase payments among various funds. Your investment choices include
twenty-eight funds and three fixed accounts. The amount of money you are able
to accumulate in your contract during the accumulation phase depends upon the
amount of your purchase payments, the investment performance of the funds you
select and the interest we credit to any amounts you invest in the fixed
accounts.
At the beginning of the income phase, you can choose to receive annuity
payments on a variable basis, fixed basis or a combination of both. If you
choose variable payments, the amount of the annuity payments you receive will
fluctuate depending on the investment performance of the funds you select for
the income phase. If you choose to receive payments on a fixed basis, the
payments you receive will remain level.
We may issue the contract as an individual or group variable annuity. In those
states where we issue a group contract, we issue certificates to individuals,
and these individuals are considered participants. The certificate is subject
to the terms
The Company/General Overview
10
<PAGE>
of the group contract under which we issue the certificate. You may become a
participant under the group contract by completing an application and
forwarding an initial purchase payment to us. The certificate we issue
indicates the participant's rights and benefits under the group contract. Terms
of the group contract are controlling.
The participant, as an owner, may exercise all rights and benefits of the
certificate without the consent of the group contract owner. Unless we state
otherwise, the owner of a certificate under a group contract and the owner of
an individual contract have the same rights and benefits. As a result, the term
"contract" means either an individual Panorama Passage deferred variable
annuity or a certificate issued under the group Panorama Passage deferred
variable annuity.
The Company/General Overview
11
<PAGE>
Ownership of the Contract
Owner
The owner is named at time of application. The owner can be an individual or a
non-natural person. We will not issue a contract to you if you have reached
your 90th birthday as of the date we proposed to issue the contract.
As the owner of the contract, you exercise all rights under the contract. The
owner names the beneficiary. You may change the owner of the contract at any
time prior to the annuity date by written request. If you change the owner, the
change is subject to our underwriting rules. Changing the owner may result in
tax consequences. On and after the annuity date, you continue as the owner.
Joint Owner
The contract can be owned by joint owners. Unless prohibited by a state, only
you and your spouse can be joint owners. We will not issue a contract to you if
either proposed joint owner has reached their 90th birthday as of the date we
proposed to issue the contract.
Upon the death of either joint owner, the surviving spouse will be the
designated beneficiary and may continue the contract unless prohibited by a
state. We will treat any other beneficiary designation at the time of death as
a contingent beneficiary. Unless otherwise indicated on the application, both
signatures will be required for all transactions, if there are joint owners.
Annuitant
The annuitant is the person on whose life we base annuity payments. You
designate the annuitant at the time of application. We will not issue a
contract to you if the proposed annuitant has reached his/her 90th birthday as
of the date we proposed to issue the contract. You may change the annuitant
before the annuity date, subject to our underwriting rules. However, the
annuitant may not be changed on a contract owned by a non-natural person.
Beneficiary
The beneficiary is the person(s) or entity you name to receive any death
benefit. You name the beneficiary at the time of application. Unless an
irrevocable beneficiary has been named, you can change the beneficiary at any
time before you die. If you name an irrevocable beneficiary, you must get
consent from the irrevocable beneficiary to change the beneficiary.
A beneficiary who is your surviving spouse may elect to continue the contract
in his or her own name, elect a lump sum payment of the death benefit, or apply
the death benefit to an annuity option.
Ownership of the Contract
12
<PAGE>
Purchasing a Contract
Purchase Payments
The minimum amount we accept for your initial purchase payment is $25,000.
You can make additional purchase payments of $250 or more to your contract. We
will accept as little as $100 if you have selected our automatic investment
plan option.
The maximum amount of cumulative purchase payments we accept without our prior
approval is based on your age when we issued the contract. The maximum amount
is:
. $1 million up to age 75 1/2; or
. $500,000 if older than age 75 1/2.
If the owner is not a natural person, these purchase payment limits will apply
to the annuitant's age. If there are joint owners, age refers to the oldest
owner.
You may make your initial purchase payment by giving it and your completed
application to your agent/broker. You can make additional purchase payments by
mailing them to our Annuity Service Center. You may also instruct your bank to
wire transfer funds to:
Chase Manhattan Bank,
New York, New York
ABA #021000021
MassMutual Account 323065422
Ref: VA Income Contract #
Name: (Your Name)
We have the right to reject any application or purchase payment.
Allocation of Purchase Payments
When you purchase your contract, you choose how we will apply your purchase
payments among the investment choices. If you make additional purchase
payments, we will apply them in the same way as your first purchase payment,
unless you tell us otherwise.
Once we receive your purchase payment and the necessary information at our
Annuity Service Center, we will issue your contract and apply your first
purchase payment within 2 business days. If you do not give us all of the
information we need, we will contact you to get it. If for some reason we are
unable to complete this process within 5 business days, we will either send
back your money or get your permission to keep it until we get all of the
necessary information.
If you add more money to your contract by making additional purchase payments,
we will credit these amounts to your contract on the business day we receive
them at our Annuity Service Center. Our business day closes when the New York
Stock Exchange closes, usually 4:00 p.m. Eastern time. If we receive your
purchase payment at our Annuity Service Center on a non-business day or after
the business day closes, we will credit the amount to your contract effective
the next business day.
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Investment Choices
The Separate Account
We established a separate account, C.M. Multi-Account A (separate account), to
hold the assets that underlie the contracts. Our Board of Directors adopted a
resolution to establish the separate account under Connecticut insurance law
on August 3, 1994. We have registered the separate account with the Securities
and Exchange Commission as a unit investment trust under the Investment
Company Act of 1940.
We own the assets of the separate account. However, those separate account
assets equal to the reserves and other contract liabilities are not chargeable
with liabilities arising out of any other business we may conduct. All the
income, gains and losses (realized or unrealized) resulting from these assets
are credited to, or charged against, the contracts and not against any other
contracts we may issue.
We established a segment of the separate account for the contracts. We
currently divide this segment into 28 sub-accounts. Each of these sub-accounts
invests in a fund. You bear the complete investment risk for purchase payments
that you allocate to a fund.
The Funds
The contract offers 28 funds which are listed below. Additional funds may be
added in the future.
Panorama Series Fund, Inc.
Panorama Series Fund, Inc. ("Panorama Fund") is an open-end investment
company. OppenheimerFunds, 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. It performs
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 $95 billion in assets and 4 million
shareholder accounts as of December 31, 1998. OFI is owned by Oppenheimer
Acquisition Corporation, a holding company that is owned in part by senior
officers for OFI and controlled by MassMutual. The address of OFI is Two World
Trade Center, New York, NY 10048-0203.
Panorama Total Return Portfolio. The Panorama Total Return Portfolio seeks to
maximize total investment return (including both capital appreciation and
income) by allocating its assets among stocks, corporate bonds, U.S.
Government securities and its instrumentalities, and money market instruments
according to changing market conditions.
Panorama Growth Portfolio. The Panorama Growth Portfolio seeks 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.
Oppenheimer International Growth Fund/VA. The Oppenheimer International Growth
Fund/VA seeks long-term growth of capital by investing primarily in equity
securities of companies wherever located, the primary stock market of which is
outside the United States.
Oppenheimer Variable Account Funds
Oppenheimer Variable Account Funds ("Oppenheimer Funds") is an investment
company consisting of 10 separate series of shares known as funds. Seven of
these funds are available as investment options in the contract. The
Oppenheimer Funds are also advised by OFI.
Oppenheimer Money Fund/VA. The Oppenheimer Money Fund/VA seeks maximum current
income from investments in money market securities that is consistent with low
capital risk and maintenance of liquidity. The Fund invests in short-term,
high quality "money market" securities.
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Oppenheimer Aggressive Growth Fund/VA. The Oppenheimer Aggressive Growth
Fund/VA seeks long-term capital appreciation by investing in "growth-type"
companies.
Oppenheimer Strategic Bond Fund/VA. The Oppenheimer Strategic Bond Fund/VA
seeks a high level of current income principally derived from interest on debt
securities and seeks to enhance such income by writing covered call options on
debt securities. The Fund invests in three market sectors: debt securities of
foreign governments and companies, U.S. Government securities and lower-rated
high yield securities of U.S. Companies.
Oppenheimer Main Street Growth & Income Fund/VA. The Oppenheimer Main Street
Growth & Income Fund/VA seeks total return (which includes growth in the value
of its shares as well as current income) from equity and debt securities.
Oppenheimer High Income Fund/VA. The Oppenheimer High Income Fund/VA seeks a
high level of current income. The Fund invests in unrated securities or high
risk securities in the lower rating categories, commonly known as "junk bonds,"
which are subject to a greater risk of loss of principal and nonpayment of
interest than higher-rated securities.
Oppenheimer Capital Appreciation Fund/VA. The Oppenheimer Capital Appreciation
Fund/VA seeks long-term capital appreciation by investing in securities of
well-known established companies. It invests mainly in equity securities.
Oppenheimer Global Securities Fund/VA. The Oppenheimer Global Securities
Fund/VA seeks long-term capital appreciation by investing a substantial portion
of assets in securities of foreign issuers, "growth-type" companies, cyclical
industries and special situations which are considered to have appreciation
possibilities. It invests in equity securities of U.S. and foreign issuers.
MML Series Investment Fund ("MML Trust")
MML Trust is a no-load, open-end, investment company having eight series of
shares, each of which has different investment objectives designed to meet
different investment needs. Seven of the series are available as investment
options within the contract. MassMutual serves as the investment adviser to the
MML Trust.
MassMutual has entered into a subadvisory agreement with David L. Babson and
Company, Inc. ("Babson"), a controlled subsidiary of the MassMutual, whereby
Babson manages the investment of the assets of the MML Small Cap Value Equity
Fund, the MML Equity Fund, and the equity sector of the MML Blend Fund.
MassMutual has entered into a subadvisory agreement with Massachusetts
Financial Services Company ("MFS"), whereby MFS manages the investment of the
MML Growth Equity Fund.
MassMutual has entered into subadvisory agreements with J.P. Morgan Investment
Management Company Inc. ("J.P. Morgan") and Waddell & Reed Investment
Management Company ("Waddell & Reed"), whereby J.P. Morgan and Waddell & Reed
each manage 50% of the portfolio of MML Small Cap Growth Equity Fund.
MassMutual has entered into a subadvisory agreement with Mellon Equity
Associates, LLP ("Mellon Equity") whereby Mellon Equity manages the investments
of the MML Equity Index Fund.
MML Small Cap Value Equity Fund. The MML Small Cap Value Equity Fund seeks
growth of capital and income over time by investing primarily in small company
stocks.
MML Equity Fund. The MML Equity Fund seeks to achieve a superior rate of return
over time from both capital appreciation and current income and to preserve
capital by investing in equity securities.
MML Blend Fund. The MML Blend Fund seeks a high total rate of return over time,
consistent with prudent investment risk and capital preservation, by investing
in equity, fixed income and money market securities.
MML Equity Index Fund. The MML Equity Index Fund seeks investment results that
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index./1/
/1/ "Standard & Poor's," "Standard & Poor's 500" and "S&P 500" are trademarks
of The McGraw-Hill Companies and have been
Investment Choices
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licensed for use by the Fund. The Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, a division of The McGraw-Hill Companies ("S&P"),
or The McGraw-Hill Companies, Inc. Standard & Poor's makes no representation
regarding the advisability of investing in the Fund.
MML Growth Equity Fund. The MML Growth Equity Fund seeks growth of capital and
income over time by investing primarily in equity securities of large companies
with long-term growth potential.
MML Small Cap Growth Equity Fund. The MML Small Cap Growth Equity Fund seeks
growth of capital over time by investing primarily in equity securities of
smaller and medium-size companies with long-term growth potential.
MML Managed Bond Fund. The MML Managed Bond Fund seeks a high rate of return,
consistent with capital preservation, by investing primarily in investment
grade, publicly-traded, fixed income securities.
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Series, Inc. is a diversified, open-end investment company
incorporated in Maryland in 1994. The T. Rowe Price Mid-Cap Growth Portfolio is
a separate series of shares of T. Rowe Price Equity Series, Inc. T. Rowe Price
Associates, Inc. ("T. Rowe Price") was founded in 1937 and is the investment
adviser to the Portfolio. Its business address is 100 East Pratt Street,
Baltimore, MD 21202.
T. Rowe Price Mid-Cap Growth Portfolio. The T. Rowe Price Mid-Cap Growth
Portfolio seeks long-term capital appreciation by investing in mid-cap stocks
with potential for above-average earnings growth. T. Rowe Price defines mid-cap
companies as those with market capitalizations within the range of companies in
the S&P 400 Mid-Cap Index.
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 Fund. The American Century VP Income &
Growth Fund seeks dividend growth, income and capital appreciation by investing
in common stocks.
American Century VP Value Fund. The American Century VP Value Fund seeks long-
term capital growth by investing primarily in common stocks that the management
team believes to be undervalued at the time of purchase. Income is a secondary
objective.
Fidelity Variable Insurance Products Fund
Fidelity Variable Insurance Products Fund ("VIP") is an open-end management
investment company organized as a Massachusetts business trust in 1981.
Fidelity's VIP Growth Portfolio is a diversified fund of VIP.
Fidelity Management & Research Company ("FMR") is the investment adviser to
Fidelity's VIP Growth Portfolio. FMR is the management arm of Fidelity
Investments(R). Fidelity Investments has its principal place of business
address at 82 Devonshire Street, Boston, MA 02109.
Fidelity's VIP Growth Portfolio - Service Class. Fidelity's VIP Growth
Portfolio seeks to achieve capital appreciation by investing primarily in
common stocks. This Portfolio invests in companies that the manager believes
have above-average growth potential.
Fidelity Variable Insurance Products Fund II
Fidelity Variable Insurance Products Fund II ("VIP II") is an open-end
management investment company, organized as a Massachusetts business trust in
1988. Fidelity's VIP II Contrafund(R) Portfolio is a diversified fund of VIP
II.
FMR is the investment adviser to Fidelity's VIP II Contrafund(R) Portfolio.
Fidelity Management & Research (U.K.) Inc. ("FMR U.K."), in London, England,
and Fidelity Management &
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Research (Far East) Inc., ("FMR Far East") in Tokyo, Japan, assist FMR with
foreign investments. They each serve as subadvisors for Fidelity's VIP II
Contrafund(R) Portfolio.
Fidelity's VIP II Contrafund(R) Portfolio - Initial Class. Fidelity's VIP II
Contrafund(R) Portfolio seeks long term capital appreciation by investing in
the securities of companies whose value is not fully recognized by the public.
Fidelity Variable Insurance Products Fund III
Fidelity Variable Insurance Products Fund III ("VIP III") is an open-end
management investment company organized as a Massachusetts business trust in
1994. Fidelity's VIP III Growth Opportunities Portfolio is a diversified fund
of VIP III.
FMR is the investment adviser to Fidelity's VIP III Growth Opportunities
Portfolio. FMR U.K. and FMR Far East assist FMR with foreign investments. They
each serve as subadvisors for Fidelity's VIP III Growth Opportunities
Portfolio.
Fidelity's VIP III Growth Opportunities Portfolio - Service Class. Fidelity's
VIP III Growth Opportunities Portfolio seeks to provide capital growth by
investing primarily in common stocks.
Janus Aspen Series
Janus Aspen Series ("Janus Aspen") is an open-end management investment
company. Janus Aspen Worldwide Growth Portfolio and Janus Aspen Capital
Appreciation are each a separate series of Janus Aspen.
Janus Capital is the investment adviser to the Janus Aspen Worldwide Growth
Portfolio and the Janus Aspen Capital Appreciation Portfolio. Janus Capital is
located at 100 Fillmore Street, Denver, CO 80206-4928.
Janus Aspen Worldwide Growth Portfolio. The Janus Aspen Worldwide Growth
Portfolio seeks long-term growth of capital in a manner consistent with the
preservation of capital. The Portfolio invests primarily in common stocks of
companies of any size throughout the world.
Janus Aspen Capital Appreciation Portfolio. The Janus Aspen Capital
Appreciation Portfolio seeks long-term growth of capital. The Portfolio invests
primarily in common stocks selected for their growth potential. The Portfolio
may invest in companies of any size, from larger, well-established companies to
smaller, emerging growth companies.
Templeton Variable Products Series Fund
The Templeton Variable Products Series Fund ("Templeton Fund") is an open-end
management investment company organized as a Massachusetts business trust on
February 25, 1988. The Templeton International Fund is a separate series of the
Templeton Fund.
Templeton Investment Counsel, Inc. ("Templeton Investment Counsel") is the
investment manager of the Templeton International Fund. Templeton Investment
Counsel is located at 500 East Broward Boulevard, Fort Lauderdale, FL 33394-
3091.
Templeton International Fund - Class 2 Shares. The Templeton International Fund
seeks long-term capital growth. The Fund, under normal market conditions, will
invest at least 65% of its total assets in the equity securities of companies
located outside the U.S., including in emerging markets.
BT Insurance Funds Trust
BT Insurance Funds Trust ("BT Insurance Funds") was organized as a
Massachusetts business trust in 1996. The BT Small Cap Index Fund is a separate
series of the BT Insurance Funds.
Bankers Trust Company is the investment adviser to the BT Small Cap Index Fund.
Bankers Trust Company is located at 130 Liberty Street, New York, NY 10006.
BT Small Cap Index Fund. The BT Small Cap Index Fund seeks to match, as closely
as possible, before expenses, the performance of the Russell 2000(R) Small
Stock Index* which emphasizes stocks of small U.S. companies.
*"Frank Russell Company is the owner of the trademarks and copyrights relating
to the Russell Indexes."
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MFS(R) Variable Insurance Trust SM
The MFS(R) Variable Insurance Trust SM ("MFS Trust") is an open-end management
investment company, organized as a Massachusetts business trust in 1994. The
MFS(R) Growth With Income Series is a separate series of the MFS Trust.
Massachusetts Financial Services Company ("MFS") advises the MFS(R) Growth With
Income Series. MFS is located at 500 Boylston Street, Boston, MA 02116.
MFS(R) Growth With Income Series. The MFS(R) Growth With Income Series seeks to
provide reasonable current income and long-term growth of capital and income.
This Series invests, under normal market conditions, at least 65% of its total
assets in common stocks and related securities, such as preferred stocks,
convertible securities and depository receipts for those securities.
There is no assurance that the funds will achieve their stated objective. The
fund prospectuses contain more detailed information about the funds. Current
copies of the fund prospectuses are attached to this prospectus. You should
read the information contained in the funds' prospectuses carefully before
investing.
Investment Choices
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The Fixed Accounts
In most states, we offer three fixed accounts as investment options--two fixed
accounts for Dollar Cost Averaging (the "DCA Fixed Accounts"), each with a
different maximum term, and The Fixed Account (collectively, "the fixed
accounts"). The fixed accounts are investment options within our general
account.
Amounts that you allocate to the fixed accounts become part of our general
account assets and are subject to the claims of all our creditors. All of our
general account assets will be available to fund benefits under a contract.
You do not participate in the investment performance of the assets in the fixed
accounts. Instead, we credit your contract with interest at a specified rate
that we declare in advance. We guarantee this rate will be at least 3% per
year. We may credit a higher rate of interest at our discretion.
DCA Fixed Accounts. Each DCA Fixed Account is a fixed account from which assets
are systematically transferred to any fund(s). During the accumulation phase,
you may choose to have your purchase payments allocated to a DCA Fixed Account
for the period of the DCA Fixed Account Term (DCA Term). Your election must be
in writing.
Currently, you have a choice of two DCA Fixed Accounts:
(a) DCA Fixed Account with a DCA Term of 6 months; or
(b) DCA Fixed Account with a DCA Term of 12 months.
To the extent permitted by law, we reserve the right to change the duration of
the DCA Terms in the future. You may participate in one DCA Fixed Account at a
time.
We will only accept a purchase payment as of the beginning of a DCA Term. We
will only accept a new purchase payment of at least $5,000. Purchase payments
which originate from any contract or policy issued by us or any of our
affiliates cannot be allocated to a DCA Fixed Account. You cannot transfer
current contract values to a DCA Fixed Account. We reserve the right to reject
purchase payments.
We make scheduled monthly transfers from the DCA Fixed Account according to the
rules of our Dollar Cost Averaging Program. You may not make unscheduled
transfers or take partial withdrawals from the DCA Fixed Account.
We reserve the right to assess a fee for processing transactions under the DCA
Fixed Account.
If you elect to make an allocation to a DCA Fixed Account at a time when your
annuity date would be less than your elected DCA Term, the expiration of your
DCA Term will be your annuity date. No amounts will remain in the DCA Fixed
Account after the expiration of the DCA Term. We guarantee the interest rate
for the full DCA Term.
The Fixed Account. You may allocate purchase payments to The Fixed Account. You
can also make transfers of your contract value into or out of The Fixed
Account, subject to certain limitations.
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Contract Value
Your contract value is the sum of your value in the separate account and the
fixed account(s).
Your value in the separate account will vary depending on the investment
performance of the funds you choose. In order to keep track of your contract
value, we use a unit of measure called an accumulation unit. During the income
phase of your contract we call the unit an annuity unit.
Accumulation Units
Every business day we determine the value of an accumulation unit for each of
the funds. Changes in the accumulation unit value reflect the investment
performance of the fund as well as deductions for insurance and other charges.
The value of an accumulation unit may go up or down from business day to
business day.
The Statement of Additional Information contains more information on the
calculation of the accumulation unit value.
When you make a purchase payment, we credit your contract with accumulation
units. We determine the number of accumulation units to credit by dividing the
amount of the purchase payment allocated to a fund by the value of the
accumulation unit for that fund. When you make a withdrawal, we deduct from
your contract accumulation units representing the withdrawal amount.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each business day. Any change in the
accumulation unit value will be reflected in your contract value.
Example:
On Monday we receive an additional purchase payment of $5,000 from you. You
have told us you want this to go to the Oppenheimer Money Fund/VA. When the New
York Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Oppenheimer Money Fund/VA is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Oppenheimer Money Fund/VA.
Transfers
You can transfer all or part of your contract value. You can make transfers by
telephone, internet or by other means we authorize. To make transfers other
than by telephone or internet, you must submit a written request. If you own
the contract with a joint owner, we will accept transfer instructions from
either you or the other owner, unless we are instructed otherwise. We will use
reasonable procedures to confirm that instructions given to us are genuine. We
may be liable for any losses due to unauthorized or fraudulent instructions, if
we fail to use such procedures. We may tape record all telephone instructions.
Your transfer is effective on the business day at the accumulation unit values
next determined after we receive your fully completed request at our Annuity
Service Center. Our business day closes when the New York Stock Exchange
closes, usually 4:00 p.m. Eastern time. If we receive your fully completed
transfer request at our Annuity Service Center on a non-business day or after
our business day closes, your transfer request will be effective on the next
business day.
Transfers During the Accumulation Phase
You may transfer all or part of your assets in a fund or The Fixed Account. You
can make a transfer to or from The Fixed Account and to or from any fund. You
can make 12 transfers every calendar year during the accumulation phase without
charge. If you make more than 12 transfers in a year, we reserve the right to
deduct a transfer fee. The fee is $20 per transfer or, if less, 2% of the
amount you transfer. The following rules apply to any transfer during the
accumulation phase:
(1) The minimum amount which you can transfer is:
. $1,000; or
. the entire value in a fund or The Fixed Account, if less.
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After a transfer, the minimum amount which must remain in the fund is $1,000
unless you transfer the entire fund value. We waive these requirements if the
transfer is made in connection with the Rebalancing Program.
(1) You must clearly indicate the amount and investment choices from and to
which you wish to transfer.
(2) During any contract year, we limit transfers out of The Fixed Account to
30% of your contract value in The Fixed Account as of the end of the
previous contract year. We measure a contract year from the anniversary of
the day we issued your contract. Transfers out of The Fixed Account are
done on a first-in, first-out basis. In other words, amounts attributed to
the oldest purchase payments are transferred first; then amounts attributed
to the next oldest purchase payment are transferred; and so on.
(3) We do not allow transfers between competing accounts. For this purpose, we
consider The Fixed Account and the Oppenheimer Money Fund/VA "competing
accounts." We restrict other transfers involving any competing account for
certain periods:
. for a period of 90 days following a transfer out of a competing account,
you may not transfer into the other competing account.
. for a period of 90 days following a transfer into a competing account,
you may not transfer out of the other competing account.
(4) We do not count transfers made as part of the Dollar Cost Averaging Program
or the Rebalancing Program in determining the number of transfers you make
in a year.
Transfers During the Income Phase
You may make 6 transfers between the funds each calendar year without incurring
a fee. You cannot transfer contract value from the general account to a fund,
but you can transfer contract value from one or more funds to the general
account once a contract year. The minimum amount which you can transfer is
$1,000 or your entire interest in the fund, if less. After a transfer, the
minimum amount which must remain in a fund is $1,000 unless you have
transferred the entire value.
