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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Registration No. 33-91072
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
POST-EFFECTIVE AMENDMENT
No. 3 to the
Registration Statement
of
C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
(Exact Name of Registrant)
C.M. LIFE INSURANCE COMPANY
140 Garden Street
Hartford, CT 06154
(Address of Principal Executive Office)
ANN LOMELI, SECRETARY
140 Garden Street
Hartford, CT 06154
(Name and Address of Agent for Service of Process)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485.
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X on May 1, 1998 pursuant to paragraph (b) of Rule 485.
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60 days after filing pursuant to paragraph (a) of Rule 485
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on (date) pursuant to paragraph (a) of Rule 485.
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FLEXIBLE PREMIUM VARIABLE LIFE
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's fiscal year ending December 31,
1997 was filed on March 20, 1998.
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RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8b-2 AND THE PROSPECTUS
Item No. of
FORM N-8B-2 CAPTION IN PROSPECTUS
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution
5 C.M. Life, The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Summary; Description of C. M. Life, the Separate Account, the C.M. Fund,
Oppenheimer Funds; the VIP Funds; The Policy; Policy Termination and
Reinstatement; Other Policy Provisions
11 Summary; the C.M. Fund; Oppenheimer Funds; the VIP Funds; Investment
Objectives and Policies
12 Summary; the C.M. Fund; Oppenheimer Funds; the VIP Funds
13 Summary; the C.M. Fund; Oppenheimer Funds; the VIP Funds; Investment
Advisory Services to the C.M. Fund; Investment Advisory Services to the
Oppenheimer Funds; Investment Advisory Services to the VIP Funds; Charges
Deductions
14 Summary; Application for a Policy
15 Summary; Application for a Policy; Premium Payments; Allocation of Net
Premiums
16 The Separate Account; The C.M. Fund; Oppenheimer Funds; VIP Funds
Portfolio; Premium Charge; Allocation of Net Premiums
17 Summary; Surrender; Partial Withdrawal; Charges and Deductions; Reduction
in Charges, Policy Termination and Reinstatement
18 The Separate Account; The C.M. Fund; Oppenheimer Funds; the VIP Funds;
Premium Payments
19 Reports; Voting Rights
20 Not Applicable
21 Summary; Policy Loans; Other Policy Provisions
22 Other Policy Provisions
23 Not Required
24 Other Policy Provisions
25 C.M. Life, Massachusetts Mutual Life Insurance Co.
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Item No. of
FORM N-8B-2 CAPTION IN PROSPECTUS
26 Not Applicable
27 C.M. Life
28 Directors and Principal Officers of C.M. Life
29 C.M. Life
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Distribution
36 Not Applicable
37 Not Applicable
38 Summary; Distribution
39 Summary; Distribution
40 Not Applicable
41 C.M. Life; Distribution
42 Not Applicable
43 Not Applicable
44 Premium Payments; Policy Value and Surrender Value
45 Not Applicable
46 Policy Value and Surrender Value; Federal Tax Considerations
47 C.M. Life
48 Not Applicable
49 Not Applicable
50 The Separate Account
51 Cover Page; Summary; Charges and Deductions; The Policy; Policy
Termination and Reinstatement; Other Policy Provisions
52 Addition, Deletion or Substitution of Investments
53 Federal Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Not Applicable
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C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
EXECUTIVE BENEFIT VARIABLE UNIVERSAL LIFE POLICY ISSUED BY
C.M. LIFE INSURANCE COMPANY
140 GARDEN STREET, HARTFORD, CT 06154
1-860-987-6500
This prospectus describes the Executive Benefit Variable Universal Life Policy,
which is an individual flexible premium variable life insurance policy (the
"Policy") offered by C.M. Life Insurance Company ("C.M. Life"). The Policy is
designed for use in funding corporate obligations, for example non-qualified
employee fringe benefit plans, through the Death Benefit, Surrender Value, and
Loan Value available under the Policy. Generally, the Policyowner will be a
corporation, partnership, trust, or other employer. In those cases, individual
Insureds will have a specific insurable relationship with the Policyowner. In
certain instances, the Policyowner may be an individual.
The Policy offers the flexibility to vary the frequency and amount of premium
payments, subject to certain restrictions and conditions described in more
detail in this prospectus. You may also choose between two Death Benefit Options
and between two tests to determine if the Policy qualifies as "life insurance"
under the Federal tax laws. Subject to certain limitations, you may withdraw a
portion of the Policy Value, or the Policy may be fully surrendered at any time.
No surrender charges apply if a Policy is surrendered. If the Policy is in
effect on the Maturity Date, the Proceeds are payable to the Policyowner. If it
is in effect upon the death of the Insured prior to the Maturity Date, the
Proceeds will be payable to the Beneficiary. The Proceeds may be payable in a
lump sum, or a settlement option may be selected. The Policy Value will vary
with the investment experience of allocations to the Sub-Accounts, the fixed
rates of interest earned by allocations to the Fixed Account, and the charges
imposed under the terms of the Policy.
The Policy currently allows a Policyowner to allocate Policy Value and Net
Premiums among ten investment choices and a Fixed Account. Allocations to the
Fixed Account will earn interest at a rate determined by C.M. Life and
guaranteed to be no less than 4% annually. Allocations may also be made among
the ten sub-accounts ("Sub-Accounts") of C.M. Life Variable Life Separate
Account I (the "Separate Account"). The Sub-Accounts are described in detail in
the Separate Account section of this prospectus. The corresponding investment
portfolios in which each Sub-Account invests, as well as a discussion of
investment objectives and charges of each portfolio, are described in the
accompanying prospectuses for Panorama Series Fund, Inc. ("Panorama Fund"),
Oppenheimer Bond Fund (the "Oppenheimer Bond Fund"), which is one of the funds
of Oppenheimer Variable Account Funds ("Oppenheimer Funds"), Variable Insurance
Products Fund ("VIP Fund") and Variable Insurance Products Fund II ("VIP Fund
II"). (The Panorama Fund, Oppenheimer Funds and VIP Funds are sometimes
collectively referred to as the "Funds," while VIP Fund and VIP Fund II are
collectively referred to as the "VIP Funds.")
This prospectus should be reviewed carefully before making any decisions
concerning the Policy or making allocations among the Sub-Accounts.
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IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF THE
PANORAMA FUND, OPPENHEIMER FUNDS, VARIABLE INSURANCE PRODUCTS FUNDS, AND
VARIABLE INSURANCE PRODUCTS FUND II. INVESTORS SHOULD RETAIN A COPY OF EACH OF
THESE PROSPECTUSES FOR FUTURE REFERENCE.
THE POLICY DESCRIBED IN THIS PROSPECTUS IS NOT A DEPOSIT OR AN OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND IS NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is May 1, 1998.
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<TABLE>
<CAPTION>
Table Of Contents
<S> <C>
Special Terms............................................................................................................... 4
Summary..................................................................................................................... 6
Description of C.M. Life, Massachusetts Mutual Life Insurance Company,
The Separate Account, The Panorama Fund, Oppenheimer Funds, VIP Fund, and VIP Fund II....................................... 6
C.M. Life.................................................................................................................. 6
Massachusetts Mutual Life Insurance Company ("MassMutual")................................................................. 7
The Separate Account....................................................................................................... 7
The Panorama Fund.......................................................................................................... 7
Oppenheimer Funds.......................................................................................................... 7
VIP Fund and VIP Fund II................................................................................................... 7
Investment Objectives and Policies......................................................................................... 8
Investment Advisory Services to the Panorama Fund and the Oppenheimer Funds................................................ 9
Investment Advisory Services to the VIP Funds.............................................................................. 10
Changes to the Separate Account............................................................................................ 10
Voting Rights.............................................................................................................. 10
Performance Information..................................................................................................... 10
The Policy.................................................................................................................. 14
Application for a Policy................................................................................................... 14
Free Look Period........................................................................................................... 14
Conversion Privileges...................................................................................................... 14
Premium Payments........................................................................................................... 15
Allocation of Net Premiums................................................................................................. 15
Transfer Privilege......................................................................................................... 15
Account Rebalancing........................................................................................................ 16
Proceeds Payable on Death of the Insured................................................................................... 16
Death Benefit Options...................................................................................................... 16
Change in Death Benefit Option............................................................................................. 16
Definition of Life Insurance Test.......................................................................................... 17
Change in Specified Amount................................................................................................. 17
Policy Value and Surrender Value........................................................................................... 17
Payment Options............................................................................................................ 18
Optional Insurance Benefits................................................................................................ 19
Surrender.................................................................................................................. 19
Partial Withdrawal......................................................................................................... 19
Charges and Deductions...................................................................................................... 19
Tax Expense Charge......................................................................................................... 19
Premium Charge............................................................................................................. 20
Monthly Deduction from Policy Value........................................................................................ 20
Charges Against Assets of the Separate Account............................................................................. 20
Surrender Charge........................................................................................................... 21
Charges on Partial Withdrawal.............................................................................................. 21
Transfer Charges........................................................................................................... 21
Charge for Increase in Specified Amount.................................................................................... 21
Other Administrative Charges............................................................................................... 21
Reduction of Charges....................................................................................................... 21
Policy Loans................................................................................................................ 22
Loan Interest Charged...................................................................................................... 22
Preferred Loan Provision................................................................................................... 22
Repayment of Policy Debt................................................................................................... 22
Effect of Policy Loans..................................................................................................... 22
Policy Termination and Reinstatement........................................................................................ 23
Termination................................................................................................................ 23
Reinstatement.............................................................................................................. 23
</TABLE>
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<TABLE>
<S> <C>
Other Policy Provisions.................................................................................................... 23
Policyowner............................................................................................................. 23
Beneficiary............................................................................................................. 23
Incontestability........................................................................................................ 23
Suicide................................................................................................................. 23
Age..................................................................................................................... 24
Assignment.............................................................................................................. 24
Postponement of Payments................................................................................................ 24
Directors and Principal Officers of C.M. Life.............................................................................. 25
Distribution............................................................................................................... 26
Reports.................................................................................................................... 26
Legal Proceedings.......................................................................................................... 26
Further Information........................................................................................................ 26
Experts.................................................................................................................... 26
Federal Tax Considerations................................................................................................. 27
Tax Status of C.M. Life and the Separate Account........................................................................ 27
Taxation of the Policies................................................................................................ 27
Conventional Life Insurance Policies.................................................................................... 28
Modified Endowment Contracts............................................................................................ 28
Reasonableness Requirement for Charges.................................................................................. 29
Other................................................................................................................... 29
More Information About the Fixed Account................................................................................... 29
General Description..................................................................................................... 29
Fixed Account Value..................................................................................................... 29
The Policy.............................................................................................................. 30
ERISA Compliance........................................................................................................... 30
Financial Statements....................................................................................................... 30
Appendix A - Optional Benefits............................................................................................. A-1
Appendix B - Payment Options............................................................................................... B-1
Appendix C - Illustrations of Death Benefit, Policy Values and Accumulated Premiums........................................ C-1
</TABLE>
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Special Terms
Accumulation Unit: A measure of your interest in a Sub- Account.
Age: The Insured's age as of his or her nearest birthday.
Beneficiary: The person(s) or entity(ies) designated to receive the Proceeds
upon the death of the Insured.
Company: C.M. Life Insurance Company, a stock life insurance company
incorporated under the laws of the State of Connecticut, and a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual").
Death Benefit: The amount payable upon the death of the Insured, before the
Maturity Date. The amount of the Death Benefit will depend on the Death Benefit
Option and the Definition of Life Insurance Test chosen, but will always be at
least equal to the Specified Amount.
Delivery Receipt: An acknowledgment, signed by the Policyowner and returned to
C.M. Life's Service Center, stating that the Policyowner has received the Policy
and the Notice of Withdrawal Rights.
Definition of Life Insurance Test: The test chosen at issue by the Policyowner
to determine if the Policy qualifies as "life insurance" under Federal tax laws.
The two possible choices are the Guideline Premium Test and the Cash Value
Accumulation Test.
Evidence of Insurability: Information, including medical information
satisfactory to C.M. Life, that is used to determine the Insured's Underwriting
Class. Additionally, information may be required to ascertain the existence of a
sufficient insurable interest to support ownership of the Policy by the
Policyowner.
Fixed Account: An account that bears interest at a fixed rate determined by C.M.
Life but guaranteed to be no lower than 4% annually. Amounts allocated to the
Fixed Account will be held in the General Account of C.M. Life.
General Account: All the assets of C.M. Life other than those held in a separate
investment account.
Guideline Minimum Death Benefit: The minimum Death Benefit required to qualify
the Policy as "life insurance" under Federal tax laws. The Guideline Minimum
Death Benefit is calculated by multiplying the Policy Value by a percentage
determined by the Insured's Age and the Definition of Life Insurance Test chosen
at issue.
Insurance Amount At Risk: The Death Benefit less the Policy Value.
Loan Value: The maximum amount that may be borrowed under the Policy. The Loan
Value is currently equal to the Policy Value as of the date of the loan less any
outstanding Policy Debt and less loan interest projected to the next Policy
Anniversary at the then current Loan Interest Rate.
Maturity Date: Unless a different date is mandated under applicable state law,
the Maturity Date will be the Policy Anniversary nearest the Insured's 95th
birthday. The Maturity Date is the latest date on which a premium payment may be
made.
Monthly Deduction: Charges deducted monthly from the Policy Value of a
Policy prior to the Maturity Date. The charges include the monthly cost of
insurance, the monthly cost of any benefits provided by riders, and the monthly
administrative charge.
Monthly Payment Date: The date on which the Monthly Deduction is deducted from
Policy Value.
Net Premium: An amount equal to the premium payment made less a tax expense
charge and any applicable premium charge.
Policy Change: Any change in the Specified Amount, the addition or deletion of a
rider, or a change in the Death Benefit Option and certain changes in
Underwriting Class.
Policy Date: The date set forth in the Policy used to determine the Monthly
Payment Date, Policy months, Policy years, and Policy anniversaries.
Policy Debt: All unpaid Policy loans plus interest currently due or accrued on
such loans.
Policy Value: The total amount available for allocation under a Policy at any
time. It is equal to the sum of (a) the value of the Accumulation Units credited
to a Policy in the Sub-Accounts, and (b) the value held in the Fixed Account
credited to that Policy.
Policyowner: The corporation, partnership, trust, individual or other entity who
owns the Policy.
Principal Office: C.M. Life's home office, located at 140 Garden Street,
Hartford, CT 06154.
Proceeds: Amounts paid to the Policyowner (or any assignee) through a surrender
or payment at Maturity or to the Beneficiary at the death of the Insured.
Proceeds equal the Surrender Value, if paid out by Surrender or at the Maturity
Date. If paid on the death of the Insured the amount of the Proceeds will depend
on the Death Benefit option selected.
Pro Rata Allocation: A method of allocating amounts to or from the Fixed Account
and the Sub-Accounts that contain Policy Value. Each account will be allocated a
percentage of the total amount to be allocated, and that percentage will be
equal to the percentage of the total Policy Value less Policy Debt that is
contained in that account.
Separate Account: The separate investment account called "C.M. Life Variable
Life Separate Account I." Established by C.M. Life under the laws of the State
of Connecticut, the Separate Account is registered as a unit investment trust
under the Investment Company Act of 1940, as amended. The Separate Account will
be used to receive and invest premiums for the Policy and it may also be used
for other variable life insurance policies that C.M. Life may issue.
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Service Center: Currently, C.M. Life's home office, located at 140 Garden
Street, Hartford, Connecticut 06154. Specified Amount: The amount of insurance
coverage applied for. The Specified Amount of each Policy is set forth in the
specification pages of the Policy.
Sub-Account: A division of the Separate Account. Each Sub-Account invests
exclusively in the shares of a corresponding portfolio of the Panorama Fund,
Oppenheimer Funds or VIP Funds.
Surrender Value: The amount payable upon a full surrender of the Policy. It is
the Policy Value less any Policy Debt.
Target Premium: A premium amount used to determine premium charges for the
Policy. Target Premiums vary by Insured's Age, Underwriting Class, and tobacco
status.
Underwriting Class: The risk classification that C.M. Life assigns the Insured
based on the type of underwriting applied to the Insured, the information in the
application and any other Evidence of Insurability considered by C.M. Life. The
Insured's Underwriting Class will affect the cost of insurance charge and the
amount of premium required to keep the Policy in force.
Valuation Date: A day on which the net asset value of the shares of the Panorama
Fund, Oppenheimer Funds or VIP Funds is determined and Accumulation Unit values
of the Sub-Accounts are determined. Valuation Dates currently occur on each day
on which the New York Stock Exchange is open for trading.
Valuation Period: The interval between two consecutive Valuation Dates.
Written Request: A request by the Policyowner in writing in a form satisfactory
to C.M. Life.
You or Your: The Policyowner, as shown in the application for the Policy.
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Summary
This Policy, issued by C.M. Life, is an individual flexible premium variable
life insurance policy. The Policy is generally issued to corporations and other
entities who are employers. The Policy is subject to certain underwriting rules.
While it provides a Death Benefit, Surrender Values, and Policy Loan options
like a traditional life insurance product, it offers the Policyowner the
flexibility to adjust the amount and timing of premiums paid. The Policy will
remain in effect as long as the Policy Value less Policy Debt is sufficient to
cover any charges assessed against the Policy. The Policy is "variable" in that
it allows the Policyowner to bear the investment risk on Policy Value allocated
to any of the Sub-Account choices offered by the Policy. While Policy Value
allocated to the Fixed Account bears interest at a fixed rate guaranteed to be
no lower than 4% annually, Policy Value allocated to a Sub-Account will vary
with the investment performance of that Sub-Account. The Sub-Accounts do not
have a guaranteed minimum rate of return. (See "The Policy.")
Net premiums and Policy Value may be allocated among any of the ten Sub-Accounts
and the Fixed Account. Each of the ten Sub-Accounts invests in a corresponding
Portfolio of the Panorama Fund, Oppenheimer Funds, VIP Fund or VIP Fund II.
These Portfolios include six Panorama Fund Portfolios: Total Return; Growth;
International Equity; LifeSpan Diversified Income; LifeSpan Balanced; and
LifeSpan Capital Appreciation. The one available Oppenheimer Fund is the
Oppenheimer Bond Fund. The two VIP Fund Portfolios are the Money Market and the
High Income, while the Index 500 Portfolio is offered by VIP Fund II. (See
"DESCRIPTION OF C.M. LIFE, MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, THE
SEPARATE ACCOUNT, PANORAMA FUND, OPPENHEIMER FUNDS AND VIP FUNDS.")
Transfers of Policy Value, within certain limits, are allowed between these
options. Currently, the first twelve transfers per policy year will be free of
charge. The charge per transfer in excess of twelve per Policy year is $25.
Rebalancing of the Policy Value among the Sub-Accounts and the Fixed Account may
be chosen by the Policyowner. Rebalancing compares the percentage of the total
Policy Value in each of the Sub-Accounts and the Fixed Account with a set of
percentages specified by the Policyowner. If those percentages differ by more
than a specified tolerance, automatic transfers will rebalance the Policy Value
within each Sub-Account to match the specified mix. Automatic transfers do not
count toward the twelve free transfers. (See "TRANSFER PRIVILEGES" and "ACCOUNT
REBALANCING.")
In addition to premium flexibility and investment choices, the Policy offers
other choices. At issue, and once per policy year, the Policyowner may choose
between two Death Benefit Options. Death Benefit Option 1 is a level death
benefit equal to the Specified Amount (or if greater, the Guideline Minimum
Death Benefit), while Death Benefit Option 2 is an increasing death benefit
equal to the Specified Amount plus the Policy Value (or if greater, the
Guideline Minimum Death Benefit). The Policyowner may also choose the test to be
used to determine if the Policy qualifies as "life insurance" under Federal Tax
laws. The two choices are the Cash Value Accumulation Test and the Guideline
Premium Test. The Definition of Life Insurance Test cannot be changed after
issue.
The Policy offers other benefits and features described in greater detail in
"The Policy" section of this prospectus. Additionally, you should consult the
Policy itself to reference the insurance coverage and rights afforded to the
Policyowner.
There are no surrender charges assessed upon full surrender of the Policy.
Partial withdrawals are permitted at any time, and are subject to a transaction
charge of $25. Loans are available from the inception of the Policy, and
Preferred Loans are available after the tenth policy year. Within certain limits
the Specified Amount can be adjusted by the Policyowner, and the Policy may be
reinstated for up to three years from the lapse date.
The charges associated with the Policy include a tax expense charge, a premium
charge, and a Monthly Deduction. The Monthly Deduction consists of a charge for
the cost of insurance, a charge for any additional benefits provided by rider,
and a monthly administrative charge. There are also charges associated with
certain transactions that may be requested by the Policyowner. (See "CHARGES AND
DEDUCTIONS.")
Charges are also assessed against assets of the Separate Account. A mortality
and expense risk charge, and an administrative charge are assessed against all
assets in the Separate Account. Additionally, investment advisory fees and other
expense charges are assessed by each Fund. See the accompanying prospectuses for
each Fund for more detail concerning applicable Fund charges. (See "CHARGES AND
DEDUCTIONS.")
The purpose of the Policy is to provide insurance protection on the life of the
named Insured. This Summary is intended to provide only a very brief overview of
the more significant aspects of the Policy. Further detail is provided in this
prospectus and in the Policy. No claim is made that the Policy is in any way
similar or comparable to a systematic investment plan of a mutual fund. The
Policy together with its attached application and any amendments thereto
constitutes the entire agreement between C.M. Life and you.
DESCRIPTION OF C.M. LIFE,
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, THE SEPARATE
ACCOUNT, THE PANORAMA FUND,
OPPENHEIMER FUNDS, VIP FUND,
AND VIP FUND II.
C.M. Life
C.M. Life is a stock life insurance company located at 140 Garden Street,
Hartford, CT 06154. C.M. Life was chartered by
6
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a Special Act of the Connecticut General Assembly on April 25, 1980. C.M. Life
is principally engaged in the sale of life insurance policies and annuity
contracts, and is licensed to sell such products in all states except New York.
C.M. Life is a wholly-owned subsidiary of Massachusetts Mutual Life Insurance
Company ("MassMutual"). As of April 1, 1998 C.M. Life is licensed to transact a
variable life insurance business in 48 States plus Puerto Rico and The District
of Colombia.