We have the right to terminate or modify these transfer provisions.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount from a selected fund to any of the other funds. By allocating amounts on
a regular schedule as opposed to allocating the total amount at one particular
time, you may be less susceptible to the impact of market fluctuations. The
Dollar Cost Averaging Program is available only during the accumulation phase.
Dollar Cost Averaging does not assure a profit and does not protect you against
loss in declining markets. Since Dollar Cost Averaging involves continuous
investment in securities regardless of fluctuating price levels of such
securities, you should consider your financial ability to continue the Dollar
Cost Averaging Program through periods of fluctuating price levels. The minimum
amount you can transfer is $250.
The minimum duration of participation in any Dollar Cost Averaging Program is
currently 6 months. You can choose the frequency at which the Dollar Cost
Averaging transfers are to be made, i.e., monthly, quarterly, semi-annually or
annually. You will also choose the specific date when the first Dollar Cost
Averaging transfer is made. However, if you select a date that is less than 5
business days from the date the election form is received at our Annuity
Service Center, we may defer the first transfer for one month. If you do not
select a start date, we will automatically start the Dollar Cost Averaging
Program within 5 business days from the date we receive your election form. You
may make changes to your selection, including termination of the program, by
written request.
If you participate in the Dollar Cost Averaging Program, we do not take the
transfers made under the program into account in determining any transfer fee.
We consider each DCA Fixed Account to be a Dollar Cost Averaging Program. You
can only participate in one Dollar Cost Averaging Program at a time. Further,
if you are participating in the
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Dollar Cost Averaging Program you cannot also participate in the Rebalancing
Program or a DCA Fixed Account.
The Dollar Cost Averaging option will terminate:
. if you withdraw your total contract value;
. upon your death or the annuitant's death;
. if the last transfer you selected has been made;
. if there is insufficient contract value to make the transfer; or
. if we receive from you a written request to terminate the program at our
Annuity Service Center at least 5 business days prior to the next transfer
date.
We currently do not charge you for participation in the Dollar Cost Averaging
Program. However, we reserve the right to charge for this feature in the
future. We have the right to modify, terminate or suspend any Dollar Cost
Averaging Program.
Automatic Rebalancing Program
Over time, the performance of each fund may cause your allocation to shift
from your original allocation. You can direct us to automatically rebalance
your contract to return to your original percentage allocations by selecting
our Rebalancing Program. You can tell us whether to rebalance monthly,
quarterly, semi-annually or annually. The Rebalancing Program is available
only during the accumulation phase. If you participate in the Rebalancing
Program, the transfers made under the program are not taken into account in
determining any transfer fee.
You cannot participate in the Rebalancing Program if you have purchase
payments allocated to the fixed accounts. You cannot participate in the
Rebalancing Program if you are participating in a Dollar Cost Averaging
Program.
You can terminate the Rebalancing Program at anytime by giving us written
notice. Any unscheduled transfer request will automatically terminate the
Rebalancing Program election.
Example:
Assume that you want your initial purchase payment split between 2 funds. You
want 40% to be in the MML Managed Bond Fund and 60% to be in the Panorama
Growth Portfolio. Over the next 2 1/2 months the bond market does very well
while the stock market performs poorly. At the end of the first quarter, the
MML Managed Bond Fund now represents 50% of your holdings because of its
increase in value. If you had chosen to have your holdings rebalanced
quarterly, on the first day of the next quarter, we would sell some of your
units in the MML Managed Bond Fund to bring its value back to 40% and use the
money to buy more units in the Panorama Growth Portfolio to increase those
holdings to 60%.
Withdrawals
During the accumulation phase you may make either partial or total withdrawals
of your contract value. Your withdrawal is effective on the business day we
receive your written request at our Annuity Service Center. If we receive your
written request at our Annuity Service Center on a non-business day or after
our business day closes, your withdrawal request will be effective on the next
business day. We will pay any withdrawal amount within 7 days of our receipt
of your fully completed written request at our Annuity Service Center unless
we are required to suspend or postpone withdrawal payments.
Unless you instruct us otherwise, we will take any partial withdrawal
proportionally from your contract value in the funds and The Fixed Account.
You must withdraw at least $250 or the entire value in a fund or The Fixed
Account, if less. We require that after you make a partial withdrawal you keep
at least $25,000 in your contract, unless you are taking distributions as
required by the Internal Revenue Code or receiving payments under the
Systematic Withdrawal Program.
When you make a total withdrawal you will receive the value of your contract:
. less any applicable premium tax;
. less any contract maintenance charge; and
. less any purchase payments we credited to your contract that have not
cleared the bank, until they clear the bank.
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Systematic Withdrawal Program
This program provides for an automatic monthly, quarterly, semi-annual or
annual payment to you from your contract of at least $250. Your contract value
must be at least $25,000 to initiate the withdrawal plan. Currently, we do not
have a charge for this program, but we reserve the right to charge in the
future.
Your systematic withdrawal program will begin on the start date you selected as
long as we receive a fully completed written request at our Annuity Service
Center at least 5 business days before the start date you selected. We may
defer the start of your systematic withdrawal program for one month if the
start date you selected is less than 5 business days after we receive your
written request. If you do not select a start date, we will automatically begin
systematic withdrawals within 5 business days after we receive your request.
Your request must be in writing.
If you terminate your Systematic Withdrawal Program from The Fixed Account, you
may not elect a new program involving withdrawals from The Fixed Account for 6
months.
Your systematic withdrawal program ends:
. if you withdraw your total contract value;
. upon your death or the annuitant's death;
. if we process the last withdrawal you selected;
. if your value in a selected fund or The Fixed Account is insufficient to
complete the withdrawal;
. if you begin receiving annuity payments; or
. if you give us a written request to terminate your program. We must receive
your request at least 5 business days before the next withdrawal date.
Income taxes, tax penalties and
certain restrictions may apply to
any withdrawal you make.
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Expenses
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
Insurance Charges
Each business day we deduct our insurance charges from the assets of the
separate account. We do this as part of our calculation of the value of the
accumulation units and the annuity units. The insurance charge has two parts:
(1) the mortality and expense risk charge and (2) the administrative charge.
Mortality and Expense Risk Charge
The mortality and expense risk charge is for:
. the mortality risk associated with the insurance benefits provided,
including our obligation to make annuity payments after the annuity date
regardless of how long all annuitants live, the death benefits, and the
guarantee of rates used to determine your annuity payments during the income
phase; and
. the expense risk that the current charges will be insufficient to cover the
actual cost of administering the contract.
For contract years 1 through 10, the mortality and expense risk charge is
currently equal, on an annual basis, to 1.34% of the daily value of the assets
invested in each fund, after fund expenses are deducted. For contract years 11
and after, this charge currently equals 1.09%.
We may increase the mortality and expense risk charge, but it will not exceed
1.50% in contract years 1 through 10, or 1.35% in contract years 11 and after.
Administrative Charge
This charge reimburses us for the expenses associated with the administration
of the contract and the separate account. Some of these expenses are:
preparation of the contract, confirmations, annual reports and statements,
maintenance of contract records, personnel costs, legal and accounting fees,
filing fees, and computer and systems costs.
Currently this charge is equal, on an annual basis, to 0.15% of the daily value
of the assets invested in each fund, after fund expenses are deducted. This
charge is guaranteed not to be greater than 0.25%.
Annual Contract Maintenance Charge
At the end of each contract year, we deduct $40 from your contract as an annual
contract maintenance charge. We may increase this charge, but it will not
exceed $60. If we increase this charge, we will give you 90 days prior notice.
Currently, we will not deduct this charge if, when we are to make the
deduction, the value of your contract is $100,000 or more. Furthermore, if you
purchased your contract prior to April 30, 2000 and your contract value is
$100,000 or more at the end of your fifth contract year, we will apply a one-
time credit to your contract value equal to the amount of any annual contract
maintenance charges that you paid during your first five contract years. We
will apply this credit to the Oppenheimer Money Fund. Subject to state
regulations, we will deduct the annual contract maintenance charge
proportionately from the investment choices you have selected.
If you make a total withdrawal from your contract, and the contract value is
less than $100,000, we will deduct the full annual contract maintenance charge.
If your contract enters the income phase on a date other than its contract
anniversary and the contract value is less than $100,000, we will deduct a pro
rata portion of the charge. During the income phase, we will deduct the annual
contract maintenance charge pro rata from each payment regardless of the
contract value.
Premium Taxes
Some states and other governmental entities charge premium taxes or similar
taxes. We are responsible for the payment of these taxes and
Expenses
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will make a deduction from your contract value for them. Some of these taxes
are due when your contract is issued, others are due when annuity payments
begin. Currently we do not charge you for these taxes until you begin receiving
annuity payments or you make a total withdrawal. We may discontinue this
practice and assess the charge when the tax is due. Premium taxes generally
range from 0% to 3.5%, depending on the state.
Transfer Fee
During the accumulation phase, you can make 12 free transfers every calendar
year. If you make more than 12 transfers a calendar year, we reserve the right
to deduct a transfer fee of $20 or 2% of the amount that is transferred,
whichever is less.
If you request to transfer a dollar amount, we will deduct any transfer fee
from the amount transferred. If you request to transfer a percentage of your
value in an investment choice, we will deduct any transfer fee from the amount
remaining in the investment choice. If you transfer the entire amount in an
investment choice, we will deduct the transfer fee from the amount you
transfer.
During the income phase, we allow 6 transfers and they are not subject to a
transfer fee. We consider all transfers made on one business day as one
transfer.
Income Taxes
We will deduct from the contract any income taxes which we incur because of the
operation of the separate account. At the present time, we are not making any
such deductions. We will deduct any withholding taxes required by law.
Fund Expenses
There are deductions from and expenses paid out of the assets of the various
funds, which are described in the attached fund prospectuses. We may enter into
certain arrangements under which we are reimbursed by the funds' advisors,
distributors and/or affiliates for the administrative service that we provide.
Expenses
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The Income Phase
If you want to receive regular income from your annuity, you can choose to
receive fixed and/or variable annuity payments under one of six options. You
can choose the month and year in which those payments begin. We call that date
the annuity date. Your annuity date must be the first day of a calendar month.
According to your contract, your annuity date cannot be earlier than 5 years
after you buy the contract. However, we currently allow you to select an
annuity date that is at least 1 year after you buy the contract.
You choose your annuity date when you purchase your contract. You can change it
at any time before the annuity date provided you give us 30 days written
notice. If you do not choose an annuity option, we will assume that you
selected Option B with 10 years of payments guaranteed.
At the annuity date, you have the same fund choices that you had in the
accumulation phase. You can choose whether payments will be fixed, variable, or
a combination of both. If you do not tell us otherwise, we will base your
annuity payments on the investment allocations that are in place on the annuity
date. Therefore, any amounts in the funds will be applied to a variable payout
and any amounts in The Fixed Account will be applied to a fixed payout.
Annuity payments must begin by the earlier of:
(1) The annuitant's 100th birthday or the 100th birthday of the oldest joint
annuitant;
(2) Your 100th birthday if you are not the annuitant or the 100th birthday of
the oldest joint owner; or
(3) The latest age permitted under state law.
We make annuity payments based on the age and sex of the annuitant under all
options except Option E. We may require proof of age and sex before annuity
payments begin.
If your contract value is less than $2,000 on the annuity date, we reserve the
right to pay you a lump sum rather than a series of annuity payments. If any
annuity payment is less than $100, we reserve the right to change the payment
basis to equivalent less frequent payments.
In order to avoid adverse tax consequences, you should begin to take
distributions at least equal to the minimum amount required by the Internal
Revenue Service, no later than the required beginning date. If your contract is
an IRA that date should be no later than April 1st of the calendar year after
the year you reach age 70 1/2. For qualified plans, that date is no later than
April 1st of the calendar year after the later of (a) the calendar year in
which you retire or (b) the year in which you attain age 70 1/2.
Fixed Annuity Payments
If you choose fixed payments, the payment amount will not vary. The payment
amount will depend upon the following 5 things:
. the value of your contract on the annuity date;
. the deduction of premium taxes, if applicable;
. the deduction of the annual contract maintenance charge;
. the annuity option you select; and
. the age and sex of the annuitant (and the age and sex of the joint
annuitant, if any).
Variable Annuity Payments
If you choose variable payments, the payment amount will vary with the
investment performance of the funds. The first payment amount will depend on
the following 6 things:
. the value of your contract on the annuity date;
. the deduction of premium taxes, if applicable;
. the deduction of the annual contract maintenance charge;
. the annuity option you select;
. the age and sex of the annuitant (and the age and sex of the joint
annuitant, if any); and
. an assumed investment rate (AIR) of 4% per year.
Future variable payments will depend on the performance of the funds you
selected. If the actual performance exceeds the 4% assumed
The Income Phase
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investment rate plus the deductions for expenses, your annuity payments will
increase. Similarly, if the actual rate is less than 4% plus the amount of the
deductions, your annuity payments will decrease.
Annuity Unit Value
In order to keep track of the value of your variable annuity payment, we use a
unit of measure called an annuity unit. We calculate the number of your annuity
units at the beginning of the income phase. During the income phase, the number
of annuity units will not change. However, the value of your annuity units will
change to reflect the investment performance of the funds you selected. The
Statement of Additional Information contains more information on how annuity
payments and annuity unit values are calculated.
Annuity Options
The following annuity options are available for fixed or variable payments.
After annuity payments begin, you cannot change the annuity option or the
frequency of annuity payments. In addition, during the income phase we do not
allow withdrawals.
Annuity Option A - Life Income. Under this option we make periodic payments as
long as the annuitant is alive. After the annuitant dies we stop making
payments.
Annuity Option B - Life Income with Period Certain. We will make periodic
payments for a guaranteed period, or as long as the annuitant lives, whichever
is longer. The guaranteed period may be 5, 10 or 20 years. If the beneficiary
chooses, he/she may elect a lump sum payment equal to the present value of the
remaining guaranteed annuity payments.
For a fixed annuity payment under Option B, we compute the present value of the
remaining guaranteed annuity payments at a 3% interest rate. For a variable
annuity payment under Option B, we compute the present value of the number of
annuity units in each fund for the remainder of the guarantee period at the
assumed investment rate (AIR). We multiply the present value of these units in
each fund by the annuity unit value for that fund on the date we determine the
present value. The present value will be the sum of the values determined for
each fund.
Annuity Option C - Joint and Last Survivor Payments. We will make periodic
payments during the joint lifetime of 2 annuitants. When one dies, we will
continue making these payments to the survivor as if both annuitants were
alive. We will not make payments after both annuitants have died.
Annuity Option D - Joint and 2/3 Survivor Annuity. We will make periodic
payments during the joint lifetime of 2 annuitants. We will continue making
payments during the lifetime of the surviving annuitant. We will compute these
payments for the surviving annuitant on the basis of two-thirds of the annuity
payment (or units) in effect during the joint lifetime. We will not make
payments after both annuitants have died.
Annuity Option E - Period Certain. We will make periodic payments for a
specified period. The specified period must be at least 5 years and cannot be
more than 30 years. In most states, if you do not want payments to continue for
the remainder of the specified period, you may elect to have an amount equal to
the present value of the remaining guaranteed annuity payments paid as a lump
sum or applied to another annuity option.
For a fixed annuity payment under Option E, we compute the present value of the
remaining guaranteed annuity payments at a 3% interest rate. For a variable
annuity payment under Option E, we compute the present value of the number of
annuity units in each fund for the remainder of the guarantee period at the
assumed investment rate (AIR). We multiply the present value of these units in
each fund by the annuity unit value for that fund on the date we determine the
present value. The present value will be the sum of the values determined for
each fund.
Annuity Option F - Special Income Settlement Agreement. We will pay you in
accordance with terms agreed upon in writing by both you and us.
The Income Phase
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Death Benefit
Death Of Contract Owner During The Accumulation Phase
If you or the joint owner dies during the accumulation phase, we will pay a
death benefit to your primary beneficiary. If the joint owner dies, we will
treat the surviving joint owner, if any, as the primary beneficiary. We will
treat any other beneficiary designation on record at the time of death as a
contingent beneficiary.
Your beneficiary may request that the death benefit be paid under one of the
death benefit options. If the beneficiary is your spouse, he or she may elect
to become the owner of the contract at the then current contract value, which
may be less than the death benefit. If joint owners die simultaneously, the
death benefit will become payable.
You may choose from three death benefits:
. Basic death benefit;
. Reset death benefit; or
. Ratchet death benefit.
You will automatically receive the basic death benefit unless you select one of
the other two death benefits. However, if you are age 80 or over when we issue
your contract, the reset death benefit is not available. Therefore, you will
automatically receive the basic death benefit unless you select the ratchet
death benefit.
If you choose either the reset death benefit or the ratchet death benefit, you
will pay an additional charge. You must elect your death benefit at time of
issue and cannot change your choice once you elect it. If the contract is owned
by a non-natural person, owner means annuitant for purposes of determining the
death benefit amount.
Death Benefit Amount During The Accumulation Phase
Basic Death Benefit. You will automatically receive the basic death benefit
unless you select one of the other two death benefits. The basic death benefit
before you or the oldest joint owner reaches age 80 will be the greater of:
(1) your purchase payments, less any withdrawals and any applicable charges; or
(2) your contract value as of the business day we receive proof of death at our
annuity service center and election of the payment method.
If you or the oldest joint owner reaches age 80, the basic death benefit is
your contract value as of the business day we receive proof of death at our
annuity service center and election of the payment method.
Reset Death Benefit. If you choose the reset death benefit, and before the date
you or the oldest joint owner reaches age 75, the death benefit will be the
greatest of:
(1) your purchase payments, less any withdrawals and any applicable charges;
(2) your contract value as of the business day we receive proof of death at our
Annuity Service Center and election of the payment method; or
(3) your contract value on the most recent 3 year contract anniversary, plus
any subsequent purchase payments, less any subsequent withdrawals,
including any applicable charges. Your first contract anniversary is one
calendar year from the date we issued your contract.
If you choose the reset death benefit, and you or the oldest joint owner
reaches age 75, the death benefit will be the greatest of:
(1) your purchase payments, less any withdrawals and any applicable charges;
(2) your contract value as of the business day we receive proof of death at our
Annuity Service Center and election of the payment method; or
(3) your contract value on the most recent 3 year contract anniversary prior to
the owner or the oldest joint owner reaching age 75, plus any subsequent
purchase payments, less any subsequent withdrawals, including any
applicable charges. Your first contract anniversary is one calendar year
from the date we issued your contract.
Death Benefit
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We will deduct a quarterly charge for the reset death benefit from the value of
the assets in the investment choices. This charge is currently 0.10% on an
annual basis of the daily value of the assets invested in the investment
choices. We will deduct this charge proportionately from the investment choices
you have selected. This charge is guaranteed not to exceed 0.20%.
Ratchet Death Benefit. If you choose the ratchet death benefit, the death
benefit will be the greater of:
(1) your contract value as of the business day we receive proof of death at our
Annuity Service Center and election of the payment method; or
(2) the annual ratchet death benefit amount.
We calculate the annual ratchet death benefit amount as follows:
When we issue your contract, the annual ratchet death benefit is equal to your
initial purchase payment. Thereafter, and prior to the date you, or the oldest
joint owner or the annuitant if the contract is owned by a non-natural entity
reaches age 80, we will calculate the ratchet death benefit:
a. when you make a purchase payment;
b when you make a partial withdrawal; and
c. on your contract anniversary.
You will increase your ratchet death benefit if you make a purchase payment. If
you make a subsequent purchase payment, the annual ratchet death benefit is
equal to the most recently calculated annual ratchet death benefit plus the
additional purchase payment.
You will decrease your ratchet death benefit if you make a partial withdrawal.
If you make a withdrawal, the annual ratchet death benefit is equal to the most
recently calculated annual ratchet death benefit, minus a withdrawal amount. We
calculate the withdrawal amount as follows:
. divide the amount withdrawn by the most recent contract value; and
. multiply it by the most recent annual ratchet death benefit.
On your contract anniversary, the annual ratchet death benefit is equal to the
greater of your contract value or the most recently calculated annual ratchet
death benefit.
If you do not make any additional purchase payments or any withdrawals, the
annual ratchet death benefit will be the greatest of all contract anniversary
contract values on or prior to the date we calculate the death benefit.
When you, or the oldest joint owner, or the annuitant if the contract is owned
by a non-natural entity, reaches age 80, the death benefit is the greater of:
(1) your contract value as of the business day we receive proof of death at our
Annuity Service Center and election of the payment method; or
(2) the annual ratchet death benefit amount calculated on the contract
anniversary just prior to age 80, and adjusted for subsequent purchase
payments and/or partial withdrawals in the same manner as described under
(a) and (b) above.
We will deduct a quarterly charge for the ratchet death benefit from the value
of the assets in the investment choices. This charge is currently 0.25% on an
annual basis of the daily value of the assets invested in the investment
choices. We will deduct this charge proportionately from the investment choices
you have selected. This charge is guaranteed not to exceed 0.35% if you were
age 60 or less when we issued your contract; 0.50% if you were age 61 through
age 70 when we issued your contract; or 0.70% if you were age 71 and older when
we issued your contract.
Death Benefit
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Death Benefit Payment Options During The Accumulation Phase
A beneficiary who is not your surviving spouse must elect to receive the death
benefit under one of the following payment options, in the event you die during
the accumulation phase.
Option 1 - lump sum payment of the death benefit; or
Option 2 - the payment of the entire death benefit within 5 years of the date
of death; 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 1 year of the
date of your death or any joint owner.
If a lump sum payment is requested, we will pay the amount within 7 days after
we receive due proof of death and other necessary information at our Annuity
Service Center unless we are required to suspend or delay payment. Payment to
the beneficiary, in any form other than a lump sum, may only be elected during
the 60-day period beginning with the date of receipt by us of proof of death.
Death Of Contract Owner During The Income Phase
If you or the joint owner dies during the income phase, but the annuitant is
still alive, we will pay the remaining payments under the annuity option
elected at least as rapidly as under the method of distribution in effect at
the time of your death.
Death Of Annuitant
If the annuitant, who is not the owner or joint owner, dies during the
accumulation phase, you can name a new annuitant subject to the underwriting
rules we have in effect at the time. If you do not name an annuitant within 30
days of the death of the annuitant, you will become the annuitant. However, if
the owner is a non-natural person we will treat the death of the annuitant as
the death of the owner, and you may not name a new annuitant.
Upon the death of the annuitant on or after the annuity date, the death
benefit, if any, is as specified in the annuity option elected. We will pay
death benefits at least as rapidly as under the method of distribution in
effect at the annuitant's death.
Death Benefit
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Taxes
NOTE: We have prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. We have
included in the Statement of Additional Information an additional discussion
regarding taxes.
Annuity Contracts In General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings
on the money held in your annuity contract until you take the money out. This
is referred to as tax deferral.
For variable annuity contracts, tax deferral depends on the insurance company,
and not you having control of the assets held in the separate accounts. You can
allocate account value from one fund of the separate account to another but
cannot direct the investments each fund makes. If you have too much "investor
control" of the assets supporting the separate account funds, then you will be
taxed on the gain in the contract as it is earned rather than when it is
withdrawn.
The Internal Revenue Service (IRS) has provided some guidance on investor
control but several issues remain unclear. One unanswered question is whether a
contract owner can have too much investor control if the variable contract
offers a large choice of funds in which to invest account values.
We do not know if the IRS will issue any guidance on this question. We do not
know if any guidance would have a retroactive effect. Consequently, we reserve
the right to modify the contract, as necessary, so that you will not be treated
as having investor control of the assets held under the separate account.
There are different rules as to how you are taxed depending on how you take the
money out and the type of contract - qualified or non-qualified (see following
sections).
You, as the owner of a non-qualified annuity, will generally not be taxed on
increases in the value of your contract until a distribution occurs--either as
a withdrawal or as annuity payments. When you make a withdrawal, you are taxed
on the amount of the withdrawal that is earnings. For annuity payments,
different rules apply. A portion of each annuity payment is treated as a
partial return of your purchase payments and is not taxed. The remaining
portion of the annuity payment is treated as ordinary income. How the annuity
payment is divided between taxable and non-taxable portions depends upon the
period over which the annuity payments are expected to be made. Annuity
payments received after you have recovered all of your purchase payments are
fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract
as an agent for a natural person), the contract will generally not be treated
as an annuity for tax purposes.
Qualified And Non-Qualified Contracts
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a
qualified contract. Examples of qualified plans are: deductible and non-
deductible Individual Retirement Annuities (IRAs), and pension and profit-
sharing plans, which include 401(k) plans and H.R. 10 Plans.
Withdrawals - Non-Qualified Contracts
The Code treats any withdrawals (1) allocable to purchase payments made after
August 13, 1982 in an annuity contract entered into prior to August 14, 1982
and (2) from an annuity contract entered into after August 14, 1982, as first
coming from
Taxes
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earnings and then from your purchase payments. The withdrawn earnings are
includible in income.