MassMutual
MassMutual is a mutual life insurance company chartered in 1851 under the laws
of Massachusetts. Its Home Office is located in Springfield, Massachusetts.
MassMutual is licensed to transact life, accident and health business in all
fifty states of the United States, the District of Columbia, Puerto Rico and
certain provinces of Canada. As of December 31, 1997, MassMutual had total
contingency reserves in excess of $2.8 billion and unconsolidated assets of
$57.6 billion.
The Separate Account
The Separate Account was established on February 2, 1995, by the Board of
Directors of C.M. Life, in accordance with the laws of the State of Connecticut.
The Separate Account is a separate investment account of C.M. Life, and is
registered with the Securities and Exchange Commission ("SEC") as a unit
investment trust under the Investment Company Act of 1940, as amended ("1940
Act"). Such registration does not involve the supervision of its management or
investment practices or policies of the Separate Account or C.M. Life by the
SEC.
The assets used to fund the variable portion of the Policies are set aside in
the Separate Account and are kept separate from the general assets of C.M. Life.
Assets equal to the reserves and other liabilities of the Separate Account may
not be charged with any liabilities arising out of any other business of C.M.
Life.
The Separate Account currently has ten Sub-Accounts. Each Sub-Account is
administered and accounted for as part of the general business of C.M. Life, but
the income, capital gains, or capital losses of each Sub-Account are allocated
to such Sub-Account, without regard to other income, capital gains, or capital
losses of C.M. Life or the other Sub-Accounts. Each of the ten Sub-Accounts
invests its assets in an investment portfolio of either the Panorama Fund,
Oppenheimer Funds or VIP Funds, each open-end management investment companies
registered under the SEC under the 1940 Act. The Income Sub-Account invests in
the Bond Fund of the Oppenheimer Funds. The Total Return, Growth, International
Equity, LifeSpan Capital Appreciation, LifeSpan Balanced and LifeSpan
Diversified Income Sub-Accounts invest in the corresponding Portfolios of the
Panorama Fund. The Money Market and the High Income Sub-Accounts invest in the
corresponding Portfolios of the VIP Fund. The Index 500 Sub-Account invests in
the corresponding Portfolio of the VIP Fund II. The Panorama Fund and
Oppenheimer Funds are managed by OppenheimerFunds, Inc. ("OFI") while the VIP
Funds are managed by FMR & Research Company ("FMR").
Each Sub-Account has two sub-divisions. One sub-division applies to Policies
during their first twenty Policy years, which are subject to a Separate Account
administrative charge. (See "CHARGES AND DEDUCTIONS - Charges Against Assets of
the Separate Account.") Thereafter, such Policies are automatically allocated to
the second subdivision to account for the elimination of the Separate Account
administrative charge and the reduction in the Mortality and Expense Risk
Charge.
C.M. Life reserves the right, subject to compliance with applicable law, to
change the names of the Sub-Accounts and Separate Account and to add or delete
Sub-Accounts. Any additional Sub-Accounts added will invest in vehicles
determined by C.M. Life to be available for investment by the Separate Account.
The Panorama Fund
Panorama Series Fund, Inc. (the "Panorama Fund") is an open-end, diversified
management investment company registered with the SEC under the 1940 Act. Such
registration does not involve supervision by the SEC of the investments or
investment policy of the Trust or its separate investment Portfolios.
The Panorama Fund was incorporated in Maryland on August 17, 1981. The Panorama
Fund has seven Portfolios including: Government Securities Portfolio; Total
Return Portfolio; Growth Portfolio; International Equity Portfolio; LifeSpan
Diversified Income Portfolio; LifeSpan Balanced Portfolio; and LifeSpan Capital
Appreciation Portfolio. The Government Securities Portfolio is not available in
this Policy.
OFI is a controlled subsidiary of MassMutual, serves as investment adviser of
the Panorama Fund, and manages the investments of the Panorama Fund Portfolios.
(See "INVESTMENT ADVISORY SERVICES TO THE PANORAMA FUND.")
Oppenheimer Funds
The Oppenheimer Bond Fund is one of the funds of the Oppenheimer Funds, an
open-end, diversified, management investment company, which is available to act
as the investment vehicle for separate accounts for variable insurance policies
offered by insurance companies. OFI supervises the investment operations of the
Oppenheimer Funds and is registered as an investment adviser under the
Investment Advisers Act of 1940.
VIP Fund and VIP Fund II
VIP Fund and VIP Fund II are each managed by FMR. Two VIP Fund Portfolios are
available under the Policies: the Money Market Portfolio, and High Income
Portfolio. Additionally, the Index 500 Portfolio of the VIP Fund II is available
under the Policy.
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Various Fidelity companies perform certain activities required to operate VIP
Funds. FMR, a registered investment adviser under the Investment Advisers Act of
1940, is one of America's largest investment management organizations and has
its principal business address at 82 Devonshire Street, Boston, MA. It is
composed of a number of different companies, which provide a variety of
financial services and products. Fidelity Investment is the original Fidelity
company, founded in 1946. It provides a number of mutual funds to other clients
with investment research and portfolio management services.
Investment Objectives and Policies
A summary of investment objectives of each of the Funds' Portfolios offered as
investment under the Policies is set forth below. More detailed information
regarding the investment objectives, restrictions and risks, expenses paid by
the Funds and their Portfolios, and other relevant information regarding the
Funds may be found in their respective prospectuses, which accompany this
prospectus. Each of the prospectuses should be read carefully before investing.
The statements of additional information of the Funds are available by written
or telephone request to the Panorama Fund, Oppenheimer Funds and VIP Funds,
whose addresses and telephone numbers are shown in their prospectuses. There can
be no assurance that the investment objectives of the Funds can be achieved.
Oppenheimer Bond Fund. The Oppenheimer Bond Fund of the Oppenheimer Funds seeks
a high level of current income by investing primarily in debt securities. As a
secondary objective, the Bond Fund seeks capital growth when consistent with its
primary objective.
Total Return Portfolio. The Total Return Portfolio of the Panorama Fund seeks to
maximize over time the return achieved from capital appreciation and income by
varying the allocation of the assets of the Portfolio among stocks, corporate
bonds, securities issued by the U.S. Government and its instrumentalities and
money market instruments according to changing market conditions.
Growth Portfolio. The Growth Portfolio of the Panorama Fund seeks to achieve
long-term growth of capital by investing in common stocks with low
price-earnings ratios and better than anticipated earnings. Realization of
current income is a secondary consideration.
International Equity Portfolio. The International Equity Portfolio of the
Panorama Fund seeks long-term capital growth by investing primarily (at least
90% of its total assets under normal circumstances) in equity securities of
companies based outside the United States. A portion of the Portfolio's
investments may be held in cash and in short-term instruments. Current income is
a secondary consideration.
LifeSpan Portfolios. The LifeSpan Portfolios consist of various sub-accounts
that invest in a variety of underlying asset classes. The primary investment
objectives of these LifeSpan Portfolios are as follows:
LifeSpan Capital Appreciation Portfolio seeks long-term capital appreciation
through a strategically allocated portfolio consisting primarily of equity
securities.
LifeSpan Balanced Account Portfolio seeks capital appreciation and income
through a strategically allocated portfolio of equity securities and fixed
income securities with a slightly stronger focus on equity securities.
LifeSpan Diversified Income Portfolio attempts to provide long-term protection
for cautious investors, seeking high current income focusing on fixed income
securities.
Money Market Portfolio. The Money Market Portfolio of VIP Fund is invested in a
diversified portfolio of high-quality, short term debt instruments with the
objective of obtaining maximum current income consistent with the preservation
of capital and liquidity.
High Income Portfolio. The High Income Portfolio of VIP Fund seeks to obtain a
high level of current income by investing primarily in high yielding, lower
rated fixed income securities (commonly referred to as "junk bonds"), while also
considering growth of capital. These securities are often considered to be
speculative and involve greater risk of default or price changes than securities
assigned a high quality rating. For more information about these lower rated
securities, see "Securities and Investment Practices" in the VIP Fund
prospectus.
Index 500 Portfolio. The Index 500 Portfolio of VIP Fund II seeks investment
results that correspond to the total return (i.e., the combination of capital
changes and income) of common stocks publicly traded in the United States, as
represented by the Standard & Poor's Composite Index of 500 Stock Prices (the
"S&P 500"), while keeping transaction costs and other expenses low.
Index 500 Portfolio is not managed according to traditional methods of "active"
investment management, which involve the buying and selling of securities based
upon economic, financial, and market analyses and investment judgment. Instead,
the fund, utilizing a "passive" or "indexing" investment approach, attempts to
duplicate the performance of the S&P 500.
THE PANORAMA FUND PORTFOLIOS AND THE OPPENHEIMER FUND MAY HAVE INVESTMENT
OBJECTIVES AND/OR POLICIES SIMILAR TO THOSE OF CERTAIN VIP FUND PORTFOLIOS.
THEREFORE, TO CHOOSE THE SUB-ACCOUNTS WHICH WILL BEST MEET YOUR NEEDS AND
OBJECTIVES, CAREFULLY READ THE PROSPECTUSES OF THE PANORAMA FUND, OPPENHEIMER
FUNDS, VIP FUND AND VIP FUND II ALONG WITH THIS PROSPECTUS. IN SOME STATES,
INSURANCE REGULATIONS MAY RESTRICT THE AVAILABILITY OF PARTICULAR SUB-ACCOUNTS.
8
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If required in your state, in the event of a material change in the investment
policy of a Sub-Account or the Funds in which it invests, you will be notified
of the change. If you have Policy Value in that Sub-Account, C.M. Life will
transfer it without charge on Written Request by you to another Sub- Account or
to the Fixed Account. C.M. Life must receive your written request within sixty
(60) days of the later of (1) the effective date of such change in the
investment policy or (2) the receipt of the notice of your right to transfer.
You may then change your premium allocation percentages.
Investment Advisory Services to the
Panorama Fund and Oppenheimer Funds
The Panorama Fund and Oppenheimer Funds have entered into investment advisory
agreements with OFI. Under the investment advisory agreements, OFI provides
certain administrative services and investment advice to each Panorama Fund
Portfolio and Oppenheimer Fund Portfolio. OFI provides administrative and
management services to the Panorama Fund and the Oppenheimer Funds, such as
providing accounting, administrative and clerical personnel and monitoring the
activities of the custodian and independent auditors for the Panorama Fund and
the Oppenheimer Funds. The investment advisory agreement obligates OFI to
provide investment advisory services and to pay all compensation of and furnish
office space for officers of the Panorama Fund and Oppenheimer Funds connected
with investment and economic research, trading and investment management of the
Panorama Fund, Oppenheimer Funds and their respective Portfolios. Each Panorama
Fund Portfolio and Oppenheimer Fund Portfolio pays all other expenses incurred
in its operation. The Board of Directors of the Panorama Fund and the Board of
Trustees of the Oppenheimer Funds are primarily responsible for monitoring
activities of OFI.
OFI has engaged three sub-advisers: Babson-Stewart Ivory International
("Babson-Stewart"), BEA Associates ("BEA") and Pilgrim Baxter & Associates
("Pilgrim Baxter") to provide day-to-day portfolio management of certain
components of the LifeSpan Portfolios. Babson-Stewart also provides day-to-day
portfolio management services to the International Equity Portfolio.
Babson-Stewart, BEA and Pilgrim Baxter are registered as investment advisers
under the Investment Advisers Act of 1940.
For providing its services under the investment advisory agreement, OFI will
receive a monthly fee, computed daily at an annual rate based on the average
daily net asset value of each Panorama Fund Portfolio and the Oppenheimer Bond
Fund as follows:
<TABLE>
<CAPTION>
Portfolio Net Asset Value Rate
--------- ----------------- ------
<S> <C> <C>
Total Return First $600 Million 0.625%
More than $600 Million 0.450%
International Equity First $250 Million 1.000%
More than $250 Million 0.900%
Growth First $300 Million 0.625%
Next $100 Million 0.500%
More than $400 Million 0.450%
LifeSpan Diversified Income First $250 Million 0.750%
Over $250 Million 0.650%
LifeSpan Balanced First $250 Million 0.850%
Over $250 Million 0.750%
LifeSpan Capital Appreciation First $250 Million 0.850%
Over $250 Million 0.750%
Oppenheimer Bond(*) First $200 Million 0.750%
Next $200 Million 0.720%
Next $200 Million 0.690%
Next $200 Million 0.660%
Next $200 Million 0.600%
Over $1 Billion 0.500%
</TABLE>
(*)Prior to April 30, 1996, the Government Securities and Income Sub-Accounts of
the Separate Account were invested in the corresponding Portfolios of the
Panorama Fund. The management fee, other expenses and total portfolio annual
expenses for the fiscal year ended December 31, 1995 for the Government
Securities Portfolio were 0.554%, 0.156%, and 0.71% respectively, and for the
Income Portfolio were 0.59%, 0.06%, and 0.65% respectively. On April 30, 1996,
C.M. Life redeemed those shares of the Government Securities and Income
Portfolios of the Panorama Fund and purchased shares of the Bond Portfolio of
the Oppenheimer Funds with the proceeds.
9
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Investment Advisory Services to the
VIP Funds
For managing investments and business affairs, each VIP Fund and VIP Fund II
Portfolio pays a monthly fee to FMR. The Prospectuses of the VIP Fund and VIP
Fund II contain additional information concerning the Portfolios, including
information concerning additional expenses paid by the VIP Portfolios, and
should be read in conjunction with this Prospectus.
VIP Fund Portfolios
The Money Market Portfolio's management fee is (a) the sum of an individual fund
fee rate of 0.03% and a group fee rate; and (b) the addition of an income
component of 6% of the Portfolio's gross income in excess of a 5% annual yield.
The result is multiplied by the Portfolio's average net assets. The group fee
rate, which is based on the average net assets of all of the mutual funds
advised by FMR, cannot rise above 0.37%, and it drops as total assets under
management increase. The income component cannot rise above 0.24%. The
management fee rate for the Money Market Portfolio as of December 31, 1997 was
0.21%.
The High Income Portfolio pays a monthly fee to FMR at an
annual fee rate made up of the sum of two components:
1. A group fee rate based on the monthly average net assets
of all the mutual funds advised by FMR. On an annual basis this rate cannot
rise above 0.37%, and it drops to as low as 0.14% as total assets in all
these funds rise.
2. An individual fund fee rate of 0.45% of the High Income Portfolio's average
net assets throughout the month. One- twelfth of the annual management fee
rate is applied to net assets averaged over the most recent month, resulting
in a dollar amount which is the management fee for that month.
One-twelfth of the sum of these two rates is applied to the respective VIP Fund
Portfolio's net assets averaged over the most recent month, giving a dollar
amount which is the fee for that month.
Thus, the High Income Portfolio may have an annual fee of as high as 0.82% of
its average net assets. The actual fee rate may be less depending on the total
assets in each Portfolio and in the other funds advised by FMR. The effective
management fee rate for the High Income Portfolio as of December 31, 1997 was
0.59%.
VIP Fund II Portfolio
The Index 500 Portfolio had a monthly fee payable at the annual rate of 0.27% of
its average net assets. The actual advisory expenses for 1997 equaled 0.40% of
the Portfolio's average net assets.
Changes to the Separate Account
C.M. Life reserves the right, subject to compliance with applicable law, to
change the names of the Separate Account or its Sub-Accounts. C.M. Life also
reserves the right to add new Sub-Accounts and to restrict investments in Sub-
Accounts that C.M. Life deems unsuitable for investment.
Voting Rights
To the extent required by law, C.M. Life will vote Panorama Fund, Oppenheimer
Funds, VIP Fund, or VIP Fund II shares held by each Sub-Account in accordance
with instructions received from Policyowners with Policy Value in such Sub-
Account. If the 1940 Act or any rules thereunder should be amended or if the
present interpretation of the 1940 Act or such rules should change, and as a
result C.M. Life determines that it is permitted to vote shares in its own
right, whether or not such shares are attributable to the Policies, C.M. Life
reserves the right to do so.
Each person having a voting interest will be provided with proxy materials of
the Panorama Fund, Oppenheimer Funds or the particular VIP Fund together with an
appropriate form with which to give voting instructions to C.M. Life. Shares
held in each Sub-Account for which no timely instructions are received will be
voted in proportion to the instructions received from all persons with an
interest in such Sub- Account furnishing instructions to C.M. Life. C.M. Life
will also vote shares held in the Separate Account that it owns and which are
not attributable to Policies in the same proportion.
The number of votes which a Policyowner has the right to instruct will be
determined by C.M. Life as of the record date established for the Panorama Fund,
Oppenheimer Funds or the particular VIP Fund. This number is determined by
dividing each Policyowner's Policy Value in the Sub- Account, if any, by $100.
C.M. Life may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as (1) to cause a change in the subclassification or investment
objective of one or more of the Panorama Fund, Oppenheimer Funds or VIP Fund
Portfolios; or (2) to approve or disapprove an investment advisory contract for
the Panorama Fund, Oppenheimer Funds or VIP Funds. In addition, C.M. Life may
disregard voting instructions in favor of any change in the investment policies
or in any investment adviser or principal underwriter initiated by Policyowners,
the Board of Directors of the Panorama Fund or the Board of Trustees of the
Oppenheimer Funds, or the VIP Funds. C.M. Life's disapproval of any such change
must be reasonable and, in the case of a change in investment policies or
investment adviser, based on a good faith determination that such change would
be contrary to state law or otherwise is inappropriate in light of the
objectives and purposes of the Panorama Fund, Oppenheimer Funds or the VIP
Funds. In the event C.M. Life does disregard voting instructions, a summary of
and the reasons for that action will be included in the next periodic report to
Policyowners.
PERFORMANCE INFORMATION
C.M. Life from time to time may advertise the "Total Return" and the "Average
Annual Total Return." Such figures are based on historical earnings and are not
intended to indicate future performance.
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"Total Return" for a Portfolio refers to the total of the income generated by
the Portfolio net of total Portfolio operating expenses plus capital gains and
losses, realized or unrealized. "Total Return" for the Sub-Accounts refers to
the total of the income generated by the Portfolio net of total Portfolio
operating expenses plus capital gains and losses, realized or unrealized, the
mortality and expense risk charge, and the Separate Account administrative
charges. "Average Annual Total Return" reflects the hypothetical annually
compounded return that would have produced the same cumulative return if the
Portfolio's or Sub-Account's performance had been constant over the entire
period. Because Average Annual Total Returns tend to smooth out variations in
the return of the Portfolio, they are not the same as actual year-by-year
results.
Performance information may be compared, in reports and promotional literature,
to: (i) the Standard & Poor's 500 Stock Index ("S&P 500"), Dow Jones Industrial
Average ("DJIA"), Shearson Lehman Aggregate Bond Index or other unmanaged
indices so that investors may compare the Sub- Account results with those of a
group of unmanaged securities widely regarded by investors as representative of
the securities markets in general; (ii) other groups of variable life separate
accounts or other investment products tracked by Lipper Analytical Services, a
widely used independent research firm which ranks mutual funds and other
investment products by overall performance, investment objectives, and assets,
or tracked by other services, companies, publications, or persons, such as
Morningstar, Inc., who rank such investment products on overall performance or
other criteria; or (iii) the Consumer Price Index (a measure for inflation) to
assess the real rate of return from an investment in the Sub- Account. Unmanaged
indices may assume the reinvestment of dividends but generally do not reflect
deductions for administrative and management costs and expenses.
C.M. Life may provide in advertising, sales literature, periodic publications or
other materials information on various topics of interest to Policyowners and
prospective Policyowners. These topics may include the relationship between
sectors of the economy and the economy as a whole and its effect on various
securities markets, investment strategies and techniques (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer and account rebalancing), the advantages and disadvantages of
investing in tax-deferred and taxable investments, customer profiles and
hypothetical purchase and investment scenarios, financial management and tax and
retirement planning, and investment alternatives to certificates of deposit and
other financial instruments, including comparisons between the Policies and the
characteristics of and market for such financial instruments.
The Policies were first offered to the public in 1995. However, total return
data may be advertised based on the period of time that the Portfolios have been
in existence. The results for any period prior to the Policies being offered
will be calculated as if the Policies had been offered during that period of
time, with all charges assumed to be those applicable to the Policies.
Portfolio Performance for Period Ending:
December 31, 1997
The following performance information of the Portfolio reflects the total of the
income generated by the Portfolio net of total Portfolio operating expenses plus
capital gains and losses, realized or unrealized. The performance information
does not reflect the mortality and expense risk charges assessed against the
Separate Account. Also, they do not reflect deduction for tax expenses, premium
charges, administrative charges, cost of insurance, and underwriting charges
assessed against the Policy Value. Therefore, these rates are not illustrative
of how actual investment performance will affect the benefits under the Policy.
The rates of return shown are not necessarily indicative of future performance.
They may be considered in assessing the competence and performance of the
advisers to the Panorama Fund, Oppenheimer Funds, and VIP Funds.
11
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return of the Portfolios
---------------------------------------------
Portfolio lYr. 3Yr. 5Yr. lOYr. Life of Portfolio
--------- ------ ------ ------ ------ -----------------
<S> <C> <C> <C> <C> <C>
Growth 26.37% 27.52% 20.12% 18.66% 18.31%
Money Market 5.51% 5.60% 4.85% 5.87% 6.89%
Total Return 18.81% 17.72% 13.21% 13.80% 14.05%
Oppenheimer Bond 9.25% 10.23% 8.23% 9.50% 9.89%
High Income 17.67% 17.44% 13.91% 12.81% 12.45%
International Equity 8.11% 10.53% 10.78% N/A 8.66%
Index 500 32.82% 30.76% 19.91% N/A 19.87%
LifeSpan Balanced 12.20% N/A N/A N/A 13.71%
LifeSpan Diversified Income 12.51% N/A N/A N/A 10.84%
LifeSpan Capital Appreciation 12.53% N/A N/A N/A 16.07%
</TABLE>
Portfolio Inception Dates: Growth 1-21-82, Money Market 4-1-82, Total Return
9-30-82, Oppenheimer Bond 4-3-85, High Income 9-19-85, International Equity
5-13-92, Index 500 8-27-92, LifeSpan Balanced 9-1-95, LifeSpan Diversified
9-1-95, and LifeSpan Capital Appreciation 9-1-95.