The Code also provides that any amount received under an annuity contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals may be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid to your beneficiary after you die;
(3) paid if you become totally disabled (as that term is defined in the Code);
(4) paid in a series of substantially equal payments made annually (or more
frequently) for life or your life expectancy or for the joint life
expectancies of you and your designated beneficiary;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made before August 14, 1982.
Withdrawals - Qualified Contracts
If you have no cost basis for your interest in a qualified contract, the full
amount of any distribution is taxable to you as ordinary income. If you do
have a cost basis for your interest, a portion of the distribution is taxable,
generally based on the ratio of your cost basis to your total contract value.
Special tax rules may be available for certain distributions from a qualified
contract.
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any distribution from qualified retirement plans, including contracts issued
and qualified under Code Sections 401 (Pension and Profit-Sharing Plans), 408
(Individual Retirement Annuities - IRAs), and 408A (Roth IRAs). Exceptions
from the penalty tax are as follows:
. distributions made on or after you reach age 59 1/2;
. distributions made after your death or disability (as defined in Code
Section 72(m)(7);
. after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for your
life (or life expectancy) or the joint lives (or joint life expectancies)
of you and your designated beneficiary (in applying this exception to
distributions from IRAs, a separation from service is not required);
. distributions made after separation of service if you have reached age 55
(not applicable to distributions from IRAs);
. distributions made to you up to the amount allowable as a deduction to you
under Code Section 213 for amounts you paid during the taxable year for
medical care;
. distributions made to an alternate payee pursuant to a qualified domestic
relations order (not applicable to distributions from IRAs);
. distributions from an IRA for the purchase of medical insurance (as
described in Code Section 213(d)(1)(D)) for you and your spouse and
dependents if you received unemployment compensation for at least 12 weeks
and have not been re-employed for at least 60 days);
. distributions from an IRA to the extent they do not exceed your qualified
higher education expenses (as defined in Code Section 72(t)(7) for the
taxable year; and
. distributions from an IRA which are qualified first-time home buyer
distributions (as defined in Code Section 72(t)(8)).
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which you
attain age 70 1/2 or (b) the calendar year in which you retire. The date set
forth in (b) does not apply to an IRA. Required distributions do not apply to
a Roth IRA during your lifetime. Required distributions must be over a period
not exceeding your life expectancy or the joint lives or joint life
expectancies of you and your designated beneficiary. If required minimum
distributions are not made, a 50% penalty tax is imposed on the shortfall
amount.
Withdrawals - Tax-Sheltered Annuities
Pursuant to Revenue Ruling 90-24, we will allow partial or full transfers of a
participant's interest in a non-ERISA Tax-Sheltered Annuity to this contract.
However, this contract cannot be used for salary reduction contributions.
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The Code limits the withdrawal of purchase payments made by owners through
salary reductions from certain Tax-Sheltered Annuities. Withdrawals of salary
reduction amounts and their earnings can only be made when an owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled, as that term is defined in the Code; or
(5) in the case of hardship.
In the case of hardship, the owner can only withdraw the purchase payments and
not any earnings.
Any contract value as of December 31, 1988 is not subject to these
restrictions. Additionally, return of "excess contributions" or amounts paid
to a spouse as a result of a qualified domestic relations order are not
subject to these restrictions.
Taxes
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Other Information
Terminal Illness Benefit
In most states, you may elect to receive payment under your Terminal Illness
Benefit. We will require written proof that you are terminally ill and not
expected to live more than 12 months. This proof will include certification by
a licensed medical practitioner performing within the scope of his/her license.
You may not be the licensed medical practitioner, nor can the medical
practitioner be your parent, spouse or child. We may also impose additional
requirements.
We will determine the amount of payment when we receive your written request.
The Terminal Illness Benefit will equal the death benefit we would pay out on
your contract. Payment of the Terminal Illness Benefit will terminate the
contract. If joint owners are named, we will use the age of the oldest to
determine the Terminal Illness Benefit. If the contract is owned by a non
natural person, the Terminal Illness Benefit applies to the annuitant.
Performance
We may advertise certain performance-related information. This information
reflects historical performance and is not intended to indicate or predict the
future performance.
Standardized Total Returns
We will show standardized average annual total returns for sub-accounts that
have been in existence for more than one year. These returns assume you made a
single $1,000 payment at the beginning of the period and withdrew the entire
amount at the end of the period. The return reflects the annual contact
maintenance charge and all other separate account and contract level charges,
except premium taxes, if any.
If a sub-account has been in existence for less than one year, we will show the
aggregate total return. This assumes you made a single $1,000 payment at the
beginning of the period and withdrew the entire amount at the end of the
period. The return reflects the change in unit value.
Nonstandard Total Returns
We will also show total returns based on historical performance of the sub-
accounts and underlying funds. We may assume the contracts were in existence
prior to their inception date, which they were not. Total return percentages
include all fund level and separate account level charges. They do not include
a contract maintenance charge, or premium taxes, if any. If these charges were
included, returns would be less than those shown.
Total Returns compare the value of an accumulation unit at the beginning of a
period with the value of an accumulation unit at the end of the period.
Average Annual Total Returns measure this performance over a period of time
greater than one year. Average annual total returns compare values over a given
period of time and express the percentage as an average annual rate.
Yield and Effective Yield
We may also show yield and effective yield for the Oppenheimer Money Fund/VA
over a seven-day period, which we then "annualize". This means that when we
calculate yield, we assume that the amount of money the investment earns for
the week is earned each week over a 52-week period. We show this as a
percentage of the investment. We calculate the "effective yield" similarly, but
when we annualize the amount, we assume the income earned is re-invested.
Therefore, the effective yield is slightly higher that the yield because of the
compounding effect.
Related Performance
Some of the funds available to you may be similar to mutual funds offered in
the retail marketplace. These funds generally have the same investment
objectives, policies and portfolio managers as the retail mutual funds and
usually were formed after the retail mutual funds. While these funds generally
have identical investment objectives, policies and portfolio managers, they are
separate and distinct from retail mutual funds. In fact, performance of these
funds may be dramatically
Other Information
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different from the performance of the retail mutual funds. This is due to
differences in the funds' sizes, dates shares of stocks are purchased and
sold, cash flows and expenses. You should remember that retail mutual fund
performance is not the performance of the funds available in this contract and
is not an indication of future performance of these funds.
Year 2000
Like other businesses and governments around the world, we could be adversely
affected if the computer systems used by us and those with which we do
business do not properly recognize the year 2000. This is commonly known as
the "Year 2000 issue".
In 1996, our parent company, MassMutual, began an enterprise-wide process of
identifying, evaluating and implementing changes to computer systems and
applications software to address the Year 2000 issue on its own behalf and on
behalf of certain subsidiaries, including us. MassMutual is addressing the
Year 2000 issue internally with modifications to existing programs and
conversions to new programs. MassMutual is also seeking assurances from
vendors, customers, service providers, governments and others with which we
and MassMutual conduct business, to determine their year 2000 readiness.
MassMutual has allocated a portion of the costs related to the year 2000 issue
to us. The costs are currently being expensed, and when measured against net
gain from operations, are not material to us.
Distributors
MML Distributors, LLC ("MML Distributors") serves as principal underwriter for
the contracts. MML Investors Services, Inc. ("MMLISI") serves as co-
underwriter for the contracts. Their purpose as underwriters is to distribute
the contracts. MML Distributors and MMLISI are wholly owned subsidiaries of
MassMutual. Both are located at 1414 Main Street, Springfield, Massachusetts
01144-1013.
We will pay commissions to broker-dealers who sell the contracts. Currently,
we pay an amount up to 1% of purchase payments made during the first contract
year. Thereafter, we pay a maximum commission of 1.25% of the contract value.
From time to time, MML Distributors may enter into special arrangements with
certain broker-dealers. These special arrangements may provide for the payment
of higher compensation to such broker-dealers for selling the contracts.
Electronic Transmission Of Application Information
Upon agreement with a limited number of broker-dealers, we will accept
electronic data transmissions of application information. Our Annuity Service
Center will accept this information at the time the initial purchase payment
is transmitted by wire. We will not allow you to exercise any ownership rights
in the contract until you have signed and returned to us one of the following:
an application; a delivery receipt; or what we consider to be their
equivalent. Please contact your representative for more information.
Assignment
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive written notice of the assignment. We
will not be liable for any payment or other action we take in accordance with
the contract before we receive notice of the assignment. We are not
responsible for the validity of an assignment. You may be subject to tax
consequences if you assign your contract.
If the contract is issued pursuant to a qualified plan, there may be
limitations on your ability to assign the contract. If you assign your
contract, your rights may only be exercised with the consent of the assignee
of record. We require consent of any irrevocable beneficiary before we assign
proceeds.
Voting Rights
We are the legal owner of the fund shares. However, when a fund solicits
proxies in conjunction with a vote of shareholders, it is required to obtain
from you and other owners, instructions as to how to vote those shares. When
we receive those instructions, we will vote all of the shares, for which we
have not received voting instructions, in proportion to those instructions.
This will also include any shares that we own on our own behalf. If we
determine that we are no
Other Information
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longer required to comply with the above, we will vote the shares in our own
right.
During the accumulation phase of your contract and while the annuitant is
living, we determine the number of shares you may vote by dividing your
contract value in each fund, if any, by $100. Fractional shares are counted.
During the income phase or after the annuitant dies, we determine the number
of shares you may vote based on our liability for future variable monthly
annuity payments.
Reservation Of Rights
In addition to any other rights reserved under the contract, we reserve the
right to:
. substitute another fund for one of the funds you selected;
. add or eliminate sub-accounts; and
. change the name of any sub-account and/or fund.
If we exercise any of these rights, we will receive prior approval from the
Securities and Exchange Commissions, if necessary. We will also give you
notice of our intent to exercise any of these rights.
Suspension Of Payments Or Transfers
We may be required to suspend or postpone payments for withdrawals or
transfers from the funds for any period when:
. the New York Stock Exchange is closed (other than customary weekend and
holiday closings); or
. trading on the New York Stock Exchange is restricted; or
. an emergency exists as a result of which disposal of shares of the funds is
not reasonably practicable or we cannot reasonably value the shares of the
funds; or
. during any other period when the Securities and Exchange Commission, by
order, so permits for your protection.
We reserve the right to defer payment for a withdrawal from The Fixed Account
for the period permitted by law but not for more than six months.
Legal Proceedings
We are currently not involved in any legal proceedings that might adversely
impact the contracts.
Financial Statements
We have included our company financial statements in the Statement of
Additional Information.
Additional Information
For further information about the contract, you may obtain a Statement of
Additional Information. You can call the telephone number indicated on the
cover page or you can write to us. For your convenience we have included a
form for that purpose.
The Table of Contents of this statement is as follows:
1.Company
2.Custodian
3.Assignment of Contract
4.Distribution
5.Purchase of Securities Being Offered
6.Accumulation Units and Unit Value
7.Transfers During the Income Phase
8.Payment of Death Benefit
9.Annuity Payments
10.Performance Measures
11.Federal Tax Matters
12.Experts
13.Financial Statements
Other Information
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To: C.M. Life Insurance Company
Annuity Products, W578
P.O. Box 9067
Springfield, Massachusetts 01102-9067
Please send me a Statement of Additional Information for C.M. Life Insurance
Company's Panorama Passage.
Name___________________________________
Address________________________________
--------------------------------
City________________State ___ Zip ____
Telephone______________________________
37
- --------------------------------------------------------------
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PANORAMA PASSAGE VARIABLE ANNUITY
C.M. LIFE INSURANCE COMPANY
(Depositor)
C.M. MULTI-ACCOUNT A
(Registrant)
STATEMENT OF ADDITIONAL INFORMATION
September 30, 1999
This is not a prospectus. This Statement of Additional Information should be
read in conjunction with the prospectus dated September 30, 1999, for the
individual or group variable deferred annuity contracts with flexible purchase
payments which are referred to herein.
For a copy of the prospectus call 1-800-366-8226 or write to: C.M. Life
Insurance Company, Panorama Passage, Annuity Service Center, W578, P.O. Box
9067, Springfield, MA 01102-9067.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Company.................................................................... 2
Custodian.................................................................. 2
Assignment of Contract..................................................... 2
Distribution............................................................... 3
Purchase of Securities Being Offered....................................... 3
Accumulation Units and Unit Value.......................................... 3
Transfers During The Income Phase.......................................... 4
Payment of Death Benefit................................................... 4
Annuity Payments........................................................... 5
Performance Measures....................................................... 5
Federal Tax Matters........................................................ 7
Experts.................................................................... 13
Financial Statements....................................................... FF-1
</TABLE>
1
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COMPANY
C.M. Life Insurance Company ("C.M. Life"), 140 Garden Street, Hartford,
Connecticut 06154, is a stock life insurance company. It was chartered by a
special Act of the Connecticut General Assembly on April 25, 1980. It is
principally engaged in the sale of life insurance and annuities, and is
licensed in all states except New York. C.M. Life is a wholly-owned subsidiary
of Massachusetts Mutual Life Insurance Company ("MassMutual").
MassMutual 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 consolidated statutory assets in excess of $67 billion, and estimated total
assets under management of $176.8 billion as of December 31, 1998.
CUSTODIAN
The shares of the underlying funds purchased by the sub-accounts are held by
C.M. Life as custodian of C.M. Multi-Account A ("the separate account").
ASSIGNMENT OF CONTRACT
C.M. Life will not be charged with notice of any assignment of a contract or
of the interest of any beneficiary or of any other person unless the assignment
is in writing and C.M. Life receives the original or a true copy thereof at its
Annuity Service Center. C.M. Life assumes no responsibility for the validity of
any assignment.
While the contracts are generally assignable, all non-tax qualified
contracts must carry a non-transferability endorsement which precludes their
assignment. For qualified contracts, the following exceptions and provisions
should be noted:
(1) No person entitled to receive annuity payments under a contract or part
or all of the contract's value will be permitted to commute, anticipate,
encumber, alienate or assign such amounts, except upon the written authority of
the contract owner given during the annuitant's lifetime and received in good
order by C.M. Life at its Annuity Service Center. To the extent permitted by
law, no contract 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 contract is in effect on the maturity date, C.M.
Life reserves the right to pay to the assignee in one sum the amount of the
contract's maturity value to which he is entitled, and to pay any balance of
such value in one sum to the contract owner, regardless of any payment options
which the contract owner may have elected. Moreover, if an assignment of a
contract is in effect at the death of the annuitant prior to the maturity date,
C.M. Life will pay to the assignee in one sum, the death benefit amount which
corresponds to the death benefit choice in effect at the time of the
annuitant's death. See Death Benefit in the prospectus;
(3) Contracts 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) Contracts 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 contracts 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 Annuitant to any person or party
other than C.M. Life, 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.
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<PAGE>
DISTRIBUTION
MML Distributors, LLC ("MML Distributors"), is the principal underwriter of
the contracts. MML Investors Services, Inc. ("MMLISI") serves as co-
underwriter of the contracts. 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 MassMutual and affiliates of
C.M. Life.
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 Contracts.
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"). Contracts are sold through agents who are licensed by state
insurance officials to sell the Contracts. 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
C.M. Life sells interests in the separate account to contract owners as
accumulation units. Charges associated with such securities are discussed in
the Expenses section of the prospectus. Any special purchase plan or exchange
program offered by this contract is mentioned in prospectus.
ACCUMULATION UNITS AND UNIT VALUE
During the accumulation phase, 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. C.M. Life 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
business day during which the transaction is received at the annuity service
center.
The accumulation unit value for each sub-account was arbitrarily set
initially at $10. Subsequent accumulation unit values for each sub-account are
determined for each day in which the New York Stock Exchange is open for
business ("business day") by multiplying the accumulation unit value for the
immediately preceding business day by the net investment factor for the sub-
account for the current business day.
The net investment factor for each sub-account is determined by dividing A
by B and subtracting C where:
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 business day;
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
business day; less (iii) the cumulative charge or credit for taxes reserved
which is determined by C.M. Life to have resulted from the operation or
maintenance of the sub-account.
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B is the net asset value per share of the funding vehicle or portfolio held
by the sub-account for the immediately preceding business day.
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 business day to
business day.
TRANSFERS DURING THE INCOME PHASE
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 with out 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 contract owner 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.
See the Transfers During the Income Phase section in the prospectus for
more information about transfers during the income phase.
PAYMENT OF DEATH BENEFIT
C.M. Life 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 C.M. Life.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
The beneficiary designation in effect on the date we issue the contract
will remain in effect until changed. Unless the contract owner provides
otherwise, the death benefit will be paid in equal shares to the
beneficiary(ies) as follows:
1. to the primary beneficiary(ies) who survive the contract owner's and/or
the annuitant's death, as applicable; or if there are none
2. to the contingent beneficiary(ies) who survive the contract owner's
and/or the annuitant's death, as applicable; or if there are none
3. to the estate of the contract owner.
You may name an irrevocable beneficiary(ies). In that case, a change of
beneficiary requires the consent of any irrevocable beneficiary. If an
irrevocable beneficiary is named, the contract owner retains all other
contractual rights.
See the Death Benefit section in the prospectus for more information on
death benefits.
4
<PAGE>
ANNUITY PAYMENTS
A variable annuity payment 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.
The number of annuity units is determined as follows:
1. The number of annuity units credited in each sub-account will be
determined by dividing the product of the portion of the contract 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 contract.
2. 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.
The value of any annuity unit for each sub-account of the separate account
was arbitrarily set initially at $10. 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 business day is multiplied by
the value of the annuity unit for the sub-account for the immediately preceding
business day.
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 business day. The assumed investment
rate is based on an effective annual rate of 4%.
The value of an annuity unit may increase or decrease from business day to
business day. See the Income Phase section in the prospectus for more
information.
PERFORMANCE MEASURES
C.M. Life may advertise certain performance-related information. This
information reflects historical performance and is not intended to indicate or
predict future performance.
Standardized Average Annual Total Return
C.M. Life will show standardized average annual total returns for each sub-
account that has been in existence for more than one year. These returns assume
you made a single $1,000 payment at the beginning of the period and withdrew
the entire amount at the end of the period. The return reflects a deduction for
the
5
<PAGE>
annual contract maintenance charge and all other fund, separate account and
contract level charges, except premium taxes, if any.
If a sub-account has been in existence for less than one year, C.M. Life
will show the aggregate total return. This assumes you made a single $1,000
payment at the beginning of the period and withdrew the entire amount at the
end of the period. The return reflects the change in unit value.
Non-Standard Total Returns
C.M. Life will also show total returns based on historical performance of
the sub-accounts and underlying funds. C.M. Life may assume the contracts were
in existence prior to their inception date, which they were not. Total return
percentages will include all fund level and separate account level charges.
They do not include the annual contract maintenance charge, or premium taxes,
if any. If these charges were included, returns would be less than those shown.
Total Returns compare the value of an accumulation unit at the beginning of
a period with the value of an accumulation unit at the end of the period.
Average Annual Total Returns measure this performance over a period of time
greater than one year. Average annual total returns compare values over a given
period of time and express the percentage as an average annual rate.
The performance figures will be calculated on the basis of the historical
performance of the funds, and may assume the contracts were in existence prior
to their inception date (which they were not). Beginning as of the date the
contracts are available (inception date), actual accumulation unit values are
used for the calculations.
C.M. Life may also show yield and effective yield for the Money Sub-Account
over a seven-day period, which we then "annualize." This means that when we
calculate yield, we assume that the amount of money the investment earns for
the week is earned each week over a 52-week period. We show this as a
percentage of the investment. We calculate the "effective yield" similarly but
when it annualizes the amount, the Company assumes the income earned is re-
invested. Therefore, the effective yield is slightly higher than the yield
because of the compounding effect.
These figures reflect a deduction for all fund, separate account and
contract level charges assuming the contract remains in force. The figures do
not reflect premium tax deductions, if any, which if included, would reduce the
percentages reported.
6
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FEDERAL TAX MATTERS
General
Note: The following description is based upon C.M. Life's understanding of
current federal income tax law applicable to annuities in general. C.M. Life
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. C.M. Life does not guarantee the tax status of the contracts.
Purchasers bear the complete risk that the contracts may not be treated as
"annuity contracts" under federal income tax laws. It should be further
understood that the following discussion is not exhaustive and that special
rules not described herein 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. An owner is
generally not taxed on increases in the value of a contract until distribution
occurs, either in the form of a lump sum payment 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 contract. For non-qualified
contracts, this cost basis is generally the purchase payments, while for
qualified contracts 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 contract (adjusted for any period or refund feature)
bears to the expected return under the contract. The exclusion amount for
payments based on a variable annuity option is determined by dividing the cost
basis of the contract (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 contract has been recovered (i.e. when the
total of the excludable amount equals the investment in the contract) 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 contract within the
meaning of Section 72 of the Code. Owners, annuitants and beneficiaries under
the contracts should seek competent financial advice about the tax consequences
of any distributions.
C.M. Life is taxed as a life insurance company under the Code. For federal
income tax purposes, the separate account is not a separate entity from C.M.
Life, and its operations form a part of C.M. Life.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract 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
contract as an annuity contract would result in the imposition of federal
income tax to the owner with respect to earnings allocable to the contract
prior to the receipt of payments under the contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the contract
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 fifty-five percent (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 variable contracts such as the contract. 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
7
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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."
C.M. Life intends that all investment portfolios underlying the contracts
will be managed 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 owner control of
the investments of the separate account will cause the owner to be treated as
the owner of the assets of the separate account, thereby resulting in the loss
of favorable tax treatment for the contract. 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 owner control which may be exercised under the contract 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 owner's ability to transfer among
investment choices or the number and type of investment choices available,
would cause the owner to be considered as the owner of the assets of the
separate account resulting in the imposition of federal income tax to the owner
with respect to earnings allocable to the contract prior to receipt of payments
under the contract.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will 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 owner
being retroactively determined to be the owner of the assets of the separate
account.
Due to the uncertainty in this area, C.M. Life reserves the right to modify
the contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract 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 contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on premiums for the
contracts will be taxed currently to the owner if the owner is a non-natural
person, e.g., a corporation or certain other entities. Such contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a contract held by a trust or other entity as an
agent for a natural person nor to contracts held by qualified plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their contracts.
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Income Tax Withholding
All distributions or the portion thereof which is includible in the gross
income of the owner 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 owner, in some cases,
may elect not to have taxes withheld or to have withholding done at a different
rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 of the Code, 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 generally does not apply to: a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary or for a specified period of 10 years
or more; or b) distributions which are required minimum distributions; or c)
the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions). The 20% withholding requirement also may not apply
to hardship distributions from a 401(k) plan or a tax-sheltered annuity made
after December 31, 1998. Participants should consult their own tax counsel or
other tax adviser regarding withholding requirements.
Tax Treatment of Withdrawals--Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract 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. This treatment is applicable to withdrawals
allocable to purchase payments made after August 13, 1982 in an annuity
contract entered into prior to August 14, 1982 and withdrawals from an annuity
contract entered into after August 13, 1982. Withdrawn earnings are includible
in gross income. It further provides that a ten percent (10%) penalty will
apply to the income portion of any premature 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 owner; (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 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.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% tax penalty), but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to qualified contracts. However,
separate tax withdrawal penalties and restrictions may apply to such qualified
contracts. (See "Tax Treatment of Withdrawals Qualified Contracts" below.)
Qualified Plans
The contracts offered herein 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. Owners, 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 contracts issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into C.M. Life's administrative procedures. Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
contracts comply with applicable law. Following are general descriptions of the
types of qualified plans with which the contracts may be used. Such
descriptions are not exhaustive and are for general informational purposes
only. The tax rules
9
<PAGE>
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 contract issued under a qualified
plan.
Contracts issued pursuant to qualified plans include special provisions
restricting contract provisions that may otherwise be available as described
herein. Generally, contracts 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 contracts. (See "Tax
Treatment of Withdrawals Qualified Contracts" below.)
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 contracts sold by C.M. Life in connection with
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 nonqualified deferred compensation plans.
a. 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
Contracts" below.) Purchasers of contracts for use with an H.R. 10 Plan should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
b. 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 Contracts" below.)
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 contracts 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. Purchasers of
contracts 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 provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year. Lower
maximum limitations apply to individuals with adjusted gross incomes between
$95,000 and $110,000 in the case of single taxpayers, between $150,000 and
$160,000 in the case of married taxpayers filing joint returns, and between $0
and $10,000 in the case of married taxpayers filing separately. An overall
$2,000 annual limitation continues to apply to all of a taxpayer's IRA
contributions, including Roth IRA and non-Roth IRAs.