The annualized yield for the Money Market Portfolio for the seven days ending
December 31, 1997 was 5.56%.
Annualized One Year Total Returns
<TABLE>
<CAPTION>
For the
Year Money Total Oppenheimer High International Index LifeSpan LifeSpan LifeSpan
Ended Growth Market Return Bond Income Equity 500 Balanced Div. Inc. Cap. App.
----- ------ ------ ------ ------ ------ -------- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 26.37% 5.51% 18.81% 9.25% 17.67% 8.11% 32.82% 12.20% 12.51% 12.53%
1996 18.87% 5.41% 10.14% 4.80% 14.03% 13.26% 22.71% 13.38% 6.93% 17.97%
1995 38.06% 5.87% 24.66% 17.00% 20.72% 10.30% 37.19% 6.08%* 5.69%* 6.65%*
1994 -0.51% 4.25% -1.97% -1.94% -1.64% 1.44% 1.04%
1993 21.22% 3.23% 16.28% 13.04% 20.40% 21.80% 9.74%
1992 12.36% 3.90% 10.21% 6.50% 23.17% -2.37%* 6.31%*
1991 37.53% 6.09% 28.79% 17.63% 35.08%
1990 -7.90% 8.04% 0.50% 7.92% -2.23%
1989 35.81% 9.12% 22.98% 13.32% -4.17%
1988 14.46% 7.39% 11.64% 8.97% 11.64%
1987 0.25% 6.44% 4.26% 2.52% 1.22%
1986 11.58% 6.70% 12.58% 10.12% 17.68%
1985 27.31% 8.11% 25.43% 18.82%* 6.38%*
1984 4.89% 10.43% 6.68%
1983 32.72% 9.16% 20.20%
1982 33.00%* 9.26%* 8.10%*
</TABLE>
*The figures shown are from inception of the Fund and are not annualized.
12
<PAGE>
Sub-Account Investment Performance for the Period Ending: December 31, 1997
The following performance information of the Sub-Accounts assumes that the
Sub-Accounts have been in operation for the same periods as the corresponding
Portfolio and investing in the corresponding Portfolio. It reflects the total of
the income generated by the Portfolio net of total Portfolio operating
expenses, plus capital gains and losses, realized or unrealized, net of the
mortality and expense risk charge and the separate account administrative
charge.
The following Sub-Account Performance figures do not reflect three significant
charges. If these charges were included, the total return figures would be
lower. First, cost of insurance charges have not been deducted. Second, the
total return figures do not reflect the deduction from premiums of the 2.0% tax
expense charge or any applicable premium charge. Third, the figures do not
reflect the deduction of the monthly administrative charge.
<TABLE>
<CAPTION>
Average Annual Total Return of the Sub-Account
----------------------------------------------
Sub-Account 1 Yr. 3 Yr. 5 Yr. 10 Yr. Life of Sub-Account
- ----------- ------ ------ ------ ------ -------------------
<S> <C> <C> <C> <C> <C>
Growth 25.26% 26.41% 19.07% 17.61% 17.26%
Money Market 4.57% 4.66% 3.92% 4.93% 5.93%
Total Return 17.76% 16.68% 12.21% 12.79% 12.80%
Bond 8.28% 9.26% 7.27% 8.53% 8.88%
High Income 16.63% 16.41% 12.91% 11.81% 11.48%
International Equity 7.15% 9.56% 9.80% N/A 7.59%
Index 500 31.66% 29.62% 18.86% N/A 19.07%
LifeSpan Balanced 11.21% N/A N/A N/A 12.43%
LifeSpan Diversified Income 11.52% N/A N/A N/A 9.59%
LifeSpan Capital Appreciation 11.54% N/A N/A N/A 14.77%
</TABLE>
13
<PAGE>
The Policy
APPLICATION FOR A POLICY
Upon receipt at its Principal Office of a completed application from a
prospective Policyowner, C.M. Life will follow certain insurance underwriting
procedures designed to determine whether the proposed Insured is insurable. This
process may involve such verification procedures as medical examinations and may
require that further information be provided by the proposed Policyowner before
a determination of insurability can be made. In some cases, an entire group of
Insureds will be pre-approved for Guaranteed Issue underwriting based on
information provided by the common Policyowner on a master application. In other
cases, however, applications will be subject to full underwriting, in which case
C.M. Life reserves the right to reject an application which does not meet C.M.
Life's underwriting guidelines. In all cases, C.M. Life shall comply with all
applicable federal and state prohibitions concerning unfair discrimination. This
process may include an assessment of whether the Policyowner has a sufficient
insurable interest in the Insured to support ownership of the Policy under
applicable state insurance laws. A Policy cannot be issued until this
underwriting procedure has been completed.
If, at the time of application, a prospective Policyowner makes a premium
payment equal to at least the planned periodic premium selected for the Policy,
pending underwriting approval, C.M. Life will provide fixed conditional
insurance pursuant to a Conditional Insurance Agreement in the amount of
insurance applied for, up to a maximum of $1,000,000. This coverage will
generally continue for a maximum of 90 days from the date of the application or
the completion of a medical exam, should one be required. In no event will any
insurance proceeds be paid under the Conditional Insurance Agreement if death is
by suicide.
If the application is approved, the Policy will be issued with a Policy date as
of the date the terms of the Conditional Insurance Agreement were met. If no
Conditional Insurance Agreement is in effect because the prospective Policyowner
does not wish to make any payment until the Policy is issued or has paid an
initial premium that is not sufficient to place the Policy in force, upon
delivery of the Policy C.M. Life will require payment of sufficient premium to
place the insurance in force.
Pending completion of insurance underwriting and Policy issuance procedures, the
initial premium will be held in the Company's General Account. If the
application is approved and the Policy is issued and accepted, the Net Premium
which was held in the General Account will be credited with interest at a
specified rate (no less than 3%) beginning not later than the date of receipt of
the premium at the Company's Service Center. IF A POLICY IS NOT ISSUED AND
ACCEPTED, THE INITIAL PREMIUMS WILL BE RETURNED TO YOU WITHOUT INTEREST.
If your application is approved, your Policy Value will be allocated according
to your instructions following issuance of the Policy. If your Policy provides
for a full refund of the initial purchase payment under its "Right to Examine
Policy" provision (see "THE POLICY - "Free Look Period"), for the first 10 days
following issuance and acceptance of the Policy, unless an extended right-to-
examine provision applies under applicable state law, the portion of your Policy
Value which you have instructed to be allocated to the Separate Account will be
allocated to the Money Market Sub-Account. Thereafter, your Policy Value will be
allocated to the Sub-Accounts and the Fixed Account according to your
instructions.
Subject to the approval of C.M. Life, a Policy may be backdated no more than six
months prior to the date of application. Backdating may be advantageous where
the Insured's lower Age on the Policy Date results in lower cost of insurance
rates. If a Policy is backdated, cost of insurance charges will be assessed as
of the backdated period.
FREE LOOK PERIOD
The Policy provides for an initial Free Look Period. You may cancel the Policy
by mailing or delivering the Policy to the Service Center or by delivering the
Policy to an agent of C.M. Life on or before the latest of: (a) 10 days after
you receive the Policy (unless a different period is applicable under state law
or regulation); or (b) 10 days after C.M. Life mails or personally delivers to
you a notice of withdrawal right. If your Policy provides for a full refund of
the initial payment under its "Right to Examine Policy" provision, you will
receive on cancellation the greater of (1) your entire payment, or (2) the
Surrender Value plus any amounts deducted under the Policy for taxes, charges or
fees. If your Policy does not provide for a full refund of the initial payment,
you will receive upon cancellation the sum of (1) the difference between any
payments made, including fees and charges, and the amounts allocated to the
Separate Account, (2) the Policy Value (on the date the cancellation request is
received by C.M. Life) attributable to the amounts allocated to the Separate
Account, and (3) any fees or charges imposed on amounts in the Separate Account.
The refund of any payment you have made by check may be delayed until the check
has cleared your bank.
CONVERSION PRIVILEGES
Once during the first 24 months after the Date of Issue or after the effective
date of an increase in Specified Amount, while the Policy is in force, you may
convert your Policy without Evidence of Insurability to any flexible premium
adjustable life insurance Policy with fixed and guaranteed minimum benefits
which had been offered by the Company or CML on the date of issue or on the
effective date of an increase in Specified Amount, whichever is applicable.
Assuming that there have been no increases in the initial Specified Amount, you
can accomplish this within 24 months after the date of issue by transferring,
without
14
<PAGE>
charge, the Policy Value in the Separate Account to the Fixed Account and by
simultaneously changing your premium allocation instructions to allocate future
premium payments to the Fixed Account. Within 24 months after the effective date
of each increase, you can transfer, without charge, all or part of the Policy
Value in the Separate Account to the Fixed Account and simultaneously change
your premium allocation instructions to allocate all or part of future premium
payments to the Fixed Account.
Where required by state law, and at your request, C.M. Life will issue a
flexible premium adjustable life insurance policy to you. The new Policy will
have the same Specified Amount, issue ages, and dates of issue as the original
Policy, and will have the underwriting classification we then offer that is most
similar to the original Policy.
PREMIUM PAYMENTS
Premium Payments (for both initial and subsequent premiums) are payable to C.M.
Life, and should be mailed to the Service Center. All premium payments after the
initial premium payment are credited to the Separate Account or Fixed Account as
of date of receipt in good order by C.M. Life at the Service Center.
You may establish a schedule of planned periodic premium payments. C.M. Life
will send you notice of such planned periodic payments at regular intervals.
Failure to pay planned periodic premiums, however, will not itself cause the
Policy to lapse. You may also make unscheduled premium payments at any time
prior to the Maturity Date or skip planned premium payments, subject to the
maximum and minimum premium limitations described below.
Premiums are not limited as to frequency and number. However, no premium payment
may be less than $100 without C.M. Life's consent. Moreover, premium payments
must be sufficient to provide a positive Surrender Value at the end of each
Policy month, or the Policy may lapse. (See "POLICY TERMINATION AND
REINSTATEMENT.")
If the Guideline Premium Test is chosen as the Definition of Life Insurance
Test, the test provides that there are maximum premium payments that may be
accepted. C.M. Life will not accept premium payments that will violate the
provisions of the test. If a premium payment is made in excess of the limits of
the Guideline Premium Test, C.M. Life will only accept that portion of the
premium payment that is within the limits and will refund the remainder. No such
maximum premium limitations apply under the Cash Value Accumulation Test.
However, notwithstanding the current maximum premium limitations, C.M. Life will
accept a premium which is necessary to prevent a lapse of the Policy during a
Policy year. We reserve the right to refuse any premium that would increase the
Insurance Amount at Risk.
ALLOCATION OF NET PREMIUMS
The Net Premium equals the premium paid less the 2% tax expense charge and any
applicable premium charge. At the time your application is submitted, you will
indicate your initial allocation of Net Premiums among the Fixed Account and the
Sub-Accounts of the Separate Account. There are no limitations concerning the
number of Sub-Accounts to which Net Premiums may be allocated. Allocation
percentages must be in whole numbers (for example, 33 1/3% may not be chosen)
and must total 100%.
For certain Policyowners, after the underwriting period and during the "Right to
Examine Policy" period, the portion of your Policy Value which you have
instructed to be allocated to the Separate Account will be allocated to the
Money Market Portfolio (see "THE POLICY - Application for a Policy").
Thereafter, your Net Premium will be allocated to the Sub- Accounts and the
Fixed Account according to your instructions.
You may change the allocation of future Net Premiums at any time pursuant to
written or telephone request. If allocation changes by telephone are elected by
the Policyowner, a properly completed authorization form must be on file before
telephone requests will be honored. C.M. Life and its agents and affiliates will
not be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. C.M. Life will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine; otherwise,
C.M. Life may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures C.M. Life follows for transactions initiated by
telephone include requirements that a Policyowner wanting to make such a change
identify themselves by name and identify a personal identification number. All
transfer instructions by telephone may be tape recorded as an additional
safeguard.
An allocation change will be effective as of the date of receipt of the notice
at the Service Center. Although no charge currently is imposed for changing
premium allocation instructions, C.M. Life reserves the right to impose such a
charge in the future. C.M. Life guarantees that such charge will not exceed $25.
The Policy Value in the Sub-Accounts will vary with their investment experience.
The Policyowner bears the investment risk that the Policy Value of each
Sub-Account will fluctuate. Further, investment performance of the Sub- Accounts
may affect the Proceeds as well. Policyowners should periodically review their
allocations of premiums and Policy Value in light of market conditions and
overall financial planning requirements.
TRANSFER PRIVILEGE
Subject to C.M. Life's then current rules, you may at any time transfer Policy
Value among the Sub-Accounts or between a Sub-Account and the Fixed Account. The
Policy Value held in the Fixed Account to secure a Policy Loan, however, may not
be transferred.
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All requests for transfers must be made to the Service Center. The amount
transferred will be based on the Policy Value in the Account(s) next computed
after receipt of the transfer order. C.M. Life will make transfers pursuant to
valid written or telephone request. As discussed in "THE POLICY - Allocation of
Net Premiums," a properly completed authorization form must be on file at the
Service Center before telephone requests will be honored.
(See "ALLOCATION OF NET PREMIUMS.")
Only one transfer from the Fixed Account to the Separate Account may be made
during each Policy year. The one transfer permitted may not exceed 25% of the
Policy Value held in the Fixed Account at the time of transfer request. There
will also be a ninety (90) day waiting period between transfers out of the Fixed
Account.
The Fixed Account and the Money Market Portfolio could be considered to be
competing options. Transfers between these competing options will not be
permitted. For a period of ninety (90) days following a transfer from one
competing option, no transfer can be made to the other competing option. For a
period of ninety (90) days following a transfer to one competing option, no
transfer can be made from the other competing option.
The transfer privilege is subject to the consent of C.M. Life. C.M. Life
reserves the right to impose limitations on transfers including, but not limited
to: (1) the minimum amount that may be transferred; (2) the minimum amount that
may remain in a Sub-Account following a transfer from that Sub-Account; (3) the
minimum period of time between transfers involving the Fixed Account; and (4)
the maximum amount that may be transferred each time to or from the Fixed
Account.
The first twelve transfers in a Policy Year are free of any charge. Thereafter a
transfer charge of no more than $25 will be deducted from the amount transferred
for each transfer in that Policy year. Any transfers made with respect to a
conversion privilege, Policy loan or material change in investment policy will
not count towards the twelve free transfers.
ACCOUNT REBALANCING
An Account Rebalancing option is currently available to Policies owned by
corporations and trusts. This option maintains a specified allocation of Policy
Value among selected Sub-Accounts and the Fixed Account by automatically
transferring Policy Value on a quarterly, semiannual or annual basis in
accordance with the allocation selected by the Policyowner. Additionally we
anticipate that this option may be available on a monthly basis at some time in
the future. Generally, Account Rebalancing will be processed on the 15th of each
scheduled month unless the 15th is not a business day, in which case the
rebalancing will be processed on the next business day. Transfers made in
connection with Account Rebalancing are without charge and do not count toward
the twelve free transfers allowed per Policy Year.
PROCEEDS PAYABLE UPON DEATH
OF THE INSURED
As long as the Policy remains in force C.M. Life will, upon due proof of the
Insured's death, pay the Proceeds of the Policy to the named Beneficiary. C.M.
Life will normally pay the Proceeds within seven days of receiving due proof of
the Insured's death (unless a shorter period is required under applicable law),
but C.M. Life may delay payments under certain circumstances. (See "OTHER POLICY
PROVISIONS - Postponement Of Payments.") The Proceeds may be received by the
Beneficiary in a lump sum or under one or more payment options currently offered
by C.M. Life, except as may be restricted by state law. (See "APPENDIX B -
PAYMENT OPTIONS.")
Prior to and at the Maturity Date while the Insured is living, the Proceeds
equal the Surrender Value. The amount of Proceeds payable as a Death Benefit
will be determined as of the date of C.M. Life's receipt of due proof of the
Insured's death.
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit Options: Option 1
and Option 2, as described below:
Under Option 1, the Death Benefit is equal to the greater of the Specified
Amount on the date of death and the Guideline Minimum Death Benefit.
Under Option 2, the Death Benefit is equal to the greater of the Specified
Amount on the date of death plus the Policy Value on the date of receipt of due
proof of death or the Guideline Minimum Death Benefit.
You designate the desired Death Benefit Option in the application. You may
change the option once per Policy Year by Written Request. Changing Death
Benefit Options may require Evidence of Insurability. The effective date of any
such change will be the Monthly Deduction Date on or following the date we
approve the request. Although no charge currently is assessed for processing a
change in Death Benefit Option, C.M. Life reserves the right to impose such a
charge for processing a change in Death Benefit Option in the future. Any such
charge would not be designed to produce a profit.
CHANGE IN DEATH BENEFIT OPTION
If the Death Benefit Option is changed from Option 2 to Option 1, the Specified
Amount will be increased to equal the Death Benefit which would have been
payable under Option 2 on the effective date of the change (i.e., the Specified
Amount immediately prior to the change plus the Policy Value on the date of the
change). The amount of the Death Benefit will not be altered at the time of the
change. However, the change in Death Benefit Option will affect the
determination of the Death Benefit from that point on, since the Policy Value
will no longer be added to the Specified Amount in determining the Death
Benefit.
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If the Death Benefit Option is changed from Option 1 to Option 2, the Specified
Amount will be decreased to equal the Death Benefit which would have been
payable under Option 1 at the effective date of such change less the Policy
Value on such effective date. This change may not be made if it would result in
a Specified Amount less than $50,000. A change from Option 1 to Option 2 will
not alter the amount of the Death Benefit at the time of the change, but will
affect the determination of the Death Benefit from that point on. Because the
Policy Value will be added to the new Specified Amount, the Death Benefit will
vary with the Policy Value.
Under the Guideline Premium Test, a change in the Death Benefit Option may
result in total premiums paid exceeding the maximum premium limitation
determined by the provisions of the Guideline Premium Test. In such event, C.M.
Life will pay the excess to the Policyowner.
See "THE POLICY - Premium Payments."
DEFINITION OF LIFE INSURANCE
TEST
At issue, the Policy offers a choice between two tests that may be used to
determine if the Policy qualifies as "life insurance" under Section 7702 of the
Code. They are the Guideline Premium Test and the Cash Value Accumulation Test.
The test selected will determine how the Guideline Minimum Death Benefit is
calculated.
Under either test, the Death Benefit at any point must be greater than the
Policy Value multiplied by a specified percentage. Under the Guideline Premium
Test, those percentages are prescribed and vary only by the Age of the Insured.
Under the Cash Value Accumulation Test, the percentages vary by the Underwriting
Class, tobacco status and Age of the Insured. If at any point the Death Benefit
is not greater than the Policy Value times the applicable percentage, the Death
Benefit will be increased to the amount necessary to satisfy the test. We refer
to this amount as the "Guideline Minimum Death Benefit."
The percentages used in calculating the Guideline Minimum Death Benefit are
typically lower under the Guideline Premium Test than they are under the Cash
Value Accumulation Test. However, the Guideline Premium Test imposes maximum
premium limitations while the Cash Value Accumulation Test does not. In general,
these differences in the tests make the Cash Value Accumulation Test more
appropriate for situations where maximum accumulation of Policy Value during the
initial years of the Policy is a primary objective. On the other hand, the
Guideline Premium Test is best suited for Policyowners looking for the most
economically efficient method of accumulating Policy Value to fund a specified
amount of coverage. Since a Policyowner's selection of the Cash Value
Accumulation Test or the Guideline Premium Test depends upon various complex
factors, applicants should consult with a qualified tax adviser in choosing the
Definition of Life Insurance Test.
CHANGE IN SPECIFIED AMOUNT
Subject to certain limitations, you may increase or decrease the Specified
Amount at any time by submitting a Written Request to C.M. Life requesting such
change. Any increase or decrease in the Specified Amount requested by you will
become effective on the Monthly Payment Date on or next following the date we
approve the request, unless you specify a later date.
Increases. Along with the Written Request for an increase, you must submit
satisfactory Evidence of Insurability. The consent of the Insured is also
required whenever the Specified Amount is increased. A request for an increase
in Specified Amount may not be less than $10,000. You may not increase the
Specified Amount after the Insured reaches Age 75.
An increase in the Specified Amount will generally affect the Insurance Amount
at Risk, which may affect the monthly cost of insurance charges. An increase in
Specified Amount may also have adverse tax implications and may result in
modified endowment contract status for the Policy.
After increasing the Specified Amount, you will have the right during the first
24 months following the increase, to transfer any or all Policy Value of the
amount of the increase to the General Account free of charge. (See "THE POLICY -
Conversion Privileges.")
Decreases. A decrease in Specified Amount will not be permitted during the first
three Policy years, or for the three Policy years following an increase in
Specified Amount. The Specified Amount in force after any decrease may not be
less than $50,000. Under the Guideline Premium Test, if a decrease in Specified
Amount will make the Policy not comply with the maximum premium limitations of
the test, the decrease may be limited or Policy Value may be returned to the
Policyowner (at your election) to the extent necessary to meet the requirements.
A return of Policy Value may result in tax liability to you.
A decrease in the Specified Amount will affect the total Insurance Amount at
Risk, which may affect a Policyowner's monthly cost of insurance charges. (See
"CHARGES AND DEDUCTIONS - Monthly Deduction From Policy Value.") For purposes of
determining the cost of insurance charge, any decrease in the Specified Amount
will reduce the Specified Amount in the following order: (a) the Specified
Amount provided by the most recent increase; (b) the next most recent increases
successively; and (c) the initial Specified Amount.
POLICY VALUE AND
SURRENDER VALUE
The Policy Value is the total amount available for allocation and is equal to
the sum of the accumulation in the Fixed Account and the value of the
Accumulation Units in the Sub-Accounts. The Policy Value is used in determining
the Surrender Value (the Policy Value less any Policy Debt). There is no
guaranteed minimum Policy Value. Because
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Policy Value on any date depends upon a number of variables, it cannot be
predetermined.