10
<PAGE>
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first
and therefore no distributions are taxable until distributions exceed the
amount of contributions to the Roth IRA. The 10% penalty tax and the regular
IRA exceptions to the 10% penalty tax apply to taxable distributions from a
Roth IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA.
Furthermore, an individual may make a rollover contribution from a non-Roth IRA
to a Roth IRA, unless the individual has adjusted gross income over $100,000 or
the individual is a married taxpayer filing a separate return. The individual
must pay tax on any portion of the IRA being rolled over that represents income
or a previously deductible IRA contribution.
Purchasers of contracts to be qualified as a Roth IRA should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
c. Corporate Pension and ProfitSharing 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 contracts 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 Contracts" below.)
Purchasers of contracts 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.
d. Tax Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax sheltered annuities"
by public schools and certain charitable, educational and scientific
organizations described in Section 501(c)(3) of the Code. These qualifying
employers may make contributions to the contracts for the benefit of their
employees. Such contributions are not includible in the gross income of the
employees until the employees receive distributions from the contracts. The
amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of Withdrawals--
Qualified Contracts" and "Tax Sheltered Annuities--Withdrawal Limitations"
below.) Employee loans are not allowable under the contracts. Any employee
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
Tax Treatment of Withdrawals--Qualified Contracts
In the case of a withdrawal under a qualified contract, 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 contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including contracts issued and qualified under Code Sections 401 (H.R. 10 and
Corporate Pension and Profit-Sharing Plans), and 408 (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
11
<PAGE>
eligible qualified plan, no tax penalty will be imposed. The tax penalty will
not apply to the following distributions: (a) if distribution is made on or
after the date on which the owner or annuitant (as applicable) reaches age 59
1/2; (b) distributions following the death or disability of the owner 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 owner or annuitant (as
applicable) or the joint lives (or joint life expectancies) of such owner or
annuitant (as applicable) and his or her designated beneficiary; (d)
distributions to an owner or annuitant (as applicable) who has separated from
service after he has attained age 55; (e) distributions made to the owner or
annuitant (as applicable) to the extent such distributions do not exceed the
amount allowable as a deduction under Code Section 213 to the owner 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 relations order; (g) distributions from an IRA for the purchase of
medical insurance (as described in Section 213(d)(1)(D) of the Code) for the
owner or annuitant (as applicable) and his or her spouse and dependents if the
owner or annuitant (as applicable) has received unemployment compensation for
at least 12 weeks (this exception will no longer apply after the owner or
annuitant (as applicable) has been reemployed for at least 60 days); (h)
distributions from an IRA made to the owner or annuitant (as applicable) to the
extent such distributions do not exceed the qualified higher education expenses
(as defined in Section 72(t)(7) of the Code) of the owner or annuitant (as
applicable) for the taxable year; and (i) distributions from an IRA made to the
owner or annuitant (as applicable) which are qualified first-time home buyer
distributions (as defined in Section 72(t)(8) of the Code.) The exceptions
stated in (d) and (f) above do not apply in the case of an IRA. The exception
stated in (c) above applies to an IRA without the requirement that there be a
separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Generally, distributions from a qualified plan must begin no later than
April 1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an IRA. Required
distributions do not apply to a Roth IRA during the lifetime of the owner.
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 on the amount of a shortfall.
Tax Sheltered Annuities--Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code; or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the contract owner's
value which represents contributions made by the owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December
31, 1988, to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect transfers between tax sheltered annuity plans.
Contract owners should consult their own tax counsel or other tax adviser
regarding any distributions.
Section 457 Deferred Compensation ("Section 457") Plans
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
12
<PAGE>
defer part of their salary or other compensation. The amount deferred, and
accrued income thereon, will not be taxable until it is 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 generally one-third of the employee's includible compensation, up to
$8,000 (in 1999). Includible compensation means earnings for services rendered
to the employer which are includible in the employee's gross income, excluding
the contributions under the Section 457 plan or a Tax-Sheltered Annuity.
Certain catch-up deferrals are permitted during the last three (3) years before
an employee attains normal retirement age. The contract purchased is issued to
the employer, and the employee has no rights or vested interest in the
contract. All contract value must be held for the exclusive benefit of the
employee, and payments can only be made in accordance with Section 457 plan
provisions. Presently, tax-free transfers of assets in a section 457 plan can
only be made to another section 457 plan in certain limited cases.
Purchasers of contracts for use with Section 457 plans should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
EXPERTS
We have included the financial statements of C.M. Life in this Statement of
Additional Information in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as an expert in
accounting and auditing.
PricewaterhouseCoopers LLP's report on the statutory financial statements of
C.M. Life includes explanatory paragraphs relating to the use of statutory
accounting practices rather than generally accepted accounting principles.
We have not included financial statements for the Separate Account herein
because, as of the date of this Statement of Additional Information, the sub-
accounts available under the contracts had no assets.
Effective July 22, 1999, C. M. Life dismissed PricewaterhouseCoopers LLP as
its independent certified public accountants and appointed Deloitte & Touche
LLP, City Place, 185 Asylum Street, Hartford, CT 06103, as its independent
certified public accountants. Deloitte & Touche LLP has not audited or reviewed
the financial statements of C.M. Life contained in this Statement of Additional
Information.
13
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
C.M. Life Insurance Company
We have audited the accompanying statutory statements of financial position of
C.M. Life Insurance Company as of December 31, 1998 and 1997, and the related
statutory statements of income and changes in shareholder's equity, and of cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Department of Insurance
of the State of Connecticut, 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, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements audited by us do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of C.M. Life Insurance Company as of December 31, 1998 and 1997, or the results
of its operations or its cash flows for each of the three years in the period
ended December 31, 1998.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of C.M. Life Insurance Company as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, on the basis
of accounting described in Note 1.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
FF-1
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1998 1997
---- ----
(In Millions)
Assets:
Bonds $ 683.0 $ 664.5
Mortgage loans 126.3 101.6
Other investments 76.3 63.6
Policy loans 150.4 142.5
Cash and short-term investments 105.7 88.4
-------- --------
1,141.7 1,060.6
Investment and insurance amounts
receivable 33.9 30.1
Federal income tax receivable 2.1 --
Transfer due from separate accounts 34.3 32.0
-------- --------
1,212.0 1,122.7
Separate account assets 1,318.9 1,096.5
-------- --------
$2,530.9 $2,219.2
======== ========
See notes to statutory financial statements.
FF-2
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1998 1997
---- ----
($ In Millions Except for Par Value)
Liabilities:
Policyholders' reserves and funds $ 996.3 $ 951.0
Policyholders' claims and other benefits 3.8 4.5
Payable to parent 28.8 13.6
Federal income taxes -- 6.1
Asset valuation and other investment reserves 23.9 26.6
Other liabilities 18.2 7.7
-------- --------
1,071.0 1,009.5
Separate account liabilities 1,318.9 1,096.5
-------- --------
2,389.9 2,106.0
-------- --------
Shareholder's equity:
Common stock, $200 par value
50,000 shares authorized
12,500 shares issued and outstanding 2.5 2.5
Paid-in and contributed surplus 68.8 43.8
Surplus 69.7 66.9
-------- --------
141.0 113.2
-------- --------
$2,530.9 $2,219.2
======== ========
See notes to statutory financial statements.
FF-3
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF INCOME
Years Ended December 31,
1998 1997 1996
---- ---- ----
(In Millions)
Revenue:
Premium income $406.4 $331.3 $314.4
Net investment income 82.4 75.3 75.2
Fees and other income 5.5 7.5 8.7
------ ------ ------
494.3 414.1 398.3
------ ------ ------
Benefits and expenses:
Policyholders' benefits and payments 185.2 100.4 99.0
Addition to policyholders' reserves and funds 168.8 200.7 217.8
Operating expenses 72.1 49.5 45.4
Commissions 49.6 33.5 25.0
State taxes, licenses and fees 8.1 3.5 3.2
------ ------ ------
483.8 387.6 390.4
------ ------ ------
Net gain from operations before federal
income taxes 10.5 26.5 7.9
Federal income taxes 6.8 19.0 6.3
------ ------ ------
Net gain from operations 3.7 7.5 1.6
Net realized capital gain (loss) (1.1) 0.1 0.6
------ ------ ------
Net income $ 2.6 $ 7.6 $ 2.2
====== ====== ======
See notes to statutory financial statements.
FF-4
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
Years Ended December 31,
1998 1997 1996
---- ---- ----
(In Millions)
Shareholder's equity, beginning of year $113.2 $109.8 $113.2
------ ------ ------
Increases (decreases) due to:
Net income 2.6 7.6 2.2
Change in asset valuation and investment
reserves 2.7 (4.8) (1.9)
Change in net unrealized capital gain (loss) (5.8) 0.8 (1.0)
Capital contribution 25.0 -- --
Other 3.3 (0.2) (2.7)
------ ------ ------
27.8 3.4 (3.4)
------ ------ ------
Shareholder's equity, end of year $141.0 $113.2 $109.8
====== ====== ======
See notes to statutory financial statements.
FF-5
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
Years Ended December 31,
1998 1997 1996
---- ---- ----
(In Millions)
Operating activities:
Net income $ 2.6 $ 7.6 $ 2.2
Additions to policyholders' reserves and funds
net of transfers to separate accounts 44.6 44.2 41.6
Net realized capital (gain) loss 1.1 (0.1) (0.6)
Other changes 7.8 0.5 (0.8)
------- ------- -------
Net cash provided by operating activities 56.1 52.2 42.4
------- ------- -------
Investing activities:
Loans and purchases of investments (568.6) (438.6) (184.9)
Sales and maturities of investments and
receipts from repayment of loans 504.8 411.1 191.1
------- ------- -------
Net cash provided by (used in) investing
activities (63.8) (27.5) 6.2
------- ------- -------
Financing Activities:
Capital and surplus contribution 25.0 -- --
------- ------- -------
Increase in cash and short-term investments 17.3 24.7 48.6
Cash and short-term investments, beginning of
year 88.4 63.7 15.1
------- ------- -------
Cash and short-term investments, end of year $ 105.7 $ 88.4 $ 63.7
======= ======= =======
See notes to statutory financial statements
FF-6
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS
C.M. Life Insurance Company (the Company) is a wholly-owned stock life
insurance subsidiary of Massachusetts Mutual Life Insurance Company
("MassMutual"). On March 1, 1996, the operations of the Company's former
parent, Connecticut Mutual Life Insurance Company, were merged into
MassMutual. The Company is primarily engaged in the sale of flexible premium
universal life insurance and variable annuity products distributed through
career agents. The Company is licensed to sell life insurance and annuities
in Puerto Rico, the District of Columbia and 49 states (excluding New York).
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, 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 Department of Insurance of the State of
Connecticut and are different in some respects from financial statements
prepared in accordance with generally accepted accounting principles
("GAAP"). 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 requires they be reported 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 life products and variable annuities are reported as premium
revenue, whereas under GAAP, these payments would be recorded as deposits to
policyholders' account balances.
In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles ("Codification"). Codification provides a comprehensive guide of
statutory accounting principles for use by insurers in all states and is
expected to become effective no later than January 1, 2001. The effect of
adopting Codification shall be reported as an adjustment to surplus on the
effective date. The Company is currently reviewing the impact of
Codification; however, since the Department of Insurance of the State of
Connecticut has not approved Codification, the ultimate impact cannot be
determined at this time.
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.
Certain 1997 and 1996 amounts have been reclassed to conform with the
current year presentation.
The following is a description of the Company's principal accounting
policies and practices.
A. Investments
Bonds are valued in accordance with rules established by the NAIC.
Generally, bonds are valued at amortized cost.
Mortgage loans are valued at unpaid principal net of unamortized premium or
discount. The Company discontinues the accrual of interest on mortgage loans
which are delinquent more than 90 days or when collection is uncertain.
FF-7
<PAGE>
Notes To Statutory Financial Statements (Continued)
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.
Other invested assets include investments in affiliated mutual funds and
preferred stocks and are valued in accordance with rules established by the
NAIC. Generally, investments in mutual funds are valued at fair value and
preferred stocks in good standing at cost.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve ("AVR") and an Interest Maintenance Reserve ("IMR"). The
AVR and other investment reserves stabilize surplus against fluctuations in
the value of stocks, as well as declines in the value of bonds and mortgage
loans. The IMR 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 and interest related hedging activities. These
interest 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 $2.6
million in 1998, $2.0 million in 1997 and $0.4 million in 1996 were
transferred to the IMR. Amortization of the IMR into net investment income
amounted to $0.3 million in 1998 and $0.1 million in 1997 and 1996. At
December 31, 1997, the IMR consisted of a net loss deferral, which, in
accordance with the regulations, was recorded as a reduction of surplus.
Realized capital gains and losses, less taxes, not includable in the IMR, 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 surplus.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of variable annuity
contract holders. Assets consist principally of marketable securities
reported at fair value. Transfers due from separate accounts represent the
policyholders' account values in excess of statutory benefit reserves.
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.
Net transfers to separate accounts of $121.0 million, $146.5 million and
$170.5 million in 1998, 1997 and 1996, respectively, are included in the
addition to policyholders' reserves and funds.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally prepaid agent commissions,
other prepaid expenses and the IMR, when in a net loss deferral position) are
excluded from the statutory statement of financial position. These amounted
to $5.5 million and $5.7 million as of December 31, 1998 and 1997,
respectively and changes therein are charged directly to surplus.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life insurance contracts are developed using
accepted actuarial methods computed principally on the net level premium, the
Commissioners' Reserve Valuation Method and the California Method bases using
the 1980 Commissioners' Standard Ordinary mortality tables with assumed
interest rates ranging from 3.0 to 4.5 percent.
FF-8
<PAGE>
Notes To Statutory Financial Statements (Continued)
Reserves for individual annuities are based on accepted actuarial methods,
principally at interest rates ranging from 5.25 to 9.0 percent. Reserves for
policies and contracts considered investment contracts have a carrying value
of $129.8 million and $115.6 million at December 31, 1998 and 1997,
respectively with a fair value of $132.8 million and $116.0 million at
December 31, 1998 and 1997, respectively as determined by discounted cash
flow projections.
The Company made certain changes in the valuation of policyholders' reserves
which increased surplus by $2.7 million in 1998.
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. Commissions and
other costs related to the issuance of new policies, maintenance and
settlement costs are charged to current operations when incurred.
F. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers
all highly liquid short-term investments purchased with a maturity of twelve
months or less to be short-term investments.
2. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's estimate of
its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of miscellaneous temporary differences, such as
reserves and acquisition costs, resulted in effective tax rates which differ
from the statutory tax rate.
The Company plans to file a separate company 1998 federal income tax return.
The Internal Revenue Service has completed its examination of the Company's
income tax returns through the year 1995.
Federal tax payments were $16.9 million in 1998, $6.8 million in 1997 and
$17.6 million in 1996.
3. SHAREHOLDER'S EQUITY
The Board of Directors of MassMutual has authorized the contribution of funds
to the Company sufficient to meet the capital requirements of all states in
which the Company is licensed to do business. Substantially all of the
statutory shareholder's equity is subject to dividend restrictions relating
to various state regulations, which limit the payment of dividends to the
shareholder without prior approval. Under these regulations, $11.3 million of
shareholder's equity is available for distribution to the shareholder in 1999
without prior regulatory approval.
During 1998, MassMutual contributed additional paid-in capital of $25.0
million to the Company.
4. RELATED PARTY TRANSACTIONS
MassMutual and the Company have an agreement whereby MassMutual, for a fee,
furnishes the Company, as required, operating facilities, human resources,
computer software development and managerial services. Also, investment and
administrative services are provided to the Company pursuant to a management
services agreement with MassMutual. Similar arrangements were in place with
Connecticut Mutual Life Insurance Company, the Company's former parent, prior
to its merger with MassMutual. Fees incurred under the terms of these
agreements were $74.1 million, $39.7 million and $45.9 million in 1998, 1997
and 1996, respectively.
FF-9
<PAGE>
Notes To Statutory Financial Statements (Continued)
Prior to March 1, 1996, the Company had an underwriting agreement with its
affiliates GR Phelps & Co., Inc. and MML Distributors LLC. Under this
agreement, the affiliates paid commissions and received the cash flows from
variable annuity contract fees. Effective March 1, 1996, this agreement was
cancelled, and the Company began paying all commissions and retained the
right to the related future cash flows from contract fees.
The Company cedes a portion of its life insurance business to MassMutual and
other insurers in the normal course of business. The Company's retention
limit per individual insured is $12.0 million; the portion of the risk
exceeding the retention limit is reinsured with other insurers. The Company
is contingently liable with respect to ceded reinsurance in the event any
reinsurer is unable to fulfill its contractual obligations.
The Company has a modified coinsurance quota-share reinsurance agreement with
MassMutual whereby the Company cedes 75% of the premiums on certain universal
life policies. In return, MassMutual pays the Company a stipulated expense
allowance, death and surrender benefits, and a modified coinsurance
adjustment based upon experience. Reserves for payment of future benefits for
the ceded policies are retained by the Company.
The Company also has a stop-loss agreement with MassMutual under which the
Company cedes claims which, in aggregate, exceed 18% of the covered volume
for any year, with maximum coverage of $25.0 million above the aggregate
limit. The aggregate limit was $36.9 million in 1998, $35.6 million in 1997,
and $28.1 million in 1996 and it was not exceeded in any of the years. The
Company paid approximately $1.0 million in premiums to MassMutual under the
agreement in 1998 and 1997, and $0.4 million in 1996.
5. 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.
A. Bonds
The carrying value and estimated fair value of investments in bonds as of
December 31, 1998 and 1997 are as follows:
December 31, 1998
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Millions)
U. S. Treasury securities $ 69.3 $ 1.4 $ 0.1 $ 70.6
and obligations of U.S.
government corporations
and agencies
Debt securities issued by 3.2 -- 0.1 3.1
foreign governments
Mortgage-backed securities 57.9 1.6 0.2 59.3
State and local governments 12.1 0.4 0.2 12.3
Corporate debt securities 522.6 17.8 3.0 537.4
Utilities 17.9 0.9 -- 18.8
-------- ------- ------ --------
Total $ 683.0 $ 22.1 $ 3.6 $ 701.5
======== ======= ====== ========
FF-10
<PAGE>
Notes To Statutory Financial Statements (Continued)
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Millions)
U. S. Treasury securities $ 104.3 $ 2.2 $ 0.2 $ 106.3
and obligations of U.S.
government corporations
and agencies
Debt securities issued by 4.6 -- 0.3 4.3
foreign governments
Mortgage-backed securities 38.8 1.0 0.2 39.6
State and local governments 20.0 0.3 -- 20.3
Corporate debt securities 471.8 15.6 1.9 485.5
Utilities 25.0 1.1 -- 26.1
-------- ------- ------ --------
Total $ 664.5 $ 20.2 $ 2.6 $ 682.1
======== ======= ====== ========
The carrying value and estimated fair value of bonds at December 31, 1998, 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.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
(In Millions)
<S> <C> <C>
Due in one year or less $ 52.2 $ 52.5
Due after one year through five years 216.8 223.2
Due after five years through ten years 233.1 240.0
Due after ten years 69.4 72.1
-------- --------
571.5 587.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 111.5 113.7
-------- --------
Total $ 683.0 $ 701.5
======== ========
</TABLE>
Proceeds from sales of investments in bonds were $480.4 million during 1998,
$388.8 million during 1997, and $162.9 million during 1996. Gross capital
gains of $5.0 million in 1998, $3.8 million in 1997, and $1.6 million in 1996
and gross capital losses of $0.9 million in 1998, $0.5 million in 1997, and
$0.9 million in 1996 were realized on those sales, portions of which were
included in the IMR. Estimated fair value of non-publicly traded bonds is
determined by the Company using a pricing matrix and quoted market prices for
publicly traded bonds.
B. 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 $10.4 million and
$17.3 million at December 31, 1998 and 1997, respectively. The loans
typically have been modified to defer a portion of the contractual interest
payments to future periods. Interest deferred to future periods totaled $0.2
million in 1998, 1997 and 1996. At December 31, 1998, scheduled commercial
mortgage loan maturities were as follows: 1999 - $8.6 million; 2000 - $1.5
million; 2001 - $10.3 million; 2002 - $15.0 million; 2003 - $8.6 million; and
$37.0 million thereafter.
FF-11
<PAGE>
Notes To Statutory Financial Statements (Continued)
C. Policy Loans
Policy loans are recorded at cost as it is not practicable to determine the
fair value since they do not have a stated maturity.
D. Other
Investments in affiliated mutual funds had a cost of $62.4 million in 1998
and $50.2 million in 1997 with fair values of $67.7 million in 1998 and $61.4
million in 1997, using quoted market prices. Preferred stocks in good
standing had fair values of $0.5 million in 1998 using a pricing matrix for
non-publicly traded stocks and quoted market prices for publicly traded
stocks. At December 31, 1998, the fair values of preferred stocks
approximated cost. The Company did not invest in any preferred stocks at
December 31, 1997.
The carrying value of investments which were non-income producing for the
preceding twelve months was $0.4 million at December 31, 1998 and 1997.
6. 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, 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.
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 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. Gains and losses realized on the termination of contracts
are deferred and amortized through the IMR over the remaining life of the
associated contract. IMR amortization is included in net investment income on
the Statutory Statement of Income. Net amounts receivable and payable are
accrued as adjustments to investment income and included in investment and
insurance amounts receivable on the Statutory Statement of Financial
Position. At December 31, 1998 and 1997, the Company had swaps outstanding
with notional amounts of $197.5 million and $46.5 million, respectively. The
fair value of these instruments was $2.7 million at December 31, 1998 and
$0.2 million at December 31, 1997.
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 ten years. The amounts paid
for options purchased are amortized into investment income over the life of
the contract on a straight-line basis. Unamortized costs 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 deferred and amortized through the IMR over the remaining life of the
option contract. At December 31, 1998 and 1997, the Company had option
contracts with notional amounts of $961.2 million and $111.3 million,
respectively. The Company's credit risk exposure was limited to the
unamortized costs of $7.5 million and $2.2 million which had fair values of
$9.8 million and $2.3 million at December 31, 1998 and 1997, respectively.
FF-12
<PAGE>
Notes To Statutory Financial Statements (Continued)
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a stated 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 stated 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
investment 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 investment 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 deferred and amortized through the IMR over the
remaining life of the associated cap or floor agreement. At December 31,
1998, the Company had agreements with notional amounts of $355.0 million. The
Company's credit risk exposure on these agreements is limited to the
unamortized costs of $0.5 million. The fair values of these instruments were
$1.6 million at December 31, 1998. At December 31, 1997, the Company did not
have any open interest rate caps or floor agreements.
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' investment 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 $1.0 million at December 31, 1997. The fair values of these
instruments were an unrealized gain of $0.1 million at December 31, 1997. As
of December 31, 1998, the Company did not have any open asset swap
agreements.
The Company enters into forward U.S. Treasury, Government National Mortgage
Association ("GNMA") and Federal National Mortgage Association ("FNMA")
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 IMR over the remaining life of the asset. At December 31, 1998 and 1997,
the Company had U. S. Treasury, GNMA and FNMA purchase commitments which will
settle during the following year with contractual amounts of $1.0 million and
$3.0 million, respectively.
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 $14.2 million and $2.6 million at December
31, 1998 and 1997, respectively. The Company monitors exposure to ensure
counterparties are credit worthy and concentration of exposure is minimized.
Additionally, collateral positions have been obtained with counterparties
when considered prudent.
7. 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.
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 impact its financial
position, results of operations or liquidity.
8. AFFILIATED COMPANIES
The relationship of the Company, its parent and affiliated companies as of
December 31, 1998 is illustrated below. Subsidiaries are wholly-owned by the
parent, except as noted.
FF-13
<PAGE>
Notes To Statutory Financial Statements (Continued)
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
CM Assurance Company
CM Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
MassMutual Mortgage Finance, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps & Co., Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MML Investor Services, Inc.
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Capital Corporation - 99.4%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 85.8%
Oppenheimer Acquisition Corporation - 89.36%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
HYP Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
MassMutual Benefits Management, Inc.
Subsidiaries of MassMutual International, Inc.
----------------------------------------------
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 (Luxembourg) S. A.
MassMutual Holding MSC, Inc.
----------------------------
MassMutual Corporate Value Limited - 40.93%
9048 - 5434 Quebec, Inc.
1279342 Ontario Limited
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
FF-14
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Satements and Exhibits
(a) Financial Statements
Financial Statements Included in Part A
Condensed Financial Information
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 contracts had no assets.
The Depositor
Report of Independent Accountants
Statutory Statements of Financial Position as of December 31, 1998 and 1997
Statutory Statements of Income for the years ended December 31, 1998, 1997
and 1996
Statutory Statements of Changes in Shareholder's equity for the years ended
December 31, 1998, 1997 and 1996
Statutory Statements of Cash Flows for the years ended December 31, 1998,
1997 and 1996
Notes to Statutory Financial Statements
(b) Exhibits
Exhibit 1 Resolution of Board of Directors of C.M. Life authorizing the
establishment of the Separate Account./7/
Exhibit 2 Not Applicable.
Exhibit 3 (i) Principal Underwriting Agreement./1/
(ii) Variable Products Dealer Agreement./9/
(iii) Underwriting and Servicing Agreement./1/
Exhibit 4 Individual Variable Deferred Annuity Contract with Flexible
Purchase Payments/10/
Exhibit 5 Form of Application Form./10/
Exhibit 6 (i) Copy of Articles of Incorporation of C.M. Life./2/
(ii) Copy of the Bylaws of C.M. Life./2/
Exhibit 7 Not Applicable.
Exhibit 8 (a) Copy of the Form of Participation Agreement with
Oppenheimer Variable Account Funds./3/
(b) Copy of the Form of Participation Agreement with Panorama
Series Fund, Inc./3/
(c) Copy of the Form of Participation Agreement with T. Rowe
Price Equity Series, Inc./5/
14
<PAGE>
(d) Copy of the Form of Participation Agreement with Fidelity
Variable Insurance Products Fund, Fidelity Variable Insurance
Products Fund II, and Fidelity Variable Insurance Products Fund
III./5/
(e) Copy of the Form of Participation Agreement with American
Century Variable Portfolios, Inc./6/
(f) Form of Participation Agreement with BT Insurance Funds
Trust./12/
(g) Form of Participation Agreement with Janus Aspen
Series./12/
(h) Form of Participation Agreement with Templeton Variable
Products Series Fund./12/
(i) Form of Participation Agreement with MFS Variable Insurance
Trust./11/
Exhibit 9 Opinion of and Consent of Counsel./10/
Exhibit 10 (i) Consent of Independent Accountants,
PricewaterhouseCoopers LLP./12/
(ii) Powers of Attorney./4/
(iii) Power of Attorney for Robert J. O'Connell./8/
Exhibit 11 Not Applicable.
Exhibit 12 Not Applicable.
Exhibit 13 Form of Schedule of Computation of Performance. [to be filed
with post-effective amendment # 1]
Exhibit 14 Not Applicable.
- --------
/1 /Incorporated by reference to Initial Registration Statement 33-61679 filed
on Form N-4 on August 9, 1995.
/2 /Incorporated by reference to Post Effective Amendment No. 3 to Registration
Statement File No. 33-91072.
/3 /Incorporated by reference to Registration Statement File No. 333-22557,
filed on February 28, 1997.
/4 /Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement No. 33-61679, filed on Form N-4 on December 21, 1998.
/5 /Incorporated by reference to Initial Registration Statement No. 333-65887,
filed on Form S-6 on October 20, 1998.
/6 /Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement No. 333-41667 filed on Form S-6 on March 19, 1998.
/7 /Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement No. 33-61679, filed and effective May 1, 1998.
/8 /Incorporated by reference to Port-Effective Amendment No. 6 to Registration
Statement No. 333-41667 filed on Form S-6 in April, 1999.
/9 /Incorporated by reference to Initial Registration Statement No. 333-65887,
filed on Form S-6 on October 20, 1998.
/10/Incorporated by reference to Initial Registration Statement No. 333-80991,
filed on Form N-4 with the Commission on June 20, 1999.
/11/Incorporated by reference to Initial Registration Statement No. 333-65887
filed on October 20, 1998.
/12/Filed herewith.
15
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
C.M. LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
Principal Occupation(s) During Past Five
Name, Position and Business Address Years
----------------------------------- ----------------------------------------
<C> <S>
Lawrence V. Burkett, Jr., Director, C.M. Life
President and Director, President and Chief Executive
Chief Executive Officer Officer (since 1996)
1295 State Street MassMutual
Springfield, MA 01111 Executive Vice President and General
Counsel (since 1993)
John B. Davies, Director C.M. Life
1295 State Street Director (since 1996)
Springfield, MA 01111 MassMutual
Executive Vice President (since 1994)
Associate Executive Vice President
(1994-1994)
Isadore Jermyn, Director and C.M. Life
Senior Vice President Director (since 1998); Senior Vice
and Actuary President and Actuary (since 1996)
1295 State Street MassMutual
Springfield, MA 01111 Senior Vice President and Actuary (since
1999 and 1995-1998)
Senior Vice President and Chief Actuary
(1998-1999)
Vice President and Actuary (1980-1995)
James E. Miller, Director and Senior C.M. Life
Vice President-Life Operations Director and Senior Vice President-Life
140 Garden Street Operations (since 1998) MassMutual
Hartford, CT 06154 Executive Vice President (since 1997 and
1987-1996)
UniCare Life & Health Senior Vice
President (1996-1997)
Robert J. O'Connell, Director C.M. Life
1295 State Street Director (since 1999)
Springfield, MA 01111 MassMutual
President and Chief Executive Officer
(since 1999)
American International Group, Inc.
Senior Vice President (1991-1998)
AIG Life Companies
President and Chief Executive Officer
(1991-1998)
Stuart H. Reese, Director and Senior C.M. Life
Vice President-Investments Director and Senior Vice President-
1295 State Street Investments (since 1996)
Springfield, MA 01111 MassMutual
Executive Vice President and Chief
Investment Officer (since 1999) Chief
Executive Director-Investment Management
(1997-1999) Senior Vice President (1993-
1997)
</TABLE>
16
<PAGE>
<TABLE>
<C> <S>
PRINCIPAL OFFICERS
(other than those who are also Directors):
Anne Melissa Dowling, Senior Vice C.M. Life
President-Large Corporate Marketing Senior Vice President-Large
140 Garden Street Corporate Marketing (since 1996)
Hartford, CT 06154 MassMutual
Senior Vice President (since 1996)
Connecticut Mutual Life Insurance
Company
Chief Investment Officer (1994-
1996)
Edward M. Kline, C.M. Life
Treasurer Treasurer (since 1997)
1295 State Street MassMutual
Springfield, MA 01111 Vice President (since 1989) and
Treasurer (since 1997)
Ann F. Lomeli, C.M. Life
Secretary Secretary (since 1988)
1295 State Street MassMutual
Springfield, MA 01111 Vice President, Secretary and
Deputy General Counsel (since 1999)
Vice President, Secretary and
Associate General Counsel (1998-
1999)
Vice President, Associate
Secretary and Associate General
Counsel (1996-1998)
Connecticut Mutual Life Insurance
Company
Corporate Secretary and Counsel
(1988-1996)
</TABLE>
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 C.M. Life.
C.M. Life Insurance Company is 100% owned by Massachusetts Mutual Life
Insurance Company.
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:
A. DIRECT SUBSIDIARIES OF MASSMUTUAL
MassMutual is the sole owner of each subsidiary unless otherwise indicated.
1. CM Assurance Company, a Connecticut corporation which operates as a life
and health insurance company. This subsidiary is inactive.
2. CM Benefit Insurance Company, a Connecticut corporation which operates as
a life and health insurance company. This subsidiary is inactive.
3. C.M. Life Insurance Company, a Connecticut corporation which operates as
a life and health insurance company.
17
<PAGE>
4. MML Bay State Life Insurance Company, a Connecticut corporation which
operates as a life and health insurance company.
5. MML Distributors, LLC, a Connecticut limited liability company which
operates as a securities broker-dealer. (MassMutual--99%; G.R. Phelps & Co.,
Inc.--1%)
6. MassMutual of Ireland, Limited, a corporation organized in the Republic
of Ireland which formerly operated to provide claims service to holders of
MassMutual group life and accident and health insurance contracts. This
subsidiary is inactive and will be dissolved in the near future.
7. MassMutual Holding Company, a Delaware corporation which operates as a
holding company for certain MassMutual entities.
8. MassMutual Mortgage Finance, LLC, a Delaware limited liability company
which makes, acquires, holds and sells mortgage loans.
B. MASSMUTUAL HOLDING COMPANY GROUP
MassMutual Holding Company is the sole owner of each subsidiary or affiliate
unless otherwise indicated.
1. G.R. Phelps & Co, Inc., a Connecticut corporation which formerly
operated as a securities broker-dealer. This subsidiary is inactive and
expected to be dissolved.
2. MML Investors Services, Inc., a Massachusetts corporation which operates
as a securities broker-dealer. (MassMutual Holding Company--86%; G.R. Phelps &
Co., Inc.--14%)
3. MassMutual Holding MSC, Inc., a Massachusetts corporation which operates
as a holding company for MassMutual positions in investment entities organized
outside of the United States. This subsidiary qualifies as a "Massachusetts
Security Corporation" under Chapter 63 of the Massachusetts General Laws.
4. MassMutual Holding Trust I, a Massachusetts business trust which
operates as a holding company for separately-staffed MassMutual investment
subsidiaries.
5. MassMutual Holding Trust II, a Massachusetts business trust which
operates as a holding company for non-staffed MassMutual investment
subsidiaries.
6. MassMutual International, Inc., a Delaware corporation which operates as
a holding company for those entities constituting MassMutual's international
insurance operations.
C. MML INVESTORS SERVICES, INC. GROUP
Set forth below are the direct and indirect subsidiaries of MML Investors
Services, Inc. The parent is the sole owner of each subsidiary unless
otherwise indicated.
Direct Subsidiaries of MML Investors Services, Inc.
1. MML Insurance Agency, Inc., a Massachusetts corporation which operates
as an insurance broker.
2. MML Securities Corporation, a Massachusetts corporation which operates
as a "Massachusetts Security Corporation" under Section 63 of the
Massachusetts General Laws.
Direct Subsidiaries of MML Insurance Agency, Inc.
1. DISA Insurance Services of America, Inc., an Alabama corporation which
operates as an insurance broker.
18
<PAGE>
2. Diversified Insurance Services of America, Inc., a Hawaii corporation
which operates as an insurance broker.
3. MML Insurance Agency of Mississippi, P.C., a Mississippi corporation
which operates as an insurance broker.
4. MML Insurance Agency of Nevada, Inc., a Nevada corporation which
operates as an insurance broker.
5. MML Insurance Agency of Ohio, Inc. an Ohio corporation which operates as
an insurance broker. (Controlled by MML Insurance Agency, Inc. through a
voting trust agreement.)
6. MML Insurance Agency of Texas, Inc., a Texas corporation which operates
as an insurance broker. (Controlled by MML Insurance Agency, Inc. through an
irrevocable proxy arrangement.)
D. MASSMUTUAL HOLDING MSC, INC. GROUP
MassMutual Holding MSC, Inc. is the sole owner of each subsidiary or
affiliate unless otherwise indicated.
1. MassMutual Corporate Value Limited, a Cayman Islands corporation which
holds a 90% ownership interest in MassMutual Corporate Value Partners Limited,
another Cayman Islands corporation operating as a high-yield bond fund.
(MassMutual Holding MSC, Inc.--46%)
2. 9048-5434 Quebec, Inc., a Canadian corporation which operates as the
owner of Hotel du Parc in Montreal, Quebec, Canada.
3. 1279342 Ontario Limited, a Canadian corporation which operates as the
owner of Deerhurst Resort in Huntsville, Ontario, Canada.
E. MASSMUTUAL HOLDING TRUST I GROUP
Set forth below are the direct and indirect subsidiaries and affiliates of
MassMutual Holding Trust I. The parent is the sole owner of each subsidiary
unless otherwise indicated.
Direct Subsidiaries of MassMutual Holding Trust I
1. Antares Capital Corporation, a Delaware corporation which operates as a
finance company. (MassMutual Holding Trust I--99%)
2. Charter Oak Capital Management, Inc., a Delaware corporation which
operates as a manager of institutional investment portfolios. (MassMutual
Holding Trust I--80%)
3. Cornerstone Real Estate Advisers, Inc., a Massachusetts corporation
which operates as an investment adviser.
4. DLB Acquisition Corporation, a Delaware corporation which operates as a
holding company for the David L. Babson companies (MassMutual Holding Trust
I--85%).
5. Oppenheimer Acquisition Corp., a Delaware corporation which operates as
a holding company for the Oppenheimer companies (MassMutual Holding Trust I--
89%).
Direct Subsidiary of DLB Acquisition Corporation
David L. Babson and Company Incorporated, a Massachusetts corporation which
operates as an investment adviser.
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<PAGE>
Direct Affiliates of David L. Babson and Company Incorporated
1. Babson Securities Corporation, a Massachusetts corporation which operates
as a securities broker-dealer.
2. Babson-Stewart Ivory International, a Massachusetts general partnership
which operates as an investment adviser. (David L. Babson and Company
Incorporated--50%).
3. Potomac Babson Incorporated, a Massachusetts corporation which operates
as an investment adviser (David L. Babson and Company Incorporated--60%).
Direct Subsidiary of Oppenheimer Acquisition Corp.
OppenheimerFunds, Inc., a Colorado corporation which operates as the
investment adviser to the Oppenheimer Funds.
Trinity Investment Management Corporation, a Pennsylvania corporation and
registered investment adviser which provides portfolio management and equity
research services primarily to institutional clients.
Direct Subsidiaries of OppenheimerFunds, Inc.
1. Centennial Asset Management Corporation, a Delaware corporation which
operates as investment adviser and general distributor of the Centennial Funds.
2. HarbourView Asset Management Corporation, a New York corporation which
operates as an investment adviser.
3. OppenheimerFunds Distributor, Inc., a New York corporation which operates
as a securities broker-dealer.
4. Oppenheimer Partnership Holdings, Inc., a Delaware corporation which
operates as a holding company.
5. Oppenheimer Real Asset Management, Inc., a Delaware corporation which is
the sub-adviser to a mutual fund investing in the commodities markets.
6. Shareholder Financial Services, Inc., a Colorado corporation which
operates as a transfer agent for mutual funds.
7. Shareholder Services, Inc., a Colorado corporation which operates as a
transfer agent for various Oppenheimer and MassMutual funds.
Direct Subsidiary of Centennial Asset Management Corporation
Centennial Capital Corporation, a Delaware corporation which formerly
sponsored a unit investment trust.
Direct Affiliate of Cornerstone Real Estate Advisers, Inc.
Cornerstone Office Management, LLC, a Delaware limited liability company
which serves as the general partner of Cornerstone Suburban Office, L.P.
(Cornerstone Real Estate Advisers, Inc.--50%; MML Realty Management
Corporation--50%).
F. MASSMUTUAL HOLDING TRUST II GROUP
MassMutual Holding Trust II is the sole owner of each subsidiary.
1. CM Advantage, Inc., a Connecticut corporation which serves as a general
partner of real estate limited partnerships. The subsidiary is largely inactive
and will be dissolved in the near future.
20
<PAGE>
2. CM International, a Delaware corporation which is the issuer of
collateralized mortgage obligation securities.
3. CM Property Management, Inc., a Connecticut corporation which serves as
the general partner of Westheimer 335 Suites Limited Partnership. The
partnership holds a ground lease with respect to hotel property in Houston,
Texas.
4. HYP Management, Inc., a Delaware corporation which operates as the "LLC
Manager" of MassMutual High Yield Partners II LLC, a high yield bond fund.
5. MassMutual Benefits Management, Inc., a Delaware corporation which
supports MassMutual with benefit plan administration and planning services.
6. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual/Darby CBO IM, Inc., MassMutual/Darby CBO LLC, MassMutual High
Yield Partners II LLC, and other MassMutual investments.
7. MML Realty Management Corporation, a Massachusetts corporation which
formerly operated as a manager of properties owned by MassMutual.
8. Urban Properties, Inc., a Delaware corporation which serves as a general
partner of real estate limited partnerships and as a real estate holding
company.
Direct Affiliate of MMHC Investment, Inc.
MassMutual/Darby CBO IM Inc., a Delaware corporation which operates as the
"LLC Manager" of MassMutual/Darby CBO LLC, a collateralized bond obligation
fund. (MMHC Investment, Inc.--50%)
Direct Affiliate of MML Realty Management Corporation
Cornerstone Office Management, LLC, a Delaware limited liability company
which serves as the general partner of Cornerstone Suburban Office, L.P. (MML
Realty Management Corporation--50%; Cornerstone Real Estate Advisers, Inc.--
50%).
G. MASSMUTUAL INTERNATIONAL, INC. GROUP
Set forth below are the direct or indirect subsidiaries and affiliates of
MassMutual International, Inc. The parent is the sole owner of each subsidiary
or affiliate unless otherwise indicated.
Direct Affiliates of MassMutual International, Inc.
1. MassMutual Internacional (Argentina) S.A., a corporation organized in the
Argentine Republic which operates as a holding company. (MassMutual
International, Inc.--99%; MassMutual Holding Company--1%)
2. MassMutual Internacional (Chile) S.A., a corporation organized in the
Republic of Chile which operates as a holding company. (MassMutual
International, Inc.--99%; MassMutual Holding Company--1%)
3. MassMutual International (Bermuda) Ltd., a corporation organized in
Bermuda which operates as a life insurance company.
21
<PAGE>
4. MassMutual International (Luxembourg) S.A., a corporation organized in
the Grand Duchy of Luxembourg which operates as a life insurance company.
(MassMutual International, Inc.--99%; MassMutual Holding Company--1%)
5. MassLife Seguros de Vida, S.A., a corporation organized in the Argentine
Republic which operates as a life insurance company. (MassMutual International,
Inc.--99.9%)
Direct Subsidiaries of MassMutual Internacional (Argentina) S.A.
MassMutual Services S.A., a corporation organized in the Argentine Republic
which operates as a service company. (MassMutual Internacional (Argentina)
S.A.--99%; MassMutual International, Inc.--1%)
Direct Affiliate of MassMutual Internacional (Chile) S.A.
1. Mass Seguros de Vida S.A., a corporation organized in the Republic of
Chile which operates as a life insurance company. (MassMutual Internacional
(Chile) S.A.--33.5%)
2. Origen Inversiones S.A., a corporation organized in the Republic of Chile
which operates as a holding company. (MassMutual Internacional (Chile) S.A.--
33.5%)
Direct Subsidiary of Origen Inversiones S.A.
Compania de Seguros Vida Corp S.A., corporation organized in the Republic of
Chile which operates as an insurance company. (Origen Inversiones S.A.--99%)
H. REGISTERED INVESTMENT COMPANY AFFILIATES
Each of the following entities is a registered investment company sponsored
by MassMutual or one of its affiliates.
1. DLB Fund Group, a Massachusetts business trust which operates as an open-
end investment company advised by David L. Babson and Company Incorporated.
MassMutual owns at least 25% of each series of shares issued by the fund.
2. MML Series Investment Fund, a Massachusetts business trust which operates
as an open-end investment company. All shares issued by the trust are owned by
MassMutual and certain of its affiliates.
3. MassMutual Corporate Investors, a Massachusetts business trust which
operates as a closed-end investment company. MassMutual serves as investment
adviser to the trust.
4. MassMutual Institutional Funds, a Massachusetts business trust which
operates as an open-end investment company. All shares issued by the trust are
owned by MassMutual.
5. MassMutual Participation Investors, a Massachusetts business trust which
operates as a closed-end investment company. MassMutual serves as investment
adviser to the trust.
6. Oppenheimer Series Fund, Inc., a Maryland corporation which operates as
an open-end investment company. MassMutual and affiliates own a majority of
certain series of shares issued by the fund.
7. Panorama Series Fund, Inc., a Maryland corporation which operates as an
open-end investment company. All shares issued by the fund are owned by
MassMutual and certain affiliates.
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<PAGE>
ITEM 27. Number of Contract Owners
Not applicable because there were no contracts sold as of the date of this
Registration Statement.
ITEM 28. Indemnification
The Bylaws of the Company provide that:
The following provisions regarding the Indemnification of Directors and
Officers of the Registrant are applicable: CONNECTICUT LAW. Except where an
applicable insurance policy is procured, Connecticut General Statutes
("C.G.S.") Section 33-320a is the sole source of indemnification rights for
directors and officers of Connecticut corporations and for persons who may be
deemed to be controlling persons by reason of their status as a shareholder,
director, officer, employee or agent of a Connecticut corporation. Under C.G.S.
Section 33-320a, a corporation shall indemnify any director or officer who was
or is a party, or was threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter referred to as "proceeding") by
virtue of the fact that he or the person whose legal representative he is: (i)
is or was a director or officer of the corporation; (ii) while a director or an
officer of the corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee or agent of another foreign
or domestic corporation, partnership, joint venture, trust or other enterprise
(hereinafter referred to as "enterprise"), other than an employee benefit plan
or trust; or (iii) while a director or an officer of the corporation, is or was
a director or officer serving at the request of the corporation as a fiduciary
or an employee benefit plan or trust maintained for the benefit of employees of
the corporation or any other enterprise, against "covered expenditures" if (and
only if) his conduct met the applicable statutory eligibility standard. The
types of expenditures which are covered and the statutory eligibility standard
vary according to the type of proceeding to which the director or officer is or
was a party or was threatened to be made a party.
According to C.G.S. Section 33-320a, in non-derivative proceedings other
than ones brought in connection with an alleged claim based upon the purchase
or sale by a director or officer of securities of the corporation or of another
enterprise, which the director or officer serves or served at the request of
the corporation, the corporation shall indemnify a director or officer against
judgments, fines, penalties, amounts paid in settlement and reasonable
expenses, including attorneys' fees, actually incurred by him in connection
with the proceeding, or any appeal therein, IF AND ONLY IF he acted (i) in good
faith and (ii) in a manner he reasonably believed to be in the best interests
of the corporation or, in the case of a person serving as a fiduciary of any
employee benefit plan or trust, in a manner he reasonably believed to be in the
best interests of the corporation or in the best interest of the participants
and beneficiaries of such employee benefit plan or trust and consistent with
the provisions of such employee benefit plan or trust. However, where the
proceeding brought is criminal in nature, C.G.S. Section 33-320a requires that
the director or officer must satisfy the additional condition that he had no
reasonable cause to believe that his conduct was unlawful in order to be
indemnified. A director or officer also will be entitled to indemnification as
described above if (i) he is successful on the merits in the defense of any
non-derivative proceeding brought against him or (ii) a court shall have
determined that in view of all the circumstances he is fairly and reasonably
entitled to be indemnified. The decision about whether the director or officer
qualifies for indemnification under C.G.S. Section 33-320a may be made (i) in
writing by a majority of those members of the board of directors who were not
parties to the proceeding in question, (ii) in writing by independent legal
counsel selected by a consent in writing signed by a majority of those
directors who were not parties to the proceeding, or (iii) by the shareholders
of the corporation at a special or annual meeting by an affirmative vote of at
least a majority of the voting power of shares not owned by parties to the
proceeding. A director or officer also may apply to a court of competent
jurisdiction for indemnification even though he previously applied to the
board, independent legal counsel or the shareholders and his application for
indemnification was rejected.
For purposes of C.G.S. Section 33-320a, the termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not create, of itself, a presumption that the
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<PAGE>
director or officer did not act in good faith or in a manner which that
director or officer did not believe reasonably to be in the best interests of
the corporation or of the participants and beneficiaries of an employee benefit
plan or trust and consistent with the provisions of such plan or trust.
Likewise, the termination of a criminal act or proceeding shall not create, of
itself, a presumption that the director or officer had reasonable cause to
believe that his conduct was unlawful.
In non-derivative proceedings based on the purchase or sale of securities of
the corporation or of another enterprise, which the director or officer serves
or served at the request of the corporation, C.G.S. Section 33-320a provides
that the corporation shall indemnify the director or officer only after a court
shall have determined upon application that, in view of all the circumstances,
the director or officer is fairly and reasonably entitled to be indemnified.
Furthermore, the expenditures for which the director or officer shall be
indemnified shall be only such amount as the court determines to be
appropriate.
Pursuant to C.G.S. Section 33-320a, where a director or officer was or is a
party or was threatened to be made a party to a derivative proceeding, the
corporation shall indemnify him against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the proceeding or
any appeal therein, in relation to matters as to which he is finally adjudged
not to have breached his duty to the corporation. The corporation also shall
indemnify a director or officer where the court determines that, in view of all
the circumstances, such person is fairly and reasonably entitled to be
indemnified; however, in such a situation, the individual shall be indemnified
only for such amount as the court determines to be appropriate. Furthermore,
the statute provides that the corporation shall not indemnify a director or
officer for amounts paid to the corporation, to a plaintiff or to counsel for a
plaintiff in settling or otherwise disposing of a threatened or pending action,
with or without court approval, or for expenses incurred in defending a
threatened action or a pending action which is settled or otherwise disposed of
without court approval.
C.G.S. Section 33-320a also provides that expenses incurred in defending a
proceeding may be paid by the corporation in advance of the final disposition
of such proceeding upon authorization of the board of directors, provided said
expenses are indemnifiable under the statute and the director or officer agrees
to repay such amount if he is later found not entitled to indemnification by
the corporation.