Policy Value and Surrender Value will reflect frequency and amount of Net
Premiums paid, interest credited to accumulations in the Fixed Account, the
investment performance of the chosen Sub-Accounts, any partial withdrawals, any
loans, any loan repayments, any loan interest paid or credited, and any charges
assessed in connection with the Policy.
Calculation of Policy Value. The Policy Value is determined following the Date
of Issue and thereafter on each Valuation Date. Following the Date of Issue, the
Policy Value will be the Net Premiums received, plus any interest earned during
the period when premiums are held in the Fixed Account (before being transferred
to the Separate Account; see "THE POLICY - Application For A Policy") less any
Monthly Deductions due.
On each Valuation Date after the Policy has been issued the Policy Value will
be:
(1) the aggregate of the values in each of the Sub-Accounts on the Valuation
Date, determined for each Sub-Account by multiplying the value of an
Accumulation Unit in that Sub-Account on that date by the number of such
Accumulations Units allocated to the Policy; plus
(2) the value in the Fixed Account allocated to the Policy (including any
amounts transferred to the Fixed Account with respect to a loan).
Thus, the Policy Value is determined by multiplying the number of Accumulation
Units in each Sub-Account by the value of the applicable Accumulation Units on
the particular Valuation Date, adding the products, and adding the amount of the
accumulations in the Fixed Account allocated to the Policy, if any.
The Accumulation Unit. Each Net Premium payment is allocated to either the
Sub-Account(s) or the Fixed Account in accordance with your instructions.
Allocations to the Sub-Accounts are credited to the Policy in the form of
Accumulation Units. Accumulation Units are credited separately for each
Sub-Account.
The number of Accumulation Units for each Sub-Account credited to the Policy is
equal to the portion of the Net Premium allocated to the Sub-Account, divided by
the dollar value of the applicable Accumulation Unit as of the Valuation Date
the payment is received at the Service Center. The number of Accumulation Units
will remain fixed unless changed by a subsequent split of Accumulation Unit
value, transfer, partial withdrawal or surrender. In addition, if C.M. Life is
deducting the Monthly Deduction or other charges from a Sub-Account, each such
deduction will result in cancellation of a number of Accumulation Units equal in
value to the amount deducted.
The dollar value of an Accumulation Unit of each Sub- Account varies from
Valuation Date to Valuation Date based on the investment experience of that
Sub-Account. That experience, in turn, will reflect the investment performance,
expenses and charges of the respective Funds. The value of an Accumulation Unit
was set at $1.00 on the first Valuation Date for each Sub-Account. The dollar
value of an Accumulation Unit on a given Valuation Date is determined by
multiplying the dollar value of the corresponding Accumulation Unit as of the
immediately preceding Valuation Date by the appropriate net investment factor.
Net Investment Factor. The net investment factor measures the investment
performance of a Sub-Account of the Separate Account during the Valuation Period
just ended. The net investment factor for each Sub-Account is equal to 1.0000
plus the number arrived at by dividing (a) by (b) and subtracting (c) and (d)
from the result, where:
(a) is the investment income of that Sub-Account for the Valuation Period,
plus capital gains, realized or unrealized, credited during the
Valuation Period; minus capital losses, realized or unrealized, charged
during the Valuation Period; adjusted for provisions made for taxes, if
any;
(b) is the value of that Sub-Account's assets at the beginning of the
Valuation Period;
(c) is a charge for each day in the Valuation Period equal on an annual
basis to 0.65% of the daily net asset value of that Sub-Account for
mortality and expense risks for the first twenty policy years. After the
twentieth policy anniversary, the charge will be reduced to 0.25% of the
daily net asset value of that Sub-Account. This charge may be increased
or decreased by C.M. Life, but may not exceed 0.90% at any point in
time; and
(d) is the Separate Account administrative charge for each day in the
Valuation Period equal on an annual basis to 0.25% of the daily net
asset value of that Sub-Account. This charge is applicable only during
the first twenty Policy years.
The net investment factor may be greater or less than one. Therefore, the value
of an Accumulation Unit may increase or decrease. You bear the investment risk.
Allocations to the Fixed Account are not converted into Accumulation Units, but
are credited interest at a rate periodically set by C.M. Life. (See "MORE
INFORMATION ABOUT THE GENERAL ACCOUNT.")
PAYMENT OPTIONS
During the Insured's lifetime, you may arrange for the Proceeds to be paid in a
single sum or under one or more of the payment options currently offered by C.M.
Life, subject to any state limitations. (See "APPENDIX B, "PAYMENT OPTIONS.")
These payment options are also available at
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the Maturity Date and if the Policy is surrendered. C.M. Life may make more
payment options available in the future. If no election is made, C.M. Life will
pay the Proceeds in a single sum. When the Proceeds are payable in a single sum,
the Beneficiary may, within one year of the Insured's death, select one or more
of the payment options, if no payments have yet been made.
OPTIONAL INSURANCE BENEFITS
Subject to certain requirements, one or more of the optional insurance benefits
described in "APPENDIX A OPTIONAL BENEFITS" may be added to a Policy by rider.
The cost of any optional insurance benefits will be deducted as part of the
Monthly Deduction. (See "CHARGES AND DEDUCTIONS - Monthly Deduction From Policy
Value.")
SURRENDER
You may at any time surrender the Policy and receive its Surrender Value. The
Surrender Value is the Policy Value less any Policy Debt. The Surrender Value
will be calculated as of the Valuation Date on which a Written Request for
surrender and the Policy are received at the Service Center. No Surrender
Charges are applied.
The proceeds from a surrender may be paid in a single lump sum or under one or
more payment options currently offered by C.M. Life, subject to any state
limitations. (See "APPENDIX B - PAYMENT OPTIONS.") C.M. Life will normally pay
the Surrender Value within seven days following C.M. Life's receipt of the
surrender request (unless a shorter period is required under applicable law or
regulation), but C.M. Life may delay payment under the circumstances described
in "OTHER POLICY PROVISIONS - Postponement Of Payments."
For important tax consequences which may result from surrender see "FEDERAL TAX
CONSIDERATIONS."
PARTIAL WITHDRAWAL
You may withdraw a portion of the Surrender Value of your Policy at any time
after the Policy has been issued, upon Written Request filed at the Service
Center. The Written Request must indicate the dollar amount you wish to receive
and the accounts from which such amount is to be withdrawn. You may allocate the
amount withdrawn among the Sub-Accounts and the Fixed Account. If you do not
provide allocation instructions C.M. Life will make a Pro Rata Allocation. Under
Option 1, the Specified Amount is reduced by the amount of the partial
withdrawal. Additionally, the maximum amount of a partial withdrawal is 90% of
the Surrender Value. A request for a partial withdrawal that would reduce the
Specified Amount below the minimum Specified Amount or that exceeds 90% of the
Surrender Value may be treated as a request for a full surrender of the Policy.
A partial withdrawal from a Sub-Account will result in the cancellation of the
number of Accumulation Units equivalent in value to the amount withdrawn. The
amount withdrawn equals the amount requested by you plus the transaction charge
as described under "CHARGES AND DEDUCTIONS - Charges On Partial Withdrawal."
C.M. Life will normally pay the amount of the partial withdrawal within seven
days (unless a shorter period is required pursuant to applicable law) following
C.M. Life's receipt of the partial withdrawal request, but C.M. Life may delay
payment under certain circumstances described in "OTHER POLICY PROVISIONS -
Postponement Of Payments."
For important tax consequences which may result from partial withdrawals, see
"FEDERAL TAX CONSIDERATIONS."
Charges and Deductions
Charges will be deducted in connection with the Policy to compensate C.M. Life
for providing the insurance benefits set forth in the Policy and any additional
benefits added by rider, administering the Policy, incurring distribution
expenses, and assuming certain risks in connection with the Policies. Each of
the charges identified as an administrative charge is intended to reimburse C.M.
Life for actual administrative costs incurred, and is not intended to result in
a profit to C.M.
Life.
TAX EXPENSE CHARGE
Currently, a deduction of 2% of premiums for state and local premium taxes is
made from each premium payment. The premium payment less the tax expense charge
and any applicable premium charge equals the Net Premium. While the premium tax
of 2% is deducted from each premium payment, some jurisdictions may not impose
premium taxes. Premium taxes vary from state to state, ranging from zero to
4.0%, and the 2% rate attributable to premiums for state and local premium taxes
approximates the average expenses to C.M. Life associated with the premium
taxes. The 2% charge may be higher or lower than the actual premium tax imposed
by the applicable jurisdiction. C.M. Life reserves the right to increase or
decrease the tax expense charge to reflect tax expenses incurred by C.M. Life.
C.M. Life does not expect to make a profit from this charge. During 1997, the
aggregate amount of deductions for state premium tax was $13,719.
Although not currently deducted, C.M. Life reserves the right to make deductions
from premium payments for Deferred Acquisition Cost ("DAC") tax charges. If
currently imposed, the rate would be at 1%, a rate that C.M. Life approximates
to be equal to C.M. Life's expenses in paying federal taxes for deferred
acquisition costs associated with the Policies. The DAC tax deduction is a
factor C.M. Life must use when calculating the maximum sales load it can charge
under SEC rules.
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PREMIUM CHARGE
A premium charge will be applied to premium payments received during the first
seven Policy years after issue or the effective date of an increase in Specified
Amount. The maximum premium charge applied in a Policy year will be 6% of
premium received during that Policy Year, up to the annual Target Premium for
the Policy. If more than the Target Premium for the Policy is paid in a Policy
year, there will be no premium charge applied to the premium in excess of the
Target Premium. In the event of an increase in Specified Amount, premium
payments will be pro rated between the original Specified Amount and the
increase in Specified Amount using the Target Premiums for each to determine the
pro rata split. The premium charge is designed primarily to compensate C.M. Life
for the distribution expenses associated with the Policy. In certain instances,
C.M. Life may reduce this charge. (See "Reduction of Charges.") During 1997, the
aggregate amount of deductions for premium charges was $39,547.
MONTHLY DEDUCTION FROM
POLICY VALUE
Prior to the Maturity Date, a Monthly Deduction from Policy Value will be made
to cover a charge for the cost of insurance, a charge for any optional insurance
benefits added by rider and a monthly administrative charge. The cost of
insurance charge and the monthly administrative charges are discussed below.
Prior to the Maturity Date, the Monthly Deduction will be deducted as of each
Monthly Payment Date commencing with the Policy Date of the Policy. The Monthly
Deduction will be made Pro Rata from the Fixed Account and Sub-Accounts in which
you have Policy Value on the Monthly Calculation Date. No Monthly Deductions
will be made on or after the Maturity Date.
Cost of Insurance. This charge is designed to compensate C.M. Life for the
anticipated cost of providing Proceeds to Beneficiaries of those Insureds who
die prior to the Maturity Date. The cost of insurance is determined on a monthly
basis, and is calculated separately for the initial Specified Amount and for
each subsequent increase in Specified Amount. During 1997, the aggregate amount
of deductions for cost of insurance charges was $75,277.
Calculation of the Charge. The monthly cost of insurance is determined by
multiplying the Insurance Amount at Risk by the appropriate cost of insurance
rates. Under Death Benefit Option 1, the Insurance Amount at Risk is equal to
the greater of the Specified Amount less the Policy Value or the Guideline
Minimum Death Benefit less the Policy Value. Under Death Benefit Option 2, the
Insurance Amount at Risk is equal to the greater of the Specified Amount or the
Guideline Minimum Death Benefit less Policy Value.
Cost of Insurance Rates. The Policy contains both current and guaranteed cost of
insurance rates. The current rates are used to calculate the monthly cost of
insurance charges and they may be lower than the guaranteed rates. The
guaranteed rates represent the maximum rates that C.M. Life may charge.
The guaranteed cost of insurance rates vary by the Underwriting Class, tobacco
status and Age of the Insured. For Policies that are fully underwritten, the
guaranteed rates for Preferred risks are based on the 1980 Commissioners
Standard Ordinary Unisex Mortality Table B which assumes an 80% male and 20%
female distribution by sex. The guaranteed rates for Substandard Risks are based
on multiples or additives of the same table. For Policies that are guaranteed
issue (i.e. issued without full underwriting), the guaranteed cost of insurance
rates are based on 150% of the 1980 Commissioners Standard Ordinary Unisex
Mortality Table B.
Current cost of insurance rates vary by Underwriting Class, tobacco status, age
at issue, and the number of Policy years that have elapsed since the Policy date
or the effective date of an increase in Specified Amount. The current cost of
insurance rates are based upon C.M. Life's expectations as to future mortality,
investment, expense and persistency experience. C.M. Life may adjust current
cost of insurance rates periodically. The current cost of insurance rates are
determined at the beginning of each Policy Year. The current cost of insurance
rates for an increase in Specified Amount or rider are also determined annually
on the anniversary of the effective date of each increase or rider.
Monthly Administrative Charges. Prior to the Maturity Date, current
administrative charges of $5 per Policy and $0.05 per thousand of Specified
Amount will be deducted from the Policy Value each month. These charges are
guaranteed not to exceed $10 per Policy and $0.10 per thousand of Specified
Amount. After the twentieth Policy Anniversary, the $0.05 per thousand charge
will be eliminated, and the amount deducted monthly will be $5.00 per Policy.
This charge will be used to compensate C.M. Life for first year and on-going
expenses incurred in the administration of the Policy. These expenses include
the cost of processing applications, conducting any applicable medical
examinations, determining insurability and the Insured's Underwriting Class,
establishing Policy records, and paying Proceeds. During 1997, the aggregate
amount of deductions for monthly administrative charges was $28,650.
CHARGES AGAINST ASSETS OF THE
SEPARATE ACCOUNT
C.M. Life assesses each Sub-Account with a charge for mortality and expense
risks assumed by C.M. Life and a charge for administrative expenses of the
Separate Account.
Mortality and Expense Risk Charge. C.M. Life currently makes a charge on an
annual basis of 0.65% of the daily net asset value in each Sub-Account for
Policy years one through twenty. This charge is reduced to 0.25% in subsequent
Policy years. This charge is for the mortality risk and expense risk
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which C.M. Life assumes in relation to the variable portion of the Policies. The
total charges may be increased or decreased by the Board of Directors of C.M.
Life, subject to compliance with applicable state and federal requirements, but
it may not exceed 0.90% on an annual basis. The aggregate amount of such charges
paid in 1997 was $20,568.
The mortality risk assumed by C.M. Life is that Insureds may live for a shorter
time than anticipated, and that C.M. Life will therefore pay an aggregate amount
of Proceeds sooner than anticipated. The expense risk assumed is that the
expenses incurred in issuing and administering the Policies will exceed the
amounts realized from the administrative charges provided in the Policies. If
the charge for mortality and expense risks is not sufficient to cover actual
mortality experience and expenses, C.M. Life will absorb the losses. If costs
are less than the amounts provided, the difference will be a profit to C.M.
Life. To the extent this charge results in a current profit to C.M. Life, such
profit will be available for use by C.M. Life for, among other things, the
payment of distribution, sales and other expenses. Since mortality and expense
risks involve future contingencies which are not subject to precise
determination in advance, it is not feasible to identify specifically the
portion of the charge which is applicable to each.
Separate Account Administrative Charge. During the first twenty Policy Years,
C.M. Life assesses a charge on an annual basis of 0.25% of the daily net asset
value in each Sub-Account. Thereafter, in subsequent Policy Years, this
administrative charge will be waived. The charge is assessed to help defray
administrative expenses. The administrative functions and expenses assumed by
C.M. Life in connection with the Separate Account and the Sub- Accounts include,
but are not limited to, clerical, accounting, actuarial and legal services,
rent, postage, telephone, office equipment and supplies, expenses of preparing
and printing registration statements, expenses of preparing and typesetting
prospectuses and the cost of printing prospectuses not allocable to sales
expense, filing and other fees. During 1997, the aggregate amount of separate
account administrative charges was $7,911.
Other Charges Against the Assets of the Separate Account. Because the
Sub-Accounts purchase shares of the Funds, the value of the Accumulation Units
of the Sub- Accounts will reflect the investment advisory fee and other expenses
incurred by the Funds. The prospectuses and statements of additional information
of each of the Funds contain additional information concerning such fees and
expenses.
No charges are currently made against the Sub-Accounts for federal or state
income taxes. Should C.M. Life determine that taxes will be imposed, C.M. Life
may make deductions from the Sub-Account to pay such taxes. (See "FEDERAL TAX
CONSIDERATIONS.") The imposition of such taxes would result in a reduction of
the Policy Value in the Sub-Accounts.
SURRENDER CHARGE
No Surrender Charges are applied against the Policy.
CHARGES ON PARTIAL WITHDRAWAL
A transaction charge of $25 will be assessed on each partial withdrawal to
reimburse C.M. Life for the cost of processing the withdrawal. C.M. Life does
not expect to make a profit on this charge.
TRANSFER CHARGES
The first twelve transfers in a Policy year will be free of charge. Thereafter,
a transfer charge of $25 will be imposed for each transfer request to reimburse
C.M. Life for the administrative costs incurred in processing the transfer
request. This transfer charge and the number of free transfers permitted per
Policy year may be adjusted periodically by C.M. Life; however, the transfer
charge is guaranteed not to increase. C.M. Life reserves the right to change the
number of free transfers allowed in a Policy Year.
Transfers made in connection with Account Rebalancing do not count toward the
number of free transfers allowed in each Policy year and are free of charge. If
you utilize the Conversion Privilege, Loan Privilege or reallocate Policy Value
within 20 days of the Date of Issue of the Policy, any resulting transfer of
Policy Value from the Sub-Accounts to the General Account will also be free of
charge and in addition to the free transfers permitted in a Policy Year. (See
"THE POLICY - Conversion Privileges" and "POLICY LOANS.")
CHARGE FOR INCREASE IN
SPECIFIED AMOUNT
No charge is imposed for any increase in Specified Amount. C.M. Life does,
however, reserve the right to impose such a charge in the future. This charge
would be imposed to reimburse C.M. Life for underwriting and other costs
associated with the increase. It would not be designed to produce a profit.
OTHER ADMINISTRATIVE CHARGES
C.M. Life reserves the right to impose a charge for the administrative costs
incurred for changing the Net Premium allocation instructions or for producing a
projection of values.
REDUCTION OF CHARGES
While this Policy is available for sale to individuals, it will also be sold to
corporations and to other multiple life groups or sponsoring organizations.
Depending on the size of the group, the nature of the sale, the expected premium
volume, or other factors that C.M. Life considers to be significant, there may
be expense savings that could be passed on to the customer. Subject to
applicable state laws and regulations, we reserve the right to reduce the
premium charge, cost of
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insurance charge, or any other charge that is appropriate to reflect any expense
savings. Distribution expenses, underwriting expenses and administrative
expenses are examples of potential areas where savings may be realized.
Policy Loans
Loans may be obtained by request to C.M. Life on the sole security of this
Policy. The total amount which may be borrowed is the Loan Value. The Loan Value
is an amount equal to the Policy Value less existing Policy Debt and less
projected interest to the next Policy Anniversary Date at the then applicable
Loan Interest Rate. We reserve the right to defer Policy Loan requests for a
period not exceeding six months after the date when the Policyholder applies for
the Policy Loan. There is no minimum limit on the amount of the loan.
A Policy Loan may be allocated among the Fixed Account and one or more
Sub-Accounts. If you do not make an allocation, C.M. Life will make a Pro Rata
Allocation based on the amounts in the Accounts on the date C.M. Life receives
the loan request. Policy Value in each Sub- Account equal to the Policy Debt
allocated to such Sub- Account will be transferred to the Fixed Account, and the
number of Accumulation Units equal to the Policy Value so transferred will be
cancelled. This will reduce the Policy Value in these Sub-Accounts. These
transactions are not treated as transfers for purposes of the transfer charge.
As long as the Policy is in force, Policy Value in the Fixed Account equal to
the loan amount will be credited with interest at a specified rate equal to 1
1/2% less than the Loan Interest Rate.
LOAN INTEREST CHARGED
Interest accrues daily and is payable in arrears. A Policy Loan will be subject
to a Loan Interest Rate which is calculated based on the current rate specified
as the monthly average of the Composite Yield on Seasoned Corporate Bonds as
published by Moody's Investors Service. The rate will be calculated two months
prior to the Policy's anniversary date, and will remain in force for the entire
Policy Year. If increased at the next Policy anniversary, the increase will be
at least for 1/2%. Where required by state law, a fixed interest rate will be
available at a rate of 8%, unless a different rate is required under applicable
state law. Further, the variable interest rate will not exceed the maximum
interest rate permitted in the Policy's contract state. Interest is due and
payable at the end of each Policy year or on a pro rata basis for such shorter
period as the loan may exist. Interest not paid when due will be added to the
loan amount and bear interest at the same rate. After the due and unpaid
interest is added to loan amount, if the new loan amount exceeds the Policy
Value in the Fixed Account, C.M. Life will transfer Policy Value equal to that
excess loan amount from the Policy Value in each Sub-Account to the Fixed
Account as security for the excess loan amount. C.M. Life will allocate the
amount transferred among the Sub-Accounts in the same proportion that the Policy
Value in each Sub-Account bears to the total Policy Value in all Sub-Accounts.
PREFERRED LOAN PROVISION
Where permitted by applicable law, a Preferred Loan Provision is available under
the Policy. When available, the Preferred Loan Provision permits the Policyowner
to take loans against the Policy Value at a rate that is 1 1/2% less than the
Loan Interest Rate then in effect for the Policy. Additionally, we reserve the
right to adjust this preferred rate at each Policy anniversary when the Loan
Interest Rate for the coming Policy year is determined. The maximum Preferred
Loan Amount is 10% of the Policy Value at the time of the Preferred Loan
request. This provision is available after the tenth Policy year.
REPAYMENT OF POLICY DEBT
Loans may be repaid at any time prior to the lapse of the Policy. You must
notify C.M. Life if a payment is a loan repayment, otherwise it will be
considered a premium payment. Upon repayment of Policy Debt, the portion of the
Policy Value that is in the Fixed Account securing the Policy Debt repaid will
be allocated to the various Sub-Accounts and increase the Policy Value in such
accounts in accordance with your instructions. If you do not make a repayment
allocation, C.M. Life will allocate Policy Value in accordance with your most
recent premium allocation instructions; provided, however, that loan repayments
allocated to the Separate Account cannot exceed Policy Value previously
transferred from the Separate Account to secure the Policy Debt.