Lastly, C.G.S. Section 33-320a is intended to be an exclusive statute. A
corporation established under Connecticut statute cannot indemnify a director
or officer (other than a director or officer who is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee
or agent of another enterprise), to an extent either greater or less than that
authorized by the statute, and any provision in the certificate of
incorporation, the by-laws, a shareholder or director resolution, or agreement
or otherwise that is inconsistent with the statute is invalid. C.M. Life
Insurance Company was not established under Connecticut statute but was instead
created by special act of the Connecticut General Assembly. Currently, its
charter does not have provisions dealing with indemnification of its directors
or officers, therefore the provisions of C.G.S. Section 33-320a currently apply
to such indemnification. However, in the event C.M. Life Insurance Company's
charter is amended by the Connecticut General Assembly in such a manner which
is inconsistent with the statute, the charter would take precedence over C.G.S.
Section 33-320a. Notwithstanding the above, C.G.S. Section 33-320a specifically
authorizes a corporation to procure insurance providing greater indemnification
rights than those set out in the statute the premium cost of which may be
shared with the director or officer on such basis as may be agreed upon. The
directors and officers may be covered by an errors and omissions insurance
policy or other insurance policy. Insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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<PAGE>
ITEM 29. Principal Underwriters
(a) MML Distributors, LLC, a controlled 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 for the
contracts. The following people are officers and member representatives of the
principal underwritier.
OFFICERS AND MEMBER REPRESENTATIVES
MML DISTRIBUTORS, LLC
<TABLE>
<S> <C> <C>
Kenneth M. Rickson Member Representative One Monarch Place
G.R. Phelps & Co., Inc. 1414 Main Street
Springfield, MA 01144-1013
Margaret Sperry Member Representative 1295 State Street
Massachusetts Mutual Life Springfield, MA 01111-0001
Insurance Co.
Kenneth M. Rickson Chief Executive Officer, One Monarch Place
President, and Main OSJ 1414 Main Street
Supervisor Springfield, MA 01144-1013
John E. Forrest Vice President One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley Vice President One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
Ronald E. Thomson Vice President One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
James T. Bagley Treasurer 1295 State Street
Springfield, MA 01111
Bruce C. Frisbie Assistant Treasurer 1295 State Street
Springfield, MA 01111-0001
Raymond W. Anderson Assistant Treasurer 140 Garden Street
Hartford, CT 06154
Ann F. Lomeli Secretary 1295 State Street
Springfield, MA 01111-0001
Marilyn A. Sponzo Chief Legal Officer One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
Robert Rosenthal Compliance Officer One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C>
Melissa Thompson Registration Manager One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
Ruth B. Howe Director of Continuing One Monarch Place
Education 1414 Main Street
Springfield, MA 01144-1013
Peter D. Cuozzo Variable Life Supervisor and 140 Garden Street
Hartford OSJ Supervisor Hartford, CT 06154
Anne Melissa Dowling Large Corporate Markets 140 Garden Street
Supervisor Hartford, CT 06154
</TABLE>
(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
<TABLE>
<CAPTION>
Officer Business Address
------- ----------------
<S> <C>
Kenneth M. Rickson One Monarch Place
President 1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley One Monarch Place
Vice President, Chief Legal Officer, 1414 Main Street
Chief Compliance Officer, Assistant Secretary Springfield, MA 01144-1013
Ronald E. Thomson One Monarch Place
Vice President, Treasurer 1414 Main Street
Springfield, MA 01144-1013
Ann F. Lomeli 1295 State Street
Secretary/Clerk Springfield, MA 01111
John E. Forrest One Monarch Place
Vice President 1414 Main Street
National Sales Director Springfield, MA 01144-1013
Marilyn A. Sponzo One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
James Furlong One Monarch Place
Chief Operations Officer 1414 Main Street
Springfield, MA 01144-1013
James T. Bagley One Monarch Place
Controller 1414 Main Street
Springfield, MA 01144-1013
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Officer Business Address
------- ----------------
<S> <C>
David Deonarine One Monarch Place
Sr. Registered Options Principal 1414 Main Street
Compliance Registered Options Principal Springfield, MA 01144-1013
Nicholas J. Orphan 245 Peach Tree Center Ave.,
Regional Supervisor (South) Suite 2330
Atlanta, GA 30303
Robert W. Kumming 1295 State Street
Retirement Services Regional Supervisor Springfield, MA 01111
(East/Central)
Peter J. Zummo 1295 State Street
Retirement Services Regional Springfield, MA 01111
Supervisor(South/West)
Bruce Lukowiak 6263 North Scottsdale Rd.,
Regional Supervisor (West) Suite 222
Scottsdale, AZ 85250
Gary L. Greenfield 1 Lincoln Center,
Regional Supervisor (Central) Suite 1490
Oakbrook Terrace, IL 60161
Burvin E. Pugh, Jr. 1295 State Street
Chief Agency Field Force Supervisor Springfield, MA 01111
John P. McCloskey 1295 State Street
Regional Supervisor (East) Springfield, MA 01144
Robert J. O'Connell 1295 State Street
Chairman of the Board of Directors Springfield, MA 01144
Susan Alfano 1295 State Street
Director Springfield, MA 01111
Lawrence V. Burkett, Jr. 1295 State Street
Director Springfield, MA 01111
John B. Davies 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 01654
Burvin E. Pugh, Jr. 1295 State Street
Director Springfield, MA 01111
</TABLE>
(c) See the section captioned "Distribution" in the Statement of Additional
Information.
27
<PAGE>
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 through C.M. Life Insurance
Company, 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. C.M. Life Insurance Company hereby represents that the fees and charges
deducted under the individual or group deferred variable annuity contracts 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 C.M. Life Insurance Company.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
C.M. Multi-Account A, certifies that it has caused this Pre-Effective Amendment
No. 1 to Registration Statement No. 333-80991 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 8th day of September, 1999.
C.M. MULTI-ACCOUNT A
C.M. LIFE INSURANCE COMPANY
(Depositor)
/s/ Lawrence V. Burkett, Jr.*
By: _________________________________
Lawrence V. Burkett, Jr.,
Director, President and Chief
Executive Officer
C.M. Life Insurance Company
<TABLE>
<S> <C> <C>
/s/ Richard M. Howe On September 8, 1999, as
______________________________________ Attorney-in-Fact pursuant
*Richard M. Howe to powers of attorney.
</TABLE>
As required by the Securities Act of 1933, this Pre-Effective Amendment No.1
to Registration Statement No. 333-80991 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Lawrence V. Burkett, Jr.* Director, President and Chief September 8, 1999
______________________________________ Executive Officer
Lawrence V. Burkett, Jr.
/s/ Edward M. Kline* Vice President and Treasurer September 8, 1999
______________________________________ (Principal Financial Officer)
Edward M. Kline
/s/ John M. Miller, Jr.* Vice President and Comptroller September 8, 1999
______________________________________ (Principal Accounting Officer)
John M. Miller, Jr.*
/s/ Robert J. O'Connell* Director September 8, 1999
______________________________________
Robert J. O'Connell
/s/ John B. Davies* Director September 8, 1999
______________________________________
John B. Davies
/s/ Stuart H. Reese* Director September 8, 1999
______________________________________
Stuart H. Reese
/s/ Isadore Jermyn* Director September 8, 1999
______________________________________
Isadore Jermyn
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James Miller* Director September 8, 1999
______________________________________
James Miller
/s/ Richard M. Howe On September 8, 1999, as
______________________________________ Attorney-in-Fact pursuant
*Richard M. Howe to powers of attorney.
</TABLE>
30
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
8(f) Form of Participation Agreement with BT Insurance Funds Trust.
8(g) Form of Participation Agreement with Janus Aspen Series.
Form of Participation Agreement with Templeton Variable Products
8(h) Series Fund.
10(i) Consent of Independent Accountants
</TABLE>
<PAGE>
Exhibit 8(f)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the day of , 1999 by and among BT
Insurance Funds Trust ("TRUST"), a Massachusetts business trust, Bankers Trust
Company ("ADVISER"), a New York banking corporation, and Massachusetts Mutual
Life Insurance Company, a life insurance company organized under the laws of
The Commonwealth of Massachusetts, and C.M. Life Insurance Company, a life
insurance company organized under the laws of the state of Connecticut
(collectively the "LIFE COMPANIES").
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, TRUST is comprised of several series funds (each a "Portfolio"),
with those Portfolios currently available being listed on Appendix A hereto;
and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable
Contracts") offered by life insurance companies through separate accounts
("Separate Accounts") of such life insurance companies ("Participating
Insurance Companies"); and
WHEREAS, TRUST may also offer its shares to certain qualified pension and
retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has received an order from the SEC, granting Participating
Insurance Companies and their separate accounts exemptions from the provisions
of Sections 9(a), 13(a), 15(a) and 15(b) of the '40 Act, and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the TRUST to be sold to and held by Variable Contract Separate
Accounts of both affiliated and unaffiliated Participating Insurance Companies
and Qualified Plans ("Exemptive Order"); and
WHEREAS, LIFE COMPANIES have established or will establish one or more
Separate Accounts to offer Variable Contracts and is desirous of having TRUST
as one of the underlying funding vehicles for such Variable Contracts; and
WHEREAS, ADVISER is a "bank" as defined in the Investment Advisers Act of
1940, as amended (the "Advisers Act") and as such is excluded from the
definition of "Investment Adviser" and is not required to register as an
investment adviser pursuant to the Advisers Act; and
WHEREAS, ADVISER serves as the TRUST's investment adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANIES intend to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares
to LIFE COMPANIES at such shares' net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANIES,
TRUST, and ADVISER agree as follows:
ARTICLE I
Sale of Trust Shares
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANIES shares of the selected Portfolios as listed on Appendix B for
investment of purchase payments of Variable Contracts allocated to the
designated Separate Accounts as provided in TRUST's Registration Statement.
1
<PAGE>
1.2 TRUST agrees to sell to LIFE COMPANIES those shares of the selected
Portfolios of TRUST which LIFE COMPANIES orders, executing such orders on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section
1.2, LIFE COMPANIES shall be the designee of TRUST for receipt of such orders
from the designated Separate Account and receipt by such designee shall
constitute receipt by TRUST; provided that LIFE COMPANIES receives the order by
4:00 p.m. New York time and TRUST receives notice from LIFE COMPANIES by
telephone or facsimile (or by such other means as TRUST and LIFE COMPANIES may
agree in writing) of such order by 10:00 a.m. New York time on the next
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which TRUST calculates its net asset value
pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem on LIFE COMPANIES' request, any full or
fractional shares of TRUST held by LIFE COMPANIES, executing such requests on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the request for redemption, in accordance with the provisions of
this Agreement and TRUST's Registration Statement. (In the event of a conflict
between the provisions of this Agreement and the Trust's Registration
Statement, the provisions of the Registration Statement shall govern.) For
purposes of this Section 1.3, LIFE COMPANIES shall be the designee of TRUST for
receipt of requests for redemption from the designated Separate Account and
receipt by such designee shall constitute receipt by TRUST; provided that LIFE
COMPANIES receives the request for redemption by 4:00 p.m. New York time and
TRUST receives notice from LIFE COMPANIES by telephone or facsimile (or by such
other means as TRUST and LIFE COMPANIES may agree in writing) of such request
for redemption by 10:00 a.m. New York time on the next Business Day.
1.4 TRUST shall furnish, on or before each ex-dividend date, notice to LIFE
COMPANIES of any income dividends or capital gain distributions payable on the
shares of any Portfolio of TRUST. LIFE COMPANIES hereby elect to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. TRUST shall notify
LIFE COMPANIES or its designee of the number of shares so issued as payment of
such dividends and distributions.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANIES on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
If TRUST provides LIFE COMPANIES with materially incorrect share net asset
value information through no fault of LIFE COMPANIES, LIFE COMPANIES on behalf
of the Separate Accounts, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct share net asset value. LIFE
COMPANIES shall also be entitled to recover from ADVISER the reasonable human
resource and administrative costs of any additional computer or other
technology use, printing and postage incurred by LIFE COMPANIES directly as the
result of said incorrect share net asset value information. Any material error
in the calculation of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery to LIFE COMPANIES.
1.6 At the end of each Business Day, LIFE COMPANIES shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANIES shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined
shall be transmitted to TRUST by LIFE COMPANIES by 10:00 a.m. New York Time on
the Business Day next following LIFE COMPANIES's receipt of such requests and
premiums in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE COMPANIES' order requests the purchase of TRUST shares, LIFE
COMPANIES shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is
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transmitted by LIFE COMPANIES. If LIFE COMPANIES' order requests a net
redemption resulting in a payment of redemption proceeds to LIFE COMPANIES,
TRUST will wire the redemption proceeds to LIFE COMPANIES on the same Business
Day that the redemption order is transmitted by LIFE COMPANIES to TRUST,
[unless doing so would require TRUST to dispose of Portfolio securities or
otherwise incur additional costs]. In any event, proceeds shall be wired to
LIFE COMPANIES within the time period permitted by the "40 Act or the rules,
orders or regulations thereunder, and TRUST shall notify the person designated
in writing by LIFE COMPANIES as the recipient for such notice of such delay by
3:00 p.m. New York Time on the same Business Day that LIFE COMPANIES transmit
the redemption order to TRUST. If LIFE COMPANIES' order requests the
application of redemption proceeds from the redemption of shares to the
purchase of shares of another Fund advised by ADVISER, TRUST shall so apply
such proceeds on the same Business Day that LIFE COMPANIES transmit such order
to TRUST.
1.8 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of
the TRUST's Portfolios will not be sold directly to the general public.
1.9 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio
of TRUST if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Trustees of the
TRUST (the "Board"), acting in good faith and in light of its duties under
federal and any applicable state laws, deemed necessary, desirable or
appropriate and in the best interests of the shareholders of such Portfolios.
1.10 Issuance and transfer of Portfolio shares will be by book entry only.
Stock certificates will not be issued to LIFE COMPANIES or the Separate
Accounts. Shares ordered from Portfolio will be recorded in appropriate book
entry titles for the Separate Accounts.
[1.11 TRUST shall provide LIFE COMPANIES by 2:00 p.m. New York time each
Business Day a confirmation of outstanding fund shares as of that Business Day.
Such confirmation shall be provided by facsimile or other type of electronic
transmission.]
ARTICLE II
Representations and Warranties
2.1 LIFE COMPANIES represent and warrant that they are an insurance company
duly organized and in good standing under the laws of Massachusetts and
Connecticut, respectively, and that they have legally and validly established
each Separate Account as a segregated asset account under such laws, and that
MML Distributors, LLC, the principal underwriter for the Variable Contracts, is
registered as a broker-dealer under the Securities Exchange Act of 1934 (the
"'34 Act").
2.2 LIFE COMPANIES represent and warrant that they have registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT"), if applicable, in accordance with
the provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANIES represent and warrant that the Variable Contracts will be
registered under the Securities Act of 1933 (the "'33 Act") unless an exemption
from registration is available prior to any issuance or sale of the Variable
Contracts, and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
(including all applicable blue sky laws) and further that the sale of the
Variable Contracts shall comply in all material respects with applicable state
insurance law suitability requirements.
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2.4 LIFE COMPANIES represent and warrant that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 TRUST represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the "33 Act and sold in
accordance with all applicable federal laws, and TRUST shall be registered
under the "40 Act prior to and at the time of any issuance or sale of such
shares. TRUST, subject to Section 1.9 above, shall amend its registration
statement under the "33 Act and the "40 Act from time to time as required in
order to effect the continuous offering of its shares. TRUST shall register and
qualify its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by TRUST.
2.6 TRUST represents and warrants that each Portfolio will comply with the
diversification requirements set forth in Section 817(h) of the Code, and the
rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANIES immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply and will
immediately take all reasonable steps to adequately diversify the Portfolio to
achieve compliance. Further, TRUST represents and warrants that it will notify
LIFE COMPANIES immediately upon having a reasonable basis for believing that a
variable contract of any other companies which use TRUST as an investment
option fail to comply with the diversification requirements set forth in
Section 817(h) of the Code, and the rules and regulations thereunder, including
without limitation Treasury Regulation 1.817-5.
2.7 TRUST represents and warrants that each Portfolio invested in by the
Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify LIFE COMPANIES immediately upon
having a reasonable basis for believing it has ceased to so qualify or might
not so qualify in the future.
2.8 ADVISER represents and warrants that it shall perform its obligations
hereunder in compliance in all material respects with any applicable state and
federal laws.
ARTICLE III
Prospectus and Proxy Statements
3.1 TRUST shall prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 TRUST or its designee shall provide LIFE COMPANIES, free of charge, with
as many copies of the current prospectus (or prospectuses), statements of
additional information, annual and semi-annual reports and proxy statements for
the shares of the Portfolios as LIFE COMPANIES may reasonably request for
distribution to existing Variable Contract owners whose Variable Contracts are
funded by such shares. TRUST or its designee shall provide LIFE COMPANIES, at
LIFE COMPANIES' expense, with as many copies of the current prospectus (or
prospectuses) for the shares as LIFE COMPANIES may reasonably request for
distribution to prospective purchasers of Variable Contracts. If requested by
LIFE COMPANIES, TRUST or its designee shall provide such documentation
(including a "camera ready" copy of the current prospectus (or prospectuses) as
set in type or, at the request of LIFE COMPANIES, as a diskette in the form
sent to the financial printer) and other assistance as is reasonably necessary
in order for the parties hereto once a year (or more frequently if the
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prospectus (or prospectuses) for the shares is supplemented or amended) to have
the prospectus for the Variable Contracts and the prospectus (or prospectuses)
for the TRUST shares printed together in one document. The TRUST shall use its
best efforts to provide such prospectus (or prospectuses) to LIFE COMPANIES in
PDF or camera ready format. The expenses of such printing will be apportioned
between LIFE COMPANIES and TRUST in proportion to the number of pages of the
Variable Contract and TRUST prospectus, taking account of other relevant
factors affecting the expense of printing, such as covers, columns, graphs and
charts; TRUST shall bear the cost of printing the TRUST prospectus portion of
such document for distribution only to owners of existing Variable Contracts
funded by the TRUST shares and LIFE COMPANIES shall bear the expense of
printing the portion of such documents relating to the Separate Account;
provided, however, LIFE COMPANIES shall bear all printing expenses of such
combined documents where used for distribution to prospective purchasers or to
owners of existing Variable Contracts not funded by the shares. In the event
that LIFE COMPANIES request that TRUST or its designee provide TRUST's
prospectus in a "camera ready" or diskette format, TRUST shall be responsible
for providing the prospectus (or prospectuses) in the format in which it is
accustomed to formatting prospectuses and shall bear the expense of providing
the prospectus (or prospectuses) in such format (e.g. typesetting expenses),
and LIFE COMPANIES shall bear the expense of adjusting or changing the format
to conform with any of its prospectuses. The TRUST shall bear all the expenses
associated with supplements to the prospectus that correct any errors or
omissions made by the ADVISER or the TRUST within the prospectus.
3.3 TRUST will provide LIFE COMPANIES with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after
the filing of each such document with the SEC or other regulatory authority.
LIFE COMPANIES will provide TRUST with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account promptly
after the filing of each such document with the SEC or other regulatory
authority. TRUST shall use its best efforts to provide LIFE COMPANIES with
reasonable advance notice of proxy solicitations and prospectus supplements.
ARTICLE IV
Sales Materials
4.1 LIFE COMPANIES will furnish, or will cause to be furnished, to TRUST and
ADVISER, each piece of sales literature or other promotional material in which
TRUST or ADVISER is named, at least ten (10) Business Days prior to its
intended use. No such material will be used if TRUST or ADVISER objects to its
use in writing within ten (10) Business Days after receipt of such material.
4.2 TRUST and ADVISER will furnish, or will cause to be furnished, to LIFE
COMPANIES, each piece of sales literature or other promotional material in
which LIFE COMPANIES or its Separate Accounts are named, at least ten (10)
Business Days prior to its intended use. No such material will be used if LIFE
COMPANIES objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information or
make any representations on behalf of LIFE COMPANIES or concerning LIFE
COMPANIES, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANIES, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANIES or its designee, except
with the written permission of LIFE COMPANIES.
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4.4 LIFE COMPANIES and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and
prospectus may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by TRUST or its designee,
except with the written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
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 (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers,
Inc. ("NASD") rules, the "40 Act, the "33 Act or rules thereunder.
ARTICLE V
Potential Conflicts
5.1 The parties acknowledge that TRUST has received an order from the SEC
granting relief from various provisions of the "40 Act and the rules thereunder
to the extent necessary to permit TRUST shares to be sold to and held by
Variable Contract separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. The Exemptive Order
requires TRUST and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Section 5. The
TRUST will not enter into a participation agreement with any other
Participating Insurance Company unless it imposes the same conditions and
undertakings as are imposed on LIFE COMPANIES hereby.
5.2 The Board will monitor TRUST for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of
all separate accounts and with participants of Qualified Plans investing in
TRUST. An irreconcilable material conflict may arise for a variety of reasons,
which may include: (a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling or any similar action
by insurance, tax or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of TRUST are being managed; (e) a difference in voting instructions
given by Variable Contract owners; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Variable Contract owners and
(g) if applicable, a decision by a Qualified Plan to disregard the voting
instructions of plan participants.
5.3 LIFE COMPANIES will report any potential or existing conflicts of which
it becomes aware to the Board. LIFE COMPANIES will be responsible for assisting
the Board in carrying out its duties in this regard by providing the Board with
all information reasonably necessary for the Board to consider any issues
raised. The responsibility includes, but is not limited to, an obligation by
the LIFE COMPANIES to inform the Board whenever it has determined to disregard
Variable Contract owner voting instructions. These responsibilities of LIFE
COMPANIES will be carried out with a view only to the interests of the Variable
Contract owners.
5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting LIFE
COMPANIES, LIFE COMPANIES, at its expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested
Trustees), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including; (a) withdrawing the assets
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allocable to some or all of the Separate Accounts from TRUST or any Portfolio
thereof and reinvesting those assets in a different investment medium, which
may include another Portfolio of TRUST, or another investment company; (b)
submitting the question as to whether such segregation should be implemented to
a vote of all affected Variable Contract owners and as appropriate, segregating
the assets of any appropriate group (i.e., variable annuity or variable life
insurance Contract owners of one or more Participating Insurance Companies)
that votes in favor of such segregation, or offering to the affected Variable
Contract owners the option of making such a change; and (c) establishing a new
registered management investment company (or series thereof) or managed
separate account. If a material irreconcilable conflict arises because of LIFE
COMPANIES' decision to disregard Variable Contract owner voting instructions,
and that decision represents a minority position or would preclude a majority
vote, LIFE COMPANIES may be required, at the election of TRUST, to withdraw the
Separate Account's investment in TRUST, and no charge or penalty will be
imposed as a result of such withdrawal. The responsibility to take such
remedial action shall be carried out with a view only to the interests of the
Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
TRUST or ADVISER (or any other investment adviser of TRUST) be required to
establish a new funding medium for any Variable Contract. Further, LIFE
COMPANIES shall not be required by this Section 5.4 to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely
affected by the irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable material
conflict and its implications shall be made known promptly and in writing to
LIFE COMPANIES.
5.6 No less than annually, LIFE COMPANIES shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the
Board may fully carry out its obligations. Such reports, materials, and data
shall be submitted more frequently if deemed appropriate by the Board.
ARTICLE VI
Voting
6.1 LIFE COMPANIES will provide pass-through voting privileges to all
Variable Contract owners, if applicable, so long as the SEC continues to
interpret the '40 Act as requiring pass-through voting privileges for Variable
Contract owners. Accordingly, LIFE COMPANIES, where applicable, will vote
shares of the Portfolio held in its Separate Accounts in a manner consistent
with voting instructions timely received from its Variable Contract owners.
LIFE COMPANIES will be responsible for assuring that each of its Separate
Accounts that participates in TRUST calculates voting privileges in a manner
consistent with other Participating Insurance Companies. LIFE COMPANIES will
vote shares for which it has not received timely voting instructions, as well
as shares it owns, in the same proportion as its votes those shares for which
it has received voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule
6e-3 is adopted, to provide exemptive relief from any provision of the '40 Act
or the rules thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Exemptive
Order, then TRUST, and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule 6e-2
and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
Rules are applicable.
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ARTICLE VII
Indemnification
7.1 Indemnification by LIFE COMPANIES. LIFE COMPANIES agree to indemnify and
hold harmless TRUST, ADVISER and each of their Trustees, directors, principals,
officers, employees and agents and each person, if any, who controls TRUST or
ADVISER within the meaning of Section 15 of the '33 Act (collectively, the
"Indemnified Parties") against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of LIFE
COMPANIES, which consent shall not be unreasonably withheld) or litigation or
threatened 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 TRUST's shares or the Variable Contracts and:
(a) 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 Variable Contracts or contained in the
Variable 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 in writing to
LIFE COMPANIES by or on behalf of TRUST for use in the registration
statement or prospectus for the Variable Contracts or in the Variable
Contracts or sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Contracts or TRUST
shares; or
(b) arise out of or result from (i) statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature of TRUST not supplied by LIFE COMPANIES, or
persons under its control) or (ii) wrongful conduct of LIFE COMPANIES or
persons under its control, with respect to the sale or distribution of the
Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of TRUST or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished in writing to TRUST by or on behalf of LIFE COMPANIES; or
(d) arise as a result of any failure by LIFE COMPANIES to provide
substantially the services and furnish the materials under the terms of
this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANIES in this Agreement or
arise out of or result from any other material breach of this Agreement by
LIFE COMPANIES.
7.2 LIFE COMPANIES shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party to the extent that such losses,
claims, damages, liabilities or litigation are attributable to 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.
7.3 LIFE COMPANIES 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 LIFE COMPANIES 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 LIFE COMPANIES
of any such
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claim shall not relieve LIFE COMPANIES 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, LIFE COMPANIES shall be entitled to participate
at its own expense in the defense of such action. LIFE COMPANIES also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANIES to such party of LIFE
COMPANIES's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANIES 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.
7.4 Indemnification by TRUST and ADVISER. TRUST and ADVISER agree to
indemnify and hold harmless LIFE COMPANIES and each of its directors, officers,
employees, and agents and each person, if any, who controls LIFE COMPANIES
within the meaning of Section 15 of the "33 Act (collectively, the "Indemnified
Parties") against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of TRUST and ADVISER which
consent shall not be unreasonably withheld) or litigation or threatened
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 TRUST's shares or the Variable Contracts and:
(a) 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 TRUST (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished in writing to ADVISER or TRUST by or on behalf of
LIFE COMPANIES for use in the registration statement or prospectus for
TRUST or in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Contracts or TRUST
shares; or
(b) arise out of or result from (i) statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by
ADVISER or TRUST or persons under its control) or (ii) gross negligence or
wrongful conduct or willful misfeasance of TRUST or ADVISER or persons
under its control, with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or
(c) 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 Variable 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
statements therein not misleading, if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity
with information furnished in writing to LIFE COMPANIES for inclusion
therein by or on behalf of TRUST or ADVISER; or
(d) arise as a result of (i) a failure by TRUST to provide substantially
the services and furnish the materials under the terms of this Agreement;
or (ii) a failure by a Portfolio(s) invested in by the Separate Account to
comply with the diversification requirements of Section 817(h) of the Code;
or (iii) a failure by a Portfolio(s) invested in by the Separate Account to
qualify as a "regulated investment company" under Subchapter M of the Code;
or
(e) arise out of or result from any material breach of any
representation and/or warranty made by TRUST in this Agreement or arise out
of or result from any other material breach of this Agreement by TRUST.
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7.5 Neither TRUST nor ADVISER shall be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party to the extent that
such losses, claims, damages, liabilities or litigation are attributable to
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.
7.6 Neither TRUST nor ADVISER shall be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified TRUST and ADVISER in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify TRUST and
ADVISER of any such claim shall not relieve TRUST or ADVISER from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, TRUST and ADVISER shall each
be entitled to participate at its own expense in the defense thereof. TRUST and
ADVISER shall also be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from TRUST and
ADVISER to such party of TRUST's and ADVISER's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and TRUST and ADVISER will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
ARTICLE VIII
Term; Termination
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANIES or TRUST at any time from the date
hereof upon 90 days' notice, unless a shorter time is agreed to by the
parties;
(b) At the option of LIFE COMPANIES, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as determined
by LIFE COMPANIES. Prompt notice of election to terminate shall be
furnished by LIFE COMPANIES, said termination to be effective ten days
after receipt of notice unless TRUST makes available a sufficient number of
shares to reasonably meet the requirements of the Variable Contracts within
said ten-day period;
(c) At the option of LIFE COMPANIES, upon the institution of formal
proceedings against TRUST by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of which
would, in LIFE COMPANIES' reasonable judgment, materially impair TRUST's
ability to meet and perform TRUST's obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by LIFE COMPANIES
with said termination to be effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal proceedings
against LIFE COMPANIES and/or its broker-dealer affiliates by the SEC, the
NASD, or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in TRUST's reasonable judgment,
materially impair LIFE COMPANIES' ability to meet and perform its
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by TRUST with said termination to be effective upon
receipt of notice;
(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the
use of such shares as the underlying investment medium of
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Variable Contracts issued or to be issued by LIFE COMPANIES. Termination
shall be effective upon such occurrence without notice;
(f) At the option of TRUST if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under the
Code, or if TRUST reasonably believes that the Variable Contracts may fail
to so qualify. Termination shall be effective upon receipt of notice by
LIFE COMPANIES, [unless LIFE COMPANIES can meet the qualifications under
the Code within a reasonable period of time];
(g) At the option of LIFE COMPANIES, upon TRUST's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of LIFE COMPANIES within ten days after written notice of such
breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANIES' breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of TRUST within ten days after written notice of such breach
is delivered to LIFE COMPANIES;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such occurrence
without notice;
In the event this Agreement is assigned without the prior written consent of
LIFE COMPANIES, TRUST, and ADVISER, termination shall be effective immediately
upon such occurrence without notice, except all parties hereto shall be
permitted to assign this Agreement or any interest thereof to their ultimate
parent holding company and any affiliate or subsidiary thereof, upon written
notice but without obtaining the consent of the other parties. All assignees
shall be appropriately licensed and comply with all applicable securities and
insurance laws and regulations.
[8.3 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANIES shall not redeem the shares attributable to the Variable Contracts
(as opposed to the shares attributable to LIFE COMPANIES' assets held in the
Separate Accounts), and LIFE COMPANIES shall not prevent Variable Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Variable Contracts until thirty (30) days after the LIFE COMPANIES
shall have notified TRUST of its intention to do so.]
ARTICLE IX
Notices
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to TRUST:
BT Insurance Funds Trust
c/o First Data Investor Services Group, Inc.
101 Federal Street Boston, MA 02110
Attn: Elizabeth Russell, Legal Dep't
and
c/o BT Alex. Brown
One South Street, Mail Stop 1-18-6
Baltimore, MD 21202
Attn: Mutual Fund Services
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If to ADVISER:
Bankers Trust Company--Structured Investment Management
130 Liberty Street New York, NY 10006
Attn.: , Mail Stop 2355
If to LIFE COMPANIES:
Massachusetts Mutual Life Insurance Company and/or C.M. Life Insurance
Company
Office of the General Counsel
1295 State Street Springfield, MA 01111-0001
Attn: General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
ARTICLE X
Miscellaneous
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 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.
10.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York. It shall also
be subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the SEC granting exemptive relief
therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the shareholders
of shares of any Portfolio nor the Trustees or officers of TRUST or any
Portfolio shall be personally liable hereunder. No Portfolio shall be liable
for the liabilities of any other Portfolio. All persons dealing with TRUST or a
Portfolio must look solely to the property of TRUST or that Portfolio,
respectively, for enforcement of any claims against TRUST or that Portfolio. It
is also understood that each of the Portfolios shall be deemed to be entering
into a separate Agreement with LIFE COMPANIES so that it is as if each of the
Portfolios had signed a separate Agreement with LIFE COMPANIES and that a
single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.6 Each party 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.
10.7 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.
10.8 If the Agreement terminates, the parties agree that Article 7 and
Sections 10.5, 10.6 and 10.7 shall remain in effect after termination.
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10.9 No provision of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by TRUST,
ADVISER and the LIFE COMPANIES.
10.10 No failure or delay by a party in exercising any right or remedy under
this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first
above written.
BT Insurance Funds Trust
By: _________________________________
Name:
Title:
Bankers Trust Company
By: _________________________________
Name:
Title:
Massachusetts Mutual Life Insurance
Company
By: _________________________________
Name:
Title:
C.M. Life Insurance Company
By: _________________________________
Name:
Title:
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APPENDIX A
To Participation Agreement by and among BT Insurance Funds Trust, Bankers
Trust Company and Massachusetts Mutual Life Insurance Company and C.M. Life
Insurance Company.
List of portfolios:
Strategic Life 12:
BT Small Cap Index Fund
BT EAFE(R) Equity Index Fund
Panorama Premier and Panorama Passage:
BT Small Cap Index Fund
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APPENDIX B
To Participation Agreement by and among BT Insurance Funds Trust, Bankers
Trust Company and Massachusetts Mutual Life Insurance Company and C.M. Life
Insurance Company.
List of variable separate accounts:
Massachusetts Mutual Variable Life Separate Account III
Massachusetts Mutual Variable Annuity Separate Account 4
C.M. Multi-Account A
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Exhibit 8(g)
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this day of , 1999, between JANUS ASPEN SERIES,
an open-end management investment company organized as a Delaware business
trust (the "Trust"), and MASS MUTUAL LIFE INSURANCE COMPANY, a life insurance
company organized under the laws of the State of (the "Company"), on its
own behalf and on behalf of each segregated asset account of the Company set
forth on Schedule A, as may be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has registered the offer
and sale of its shares under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several series
of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the Securities and Exchange
Commission granting Participating Insurance Companies and their separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and
15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to
the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless registration is
not required under applicable law) certain variable life insurance policies
and/or variable annuity contracts under the 1933 Act (the "Contracts"); and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize shares of one or more Portfolios as
an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make shares of its Portfolios available to the Accounts
at the net asset value next computed after receipt of such purchase order by
the Trust (or its agent), as established in accordance with the provisions of
the then current prospectus of the Trust. Shares of a particular Portfolio of
the Trust shall be
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ordered in such quantities and at such times as determined by the Company to be
necessary to meet the requirements of the Contracts. The Trustees of the Trust
(the "Trustees") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Trustees acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Portfolio.
1.2 The Trust will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then
current prospectus of the Trust. The Trust shall make payment for such shares
in the manner established from time to time by the Trust, but in no event shall
payment be delayed for a greater period than is permitted by the 1940 Act.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints the
Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that i) such orders are received by the Company in good order prior to
the time the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 10:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
1.4 Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for no later than 12:00 noon New York time on the
same Business Day that the Trust receives notice of the order. Payments shall
be made in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish same day or prior notice to the Company of any
income dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7 The Trust shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6 p.m. New York time. If the
Trust provides the Company with materially incorrect share net asset value
information through no fault of the Company, the Company on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any
material error in the calculation of net asset value per share, dividend or
capital gain information shall be reported promptly upon discovery to the
Company. The Trust shall make the determination as to whether a material error
in the net asset value has occurred and the Trust shall control its correction
of such error. In no event shall delays in providing prices due to conditions
beyond the control of the Trust, including, but not limited to, Acts of God,
fires, electrical or phone outages, be considered pricing errors and the Trust
shall not be required to reimburse for such delays. The Trust shall use the
same standards with respect to share prices for the Company as for all other
shareholders in the Trust.
1.8 The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified
pension and retirement plans to the extent permitted by the Exemptive Order. No
shares of any Portfolio will be sold directly to the general public. The
Company agrees
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that Trust shares will be used only for the purposes of funding the Contracts
and Accounts listed in Schedule A, as amended from time to time.
1.9 The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.8 and
Article IV of this Agreement.
1.10 The Trust shall provide the Company account look-up access through DST
Vision or similar electronic look-up feature to review daily account balances.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is
subject on the issuance and transfer of its shares.
2.2 At the option of the Company, the Trust shall either (a) provide the
Company (at the Company's expense) with as many copies of the Trust's current
prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the
foregoing, as the Company shall reasonably request; or (b) provide the Company
with a camera ready copy or PDF format, font embedded or zipped postscript
file, of such documents in a form suitable for printing. The Trust shall
provide the Company with a copy of its statement of additional information in a
form suitable for duplication by the Company. The Trust (at its expense) shall
provide the Company with copies of any Trust-sponsored proxy materials in such
quantity as the Company shall reasonably require for distribution to Contract
owners. The Trust will provide these documents within a reasonable period of
time so that the Company can distribute the documents to Contract owners in a
timely manner.
2.3 (a) The Company shall bear the costs of printing and distributing the
Trust's prospectus, statement of additional information, shareholder reports
and other shareholder communications to owners of and applicants for policies
for which the Trust is serving or is to serve as an investment vehicle. The
Company shall bear the costs of distributing proxy materials (or similar
materials such as voting solicitation instructions) to Contract owners. The
Company assumes sole responsibility for ensuring that such materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws. The Trust or its adviser shall bear all the expenses
associated with supplements to the prospectus that correct any errors or
omissions made by the Trust within the prospectus.
(b) If the Company elects to include any materials provided by the Trust,
specifically prospectuses, SAIs, shareholder reports and proxy materials, on
its web site or in any other computer or electronic format, the Company assumes
sole responsibility for maintaining such materials in the form provided by the
Trust and for promptly replacing such materials with all updates provided by
the Trust.
2.4 The Company agrees and acknowledges that the Trust's adviser, Janus
Capital Corporation ("Janus Capital"), is the sole owner of the name and mark
"Janus" and that all use of any designation comprised in whole or part of Janus
(a "Janus Mark") under this Agreement shall inure to the benefit of Janus
Capital. Except as provided in Section 2.5, the Company shall not use any Janus
Mark on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of
Janus Capital. Upon termination of
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this Agreement for any reason, the Company shall cease all use of any Janus
Mark(s) as soon as reasonably practicable.
2.5 (a) The Company shall furnish, or cause to be furnished, to the Trust or
its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or its investment adviser is named prior to the
filing of such document with the Securities and Exchange Commission. The
Company shall furnish, or shall cause to be furnished, to the Trust or its
designee, each piece of sales literature or other promotional material in which
the Trust or its investment adviser is named, at least ten Business Days prior
to its use. No such material shall be used if the Trust or its designee
reasonably objects to such use within ten Business Days after receipt of such
material. No review of sales literature or other promotional material produced
by the Company shall be necessary if all references contained in such materials
regarding Trust are identical to those references that appear in Trust's
prospectus (or prospectuses) or statement of additional information.
(b) The Trust 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 is named, at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects
to such use within ten Business Days after receipt of such material. No review
of sales literature or other promotional material produced by the Trust shall
be necessary if all references contained in such materials regarding Company
are identical to those references that appear in Company's prospectus (or
prospectuses) or statement of additional information.
2.6 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or its investment
adviser in connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust shares (as such registration statement
and prospectus may be amended or supplemented from time to time), reports of
the Trust, Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee, except as required
by legal process or regulatory authorities or with the written permission of
the Trust or its designee.
2.7 The Trust shall not give any information or make any representations or
statements on behalf of the Company or concerning the Company, the Accounts or
the Contracts other than information or representations contained in and
accurately derived from the registration statement or prospectus for the
Contracts (as such registration statement and prospectus may be amended or
supplemented from time to time), or in materials approved by the Company for
distribution including sales literature or other promotional materials, except
as required by legal process or regulatory authorities or with the written
permission of the Company.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges
for variable policyowners, the Company will provide pass-through voting
privileges to owners of policies whose cash values are invested, through the
Accounts, in shares of the Trust. The Trust shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and the
Company shall be responsible for assuring that the Accounts calculate voting
privileges in the manner established by the Trust. With respect to each
Account, the Company will vote shares of the Trust held by the Account and for
which no timely voting instructions from policyowners are received as well as
shares it owns that are held by that Account, in the same proportion as those
shares for which voting instructions are received. The Company and its agents
will in no way recommend or oppose or interfere with the solicitation of
proxies for Trust shares held by Contract owners without the prior written
consent of the Trust, which consent may be withheld in the Trust's sole
discretion. The Trust will use its best efforts to provide the Company with
reasonable advance notice of proxy solicitations and prospectus supplements.
2.9 The Company shall notify the Trust of any applicable state insurance
laws that restrict the Portfolios' investments or otherwise affect the
operation of the Trust and shall notify the Trust of any changes in such laws.
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ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance company duly
organized and in good standing under the laws of the State of and that it
has legally and validly established each Account as a segregated asset account
under such law on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust in accordance with the provisions of the
1940 Act.
3.3 The Company represents and warrants that the Contracts or interests in
the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under
the 1933 Act. The Company further represents and warrants that the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws; and the sale of the Contracts shall comply
in all material respects with state insurance suitability requirements.
3.4 The Company represents and warrants that any of Company's trading
systems that interact with the Trust via any form of automated feed prior to,
during and after the calendar year 2000 will recognize accurate century data,
and user interfaces and operation environments will comply with Year 2000
application standards.
3.5 The Trust represents and warrants that it is duly organized and validly
existing under the laws of the State of Delaware.
3.6 The Trust represents and warrants that the Trust shares offered and sold
pursuant to this Agreement will be registered under the 1933 Act and the Trust
shall be registered under the 1940 Act prior to any issuance or sale of such
shares. The Trust shall amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Trust shall register and qualify its shares for
sale in accordance with the laws of the various states only if and to the
extent deemed advisable by the Trust.
3.7 The Trust represents and warrants that the investments of each Portfolio
will comply with the diversification requirements set forth in Section 817(h)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder. The Trust will notify the Company immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply and will
immediately take all reasonable steps to adequately diversify the Portfolio to
achieve compliance. Further, the Trust will notify the Company immediately upon
having a reasonable basis for believing that a variable contract of any other
company or companies which use the Trust as an investment option fail to comply
with the diversification requirements mentioned above.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. 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
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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 Trustees shall promptly inform the
Company if they determine that an irreconcilable material conflict exists and
the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3 If it is determined by a majority of the Trustees, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably practicable (as
determined by the Trustees) take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the Accounts from the Trust
or any Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or submitting
the question of whether or not 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 (b) establishing a new
registered management investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months after the
Trust gives written notice that this provision is being implemented. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of
the Trust.
4.5 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 Trust and terminate this Agreement with respect to
such Account within six (6) months after the Trustees inform 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
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption
of shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Company be required 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 Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and
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terminate this Agreement within six (6) months after the Trustees inform the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such reports,
materials or data as the Trustees may reasonably request so that the Trustees
may fully carry out the duties imposed upon them by the Exemptive Order, and
said reports, materials and data shall be submitted more frequently if deemed
appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Trust and/or
the Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to indemnify and hold
harmless the Trust and each of its Trustees, officers, employees and agents and
each person, if any, who controls the Trust within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts themselves or
in sales literature generated or approved by the Company on behalf of the
Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article V), 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
indemnity 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 was accurately derived from written information furnished to the
Company by or on behalf of the Trust for use in Company Documents or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Trust Documents as defined in Section 5.2(a)) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined in
Section 5.2(a) 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 statement or omission was made in
reliance upon and accurately derived from written information furnished to
the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide
the services or furnish the materials required under the terms of this
Agreement; or
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(e) 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.
5.2 Indemnification By the Trust. The Trust agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
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 Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) 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 Trust (or any amendment or supplement
thereto), (collectively, "Trust Documents" for the purposes of this Article
V), 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 indemnity
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 was
accurately derived from written information furnished to the Trust by or on
behalf of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or acquisition of the Contracts or Trust
shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents 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
statement or omission was made in reliance upon and accurately derived from
written information furnished to the Company by or on behalf of the Trust;
or
(d) arise out of or result from any failure by the Trust to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Trust.
5.3 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or 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.
5.4 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice
of service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of Sections 5.1 and 5.2.
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5.5 In case any such action is brought against the Indemnified Parties, the
indemnifying party shall be entitled to participate, at its own expense, in the
defense of such action. The indemnifying party also shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the party named in
the action. After notice from the indemnifying party to the Indemnified Party
of an election to assume such defense, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified 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.
ARTICLE VI
Termination
6.1 This Agreement may be terminated by either party for any reason by
ninety (90) days advance written notice delivered to the other party.
6.2 Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of the
Trust (or any Portfolio) pursuant to the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement, provided that the Company continues to pay the costs set forth in
Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII
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 Trust:
Janus Aspen Series
100 Fillmore Street
Denver, Colorado 80206
Attention: General Counsel
If to the Company:
Mass Mutual Life Insurance Company
____________________________
____________________________
Attention: Stephen R. Bosworth
Associate General Counsel
ARTICLE VIII
Miscellaneous
8.1 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.
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8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of State of Colorado.
8.5 The parties to this Agreement acknowledge and agree that all liabilities
of the Trust arising, directly or indirectly, under this Agreement, of any and
every nature whatsoever, shall be satisfied solely out of the assets of the
Trust and that no Trustee, officer, agent or holder of shares of beneficial
interest of the Trust shall be personally liable for any such liabilities.
8.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., 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.
8.7 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.
8.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
Janus Aspen Series
By: _________________________________
Name:
Title:
Mass Mutual Life Insurance Company
By: _________________________________
Name:
Title:
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SCHEDULE A
Separate Accounts and Associated Contracts
Name of Separate Account and Date Contracts Funded
Established by Board of Directors By Separate Account
C.M. Life Insurance Company
C.M. Multi-Account A Panorama Premier
August 3, 1994 Panorama Passage
Massachusetts Mutual Life Insurance
Company
Massachusetts Mutual Variable
Annuity Separate Account 4 Panorama Premier
July 9, 1997 Panorama Passage
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Exhibit 8(h)
PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN TEMPLETON DISTRIBUTORS, INC.,
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, and
C.M. LIFE INSURANCE COMPANY
THIS AGREEMENT made as of , 1999, among Templeton Variable Products
Series Fund (the "Trust"), an open-end management investment company organized
as a business trust under Massachusetts law, Franklin Templeton Distributors,
Inc., a California corporation, the Trust's principal underwriter
("Underwriter"), and Massachusetts Mutual Life Insurance Company, and C.M. Life
Insurance Company, life insurance companies organized as corporations under
Massachusetts law, (collectively, the "Company"), on their own behalf and on
behalf of each segregated asset account of the Company set forth in Schedule A,
as may be amended from time to time (the "Accounts").
WITNESSETH:
WHEREAS, the Trust is registered with the Securities and Exchange Commission
(the "SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has an effective
registration statement relating to the offer and sale of the various series of
its shares under the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Trust and the Underwriter desire that Trust shares be used as
an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Trust is divided into several series
of shares, each series representing an interest in a particular managed
portfolio of securities and other assets, and certain of those series, named in
Schedule B, (the "Portfolios") are to be made available for purchase by the
Company for the Accounts; and
WHEREAS, the Trust has received an order from the SEC, dated November 16,
1993 (File No. 812-8546), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act, and Rules 6e-2 (b) (15) and 6e-3 (T) (b) (15)
thereunder, to the extent necessary to permit shares of the Trust to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless an exemption from registration under
the 1940 Act is available and the Trust has been so advised; and has registered
or will register certain variable annuity contracts and variable life insurance
policies, listed on Schedule C attached hereto, under which the portfolios are
to be made available as investment vehicles (the "Contracts") under the 1933
Act unless such interests under the Contracts in the Accounts are exempt from
registration under the 1933 Act and the Trust has been so advised;
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 one or more Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"); and
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WHEREAS, each investment adviser listed on Schedule B (each, an "Adviser")
is duly registered as an investment adviser under the Investment Advisers Act
of 1940, as amended ("Advisers Act") and any applicable state securities laws;
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 Contracts and the Underwriter
is authorized to sell such shares to separate accounts such as each Account at
net asset value;
AGREEMENT
NOW THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
1.0 Form of Agreement. Although the parties have executed this Agreement in
the form of a Master Fund Participation Agreement for administrative
convenience, this Agreement shall create a separate agreement for each Company
as though each Company had separately executed an identical Fund Participation
Agreement with the Trust and the Underwriter. No rights, responsibilities or
liabilities arising under the Agreement as it pertains to one Company shall be
enforceable by or against any party to the Agreement as it pertains to another
Company.
ARTICLE I
Purchase and Redemption of Trust Portfolio Shares
1.1 For purposes of this Article I, the Company as agent for the Trust,
shall receive purchase orders and requests for redemption relating to each
Portfolio from each Account for acceptance as of the Close of Trading on each
Business Day, as defined in Section 1.3, and shall notify the Trust of such
Instructions by no later than 10:00 a.m. Eastern time on the next following
Business Day. The Business Day on which such Instructions are received in
proper form by the Company and time stamped by the Close of Trading will be the
date as of which Portfolio shares shall be deemed purchased, or redeemed as a
result of such Instructions. Instructions received in proper form by the
Company and time stamped after the Close of Trading on any given Business Day
shall be treated as if received on the next following Business Day. The Company
warrants that all orders and Instructions received by the Company which will be
transmitted to the Trust for processing on a Business Day will have been
received and time stamped prior to the Close of Trading on that Business Day.