If Policy Debt exceeds the Policy Value, the Policy will terminate. A notice of
such pending termination will be mailed to the last known address of you and any
assignee. If you do not make sufficient payment within 62 days after this notice
is mailed, the Policy will lapse without value.
EFFECT OF POLICY LOANS
Although Policy Loans may be repaid at any time prior to the lapse of the
Policy, Policy Loans will permanently affect the Policy Value and may
permanently affect Proceeds. The effect could be favorable or unfavorable,
depending upon whether the investment performance of the Sub-Account(s) is less
than or greater than the interest credited to the Policy Value in the Fixed
Account attributable to the loan. Moreover, outstanding Policy loans and the
accrued interest will be deducted from the proceeds payable upon the death of
the Insured or Surrender.
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Policy Termination and
Reinstatement
TERMINATION
The failure to make premium payments will not cause the Policy to lapse unless:
(a) the Surrender Value is insufficient to cover the next Monthly Deduction plus
loan interest accrued; or (b) Policy Debt and the Monthly Deductions currently
due exceed the Policy Value; or (c) the Policy Value is less than zero. If one
of these situations occurs, the Policy will be in default. You will then have a
grace period of 62 days, measured from the date of default, to make sufficient
payments to prevent termination. On the date of default, C.M. Life will send a
notice to you and to any assignee of record. The notice will state the amount of
premium due and the date on which it is due.
Failure to make a sufficient payment within the grace period will cause the
Policy to lapse. If the Insured dies during the grace period, the Proceeds will
still be payable; however, any Monthly Deductions due and unpaid through the
Policy month in which the Insured dies and any other overdue charge will be
deducted from the Proceeds paid to the Beneficiary.
REINSTATEMENT
If the Policy has not been surrendered and the Insured is alive, the terminated
Policy may be reinstated anytime within three years after the lapse date and
before the Maturity Date. The reinstatement will be effective on the Monthly
Payment Date following the date you submit the following to C.M. Life: (1) a
written application for reinstatement; (2) Evidence of Insurability showing that
the Insured is insurable consistent with C.M. Life's then applicable
underwriting rules; and (3) a Net Premium that is the greater of a Planned
Periodic Payment or a net premium sufficient to cover three monthly deductions
at an amount equal to the last Monthly Deduction just prior to the Policy
termination.
Policy Value on Reinstatement. The Policy Value on the date of reinstatement is:
. the Net Premium paid to reinstate the Policy increased at an interest rate
determined by C.M. Life, and guaranteed to be no less than 3% annually, from
the date the payment was received at C.M. Life's Service Center;
. plus an amount equal to the Policy Value less Policy Debt on the date the
Policy terminated;
. less the Monthly Deduction due on the date of reinstatement.
You may not reinstate any Policy Debt outstanding on termination date.
Other Policy Provisions
The following Policy provisions may vary in certain jurisdictions in order to
comply with requirements of the insurance laws, regulations, and insurance
regulatory agencies in those jurisdictions.
POLICYOWNER
Generally, the Policyowner named in the application for the Policy will be a
corporation, partnership, trust, or other similar business entity. Usually the
Policyowner will be the Insured's employer. In any case, the Policyowner must be
able to demonstrate the existence of a sufficient relationship to satisfy
applicable insurable interest laws and rules. C.M. Life will determine whether
such relationship exists. In certain states, the consent of the Insured must be
obtained in a form satisfactory to C.M. Life to satisfy state laws concerning
insurable interest rules. C.M. Life reserves the right to make any final
determination in this regard and will take any action to remain consistent with
such rules. The Policyowner is generally entitled to exercise all rights under a
Policy while the Insured is alive, subject to the consent of any irrevocable
Beneficiary (the consent of a revocable Beneficiary is not required). The
consent of the Insured is required whenever the Specified Amount of insurance is
increased.
BENEFICIARY
The Beneficiary is the recipient of the Proceeds upon the Insured's death. The
Beneficiary can be a person or an entity, and there can be more than one
Beneficiary under the Policy. If no Beneficiary is selected, C.M. Life will
designate the Policyowner as the Beneficiary.
INCONTESTABILITY
C.M. Life will not contest the validity of a Policy after it has been in force
during the Insured's lifetime for two years from the date of issue. C.M. Life
will not contest the validity of any increase in the Specified Amount after such
increase or rider has been in force during the Insured's lifetime for two years
from its effective date.
If the Policy is reinstated, the Death Benefit cannot be contested after the
Policy has been in force during the Insured's lifetime for two years from the
date of reinstatement. The Policy can be contested within the two-year period
over statements made in the reinstatement application.
SUICIDE
The Proceeds will not be paid if the Insured commits suicide, while sane or
insane, within two years from the date of issue. Instead, C.M. Life will pay the
Beneficiary an amount equal to all premiums paid for the Policy, without
interest, less any outstanding Policy Debt and less any partial withdrawals. If
the Insured commits suicide, while sane or insane, generally within two years
from the effective
23
<PAGE>
date of any increase in the Specified Amount, C.M. Life's liability with respect
to such increase will be limited to a refund of the cost thereof. The
Beneficiary will receive the administrative charges and insurance charges paid
for such increase.
C.M. Life does not assume the risk of suicide of the Insured, while sane or
insane, within two years of the effective date of a reinstatement of the Policy.
Instead of the Proceeds, the Beneficiary will receive the sum of the premiums
paid since reinstatement, less the sum of any outstanding debt and partial
withdrawals made since the date of reinstatement.
AGE
If the Insured's Age as stated in the application for a Policy is not correct,
benefits under a Policy will be adjusted to reflect the correct Age if death
occurs prior to the Maturity Date. In no event will the Death Benefit be reduced
to less than the Guideline Minimum Death Benefit.
ASSIGNMENT
The Policyowner may assign a Policy as collateral or make an absolute assignment
of the Policy. All rights under the Policy will be transferred to the extent of
the assignee's interest. The consent of the assignee may be required in order to
make changes in premium allocations, to make transfers, or to exercise other
rights under the Policy. C.M. Life is not bound by an assignment or release
thereof, unless it is in writing and is recorded at the Service Center. When
recorded, the assignment will take effect as of the date the written request was
signed. Any rights created by the assignment will be subject to any payments
made or actions taken by C.M. Life before the assignment is recorded. C.M. Life
is not responsible for determining the validity of any assignment or release.
POSTPONEMENT OF PAYMENTS
Payments of any amount due from the Separate Account upon surrender, partial
withdrawals, or death of the Insured, as well as payments of a Policy loan and
transfers may be postponed whenever: (i) the New York Stock Exchange is closed
other than customary weekend and holiday closings, or trading on the New York
Stock Exchange is restricted as determined by the SEC or (ii) an emergency
exists, as determined by the SEC, as a result of which disposal of securities is
not reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets. Payments under the Policy of any
amounts derived from the premiums paid by check may be delayed until such time
as the check has cleared your bank.
C.M. Life also reserves the right to defer payment of any amount due from the
Fixed Account upon surrender, partial withdrawal or death of the Insured, as
well as payments of policy loans and transfers from the Fixed Account, for a
period not to exceed six months.
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<PAGE>
<TABLE>
<CAPTION>
C.M. LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NAME AND POSITION PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence V. Burkett, Jr., Director Director, President and Chief Executive Officer, C.M. Life, since 1996; Executive
President and Chief Executive Officer Vice President and General Counsel, since 1993, Senior Vice President and Deputy
1295 State Street General Counsel, 1992-1993, MassMutual
Springfield, MA 01111
- ------------------------------------------------------------------------------------------------------------------------------------
John B. Davis, Director Director, C.M. Life, since 1996; Executive Vice President, since 1994, Associate
1295 State Street Executive Vice President, 1994-1994, General Agent, 1982-1993, MassMutual
Springfield, MA 01111
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart H. Reese, Director and Senior Vice Director and Senior Vice President-Investments, C.M. Life, since 1996; Chief
President-Investments Executive Director-Investment, since 1997, Senior Vice President, 1993-
1295 State Street 1997, MassMutual; Investment Manager, Aetna Life and Casualty and Affiliates,
Springfield, MA 01111 1979-1993
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OFFICERS (other than those who are also Directors):
- ------------------------------------------------------------------------------------------------------------------------------------
Paul D. Adornato Senior Vice President-Operations, C.M. Life, since 1996; Senior Vice President
140 Garden Street MassMutual, since 1986
Hartford, CT 06154
- ------------------------------------------------------------------------------------------------------------------------------------
Anne Melissa Dowling Senior Vice President-Large Corporate Marketing, C.M. Life, since 1996; Senior Vice
140 Garden Street President, MassMutual, since 1996; Chief Investment Officer, Connecticut Mutual
Hartford, CT 06154 Life Insurance Company, 1994-1996; Senior Vice President-International, Travelers
Insurance Co., 1987-1993
- ------------------------------------------------------------------------------------------------------------------------------------
Maureen R. Ford Senior Vice President-Annuity Marketing, C.M. Life, since 1996; Senior Vice
140 Garden Street President, MassMutual, since 1996; Marketing Officer, Connecticut Mutual Life
Hartford, CT 06154 Insurance Company, 1989-1996
- ------------------------------------------------------------------------------------------------------------------------------------
Isadore Jermyn Senior Vice President and Actuary, C.M. Life, since 1996; Senior Vice President and
1295 State Street Actuary, since 1995, Vice President and Actuary, 1980-1995, MassMutual
Springfield, MA 01111
- ------------------------------------------------------------------------------------------------------------------------------------
Edward M. Kline Treasurer, C.M. Life, since 1997; Vice President, since 1989, and Treasurer, since
1295 State Street 1997, MassMutual
Springfield, MA 01111
- ------------------------------------------------------------------------------------------------------------------------------------
Ann F. Lomeli Secretary, C.M. Life, since 1988; Vice President, Secretary and Associate General
1295 State Street Counsel, since 1998, Associate Secretary, 1996-1998, MassMutual; Corporate
Springfield, MA 01111 Secretary and Counsel, Connecticut Mutual Life Insurance Company, 1998-1996
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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Distribution
MML Distributors, LLC ("MML Distributors"), a Connecticut limited liability
company and an affiliate of C.M. Life and MassMutual, acts as the principal
underwriter of the Policies pursuant to an underwriting agreement among itself,
C.M. Life, and the Separate Account. MML Investors Services, Inc. ("MMLISI"), a
Massachusetts corporation and also an affiliate of C.M. Life and MassMutual,
acts as a co-underwriter of the Policies pursuant to an underwriting and
servicing agreement to which MMLISI, C.M. Life, and the Separate Account are
parties. Both MMLISI and MML Distributors are located at 1414 Main Street,
Springfield, Massachusetts 01144-1013. Both MML Distributors and MMLISI are
registered with the Securities and Exchange Commission (the "SEC") as
broker-dealers and are members of the National Association of Securities
Dealers, Inc. (the "NASD").
The Policy will be sold by registered representatives of registered
broker-dealers that have established selling group agreements with the MML
Distributors ("selling brokers"), or by registered representatives of MMLISI.
The maximum commission payable to a broker-dealer in the first Policy Year will
be 45% of premium up to the Target Premium for the Policy, and 10% on premium in
excess of the Target Premium. In Policy Years two through seven, the maximum
commission will be 15% up to Target Premium and 10% above Target Premium. In
years eight and later, a renewal commission of up to 0.25% of Policy Value less
Policy Debt may be payable.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies of the Separate Account. Compensation paid to
MMLISI in 1997 was $5,000. No compensation was paid to MML Distributors in
1997.
The commission payable to the registered representative is determined by the
broker-dealer and also varies by the terms of each arrangement. Commissions are
paid through MML Distributors to selling brokers and through MMLISI to agents
for selling the Policies. During 1997, such commissions charges amounted to
$35,946.
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.
Reports
C.M. Life will maintain the records relating to the Separate Account. You will
be promptly sent statements of significant transactions such as premium
payments, changes in Specified Amount, changes in Death Benefit Option,
transfers among Sub-Accounts and the Fixed Account, partial withdrawals,
increases in loan amount by you, loan repayments, lapse, termination for any
reason, and reinstatement. An annual statement will also be sent to you within
30 days after a Policy anniversary. The annual statement will summarize all of
the above transactions and deductions of charges during the Policy year. It will
also set forth the status of the Proceeds, Policy Value, Surrender Value,
amounts in the Sub-Accounts and Fixed Account, and any Policy Loan(s).
In addition, you will be sent periodic reports containing financial statements
and other information for the Panorama Fund, Oppenheimer Funds, and the VIP
Funds as required by the 1940 Act.
Legal Proceedings
There are no material legal proceedings pending to which the Separate Account is
a party, or to which the assets of the Separate Account are subject. C.M. Life
currently is not involved in any litigation that is of material importance in
relation to its total assets or that relates to the Separate Account.
Further Information
A Registration Statement under the Securities Act of 1933 relating to this
offering has been filed with the SEC. Certain portions of the Registration
Statement and amendments have been omitted from this prospectus pursuant to the
rules and regulations of the Securities and Exchange Commission. Statements
contained in this prospectus concerning the Policy and other legal documents are
summaries. The complete documents and omitted information may be obtained from
the SEC's principal office in Washington, D.C., upon payment of the SEC's
prescribed fees.
Experts
The audited financial statements of C.M. Life Variable Life Separate Account I
included in this prospectus have been so included in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The audited statements of statutory financial position of C.M. Life Insurance
Company as of December 31, 1997 and 1996 and the related statutory statements of
income, changes in capital stock and surplus and cash flows for each of the
years in the two year period ended December 31, 1997 included in this prospectus
have been so included in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The statutory statements of income, changes in capital stock and surplus and
cash flows for the year ended December 31, 1995 included in this prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
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<PAGE>
Federal Tax Considerations
The effect of federal income taxes on the value of a Policy, on loans,
withdrawals, or surrenders, on death benefit payments, and on the economic
benefit to you or the Beneficiary depends upon a variety of factors. The
following discussion is based upon C.M. Life's understanding of the present
federal income tax laws as they are currently interpreted. From time to time
legislation is proposed which, if passed, could significantly, adversely and
possibly retroactively affect the taxation of the Policies. No representation is
made regarding the likelihood of continuation of current federal income tax laws
or of current interpretations by the Internal Revenue Service (IRS). Moreover,
no attempt has been made to consider any applicable state or other tax laws.
It should be recognized that the following summary of certain federal income tax
considerations is not exhaustive, does not purport to cover all situations and
is not intended as tax advice. Specifically, the discussion below does not
address certain tax provisions that may be applicable if the Policyowner is a
corporation or the Trustee of an employee benefit plan. Because of the inherent
complexity of federal income tax laws, and the fact that tax results will vary
according to the particular circumstances of the person or entity involved, a
qualified tax adviser should always be consulted with regard to the application
of the tax laws to individual circumstances.
TAX STATUS OF C.M. LIFE AND THE
SEPARATE ACCOUNT
Under existing federal law, no taxes are payable by C.M. Life on investment
income and realized capital gains of the Separate Account credited to the
Policy. Accordingly, C.M. Life does not intend to make any charge to the
Separate Accounts to provide for company income taxes. C.M. Life may, however,
make such a charge in the future if an unanticipated construction of current law
or a change in law results in a company tax liability attributable to the
Separate Account.
C.M. Life may incur state and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not significant. If they increase,
however, charges for such taxes attributable to the Separate Account may be
made.
TAXATION OF THE POLICIES
While C.M. Life believes that the Policy meets the statutory definition of life
insurance, and that it will receive federal income tax treatment consistent with
that of fixed life insurance, the area of the tax law relating to the definition
of life insurance does not explicitly address all relevant issues. C.M. Life
reserves the right to make changes to the Policy if changes are deemed
appropriate by C.M. Life to assure qualification of the Policy as a life
insurance contract. If a Policy were determined not to qualify as life
insurance, the Policy would not provide the tax advantages normally provided by
life insurance. The discussion below summarizes the tax treatment of life
insurance contracts.
The death benefit under a Policy should be excludable from the gross income of
the Beneficiary (whether the Beneficiary is a corporation, individual or other
entity) under Code section 101(a)(1) for purposes of the regular federal income
tax and the Policyowner generally should not be deemed to be in constructive
receipt of the Policy Value, including increments thereof, under the Policy
until Surrender thereof, maturity of the Policy, or partial withdrawal. However,
certain Policy loans may be taxable in the case of Policies that are modified
endowment contracts. Prospective Policyowners that intend to use Policies to
fund deferred compensation arrangements for their employees are urged to consult
their tax advisers with respect to the tax consequences of such arrangements.
Prospective corporate owners should consult their tax advisers about the
treatment of life insurance in their particular circumstances for purposes of
the alternative minimum tax applicable to corporations and the environmental tax
under Code section 59A (for these purposes, the death benefit and increases in
Policy Value may be taxable). Changing the Policyowner may also have tax
consequences. Exchanging a Policy for another involving the same Insured
generally will not result in the recognition of gain or loss according to Code
section 1035(a). Changing the Insured under a Policy will, however, not be
treated as a tax-free exchange under Section 1035, but rather as a taxable
exchange.
The Code also requires that the investment of each Sub-Account be adequately
diversified in accordance with Treasury regulations in order to be treated as a
life insurance policy for tax purposes. The Sub-Accounts through the Funds,
intend to comply with this diversification requirement. Although C.M. Life does
not have control over the investments of the Funds, C.M. Life will monitor
continued compliance with these requirements.
In certain circumstances, owners of variable life insurance policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includable in the variable
policyowner's gross income. The IRS has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
the owner possesses incidents of ownership in those assets, such as the ability
to exercise investment control over the assets. The Treasury Department also
announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which Investor control of the investments of a segregated asset
account may cause the investor (i.e., the Policyowner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts without being treated as owners of the
underlying
27
<PAGE>
assets." As of the date of this prospectus, no regulations have been issued.
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
Policyowner has additional flexibility in allocating premium payments and Policy
Values. These differences could result in a Policyowner being treated as the
owner of a pro rata portion of the assets of the Separate Account. In addition,
C.M. Life does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. C.M. Life therefore reserves the right to modify the Policy, or C.M.
Life's administrative rules to prevent a Policyowner from being considered the
owner of a pro rata share of the assets of the Separate Account. Moreover, in
the event that regulations or rulings are issued, there can be no assurance that
a Fund will be able to operate as currently described in its prospectus, or that
a Fund will not have to change its investment objective or investment policies.
The Technical and Miscellaneous Revenue Act of 1988 established a new class of
life insurance contracts referred to as modified endowment contracts. With the
enactment of this legislation, the Policies will be treated for tax purposes in
one of two ways. Policies that are not classified as modified endowment
contracts will be taxed as conventional life insurance contracts, as described
below. Taxation of pre-death distributions from Policies that are classified as
modified endowment contracts, is somewhat different, as described below.
A life insurance contract becomes a modified endowment contract if, at any time
during the first seven Policy years, the sum of actual premiums paid exceeds the
sum of the "seven-pay premium." Generally, the "seven-pay premium" is the level
annual premium, which, if paid for each of the first seven years, would fully
pay for future benefits under a contract. For example, if the "seven-pay
premium" was $1,000, the maximum premiums that could be paid during the first
seven years to avoid modified endowment contract treatment would be $1,000 in
the first year, $2,000 through the first two years, and $3,000 through the first
three years, etc. Under this test, a Policy may or may not be a modified
endowment contract, depending on the amount of premium paid during each of the
Policy's first seven contract years. Changes in death benefit options under, or
in other terms of a Policy may require "retesting" of a Policy to determine if
it is to be classified as a modified endowment contract.
CONVENTIONAL LIFE INSURANCE
POLICIES
If a Policy is not a modified endowment contract, upon surrender or at the
Maturity Date of a Policy, the excess, if any, of the Surrender Value plus any
outstanding Policy Debt over the cost basis under a Policy will be treated as
ordinary income for federal income tax purposes. Such a Policy's cost basis will
usually equal the premiums paid less any premiums previously recovered in
partial withdrawals. If a partial withdrawal occurring within 15 years of the
Policy date is accompanied by a reduction in benefits under the Policy, special
rules apply to determine whether part or all of the cash received is paid out of
the income of the Policy and is taxable. Cash distributed to a Policyowner on
partial withdrawals occurring more than 15 years after the Policy date will be
taxable as ordinary income to the Policyowner to the extent that it exceeds the
cost basis under a Policy.
Loans received under Policies that are not modified endowment contracts should
be treated as indebtedness of the Policyowner, and no part of such Policy Loan
will constitute income to the Policyowner unless the Policy is surrendered or
the Policy matures. Interest on a loan may be deductible, subject to several
limitations, depending on the use to which the Loan proceeds are put and the tax
rules applicable to the Policyowner. Generally, if the Policy loan is used for
personal purposes by an individual, the interest expense is not deductible.
Other restrictions apply to the deduction of loan interest where the interest is
incurred on a loan under a Policy covering the life of an officer, employee, or
person financially interested in the trade of business of the Policyowner.
MODIFIED ENDOWMENT CONTRACTS
Pre-death distributions from modified endowment contracts may give rise to
taxable income. Upon full surrender or maturity of the Policy, the Policyowner
will recognize ordinary income for federal income tax purposes equal to the
amount by which the Surrender Value plus the Policy Debt exceeds the investment
in the Policy (usually the premiums paid plus certain pre-death distributions
that were taxable less any premiums previously recovered that were excludable
from gross income). Upon partial withdrawals and Policy Loans, the Policyowner
will recognized ordinary income to the extent allocable to income on the Policy
which is the amount by which the Policy Value exceeds investment in the Policy
immediately before the distribution. If two or more Policies which are
classified as modified endowment contracts are purchased from any one insurance
company and its affiliates during any calendar year, all such Policies will be
aggregated for purposes of determining the portion of the pre-death
distribution allocable to income on the Policies and the portion allocable to
investment in the Policies.
Amounts received under a modified endowment contract that are included in gross
income are subject to an additional tax equal to 10% of the amount included in
gross income, unless an exception applies. The 10% additional tax does not apply
to any amount received: (i) when the taxpayer is at least 59 1/2 years old; (ii)
which is attributable to the taxpayer becoming totally disabled; or (iii) which
is part of a series of substantially equal periodic payments made (not less
frequently than annually) for the life (or life expectancy) of the taxpayer or
the joint lives (or joint life expectancies) of the taxpayer and his or her
beneficiary.
If a Policy was not originally a modified endowment contract but becomes one
pre-death distributions received in
28
<PAGE>
anticipation of a failure of a Policy to meet the seven-pay premium test are to
be treated as pre-death distributions from a modified endowment contract (and,
therefore, are to be taxable as described above) even though, at the time of the
distribution(s) the Policy was not yet a modified endowment contract. For this
purpose, pursuant to the Code, any distribution made within two years before the
Policy is classified as a modified endowment contract shall be treated as being
made in anticipation of the Policy's failing to meet the seven-pay premium test.
Since the Policy provides for flexible premium payments. We will carefully
monitor the Policy to determine whether increases in death benefits or
additional premium payments cause either the start of a new seven-year test
period or the taxation of distributions and loans. All additional premium
payments will be considered.
REASONABLENESS REQUIREMENT
FOR CHARGES
Another provision of the tax law deals with allowable charges for mortality
costs and other expenses that are used in making calculations to determine
whether a contract qualifies as life insurance for federal income tax purposes.
These calculations must be based upon: (i) mortality charges that meet the
reasonable mortality charge requirements set forth in the Code, and (ii) other
charges reasonably expected to be actually paid. The Treasury Department is
expected to promulgate regulations governing reasonableness standards for
mortality and other charges. The area of the law relating to reasonableness
standards for mortality and other charges is currently based on statutory
language and IRS pronouncements which do not explicitly address all relevant
issues. Accordingly, while C.M. Life believes that the mortality costs and other
expenses used in making calculations to determine whether the Policy qualifies
as life insurance meet the current standards, it cannot offer complete assurance
since the law in this area is not fully developed. It is possible that future
regulations will contain standards that would require C.M. Life to modify its
mortality and other charges used for the purposes of the calculations in order
to retain the qualification of the Policy as life insurance for federal income
tax purposes, and C.M. Life reserves the right to make any such modifications.
OTHER
Federal estate and gift and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
jurisdiction and the circumstances of each Policyowner or Beneficiary.
For complete information on federal, state, local and other tax considerations,
a qualified tax adviser should be consulted.
C.M. Life does not make any guarantee regarding the tax status of any policy.
More Information About the
Fixed Account
As discussed earlier, you may allocate Net Premiums and transfer Policy Value to
the Fixed Account. Because of exemption and exclusionary provisions in the
securities law, any amount in the Fixed Account is not generally subject to
regulation under the provisions of the Securities Act of 1933 or the 1940 Act.
Accordingly, the disclosures in this Section have not been reviewed by the SEC.
Disclosures regarding the fixed portion of the Policy and the Fixed Account may,
however, be subject to certain generally applicable provisions of the Federal
securities laws concerning the accuracy and completeness of statements made in
prospectuses.
GENERAL DESCRIPTION
Allocations to the Fixed Account for this Policy are invested in the General
Account of C.M. Life. The General Account of C.M. Life is made up of all of the
general assets of C.M. Life other than those allocated to any separate account.
Allocations to the General Account become part of the assets of C.M. Life and
are used to support insurance and annuity obligations. Subject to applicable
law, C.M. Life has sole discretion over the investment of assets of the General
Account.
A portion or all of Net Premiums may be allocated or transferred to accumulate
at a fixed rate of interest in the Fixed Account. Such net amounts are
guaranteed by C.M. Life as to principal and a minimum rate of interest. The
allocation or transfer of funds to the Fixed Account does not entitle you to
share in the investment experience of the General Account.
FIXED ACCOUNT VALUE
C.M. Life bears the full investment risk for amounts allocated to the Fixed
Account and guarantees that interest credited to each Policyowner's Policy Value
in the General Account will not be less than an annual rate of 3% prior to
issuance of the Policy and 4% thereafter ("Guaranteed Minimum Rate").
C.M. Life may, AT ITS SOLE DISCRETION, credit a higher rate of interest ("excess
interest"), although it is not obligated to credit interest in excess of the
Guaranteed Minimum Rate per year, and might not do so. However, the excess
interest rate, if any, in effect on the date a premium is received at the
Service Center is guaranteed on that premium for one year, unless the Policy
Value associated with the premium becomes security for a Policy loan. AFTER SUCH
INITIAL ONE YEAR GUARANTEE OF INTEREST ON NET PREMIUM, ANY INTEREST CREDITED ON
THE POLICY'S ACCUMULATED VALUE IN THE FIXED ACCOUNT IN EXCESS OF THE GUARANTEED
MINIMUM RATE PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF C.M. LIFE.
THE POLICYOWNER ASSUMES THE RISK
29
<PAGE>
THAT INTEREST CREDITED MAY NOT EXCEED THE GUARANTEED MINIMUM RATE.
Even if excess interest is credited to accumulated value in the Fixed Account,
no excess interest will be credited to that portion of the Policy Value which is
equal to Policy Debt. However, such Policy Value will be credited interest at an
effective annual yield of at least a rate equal to the Loan Interest Rate less
1.5% (unless another rate is required by applicable law).
C.M. Life guarantees that, on each Monthly Payment Date after issuance and
acceptance of the Policy, the Policy Value in the Fixed Account will be the
amount of the Net Premiums allocated or Policy Value transferred to the Fixed
Account, plus interest at an annual rate of 4% per year, plus any excess
interest which C.M. Life credits, less the sum of all Policy charges allocable
to the Fixed Account and any amounts deducted from the Fixed Account in
connection with loans, partial withdrawals, surrenders or transfers.
Transfers, surrenders, partial withdrawals, Proceeds and Policy Loans payable
from the General Account may be delayed up to six months. However, if payment is
delayed for 30 days (state variations may exist) or more, C.M. Life will pay
interest at least equal to an effective annual yield of 3% per year for the
period of deferment. Amounts from the General Account used to pay premiums on
Policies with C.M. Life will not be delayed.
THE POLICY
This prospectus describes a flexible premium variable life insurance policy and
is generally intended to serve as a disclosure document only for the aspects of
the Policy relating to the Separate Account. For complete details regarding the
Fixed Account, see the Policy itself.
ERISA Compliance
The use of the Policy in an employer-sponsored program may result in the
application of all or portions of the Employee Retirement Income Security Act of
1974 (as amended) ("ERISA"). If ERISA applies, the employer may be subject to
government and participant disclosure, filing, fiduciary and other requirements.
The Policyowner is encouraged to consult with counsel on these matters, as
neither C.M. Life nor any of its representatives are authorized to make
representations concerning whether ERISA applies to the intended use of a
Policy.
Financial Statements
The Financial Statements of C.M. Life and the Separate Account included herein
should be considered only as bearing upon the ability of C.M. Life to meet its
obligations under the Policy.
30
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyowners of
C.M. Life Insurance Company
We have audited the statements of assets and liabilities of the Panorama Total
Return Sub-Account, Panorama Growth Sub- Account, Panorama International Equity
Sub-Account, Panorama LifeSpan Diversified Income Sub-Account, Panorama LifeSpan
Balanced Sub-Account, Panorama LifeSpan Capital Appreciation Sub-Account,
Oppenheimer Bond Sub-Account, Fidelity Money Market Sub-Account, Fidelity High
Income Sub-Account, and Fidelity Index 500 Sub-Account of the C.M. Life Variable
Life Separate Account I as of December 31, 1997, and the related statement of
operations and changes in net assets for the periods indicated thereon. These
financial statements are the responsibility of 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. Our procedures included
confirmation of securities owned as of December 31, 1997, by confirmation with
Panorama Series Fund, Inc., Oppenheimer Variable Account Funds and Fidelity
Variable Insurance Products Fund and Fund II. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Panorama Total Return
Sub-Account, Panorama Growth Sub-Account, Panorama International Equity
Sub-Account, Panorama LifeSpan Diversified Income Sub-Account, Panorama LifeSpan
Balanced Sub-Account, Panorama LifeSpan Capital Appreciation Sub-Account,
Oppenheimer Bond Sub-Account, Fidelity Money Market Sub-Account, Fidelity High
Income Sub-Account, and Fidelity Index 500 Sub-Account of the C.M. Life Variable
Life Separate Account I as of December 31, 1997, and the results of their
operations and changes in their net assets for the periods indicated thereon, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 18, 1998
F-1
<PAGE>
C.M. Life Variable Life Separate Account I
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at Market (Notes 3A and 3B):
Panorama Total Return Sub-Account
177,290 shares (Cost $324,085) $ 354,579
Panorama Growth Sub-Account
782,074 shares (Cost $2,168,187) 2,698,154
Panorama International Equity Sub-Account
56,587 shares (Cost $71,306) 76,961
Panorama LifeSpan Diversified Income Sub-Account
22,374 shares (Cost $24,404) 26,401
Panorama LifeSpan Balanced Sub-Account
35,985 shares (Cost $42,316) 46,060
Panorama LifeSpan Capital Appreciation Sub-Account
21,164 shares (Cost $26,022) 28,571
--------------
3,230,726
--------------
Oppenheimer Bond Sub-Account --------------
900 shares (Cost $10,480) 10,721
--------------
Fidelity Money Market Sub-Account
6,075 shares (Cost $6,075) 6,075
Fidelity High Income Sub-Account
8,779 shares (Cost $107,334) 119,220
Fidelity Index 500 Sub-Account
2,494 shares (Cost $228,550) 285,260
--------------
410,555
--------------
Total Assets $ 3,652,002
--------------
LIABILITIES
Due to C.M. Life Insurance Company 134
--------------
NET ASSETS $ 3,651,868
==============
<CAPTION>
Net assets consist of: Units Unit Value Net assets
--------- -------------- --------------
<S> <C> <C> <C>
Panorama Total Return Sub-Account 261,797 1.35 354,572
Panorama Growth Sub-Account 1,683,998 1.60 2,698,039
Panorama International Equity Sub-Account 62,533 1.23 76,958
Panorama LifeSpan Diversified Income Sub-Account 21,298 1.24 26,401
Panorama LifeSpan Balanced Sub-Account 35,023 1.32 46,059
Panorama LifeSpan Capital Appreciation Sub-Account 20,718 1.38 28,570
Oppenheimer Bond Sub-Account 9,255 1.16 10,721
Fidelity Money Market Sub-Account 5,487 1.11 6,075
Fidelity High Income Sub-Account 95,691 1.25 119,217
Fidelity Index 500 Sub-Account 171,213 1.67 285,256
--------------
$ 3,651,868
==============
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
C.M. Life Variable Life Separate Account I
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
Panorama Series Fund, Inc.
---------------------------------------------------------------------------------------
LifeSpan LifeSpan
International Diversified LifeSpan Capital
Total Return Growth Equity Income Balanced Appreciation
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends (Note 3B) $ 32,657 $ 177,936 $ 1,367 $ 792 $ 995 $ 542
Mortality and expense risk flees (Note 4) 2,832 21,591 587 178 325 185
------------- ------------- ------------- -------------- ------------- -------------
Net investment income (Note 3C) 29,825 156,345 780 614 670 357
------------- ------------- ------------- -------------- ------------- -------------
Realized and unrealized gain (loss)
on investments
Net realized gain on investments
(Notes 3B, 3C and 5) 4,928 24,367 316 146 607 160
Change in net unrealized appreciation
of investments 14,875 324,183 3,269 1,355 2,622 1,924
------------- ------------- ------------- -------------- ------------- -------------
Net gain on investments 19,803 348,550 3,585 1,501 3,229 2,084
------------- ------------- ------------- -------------- ------------- -------------
Net increase in net assets
resulting from operations $ 49,628 $ 504,895 $ 4,365 $ 2,115 $ 3,899 $ 2,441
============= ============= ============= ============== ============= =============
<CAPTION>
Oppenheimer
Variable
Account Fidelity Variable
Funds Insurance Products Fund & Fund II
------------- --------------------------------------------
Money High
Bond Market Income Index 500
Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Investment Income
Dividends (Note 3B) $ 562 $ 238 $ 5,242 $ 4,481
Mortality and expense risk fees (Note 4) 74 40 807 1,859
------------- ------------- ------------- --------------
Net investment income (Note 3C) 488 198 4,435 2,622
------------- ------------- ------------- --------------
Realized and unrealized gain (loss)
on investments
Net realized gain on investments
(Notes 3B, 3C and 5) 4 - 363 3,796
Change in net unrealized appreciation
of investments 258 - 8,916 43,741
------------- ------------- ------------- --------------
Net gain on investments 262 - 9,279 47,537
------------- ------------- ------------- --------------
Net increase in net assets
resulting from operations $ 750 $ 198 $ 13,714 $ 50,159
============= ============= ============= ==============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
C.M. Life Variable Life Separate Account I
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
Panorama Series Fund, Inc.
------------------------------------------------------------------------------
LifeSpan LifeSpan
International Diversified LifeSpan Capital
Total Return Growth Equity Income Balanced Appreciation
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ ----------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income $ 29,825 $ 156,345 $ 780 $ 614 $ 670 $ 357
Net realized gain on investments 4,928 24,367 316 146 607 160
Change in net unrealized appreciation of investments 14,875 324,183 3,269 1,355 2,622 1,924
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 49,628 504,895 4,365 2,115 3,899 2,441
------------ ------------ ------------ ------------ ------------ ------------
Capital transactions
Transfer of net premiums 93,635 255,881 23,123 12,609 19,964 16,593
Transfer of surrender values (40,084) (95,321) (2,837) (1,970) (4,575) (1,275)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets from capital transactions 53,551 160,560 20,286 10,639 15,389 15,318
------------ ------------ ------------ ------------ ------------ ------------
Total increase 103,179 665,455 24,651 12,754 19,288 17,759
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS, beginning of the year 251,393 2,032,584 52,307 13,647 26,771 10,811
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS, end of the year $ 354,572 $ 2,698,039 $ 76,958 $ 26,401 $ 46,059 $ 28,570
============ ============ ============ ============ ============ ============
<CAPTION>
Oppenheimer
Variable
Account Fidelity Variable
Funds Insurance Products Fund & Fund II
------------ --------------------------------------
Money High
Bond Market Income Index 500
Sub-Account Sub-Account Sub-Account Sub-Account
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income $ 488 $ 198 $ 4,435 $ 2,622
Net realized gain on investments 4 - 363 3,796
Change in net unrealized appreciation of investments 258 - 8,916 43,741
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 750 198 13,714 50,159
------------ ------------ ------------ ------------
Capital transactions
Transfer of net premiums 5,016 3,220 45,143 121,351
Transfer of surrender values (486) (255) (4,512) (11,448)
------------ ------------ ------------ ------------
Net increase in net assets from capital transactions 4,530 2,965 40,631 109,903
------------ ------------ ------------ ------------
Total increase 5,280 3,163 54,345 160,062
------------ ------------ ------------ ------------
NET ASSETS, beginning of the year 5,441 2,912 64,872 125,194
------------ ------------ ------------ ------------
NET ASSETS, end of the year $ 10,721 $ 6,075 $ 119,217 $ 285,256
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
C.M. Life Variable Life Separate Account I
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1996
<TABLE>
<CAPTION>
Panorama Series Fund, Inc.
----------------------------------------------------------------------------------------
LifeSpan LifeSpan
International Diversified LifeSpan Capital
Total Return Growth Equity Income Balanced Appreciation
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ (230) $ 4,380 $ (24) $ 12 $ (27) $ (29)
Net realized gain (loss) on investments 2,386 26,236 (384) 140 52 24
Change in net unrealized appreciation/
depreciation of investments 13,083 185,527 2,795 519 1,123 624
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations 15,239 216,143 2,387 671 1,148 619
------------- ------------- ------------- ------------- ------------- -------------
Capital transactions:
Transfer of net premiums 166,589 308,164 20,877 6,061 15,925 3,321
Transfer of surrender values (3,622) (19,301) (711) (965) (1,101) (189)
Transfers between sub-accounts and
C.M. Life Insurance Company 73,187 1,527,578 29,754 7,880 10,799 7,060
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets from
capital transaction 236,154 1,816,441 49,920 12,976 25,623 10,192
------------- ------------- ------------- ------------- ------------- -------------
Total increase 251,393 2,032,584 52,307 13,647 26,771 10,811
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS, beginning of the year - - - - - -
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS, end of the year $ 251,393 $ 2,032,584 $ 52,307 $ 13,647 $ 26,771 $ 10,811
============= ============= ============= ============= ============= =============
<CAPTION>
Panorama Oppenheimer
Series Variable
Fund, Account Fidelity Variable
Inc. Funds Insurance Products Fund & Fund II
------------- ------------- -------------------------------------------
Government Money High
Securities/1/ Bond/2/ Market Income Index 500
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (Loss) $ (5) 127 $ 1,226 $ (190) $ (339)
Net realized gain (loss) on investments (141) (126) - (50) 2,379
Change in net unrealized appreciation/
depreciation of investments - 24 - 3,080 10,869
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations (146) 25 1,226 2,840 12,909
------------- ------------- ------------- ------------- -------------
Capital transactions:
Transfer of net premiums 4,568 1,460 486,612 51,427 33,188
Transfer of surrender values (224) (95) (482) (1,460) (150)
Transfers between sub-accounts and
C.M. Life Insurance Company (4,198) 4,051 (484,444) 12,065 79,247
------------- ------------- ------------- ------------- -------------
Net increase in net assets from
capital transaction 146 5,416 1,686 62,032 112,285
------------- ------------- ------------- ------------- -------------
Total increase - 5,441 2,912 64,872 125,194
------------- ------------- ------------- ------------- -------------
NET ASSETS, beginning of the year - - - - -
------------- ------------- ------------- ------------- -------------
NET ASSETS, end of the year $ - $ 5,441 $ 2,912 $ 64,872 $ 125,194
============= ============= ============= ============= =============
</TABLE>
/1/ For the period 1/1/96-4/30/96, the Government Securities Sub-Account
invested in shares of Panorama Series Government Securities Portfolio which
has since been liquidated
/2/ For the period 5/1/96-12/31/96, the Government Securities Sub-Account
invested in shares of Oppenheimer Bond Fund
See Notes to Financial Statements.
F-5
<PAGE>
C.M. Life Variable Life Separate Account I
Notes To Financial Statements
1. HISTORY
C.M. Life Variable Life Separate Account I (the "Separate Account") was
established as a separate investment account of C.M. Life Insurance Company
("C.M. Life") to be used exclusively for C.M. Life's Variable Universal Life
Insurance policy, known as Executive Benefit Variable Universal Life. C.M.
Life was formerly a wholly-owned stock life insurance subsidiary of
Connecticut Mutual Life Insurance Company ("CML"). On February 29, 1996, CML
merged with and into Massachusetts Mutual Life Insurance Company
("MassMutual"). Upon the merger, CML's existence ceased and MassMutual
became the surviving company under the name Massachusetts Mutual Life
Insurance Company. C.M. Life became a wholly-owned subsidiary of MassMutual.
The Separate Account operates as a registered unit investment trust pursuant
to the Investment Company Act of 1940 ("the 1940 Act") and the rules
promulgated thereunder.
2. INVESTMENT OF THE SEPARATE ACCOUNT'S ASSETS
The Separate Account maintains ten Sub-Accounts. Each Sub-Account invests in
shares of certain investment portfolios of three management investment
companies: the Panorama Series Fund, Inc., ("Panorama Fund") (prior to May
1, 1996 named Connecticut Mutual Financial Services Series Fund I, Inc.),
Oppenheimer Variable Account Funds ("Oppenheimer Trust"), and the Fidelity
Variable Insurance Products Fund and Fund II("VIP Fund" and "VIP Fund II").
Panorama Fund is a registered, open-end, diversified management investment
company with six of its portfolios currently available to Executive Benefit
Variable Universal Life policyowners: Total Return, Growth, International
Equity, LifeSpan Diversified Income, LifeSpan Balanced and LifeSpan Capital
Appreciation. Oppenheimer Trust is a registered, open-end, diversified
management investment company with the Oppenheimer Bond available to
Executive Benefit Variable Universal Life policy owners. VIP Fund and VIP
Fund II are registered, open-end, diversified management investment
companies with two and one of its portfolios, respectively currently
available to Executive Benefit Variable Universal Life policy owners: Money
Market, High Income and Index 500. OppenheimerFunds, Inc., a controlled
subsidiary of MassMutual, serves as investment adviser to the Panorama Fund
and the Oppenheimer Trust. VIP Fund and VIP Fund II are managed by Fidelity
Management & Research Company. Panorama Fund, Oppenheimer Trust and the VIP
Funds are registered, open-end, diversified management investment companies
registered under the 1940 Act.
In addition to the ten Sub-Accounts of the Separate Account, a policy owner
may also allocate funds to the Fixed Account which is part of C.M. Life's
General Account. Interests in the Fixed Account are not registered under the
Securities Act of 1933, as amended, and the General Account is not
registered as an investment company under the 1940 Act.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Separate Account in preparation of the financial
statements in conformity with generally accepted accounting principles.
A. Investment Valuation
Investments in Panorama Fund, Oppenheimer Trust and the VIP Funds are each
stated at market value which is the net asset value per share of each of the
respective underlying portfolios.
B. Accounting for Investments
Investment transactions are accounted for on the trade date and identified
cost is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the ex-dividend
date.
F-6
<PAGE>
Notes To Financial Statements (Continued)
C. Federal Income Taxes
Operations of the Separate Account form a part of the total operations of
C.M. Life, and the Separate Account is not taxed separately. C.M. Life is
taxed as a life insurance company under the provisions of the 1986 Internal
Revenue Code, as amended. The Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code. Under existing federal law, no taxes are payable on investment income
and realized capital gains attributable to policies which depend on the
Separate Account's investment performance. Accordingly, no provision for
federal income tax has been made. C.M. Life may, however, make such a charge
in the future if an unanticipated change of current law results in a company
tax liability attributable to the Separate Account.
D. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
4. CHARGES
There are no deductions for sales charges made from the premium payments at
the time of purchase. A deduction of 2.0% of premiums is made from each
premium payment for state and local premium taxes.