Instructions received after the 10:00 a.m. cut off time set forth above shall
be processed on the next Business Day.
1.2 The Trust agrees to make shares of the Portfolios available to the
Accounts for purchase at the net asset value per share next computed after
receipt of a purchase order by the Trust (or its agent), as established in
accordance with the provisions of the then current prospectus of the Trust
describing Portfolio purchase procedures on those days on which the Trust
calculates its net asset value pursuant to rules of the SEC, and the Trust
shall use its best efforts to calculate such net asset value on each day on
which the New York Stock Exchange ("NYSE") is open for trading. The Company
will transmit orders from time to time to the Trust for the purchase of shares
of the Portfolios. The Trustees of the Trust (the "Trustees") 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 if, in the sole discretion of the
Trustees acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Portfolio. Without limiting the
foregoing, the Trustees have determined that there is a significant risk that
the Trust and its shareholders may be adversely affected by investors whose
purchase and redemption activity follows a market timing pattern, and have
authorized the Trust, the Underwriter and the Trust's transfer agent to adopt
procedures and take other action (including without limitation rejecting
specific purchase orders) as they deem necessary to reduce, discourage or
eliminate market timing activity.
1.3 The Company shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than the close of business on the
next Business Day after the Trust receives the purchase
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order. Payment shall be made in federal funds transmitted by wire to the Trust
or its designated custodian. Upon receipt by the Trust of the federal funds so
wired, such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Trust for this purpose. "Business Day" shall
mean any day on which the NYSE is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the SEC. "Close of
Trading" is currently 4:00 P.M. Eastern time, 1:00 P.M. Pacific time on the
NYSE on each Business Day, or at such other time as the net asset value of a
Portfolio is calculated, as disclosed in the relevant then current
prospectus(es).
1.4 The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at the net
asset value next computed after receipt by the Trust (or its agent) of the
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Trust describing Portfolio redemption
procedures. The Trust shall make payment for such shares in the manner
established from time to time by the Trust. Redemption with respect to a
Portfolio will normally be paid to the Company for an Account in federal funds
transmitted by wire to the Company before the close of business on the next
Business Day after the receipt of the request for redemption. Such payment may
be delayed if, for example, the Portfolio's cash position so requires or if
extraordinary market conditions exist, but in no event shall payment be delayed
for a greater period than is permitted by the 1940 Act.
1.5 Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 may be netted against one another on any
Business Day for the purpose of determining the amount of any wire transfer on
that Business Day.
1.6 Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Account. Portfolio Shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
1.7 The Trust shall furnish, on or before the ex-dividend date, notice to
the Company of any income dividends or capital gain distributions payable on
the shares of any Portfolio of the Trust. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. The Trust shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.8 The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net asset
value per share for each Portfolio available to the Company or its designated
agent on a daily basis as soon as reasonably practical after the net asset
value per share is calculated (normally by 6:30 p.m. Eastern time) and shall
use best efforts to make such net asset value per share available by 7:00 p.m.
Eastern time each Business Day.
1.9 The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the Shared
Funding Exemptive Order. No shares of any Portfolio will be sold directly to
the general public. The Company agrees that it will use Trust shares only for
the purposes of funding the Contracts through the Accounts listed in Schedule
A, as amended from time to time.
1.10 The Company agrees that all net amounts available under the Contracts
shall be invested in the Trust, in such other Funds advised by an Adviser or
its affiliates 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 Trust if: (a) such other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
the Portfolios; or (b) the Company gives the Trust and the Underwriter advance
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 is
available as a funding vehicle for the Contracts at the date of this Agreement
and the
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Company so informs the Trust and the Underwriter prior to their signing this
Agreement (a list of such investment companies appearing on Schedule D to this
Agreement); or (d) the Trust or Underwriter consents to the use of such other
investment company.
1.11 The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.10 and
Article IV of this Agreement.
1.12 Each party shall report to the other any material errors or omissons in
any pricing information including the information set forth below, and any
interruptions in or delay or unavailability of, the means of transmittal of any
such information as promptly as possible.
The Company shall indemnify and hold harmless the Trust or its agents for
losses caused by the Company's cancellation or correction of an order made
after the date which an order or instruction has been placed. The Company will
immediately reimburse the Trust or its agents for such losses upon
notification. The Company shall indemnify and hold harmless the Trust or its
agents for any such losses including those losses resulting from instructions
involving investment in incorrect funds.
The Trust or its agents shall indemnify and hold harmless the Company
against any amount the Company is legally required to pay qualified plans
("Plans") or Contract Owners, and which payment would be made under the Trust's
established procedures, and which amount is due to the Trust's or its agents'
material miscalculation and/or incorrect reporting of the daily net asset
value, dividend rate or capital gains distribution rate. The Company shall
submit an invoice to the Trust or its agents for losses incurred as a result of
the above which shall be payable within sixty (60) days of receipt. Should a
miscalculation by the Trust or its agents result in a gain to the Company,
Plans or Contract Owners, the Company shall immediately reimburse the Trust or
its agents for any material losses incurred by the Trust or its agents as a
result of the incorrect calculation.
With respect to the material errors or omissions described above, this
section shall control over other indemnification provisions in this Agreement.
ARTICLE II
Obligations of the Parties; Fees and Expenses
2.1 The Trust shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Trust.
The Trust shall bear the costs of registration and qualification of its shares
of the Portfolios, preparation and filing of the documents listed in this
Section 2.1 and all taxes to which an issuer is subject on the issuance and
transfer of its shares.
2.2 At the option of the Company, the Trust or the Underwriter shall either
(a) provide the Company with as many copies of portions of the Trust's current
prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the
foregoing, pertaining specifically to the Portfolios as the Company shall
reasonably request; or (b) provide the Company with a camera ready copy, or PDF
format, of such documents in a form suitable for printing and from which
information relating to series of the Trust other than the Portfolios has been
deleted to the extent practicable. The Trust or the Underwriter shall provide
the Company with a copy of its current statement of additional information,
including any amendments or supplements, in a form suitable for duplication by
the Company. Expenses of furnishing such documents for marketing purposes shall
be borne by the Company and expenses of furnishing such documents for current
contract owners invested in the Trust shall be borne by the Trust or the
Underwriter. With respect to prospectus supplements that correct material
errors or material omissions for which the Trust is solely responsible, the
Trust or the Underwriter shall pay for reasonable expenses associated with
furnishing multiple copies of such supplements as the Company shall reasonably
request.
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2.3 The Trust (at its expense) shall provide the Company with copies of any
Trust-sponsored proxy materials in such quantity as the Company shall
reasonably require for distribution to Contract owners. The Company shall bear
the costs of distributing proxy materials (or similar materials such as voting
solicitation instructions), prospectuses and statements of additional
information to Contract owners. The Company assumes sole responsibility for
ensuring that such materials are delivered to Contract owners in accordance
with applicable federal and state securities laws. The Trust will use
reasonable efforts to provide the Company advance notice of relevant proxy and
prospectus changes, where practicable.
2.4 If and to the extent required by law, the Company shall: (i) solicit
voting instructions from Contract owners; (ii) vote the Trust shares in
accordance with the instructions received from Contract owners; and (iii) vote
Trust shares for which no instructions have been received in the same
proportion as Trust shares of such 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. The Company reserves the right to vote Trust shares held in any
segregated asset account in its own right, to the extent permitted by law.
2.5 (a) Except as provided in section 2.6, the Company shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Templeton" or any other Trademark relating to the Trust or Underwriter without
prior written consent, and upon termination of this Agreement for any reason,
the Company shall cease all use of any such name or mark as soon as reasonably
practicable.
(b) The Trust or its agents shall not use any designation comprised of the
marks "Massachusetts Mutual" or any other Trademark relating to the Company or
its underwriter without prior written consent, and upon termination of this
Agreement for any reason, the Trust shall cease all use of any such mark as
soon as reasonably practicable.
2.6 The Company shall furnish, or cause to be furnished to the Trust or its
designee, at least one complete copy of each registration statement,
prospectus, statement of additional information, retirement plan disclosure
information or other disclosure documents or similar information, as applicable
(collectively "disclosure documents"), as well as any report, solicitation for
voting instructions, sales literature and other promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. The Company shall furnish, or shall cause to be
furnished, to the Trust or its designee each piece of sales literature or other
promotional material in which the Trust or an Adviser is named, at least 10
Business Days prior to its use. No such material shall be used if the Trust or
its designee reasonably objects to such use within five Business Days after
receipt of such material. For purposes of this paragraph, "sales literature or
other promotional material" includes, but is not limited to, portions of the
following that use any Trademark related to the Trust or Underwriter or refer
to the Trust or affiliates of the Trust: 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 electronic communication 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 or
any other advertisement, sales literature or published article or electronic
communication), educational or training materials or other communications
distributed or made generally available to some or all agents or employees, and
disclosure documents, shareholder reports and proxy materials.
2.7 The Company and its agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser in connection with the sale of the Contracts
other than information or representations contained in and accurately derived
from the registration statement or prospectus for the Trust shares (as such
registration statement and prospectus may be amended or supplemented from time
to time), annual and semi-annual reports of the Trust, Trust-sponsored proxy
statements, or in sales literature or other promotional material approved by
the Trust or its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its designee.
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2.8 The Trust shall use its best efforts to provide the Company, on a timely
basis, with such information about the Trust, the Portfolios and each Adviser,
in such form as the Company may reasonably require, as the Company shall
reasonably request in connection with the preparation of disclosure documents
and annual and semi-annual reports pertaining to the Contracts.
2.9 The Trust shall not give any information or make any representations or
statements on behalf of the Company or concerning the Company, the Accounts or
the Contracts other than information or representations contained in and
accurately derived from disclosure documents for the Contracts (as such
disclosure documents may be amended or supplemented from time to time), or in
materials approved by the Company for distribution including sales literature
or other promotional materials, except as required by legal process or
regulatory authorities or with the written permission of the Company.
2.10 So long as, and to the extent that, the SEC interprets the 1940 Act to
require pass-through voting privileges for Contract owners, the Company will
provide pass-through voting privileges to Contract owners whose Contract values
are invested, through the registered Accounts, in shares of one or more
Portfolios of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each registered
Account, the Company will vote shares of each Portfolio of the Trust held by a
registered Account and for which no timely voting instructions from Contract
owners are received in the same proportion as those shares held by that
registered Account for which voting instructions are received. The Company and
its agents will in no way recommend or oppose or interfere with the
solicitation of proxies for Portfolio shares held to fund the Contracts without
the prior written consent of the Trust, which consent may be withheld in the
Trust's sole discretion.
2.11 The Trust and Underwriter shall pay no fee or other compensation to the
Company under this Agreement except as provided on Schedule E, if attached.
Nevertheless, the Underwriter or an affiliate may make payments (other than
pursuant to a Rule 12b-1 Plan) to the Company or its affiliates or to the
Contracts' underwriter in amounts agreed to by the Underwriter or an affiliate
in writing and such payments may be made out of fees otherwise payable to the
Underwriter or its affiliates, profits of the Underwriter or its affiliates, or
other resources available to the Underwriter or its affiliates.
ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance company duly
organized and in good standing under the laws of its state of incorporation and
that it has legally and validly established each Account as a segregated asset
account under such law as of the date set forth in Schedule A.
3.2 The Company represents and warrants that, with respect to each Account,
(1) the Company 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 asset account for
the Contracts, or (2) if the Account is exempt from registration as an
investment company under Section 3(c) of the 1940 Act, the Company will make
every effort to maintain such exemption and will notify the Trust and the
Adviser immediately upon having a reasonable basis for believing that such
exemption no longer applies or might not apply in the future.
3.3 The Company represents and warrants that, with respect to each Contract,
(1) the Contract will be registered under the 1933 Act, or (2) if the Contract
is exempt from registration under Section 3(a)(2) of the 1933 Act or under
Section 4(2) and Regulation D of the 1933 Act, the Company will make every
effort to maintain such exemption and will notify the Trust and the Adviser
immediately upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future. The Company further represents
and warrants that the Contracts will be sold by broker-dealers, or their
registered representatives,
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who are registered with the SEC under the 1934 Act and who are members in good
standing of the NASD; the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws; and the sale
of the Contracts shall comply in all material respects with state insurance
suitability requirements.
For any unregistered Accounts which are exempt from registration under the
'40 Act in reliance upon Sections 3(c)(1) or 3(c)(7) thereof, the Company
represents and warrants that:
(a) each Account and sub-account thereof has a principal underwriter
which is registered as a broker-dealer under the Securities Exchange Act of
1934, as amended;
(b) Trust shares are and will continue to be the only investment
securities held by the corresponding Account sub-accounts; and
(c) with regard to each Portfolio, the Company, on behalf of the
corresponding sub-account, will:
(1) seek instructions from all Contract owners with regard to the
voting of all proxies with respect to Trust shares and vote such
proxies only in accordance with such instructions or vote such shares
held by it in the same proportion as the vote of all other holders of
such shares; and
(2) refrain from substituting shares of another security for such
shares unless the SEC has approved such substitution in the manner
provided in Section 26 of the '40 Act.
3.4 The Trust represents and warrants that it is duly organized and validly
existing under the laws of the State of Massachusetts and that it does and
will comply in all material respects with the 1940 Act and the rules and
regulations thereunder.
3.5 The Trust represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Trust shall be registered under the 1940 Act prior to and at the time of any
issuance or sale of such shares. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall
register and qualify its shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Trust or the
Underwriter.
3.6 The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements for variable
annuity, endowment or life insurance contracts set forth in Section 817(h) of
the Internal Revenue Code of 1986, as amended ("Code"), and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a reasonable
basis for believing any Portfolio has ceased to comply or might not so comply
and will in that event immediately take all reasonable steps to adequately
diversify the Portfolio to achieve compliance within the grace period afforded
by Regulation 1.817-5.
3.7 The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it will
make every effort to maintain such qualification and will notify the Company
immediately upon having a reasonable basis for believing it has ceased to so
qualify or might not so qualify in the future.
3.8 The Trust represents and warrants that should it ever desire to make
any payments to finance distribution expenses pursuant to Rule 12b-1 under the
1940 Act, the Trustees, including a majority who are not "interested persons"
of the Trust under the 1940 Act ( "disinterested Trustees" ), will formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
3.9 The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less that the minimum
coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such
bond shall include coverage for larceny and embezzlement and be issued by a
reputable bonding company.
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3.10 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Trust are and shall be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust, in an amount not less than $5 million. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Trust and the Underwriter in the event that
such coverage no longer applies.
3.11 The Underwriter represents that each Adviser is duly organized and
validly existing under applicable corporate law and that it is registered and
will during the term of this Agreement remain registered as an investment
adviser under the Advisers Act.
3.12 The Trust currently intends for one or more classes of shares (each, a
"Class") to make payments to finance its distribution expenses, including
service fees, pursuant to a Plan adopted under Rule 12b-1 under the 1940 Act
("Rule 12b-1"), although it may determine to discontinue such practice in the
future. To the extent that any Class of the Trust finances its distribution
expenses pursuant to a Plan adopted under Rule 12b-1, the Trust undertakes to
comply with any then current SEC and SEC staff interpretations concerning Rule
12b-1 or any successor provisions.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that a Portfolio's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. 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 Trust shall promptly inform the Company of any determination by the
Trustees that an irreconcilable material conflict exists and of the
implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Shared Funding
Exemptive Order by providing the Trustees with all information reasonably
necessary for the Trustees to consider any issues raised including, but not
limited to, information as to a decision by the Company to disregard Contract
owner voting instructions. All communications from the Company to the Trustees
may be made in care of the Trust.
4.3 If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its own expense and to the extent reasonably practicable (as
determined by the Trustees) take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the Accounts from the Trust
or any Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or submitting
the question of whether or not such withdrawal should be implemented to a vote
of all affected Contract owners and, as appropriate, withdrawing the assets of
any appropriate group (i.e. , annuity contract
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owners, life insurance policy owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such withdrawal,
or offering to the affected Contract owners the option of making such a change;
and (b) establishing a new registered management investment company or managed
separate account.
4.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months after the
Trust gives written notice that this provision is being implemented. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of
the Trust.
4.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with a
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account within six (6) months after the Trustees inform 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
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption
of shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Trust be required to establish a new funding medium for the Contracts. In
the event that the Trustees determine that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company will
withdraw the Account's investment in the Trust and terminate this Agreement
within six (6) months after the Trustees inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested
Trustees.
4.7 The Company shall at least annually submit to the Trustees such reports,
materials or data as the Trustees may reasonably request so that the Trustees
may fully carry out the duties imposed upon them by the Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Trust and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company
(a) The Company agrees to indemnify and hold harmless the Underwriter, the
Trust and each of its Trustees, officers, employees and agents and each person,
if any, who controls the Trust within the meaning of
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Section 15 of the 1933 Act (collectively, the "Indemnified Parties" and
individually the "Indemnified Party" for purposes of this Article V) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company, which consent shall not be
unreasonably withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as such
Losses are related to the sale or acquisition of Trust 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 a disclosure document
for the Contracts or in the Contracts themselves or in sales literature
generated or approved by the Company on behalf of the Contracts or Accounts
(or any amendment or supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article V), 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 indemnity 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 was accurately
derived from written information furnished to the Company by or on behalf
of the Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Trust Documents as defined in Section 5.2 (a)(i)) or wrongful conduct of
the Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(iii) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined in
Section 5.2(a)(i) 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 statement or omission was made in
reliance upon and accurately derived from written information furnished to
the Trust by or on behalf of the Company; or
(iv) arise out of or result from any failure by the Company to provide
the services or furnish the materials required 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.
(b) The Company shall not be liable under this indemnification provision
with respect to any Losses 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 Trust or Underwriter, whichever is applicable.
The Company shall also not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of the nature of
the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at 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.
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(c) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust.
5.2 Indemnification By The Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the Company, the
underwriter of the Contracts 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" and individually an
"Indemnified Party" for purposes of this Section 5.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of investigating or
defending any alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith) (collectively, "Losses")
to which the Indemnified Parties may become subject under any statute, at
common law or otherwise, insofar as such Losses are related to the sale or
acquisition of the Trust'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 sales literature of the Trust (or any amendment or
supplement to any of the foregoing) (collectively, the "Trust Documents")
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 of such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter or Trust by
or on behalf of the Company for use in the Registration Statement or
prospectus for the Trust or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the disclosure documents or
sales literature for the Contracts not supplied by the Underwriter or
persons under its control) or wrongful conduct of the Trust, Adviser or
Underwriter or persons under their control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a disclosure document or sales literature
covering the Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in reliance
upon information furnished to the Company by or on behalf of the Trust; or
(iv) arise as a result of any failure by the Trust 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 representation specified in Section 3.7 of
this Agreement and the diversification requirements specified in Section
3.6 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 5.2(b) and 5.2(c) hereof.
(b) The Underwriter shall not be liable under this indemnification provision
with respect to any Losses 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.
(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
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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 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.
(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.
5.3 Indemnification By The Trust
(a) The Trust 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 5.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Trust, which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross negligence,
bad faith or willful misconduct of the Board or any member thereof, are related
to the operations of the Trust, and arise out of or result from any material
breach of any representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Trust; as limited by and in accordance with the provisions of
Section 5.3(b) and 5.3(c) hereof. It is understood and expressly stipulated
that neither the holders of shares of the Trust nor any Trustee, officer, agent
or employee of the Trust shall be personally liable hereunder, nor shall any
resort be had to other private property for the satisfaction of any claim or
obligation hereunder, but the Trust only shall be liable.
(b) The Trust shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against any 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 Trust, the Underwriter or each Account, whichever is applicable.
(c) The Trust 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 Trust in writing within a reasonable time after
the summons or other first legal process giving information of the nature of
the claims 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 Trust of any such claim shall not relieve the
Trust from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Trust will be entitled to participate, at its own expense, in the defense
thereof. The Trust also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Trust to such party of the Trust's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Trust will not be liable to such 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.
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(d) The Company and the Underwriter agree promptly to notify the Trust 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 the
Account, or the sale or acquisition of share of the Trust.
ARTICLE VI
Termination
6.1 This Agreement may be terminated by any party in its entirety or with
respect to one, some or all Portfolios for any reason by ninety (90) days
advance written notice delivered to the other parties, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
6.2 This Agreement may be terminated immediately by either the Trust or the
Underwriter upon written notice to the Company if:
(a) the Company notifies the Trust or the Underwriter that the exemption
from registration under Section 3(c) of the 1940 Act no longer applies, or
might not apply in the future, to the unregistered Accounts, or that the
exemption from registration under Section 4(2) or Regulation D promulgated
under the 1933 Act no longer applies or might not apply in the future, to
interests under the unregistered Contracts; or
(b) either one or both of the Trust 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
(c) the Company gives the Trust and the Underwriter the written notice
specified in Section 1.10 hereof and at the same time such notice was given
there was no notice of termination outstanding under any other provision of
this Agreement; provided, however, that any termination under this Section
6.2(c) shall be effective forty-five (45) days after the notice specified
in Section 1.10 was given; or
6.3 If this Agreement is terminated for any reason, except under Article IV
(Potential Conflicts) above, the Trust shall, at the option of the Company,
continue to make available additional shares of any Portfolio and redeem shares
of any Portfolio pursuant to all of the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement. If this Agreement is terminated pursuant to Article IV, the
provisions of Article IV shall govern.
6.4 The provisions of Articles II (Representations and Warranties) and V
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 6.3, except that the Trust and the Underwriter shall
have no further obligation to sell Trust shares with respect to Contracts
issued after termination.
6.5 The Company shall not redeem Trust shares attributable to the Contracts
(as opposed to Trust shares attributable to the Company's assets held in 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) 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 Trust and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust 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 Trust or the Underwriter 90 days notice of its intention to do so.
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ARTICLE VII
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 Trust or the Underwriter:
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention: Karen L. Skidmore, Associate General Counsel
WITH A COPY TO
Templeton Variable Products Series Fund or
Franklin Templeton Distributors, Inc.
500 E. Broward Boulevard
Fort Lauderdale, FL 33394-3091
Attention: Barbara J. Green, Trust Secretary
If to the Company:
Massachusetts Mutual Life Insurance Company or
C.M. Life Insurance Company
1295 State Street
Springfield, MA 01111-0001
Attention: Office of the General Counsel
ARTICLE VIII
Miscellaneous
8.1 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.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Florida. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the SEC on behalf of the Trust
granting exemptive relief therefrom and the conditions of such orders. Copies
of any such orders shall be promptly forwarded by the Trust to the Company.
8.5 The parties to this Agreement acknowledge and agree that all liabilities
of the Trust arising, directly or indirectly, under this Agreement, of any and
every nature whatsoever, shall be satisfied solely out of the assets of the
Trust and that no Trustee, officer, agent or holder of shares of beneficial
interest of the Trust shall be personally liable for any such liabilities.
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8.6 Each party 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.
8.7 Each party hereto shall treat as confidential the names and addresses of
the Contract owners and all information reasonably identified as confidential
in writing by any other party hereto, and, except as permitted by this
Agreement or as required by legal process or regulatory authorities, shall not
disclose, disseminate, or utilize such names and addresses and other
confidential information until such time as they may come into the public
domain, without the express written consent of the affected party. Without
limiting the foregoing, no party hereto shall disclose any information that
such party has been advised is proprietary, except such information that such
party is required to disclose by any appropriate governmental authority
(including, without limitation, the SEC, the NASD, and state securities and
insurance regulators).
8.8 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.
8.9 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect, except as provided in Section 1.10.
8.10 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party,
which approval shall not be unreasonably withheld.
8.11 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
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IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
The Company:
Massachusetts Mutual Life Insurance
Company
By its authorized officer
By: _________________________________
Name:
Title:
The Company:
C.M. Life Insurance Company
By its authorized officer
By: _________________________________
Name:
Title:
The Trust:
Templeton Variable Products Series
Fund
By its authorized officer
By: _________________________________
Name: Karen L. Skidmore
Title: Assistant Vice President,
Assistant Secretary
The Underwriter:
Franklin Templeton Distributors,
Inc.
By its authorized officer
By: _________________________________
Name: Deborah R. Gatzek
Title: Senior Vice President,
Assistant Secretary
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Exhibit 10(i)
Consent of Independent Accountants
We hereby consent to the use in this Pre-Effective Amendment No. 1 to the
Registration Statement of C.M. Multi-Account A on Form N-4 (File No. 333-80991)
of our report, which includes explanatory paragraphs relating to the use of
statutory accounting practices, which practices differ from generally accepted
accounting principles, dated February 25, 1999 relating to the financial
statements of C.M. Life Insurance Company, which appear in such Registration
Statement. We also consent to the reference to us under the caption "Experts"
in the Statement of Additional Information in such Registration Statement.
PricewaterhouseCoopers LLP
Hartford, Connecticut
September 17, 1999