For assuming mortality and expense risks, C.M. Life deducts a charge equal,
on an annual basis, to .65% of the daily net asset value in each
Sub-Account. C.M. Life also deducts an administrative charge equal, on an
annual basis, to $5 per policy and $.05 per thousand of specified amount
which is deducted from the Policy Value. These charges cover expenses in
connection with the administration of the Separate Account and the Policies.
5. SALES AGREEMENTS
MML Distributors, LLC ("MML Distributors"), a wholly-owned subsidiary of
MassMutual, serves as principal underwriter of the policies pursuant to an
underwriting and servicing agreement among MML Distributors, C.M. Life and
Separate Account I (prior to May 1, 1996, MML Distributors was known as
Connecticut Mutual Financial Services, LLC). MML Distributors is registered
with the Securities and Exchange Commission (the "SEC") as a broker-dealer
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"). MML Distributors may
enter into selling agreements with other broker-dealers who are registered
with the SEC and are members of the NASD in order to sell the policies.
Effective March 1, 1996, MML Investors Services, Inc. ("MMLISI") serves as a
co-underwriter of the policies pursuant to underwriting and servicing
agreements among MMLISI, C.M. Life and Separate Account I. MMLISI is
registered with the SEC as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the NASD. Registered representatives of MMLISI
sell the policies as authorized variable life insurance agents under
applicable state insurance laws.
Pursuant to underwriting and servicing agreements, commissions or other fees
due to registered representatives for selling and servicing the policies are
paid by C.M. Life on behalf of MML Distributors or MMLISI. MML Distributors
and MMLISI also receive compensation for their actions as underwriters of
the policies.
F-7
<PAGE>
Notes To Financial Statements (Continued)
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
Panorama Series Fund, Inc.
--------------------------------------------------------------------------------------------------
LifeSpan LifeSpan
International Diversified LifeSpan Capital
For The Year Ended Total Return Growth Equity Income Balanced Appreciation
December 31, 1997 Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Cost of purchases $ 345,382 $ 485,593 $ 24,295 $ 34,677 $ 320,156 $ 108,484
<CAPTION>
Oppenheimer
Variable
Account Fidelity Variable
Funds Insurance Products Fund & Fund II
------------- -----------------------------------------------
Money High
For The Year Ended Bond Market Income Index 500
December 31, 1997 Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Cost of purchases $ 5,574 $ 3,456 $ 50,496 $ 128,246
</TABLE>
7. NET INCREASE IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
Panorama Series Fund, Inc.
--------------------------------------------------------------------------------------------------
LifeSpan LifeSpan
International Diversified LifeSpan Capital
For The Year Ended Total Return Growth Equity Income Balanced Appreciation
December 31, 1997 Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units purchased 75,445 173,549 18,974 10,819 16,030 12,946
Units withdrawn (29,925) (62,477) (2,331) (1,686) (3,642) (972)
------------- ------------- ------------- ------------- ------------- -------------
Net increase 45,520 111,072 16,643 9,133 12,388 11,974
<CAPTION>
Variable
Account Fidelity Variable
Funds Insurance Products Fund & Fund II
------------- -----------------------------------------------
Money High
For The Year Ended Bond Market Income Index 500
December 31, 1997 Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Units purchased 4,581 2,973 38,773 81,516
Units withdrawn (385) (236) (3,897) (7,485)
------------- ------------- ------------- -------------
Net increase 4,196 2,737 34,876 74,031
</TABLE>
<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, 1997 and 1996, and the related
statutory statements of income, changes in capital stock and surplus, and cash
flows for the years then ended. 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. The statutory
financial statements of C.M. Life Insurance Company for the year ended December
31, 1995 were audited by other auditors whose report, dated February 15, 1996,
expressed an adverse opinion on those statements as to fair presentation in
conformity with generally accepted accounting principles and expressed an
unqualified opinion in conformity with accounting practices prescribed or
permitted by the Insurance Department of the State of Connecticut.
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 more fully in Note 1, these financial statements were prepared in
conformity with statutory accounting practices of the National Association of
Insurance Commissioners and the accounting practices prescribed or permitted by
the Department of Insurance of the State of Connecticut ("statutory accounting
principles"), which practices differ from generally accepted accounting
principles. The effects on the financial statements of the variances between the
statutory basis of accounting and generally accepted accounting principles,
although not reasonably determinable at this time, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of C.M. Life Insurance Company at December 31, 1997 and 1996, or the results of
its operations or its cash flows for the years then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C.M. Life Insurance Company at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended, on the statutory basis of accounting described in Note
1.
COOPERS & LYBRAND, L.L.P.
Springfield, Massachusetts
February 6, 1998
28
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1997 1996
---- ----
(in Millions)
Assets:
Bonds ...................................... $ 664.5 $ 736.5
Common stocks .............................. 61.4 55.6
Mortgage loans ............................. 101.6 33.8
Other investments .......................... 2.2 -
Policy loans ............................... 142.5 132.9
Cash and short-term investments ............ 88.4 63.7
-------- --------
1,060.6 1,022.5
Investment and insurance amounts
receivable ............................... 30.1 32.9
Federal income tax receivable .............. - 7.1
Transfer due from separate account ......... 32.0 24.3
-------- --------
1,122.7 1,086.8
Separate account assets .................... 1,096.5 779.8
-------- --------
$2,219.2 $1,866.6
======== ========
See Notes to Statutory Financial Statements.
29
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION (continued)
<TABLE>
<CAPTION>
December 31,
1997 1996
---- ----
($ In Millions Except for Par Value
and Share Amounts
<S> <C> <C>
Liabilities:
Policyholders' reserves and funds .............. $ 951.0 $ 907.5
Policyholders' claims and other benefits ....... 4.5 3.8
Payable to parent .............................. 13.6 9.6
Federal income taxes payable ................... 6.1 -
Asset valuation reserve ........................ 22.7 18.5
Investment reserves ............................ 3.9 3.3
Other liabilities .............................. 7.7 34.3
-------- --------
1,009.5 977.0
Separate account reserves and liabilities ...... 1,096.5 779.8
-------- --------
2,106.0 1,756.8
-------- --------
Capital stock and surplus:
Common stock, $200 par value
50,000 shares authorized
12,500 shares issued and outstanding ........ 2.5 2.5
Paid-in and contributed surplus ................ 43.8 43.8
Surplus ........................................ 66.9 63.5
-------- --------
113.2 109.8
-------- --------
$2,219.2 $1,866.6
======== ========
</TABLE>
See Notes to Statutory Financial Statements.
30
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF INCOME
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
Revenue:
Premium Income ............................ $331.3 $314.4 $260.8
Net investment and other income ........... 72.1 76.4 84.4
------ ------ ------
403.4 390.8 345.2
------ ------ ------
Benefits and expenses:
Policy benefits and payments .............. 100.4 99.0 58.9
Addition to policyholders' reserves, funds
and separate accounts ................... 190.0 210.3 211.4
Operating expenses ........................ 49.5 45.4 32.1
Commissions ............................... 33.5 25.0 14.1
State taxes, licenses and fees ............ 3.5 3.2 5.0
------ ------ ------
376.9 382.9 321.5
------ ------ ------
Net gain from operations before federal
income taxes ............................ 26.5 7.9 23.7
Federal income taxes ...................... 19.0 6.3 9.4
------ ------ ------
Net gain from operations .................. 7.5 1.6 14.3
Net realized capital gain (loss) .......... 0.1 0.6 (0.5)
------ ------ ------
Net income ................................ $ 7.6 $ 2.2 $ 13.8
====== ====== ======
See Notes to Statutory Financial Statements.
31
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
Years Ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
Capital stock and surplus equity,
beginning of year ............................ $109.8 $113.2 $103.8
Increases (decreases) due to:
Net income ................................... 7.6 2.2 13.8
Change in asset valuation and investment
reserves .................................... (4.8) (1.9) (9.2)
Change in non-admitted assets and other ...... (0.2) (2.7) (1.2)
Net unrealized capital gain (loss) ........... 0.8 (1.0) 6.0
------ ------ ------
3.4 (3.4) 9.4
------ ------ ------
Capital stock and surplus equity, end of year.. $113.2 $109.8 $113.2
====== ====== ======
See Notes to Statutory Financial Statements.
32
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
Years Ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
Operating activities:
Net income ....................................... $ 7.6 $ 2.2 $ 13.8
Additions to policyholders' reserves and funds
net of transfers to separate accounts ........... 44.2 41.6 84.2
Net realized capital gain (loss) ................. (0.1) (0.6) 0.5
Other changes .................................... 0.5 (0.8) (0.6)
------ ------ ------
Net cash provided by operating activities ........ 52.2 42.4 97.9
------ ------ ------
Investing activities:
Loans and purchases of investments ............... (438.6) (184.9) (491.9)
Sales and maturites of investments and
receipts from repayment of loans ................ 411.1 191.1 406.0
------ ------ ------
Net cash provided by (used in) investing
activities ........................................ (27.5) 6.2 (85.9)
------ ------ ------
Increase in cash and short-term investments ......... 24.7 48.6 12.0
Cash and short-term investments, beginning of
year ................................................ 63.7 15.1 3.1
------ ------ ------
Cash and short-term investments, end of year ........ $ 88.4 $ 63.7 $ 15.1
====== ====== ======
See Notes to Statutory Financial Statements.
33
<PAGE>
Notes To Statutory Financial Statements
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
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
all 50 states except New York.
The accompanying statutory financial statements, except as to form, have been
prepared in conformity with the statutory accounting practices of the National
Association of Insurance Commissioners ("NAIC") and the accounting practices
prescribed or permitted by the Insurance Department of the State of Connecticut.
The accompanying statutory financial statements are different in some respects
from GAAP financial statements. The more significant differences are as follows:
(a) acquisition costs, such as commissions and other costs directly related to
acquiring new business, are charged to current operations as incurred, whereas
GAAP would require these expenses to be capitalized and recognized over the life
of the policies; (b) policy reserves are based upon statutory mortality and
interest requirements without consideration of withdrawals, whereas GAAP
reserves would be based upon reasonably conservative estimates of mortality,
morbidity, interest and withdrawals; (c) bonds are generally carried at
amortized cost whereas GAAP generally requires they be valued at fair value; (d)
deferred income taxes are not provided for book-tax timing differences as would
be required by GAAP; and (e) payments received for universal life products and
variable annuities are reported as premium revenue, whereas under GAAP, these
payments would be recorded as deposits to policyholders' account balances.
The NAIC is currently engaged in an extensive project to codify statutory
accounting principles ("Codification") with a goal of providing a comprehensive
guide of statutory accounting principles for use by insurers in all states. This
comprehensive guide, which has not been approved by the NAIC or any state
insurance department includes seventy-two Statements of Statutory Accounting
Principles ("SSAPs") and is expected to be effective no earlier than January 1,
1999. The effect of adopting these SSAPs shall be reported as an adjustment to
surplus on the effective date. Management is currently reviewing the impact of
Codification. However, since the SSAPs have not been finalized, the ultimate
impact cannot be determined at this time.
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 the financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a description of the Company's principal accounting policies
and practices.
A. Investments
Bonds and stocks are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at amortized
cost, preferred stocks in good standing at cost, and common stocks at fair
value.
Mortgage loans are valued at unpaid principal less unamortized discount.
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.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve and other investment reserves stabilize surplus against fluctuations in
the value of stocks, as well as declines in the value of bonds and mortgage
loans.
Notes To Statutory Financial Statements (Continued)
The Interest Maintenance Reserve captures after-tax realized capital gains and
losses which result from changes in the overall level of
34
<PAGE>
interest rates for all types of fixed income investments, as well as other
financial instruments, including financial futures, U. S. Treasury purchase
commitments, options and interest rate swaps. This reserve is 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 $2.0 million in 1997 and $0.4 million in 1996 and net realized
after tax capital losses of $0.9 million in 1995 were transferred to the
Interest Maintenance Reserve. Amortization of the Interest Maintenance Reserve
into net investment income amounted to $0.1 million in 1997, 1996 and 1995. At
December 31, 1997, 1996 and 1995, the Interest Maintenance Reserve consisted of
a net loss deferral which was recorded as a reduction of surplus.
Realized capital gains and losses, less taxes, not includable in the Interest
Maintenance Reserve, are recognized in net income. Realized capital gains and
losses are determined using the specific identification method. Unrealized
capital gains and losses are included in 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. The assets consist principally of marketable securities reported at
fair value. Transfers due from separate account represents 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. Reserves for these life and annuity contracts have been established
using assumed interest rates and valuation methods that will provide reserves at
least as great as those required by law and contract provisions. The Company
receives administrative and investment advisory fees from these accounts.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally prepaid agent commissions,
other prepaid expenses and the Interest Maintenance Reserve, when in a net loss
deferral position) are excluded from the statutory statement of financial
position. These amounted to $5.7 million and $6.6 million as of December 31,
1997 and 1996, respectively and changes therein are charged directly to surplus.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience and
1980 Commissioners' Standard Ordinary mortality tables with assumed interest
rates ranging from 4.0 to 4.5 percent.
Reserves for individual annuities are based on accepted actuarial methods,
principally at interest rates ranging from 5.5 to 9.0 percent. Reserves for
policies and contracts considered investment contracts have a carrying value of
$115.6 million and $113.7 million at December 31, 1997 and 1996, respectively
(fair value of $116.0 million and $113.7 million at December 31, 1997 and 1996,
respectively as determined by discounted cash flow projections).
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 cash and short-term investments.
35
<PAGE>
Notes To Statutory Financial Statements (Continued)
3. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's best 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 Internal Revenue Service has completed its examination of the Company's
income tax returns through the year 1991 and is currently examining the Company
for the years 1992 through 1995. The Company believes any adjustments resulting
from such examinations will not materially affect its financial statements.
The Company plans to file a separate company 1997 federal income tax return.
Federal tax payments were $6.8 million in 1997, $17.6 million in 1996 and $10.7
million in 1995.
4. CAPITAL STOCK AND SURPLUS
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
capital stock and surplus is subject to dividend restrictions relating to
various state regulations which limit the payment of dividends without prior
approval. Under these regulations, $10.7 million of capital stock and surplus is
available for distribution to the shareholder in 1998 without prior regulatory
approval.
5. RELATED PARTY TRANSACTIONS
MassMutual and the Company have an agreement whereby MassMutual, for a fee, will
furnish the Company, as required, operating facilities, human resources,
computer software development and managerial services. 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 $39.7 million, $45.9 million and $34.0 million in 1997, 1996 and 1995,
respectively.
Prior to March 1, 1996, the Company had an underwriting agreement with its
affiliates GR Phelps and MML Distributors. 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 $4 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
Mass Mutual 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.
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, with maximum
coverage at $25.0 million, under which the Company cedes claims which, in
aggregate, exceed $35.6 million in 1997, $28.1 million in 1996, and $24.2
million in 1995. For each of the years, the limit was not exceeded. The Company
paid approximately $1.0 million, $0.4 million, and $0.6 million in premiums
under the agreement in 1997, 1996 and 1995, respectively.
36
<PAGE>
Notes To Statutory Financial Statements (Continued)
6. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment.
A. Bonds
The carrying value and estimated fair value of investments in bonds as of
December 31, 1997 and 1996 are as follows:
December 31, 1997
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(in Millions)
U. S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 104.3 $ 2.2 $ 0.2 $ 106.3
Debt securities issued by
foreign governments 4.6 0.0 0.3 4.3
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 1.9 485.6
Utilities 25.0 1.1 - 26.1
------- ------ ----- -------
Total $ 664.5 $ 20.2 $ 2.6 $ 682.1
======= ====== ===== =======
December 31, 1996
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(In Millions)
U. S. Treasury securities
and obligations of U.S.
government corporations
and Agencies $138.8 $ 2.2 $ 1.0 $140.0
Debt securities issued by
foreign governments 3.9 0.1 - 4.0
Mortgage-backed securities 37.4 0.7 0.7 37.4
State and local governments 10.3 0.2 0.1 10.4
Industrial securities 509.2 11.6 3.7 517.1
Utilities 36.9 1.2 0.2 37.9
------ ------ ----- ------
Total $736.5 $ 16.0 $ 5.7 $746.8
====== ====== ===== ======
The carrying value and estimated fair value of bonds at December 31, 1997, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
Estimated
Carrying Fair
Value Value
----- -----
(In Millions)
Due in one year or less $ 34.3 $ 34.3
Due after one year through five years 227.7 232.0
Due after five years through ten years 209.7 217.4
Due after ten years 80.3 83.4
------- ------
552.0 567.1
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 112.5 115.0
------- ------
Total $ 664.5 $682.1
======= ======
37
<PAGE>
Notes To Statutory Financial Statements (Continued)
Proceeds from sales of investments in bonds were $388.8 million during 1997,
$162.9 million during 1996, and $380.6 million during 1995. Gross capital gains
of $3.8 million in 1997, $1.6 million in 1996, and $3.6 million in 1995 and
gross capital losses of $0.5 million in 1997, $0.9 million in 1996, and $4.7
million in 1995 were realized on those sales, portions of which were included in
the Interest Maintenance Reserve. Estimated fair value of non-publicly traded
bonds is determined by the Company using a pricing matrix.
B. Stocks
Common stocks had a cost of $50.2 million in 1997 and $47.2 million in 1996.
C. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for
non-performing loans, approximated carrying value.
The Company had restructured loans with book values of $17.3 million and $21.9
million at December 31, 1997 and 1996, respectively. The loans typically have
been modified to defer a portion of the contracted interest payments to future
periods. Interest deferred to future periods totaled $0.2 million in 1997, 1996
and 1995.
D. Other
The carrying value of investments which were non-income producing for the
preceding twelve months was $0.4 million and $2.8 million at December 31, 1997
and 1996, respectively.
It is not practicable to determine the fair value of policy loans as they do not
have a stated maturity.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks primarily to reduce interest rate and
duration imbalances determined in asset/liability analyses. The fair values of
these instruments, 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 and options 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 exchange, at specified intervals, the
difference between fixed and floating interest rates calculated by reference to
an agreed-upon notional principal amount. Net amounts receivable and payable are
accrued as adjustments to interest income and included in investment and
insurance amounts receivable on the Statutory Statement of Financial Position.
Gains and losses realized on the termination of contracts are amortized through
the Interest Maintenance Reserve over the remaining life of the associated
contract. At December 31, 1997 and 1996, the Company had swaps outstanding with
notional amounts of $46.5 million and $13.0 million, respectively. The fair
value of these instruments was $0.2 million at December 31, 1997 and $0.1
million at December 31, 1996.
Options grant the purchaser the right to buy or sell a security or enter into a
derivative transaction at a stated price within a stated period. The Company's
option contracts have terms of up to five years. The amounts paid for options
purchased are included in other investments on the Statutory Statement of
Financial Position. Gains and losses on these contracts are recorded at the
expiration or termination date and are amortized through the Interest
Maintenance Reserve over the remaining life of the option contract. At December
31, 1997 and 1996, the Company had option contracts with notional amounts of
$111.3 million and $34.7 million, respectively. The Company's credit risk
exposure was limited to the unamortized costs of $2.2 million and $0.1 million
which had fair values of $2.3 million and $0.1 million at December 31, 1997 and
1996, respectively.
Notes To Statutory Financial Statements (Continued)
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
38
<PAGE>
opportunities, while limiting foreign exchange risk. The net cash flows from
asset and currency swaps are recognized as adjustments to the underlying assets'
interest income. Gains and losses realized on the termination of these contracts
adjusts the bases of the underlying asset. Notional amounts relating to asset
and currency swaps totaled $1.0 million at December 31, 1997 and 1996. The fair
values of these instruments were an unrealized gain of $0.1 million and an
unrealized loss of $0.1 million at December 31, 1997 and 1996, respectively.
The Company enters into forward U.S. Treasury commitments for the purpose of
managing interest rate exposure. The Company generally does not take delivery on
forward commitments. These commitments are instead settled with offsetting
transactions. Gains and losses on forward commitments are recorded when the
commitment is closed and amortized through the Interest Maintenance Reserve over
the remaining life of the asset. At December 31, 1997 and 1996, the company had
U. S. Treasury purchase commitments which will settle during the following year
with contractual amounts of $3.0 million and $2.0 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 $2.6 million and $0.1 million at December 31, 1997 and 1996,
respectively. The Company monitors exposure to ensure counterparties are credit
worthy and concentration of exposure is minimized. Additionally, contingent
collateral positions have been obtained with counterparties when considered
prudent.
8. LIQUIDITY
The withdrawal characteristics of the policyholder's reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1997 are illustrated below:
(In Millions)
Total policyholders' reserves and funds and,
separate account liabilities $2,047.5
Not subject to discretionary withdrawal (1.4)
Policy loans (142.5)
--------
Subject to discretionary withdrawal $1,903.6
========
Total invested assets, including separate
investment accounts $2,157.1
Policy loans and other invested assets (295.3)
--------
Marketable investments $1,861.8
========
9. 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 elected not to admit $1.3 million and $1.6 million of guaranty fund
premium tax offset receivable relating to prior assessments in 1997 and 1996,
respectively.
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 forseen with certainty, it is the opinion of
management, after consultation with legal counsel, that the ultimate resolution
of these matters will not materially affect its financial position, results of
operations or liquidity.
10. RECLASSIFICATIONS
Certain 1996 and 1995 amounts have been reclassified to conform with the current
year presentation.
39
<PAGE>
Notes To Statutory Financial Statements (Continued)
11. AFFILIATED COMPANIES
The relationship of the Company, its parent and affiliated companies as of
December 31, 1997 is illustrated below. Subsidiaries are wholly-owned by the
parent, except as noted.
Parent
- ------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
- -----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investor Services, Inc.
State House One (Liquidated in December 1996)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation - 98.5%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 84.8%
Oppenheimer Acquisition Corporation - 88.55%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc. - (Liquidated in December 1997)
CM International, Inc.
CM Property Management, Inc. - (Liquidated in December 1997)
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
Subsidiaries of MassMutual International
----------------------------------------
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A.
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
------------------------------------
MassMutual/Carlson CBO N. V. - 100%
MassMutual Corporate Value Limited - 46%
9048 - 5434 Quebec, Inc.
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
40
<PAGE>
APPENDIX A
Optional Benefits
This Appendix is intended to provide only a very brief overview of additional
insurance benefits currently available by rider. We reserve the right to add
insurance benefits by rider from time to time subject to applicable laws and
regulations. For more information, contact your agent or registered
representative.
The following supplemental benefits are available for issue under the Policies.
DISABILITY WAIVER OF MONTHLY
DEDUCTIONS RIDER
This rider provides that C.M. Life will waive Monthly Deductions due under a
Policy for each month that the Insured is disabled, as that term is defined in
the rider. The rider will bear additional cost of insurance charges if added to
the Policy.
TRANSFER OF INSURED RIDER
This rider allows you to use the Policy to insure a different person, subject to
Company guidelines. This rider is available without charge.
A-1
<PAGE>
APPENDIX B
Payment Options
PAYMENT OPTIONS
Upon Written Request, all or part of the Proceeds may be placed under one or
more payment options currently offered by C.M. Life. If you do not make an
election, C.M. Life will pay the Proceeds in a single sum. A certificate will be
provided to the payee describing the payment option selected.
If a payment option is selected, the Beneficiary may pay to C.M. Life any amount
that would otherwise be deducted from the Proceeds.
SELECTION OF PAYMENT OPTIONS
The amount applied under any one option for any one payee must be at least
$5,000. The periodic payment for any one payee must be at least $50. Subject to
your and/or the Beneficiary's provision, any option selection may be changed
before the Proceeds become payable. If you make no selection, the Beneficiary
may select an option when the Proceeds become payable.
B-1
<PAGE>
APPENDIX C
Illustrations of Death Benefit, Policy Values and Accumulated Premiums
The tables on the following pages illustrate the way in which a Policy's Death
Benefit, Policy Value, and Surrender Value could vary over an extended period of
time. They assume that all premiums are allocated to and remain in the Separate
Account for the entire period shown and are based on hypothetical gross
investment rates of return for the Funds (i.e., investment income and capital
gains and losses, realized or unrealized) equivalent to constant gross (after
tax) annual rates of 0%, 6%, and 12%.
The tables on pages C-2 and C-3 illustrate a Policy issued to an individual, Age
30, based on full medical underwriting and classified as a non-tobacco user. The
illustrations are also based on a choice of Death Benefit Option 1 and the Cash
Value Accumulation Test. The tables on pages C-4 and C-5 illustrate a Policy
issued to an individual, Age 45, based on guaranteed issue underwriting and
classified as a non-tobacco user. The illustrations are also based on a choice
of Death Benefit Option 2 and the Guideline Premium Test. Illustrations are
provided using both the current and guaranteed cost of insurance rates for the
two examples. Since the Policy is issued on a unisex basis, the illustrations
are shown on a unisex basis.
The Policy Values and Death Benefits would be different from those shown if the
gross annual investment rates of return averaged 0%, 6%, and 12% over a period
of years, but fluctuated above or below such averages for individual Policy
Years. The values would also be different depending on the allocation of a
Policy's total Policy Value among the Sub- Accounts of the Separate Account, if
the actual rates of return averaged 0%, 6% or 12%, but the rates of each Fund
Portfolio varied above and below such averages.
The amounts shown for the Death Benefits and Policy Values take into account the
deduction from premium for the tax expense charge, the premium charge, and the
Monthly Deduction from Policy Value. The amounts shown also take into account
the daily charge against the Separate Account for mortality and expense risks
and the Separate Account administrative charge for the first twenty Policy
Years, equivalent to an effective annual rate of 0.90% of the average daily
value of the assets in the Separate Account attributable to the Policies, and
0.25% thereafter. The amounts shown in the tables also take into account the
Panorama Fund, Oppenheimer Funds, VIP Fund, and VIP Fund II Portfolio's advisory
fees and operating expenses, which are assumed to be at an annual rate of 0.74%
of the average daily net assets of each Panorama Fund, Oppenheimer Funds, VIP
Fund, and VIP Fund II Portfolio. This is based upon an unweighted average. The
actual fees and expenses of the Panorama Fund, Oppenheimer Funds, and VIP Funds
in 1997 ranged from an annual rate of 0.28% to an annual rate of 1.30% of
average daily net assets. The fees and expenses associated with your Policy may
be more or less than 0.83% in the aggregate, depending upon how you make
allocations of Policy Value among the Sub-Accounts. Under its investment
advisory agreement with the Panorama Fund, OFI will reimburse the Panorama Fund
for total ordinary expenses exceeding a limitation of 1.50% of average daily net
assets of the Panorama Fund. Fidelity Management has voluntarily agreed to
temporarily limit the total operating expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) of the Index 500 Portfolio to
an annual rate of 0.27% of the Portfolio's average net assets. Without the
effect of the expense limitations, in 1997 the total operating expenses of the
Index 500 Portfolio would have been 0.40% of its average net assets.
Taking into account the mortality and expense risk charge and the Separate
Account administrative charge and the assumed 0.83% charge for the Panorama
Fund, Oppenheimer Fund, VIP Fund, and VIP Fund II Portfolio advisory fees and
operating expenses, the gross annual rates of investment return of 0%, 6% and
12% correspond to net annual rates of -1.73%, 4.27% and 10.27%, respectively,
during the first 20 Policy years and -1.08%, 4.92% and 10.92%, respectively,
thereafter.
The hypothetical returns shown in the table do not reflect any charges for
income taxes against the Separate Account since no charges are currently made.
If, in the future, such charges are made, in order to produce illustrated death
benefits and cash values, the gross annual investment rate of return would have
to exceed 0%, 6% or 12% by a sufficient amount to cover the tax charges.
The second column of the tables show the amount which would accumulate if the
premium payments were invested to earn interest, (after taxes) at 5% compounded
annually.
The tables illustrate the Policy Values that would result based upon the
assumptions that no Policy loans have been made, that you have not requested an
increase or decrease in the initial Specified Amount, that no partial
withdrawals have been made, and that no transfers above twelve have been made in
any Policy Year (so that no transaction or transfer charges have been incurred).
Upon request, C.M. Life will provide a comparable illustration based upon the
proposed Insured's Age, underwriting classification, and the requested Specified
Amount, Death Benefit Option, and riders.
To choose the Sub-Accounts which will best meet your needs and objectives,
carefully read the prospectuses of the Panorama Fund, Oppenheimer Funds, and VIP
Funds along with this prospectus.
C-1
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
Fully Underwritten
Unisex Non-Tobacco User Age 30
Specified Amount $300,000
Death Benefit Option 1
Cash Value Accumulation Test
<TABLE>
<CAPTION>
CURRENT COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ----------------------- ----------------------- -----------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
- ---- -------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5,670 4,562 300,000 4,850 300,000 5,138 300,000
2 11,624 8,984 300,000 9,843 300,000 10,738 300,000
3 17,875 13,265 300,000 14,985 300,000 16,847 300,000
4 24,438 17,408 300,000 20,281 300,000 23,517 300,000
5 31,330 21,403 300,000 25,726 300,000 30,797 300,000
6 38,567 25,254 300,000 31,331 300,000 38,752 300,000
7 46,165 29,021 300,000 37,160 300,000 47,516 300,000
8 54,143 33,023 300,000 43,562 300,000 57,529 300,000
9 62,521 36,931 300,000 50,218 300,000 68,558 300,000
10 71,317 40,744 300,000 57,137 300,000 80,712 300,000
11 80,552 44,462 300,000 64,331 300,000 94,049 338,106
12 90,250 48,082 300,000 71,809 300,000 108,652 377,887
13 100,433 51,607 300,000 79,587 300,000 124,646 419,455
14 111,124 55,032 300,000 87,674 300,000 142,151 462,938
15 122,350 58,361 300,000 96,083 302,866 161,313 508,479
16 134,138 61,969 300,000 105,134 320,825 182,898 558,128
17 146,515 65,494 300,000 114,533 338,420 206,610 610,488
18 159,511 68,936 300,000 124,292 355,671 232,656 665,761
19 173,156 72,293 300,000 134,423 372,604 261,259 724,180
20 187,484 75,566 300,000 144,937 389,236 292,669 785,974
Age 60 376,708 110,734 300,000 291,729 580,696 885,271 1,762,164
Age 65 512,116 124,516 300,000 390,541 679,482 1,481,211 2,577,081
Age 70 684,935 134,460 300,000 509,607 786,146 2,439,190 3,762,818
Age 75 905,500 138,804 300,000 651,731 905,200 3,967,962 5,511,170
</TABLE>
(1) Assumes a $5,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE VALUE OF UNITS,
CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN
IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR POLICY VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-2
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
Fully Underwritten
Unisex Non-Tobacco User Age 30
Specified Amount $300,000
Death Benefit Option 1
Cash Value Accumulation Test
<TABLE>
<CAPTION>
GUARANTEED COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ----------------------- ----------------------- ------------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
---- ------- ----- ------- ----- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5,670 3,996 300,000 4,266 300,000 4,536 300,000
2 11,624 7,921 300,000 8,711 300,000 9,535 300,000
3 17,875 11,774 300,000 13,344 300,000 15,046 300,000
4 24,438 15,555 300,000 18,170 300,000 21,121 300,000
5 31,330 19,253 300,000 23,187 300,000 27,806 300,000
6 38,567 22,877 300,000 28,410 300,000 35,173 300,000
7 46,165 26,420 300,000 33,840 300,000 43,285 300,000
8 54,143 30,200 300,000 39,824 300,000 52,577 300,000
9 62,521 33,887 300,000 46,040 300,000 62,809 300,000
10 71,317 37,480 300,000 52,499 300,000 74,080 300,000
11 80,552 40,981 300,000 59,211 300,000 86,494 310,949
12 90,250 44,383 300,000 66,182 300,000 100,087 348,097
13 100,433 47,692 300,000 73,429 300,000 114,968 386,886
14 111,124 50,901 300,000 80,957 300,000 131,248 427,430
15 122,350 54,014 300,000 88,785 300,000 149,062 469,863
16 134,138 57,022 300,000 96,919 300,000 168,540 514,313
17 146,515 59,929 300,000 105,339 311,254 189,837 560,926
18 159,511 62,732 300,000 114,037 326,324 213,118 609,850
19 173,156 65,424 300,000 123,014 340,980 238,553 661,241
20 187,484 68,008 300,000 132,279 355,241 266,340 715,268
Age60 376,708 91,144 300,000 254,574 506,739 767,749 1,528,231
Age65 512,116 95,111 300,000 331,016 575,917 1,243,468 2,163,443
Age70 684,935 89,121 300,000 416,438 642,418 1,965,663 3,032,332
Age75 905,500 64,448 300,000 509,219 707,263 3,041,443 4,224,312
</TABLE>
(1) Assumes a $5,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE VALUE OF UNITS,
CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN
IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR POLICY VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-3
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
Guaranteed Issue
Unisex Non-Tobacco User Age 45
Specified Amount $500,000
Death Benefit Option 2
Guideline Premium Test
<TABLE>
<CAPTION>
CURRENT COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ----------------------- ----------------------- -----------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
---- -------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,125 10,460 510,460 11,123 511,123 11,786 511,786
2 26,906 20,441 520,441 22,412 522,412 24,464 524,464
3 41,377 29,909 529,909 33,832 533,832 38,082 538,082
4 56,570 38,816 538,816 45,331 545,331 52,676 552,676
5 72,524 47,123 547,123 56,859 556,859 68,294 568,294
6 89,275 54,777 554,777 68,353 568,353 84,974 584,974
7 106,864 62,080 562,080 80,113 580,113 103,133 603,133
8 125,332 69,749 569,749 92,904 592,904 123,725 623,725
9 144,724 77,005 577,005 105,951 605,951 146,132 646,132
10 165,085 83,812 583,812 119,223 619,223 170,497 670,497
11 186,464 90,154 590,154 132,701 632,701 196,993 696,993
12 208,912 96,006 596,006 146,363 646,363 225,806 725,806
13 232,483 101,346 601,346 160,184 660,184 257,141 757,141
14 257,232 106,157 606,157 174,144 674,144 291,228 791,228
15 283,219 110,411 610,411 188,211 688,211 328,313 828,313
16 310,505 117,114 617,114 205,484 705,484 371,892 871,892
17 339,155 123,399 623,399 223,183 723,183 419,625 919,625
18 369,238 129,228 629,228 241,278 741,278 471,890 971,890
19 400,824 134,549 634,549 259,726 759,726 529,090 1,029,090
20 433,991 139,321 639,321 278,490 778,490 591,677 1,091,677
Age 60 283,219 160,100 660,100 507,239 1,007,239 1,758,042 2,258,042
Age 65 433,991 126,111 626,111 618,177 1,118,177 2,923,961 3,423,961
Age 70 626,418 43,516 543,516 701,223 1,201,223 4,814,858 5,314,858
Age 75 872,010 0 0 716,182 1,216,182 7,885,089 8,385,089
</TABLE>
(1) Assumes a $12,500 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE VALUE OF UNITS,
CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN
IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR POLICY VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-4
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
Guaranteed Issue
Unisex Non-Tobacco User Age 45
Specified Amount $500,000
Death Benefit Option 2
Guideline Premium Test
<TABLE>
<CAPTION>
GUARANTEED COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ----------------------- ----------------------- -----------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
---- -------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,125 8,159 508,159 8,747 508,747 9,336 509,336
2 26,906 15,991 515,991 17,674 517,674 19,431 519,431
3 41,377 23,485 523,485 26,774 526,774 30,349 530,349
4 56,570 30,618 530,618 36,023 536,023 42,141 542,141
5 72,524 37,388 537,388 45,421 545,421 54,889 554,889
6 89,275 43,779 543,779 54,948 554,948 68,668 568,668
7 106,864 49,744 549,744 64,558 564,558 83,527 583,527
8 125,332 55,991 555,991 74,996 574,996 100,363 600,363
9 144,724 61,725 561,725 85,462 585,462 118,497 618,497
10 165,085 66,895 566,895 95,894 595,894 137,998 637,998
11 186,464 71,471 571,471 106,251 606,251 158,966 658,966
12 208,912 75,419 575,419 116,483 616,483 181,501 681,501
13 232,483 78,703 578,703 126,537 626,537 205,718 705,718
14 257,232 81,297 581,297 136,366 636,366 231,746 731,746
15 283,219 83,158 583,158 145,905 645,905 259,716 759,716
16 310,505 84,192 584,192 155,030 655,030 289,712 789,712
17 339,155 84,329 584,329 163,637 663,637 321,852 821,852
18 369,238 83,445 583,445 171,560 671,560 356,208 856,208
19 400,824 81,389 581,389 178,595 678,595 392,828 892,828
20 433,991 78,024 578,024 184,541 684,541 431,778 931,778
Age 60 283,219 40,064 540,064 198,326 698,326 686,172 1,186,172
Age 65 433,991 0 0 146,903 646,903 1,034,258 1,534,258
Age 70 626,418 0 0 0 0 1,478,188 1,978,188
Age 75 872,010 0 0 0 0 0 0
</TABLE>
(1) Assumes a $5,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. Excessive loans or withdrawals may
cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE VALUE OF UNITS,
CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN
IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A PERIOD
OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR POLICY VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-5
<PAGE>
Part II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING INDEMNIFICATION
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 or her in connection with
the proceeding, or any appeal therein, IF AND ONLY IF he or she acted: (i) in
good faith; and (ii) in a manner he or she 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 or she 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 or she had no reasonable cause to believe that his or her conduct was
unlawful in order to be indemnified. A director or officer also will be entitled
to indemnification as described above if: (i) he or she is successful on the
merits in the defense of any non-derivative proceeding brought against him or
her; or (ii) a court shall have determined that in view of all the circumstances
such director 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 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 or her conduct
was unlawful.
In non-derivative proceedings based on the purchase or sale of securities of the
corporation or of another enterprise, in 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,
1
<PAGE>
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 provide indemnification against expenses, including attorneys'
fees, actually and reasonably incurred in connection with the proceeding or any
appeal therein, in relation to matters as to which such director is finally
adjudged not to have breached a duty owed 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. 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
believes 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, or 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.
REPRESENTATION UNDER SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
C.M. Life Insurance Company hereby represents that fees and charges deducted
under the flexible premium variable life insurance policies 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.
2
<PAGE>
CONTENTS OF THE POST-EFFECTIVE AMENDMENT
This Post-Effective Amendment is comprised of the following papers and
documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus, consisting of 59 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representation under Section 26(e)(2)(a) of the Investment Company Act of 1940.
The signatures.
Written Consents of the Following Persons:
1. Coopers & Lybrand L.L.P. independent accountants;
1. Arthur Andersen LLP independent public accountants;
2. Counsel opining as to the legality of securities being registered.
3. Opinion opining as to actuarial matters contained in the Post-
Effective Amendment by John M. Valencia, Assistant Vice President.
The following exhibits:
1. The following Exhibits correspond to those required by Paragraph A of
the instructions as to Exhibits in Form N-8B-2:
A. (1) Copy of the Resolution of the Board of Directors of C.M.
Life Insurance Company authorizing the establishment of
C.M. Life Variable Life Separate Account I.****
(2) Not Applicable.
(3) (A) Copy of the Underwriting Agreement between C.M. Life
and Connecticut Mutual Financial Services, L.L.C.****
(B) Copy of the Co-Distribution Agreement between C.M. Life
and MML Investors Services, Inc.**
(4) Not Applicable.
(5) Not Applicable.
(6) Organizational documents of the Company.
(a) Copy of the By-laws of C.M. Life Insurance
Company.****
(b) Copy of the Articles of Incorporation for C.M. Life
Insurance Company.****
(7) Form of Policy (including Policy Riders).****
(8) (i) Copy of the Form of the Participation Agreement
between MassMutual Life Insurance Company, MML Bay
State Life Insurance Company, C.M. Life Insurance
Company, OppenheimerFunds, Inc. and Panorama Series
Fund Inc.***
3
<PAGE>
(ii) Copy of the Participation Agreement with VIP
Fund.****
(iii) Copy of the Participation Agreement with VIP
Fund II.****
(iv) Copy of the Form of Participation Agreement with
MassMutual Life Insurance Company, MML Bay State Life
Insurance Company, C.M. Life Insurance Company,
Oppenheimer Funds, Inc. and Oppenheimer Variable
Account Funds.***
(9) Not Applicable.
(10) Form of Application.****
(11) Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii)
under the 1940 Act which includes conversion procedures
pursuant to Rule 6e-3(T)(b)(13)(v)(B).****
2. Opinion and Consent of Counsel as to the legality of the securities
being registered.(****)
3. No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Opinion and consent of John M. Valencia opining as to actuarial matters
pertaining to the securities being registered.****
6. Consent of Coopers & Lybrand L.L.P.****
7. Consent of Arthur Andersen LLP****
8. Copy of the C.M. Life Insurance Company Powers of Attorney.*
* Incorporated herein by reference to Post-Effective Amendment Number 4 to
Registration Statement File Number 333-2347.
** Incorporated herein by reference to Registrant's Post-Effective Amendment
Number 1 Dated May 1, 1996.
*** Incorporated herein by reference to Registration Statement File Number
333-22557, filed February 28, 1997.
**** Filed herewith.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, C.M.
Life Variable Life Separate Account I, certifies that it meets all of the
requirement for effectiveness of this Post-Effective Amendment No. 3 pursuant to
Rule 485(b) under the Securities Act of 1933 and has caused this Post-Effective
Amendment No. 3 to Registration Statement No. 33-91072 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 10th day of April,
1998.
C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
C.M. LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Lawrence V. Burkett, Jr.*
-----------------------------
Lawrence V. Burkett, Jr., Director, President and Chief Executive Officer
C.M. Life Insurance Company
/s/ Richard M. Howe On April 10, 1998, as Attorney-in-Fact pursuant to
- --------------------- powers of attorney.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment No. 3
to Registration Statement No. 33-91072 has been signed by the following persons
in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Lawrence V. Burkett, Jr.* Director, President and Chief April 3, 1998
- ----------------------------- Executive Officer
Lawrence V. Burkett, Jr.
/s/ Edward M. Kline* Treasurer (Principal Financial Officer) April 3, 1998
- --------------------
Edward M. Kline
/s/ John M. Miller, Jr.* Second Vice President and April 3, 1998
- ------------------------ Comptroller (Principal Accounting Officer)
John M. Miller Jr.
/s/ John B. Davies* Director April 3, 1998
- -------------------
John B. Davies
/s/ Stuart H. Reese* Director April 3, 1998
- --------------------
Stuart H. Reese.
/s/ Richard M. Howe On April 3, 1998, as Attorney-in-Fact pursuant to
- ------------------- powers of attorney.
*Richard M. Howe
</TABLE>
REPRESENTATION BY REGISTRANT'S COUNSEL
--------------------------------------
5
<PAGE>
As counsel to the Registrant, I, Lynn S. Mercier, have reviewed this
Post-Effective Amendment No. 3 to Registration Statement No. 33-91072 and I
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ Lynn S. Mercier
----------------------------
Lynn S. Mercier
Attorney
C.M. Life Insurance Company
6
<PAGE>
FORM S-6 EXHIBIT TABLE
99.2 Opinion and Consent of Counsel as to the legality of the
securities being registered.
99.C.6 Opinion and consent of John M. Valencia opining as to
actuarial matters pertaining to the securities being
registered.
99.C.1.(a) Consent of Coopers & Lybrand L.L.P.
99.C.1.(b) Consent of Arthur Andersen LLP
1(1)(a) Resolution of the Board of Directors of C.M. Life Insurance
Company authorizing the establishment of C.M. Life Variable
Life Separate Account I.
99.A3(A) Underwriting Agreement between C.M. Life and Connecticut
Mutual Financial Services, L.L.C.
Copy of the By-laws of C.M. Life Insurance Company
Copy of the Articles of Incorporation of C.M. Life Insurance
Company
1(A)(5) Form of Flexible Premium Variable Life Insurance Policy
1(8)(a) Participation Agreement with VIP Fund
1(8)(b) Participation Agreement with VIP Fund II
1(A)(10) Form of Application
1(A)(11) Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii)
under the 1940 Act which includes conversion procedures
pursuant to Rule 6e-3(T)(b)(13)(v)(B).
7
<PAGE>
Exhibit 99.2
Opinion and Consent of Counsel as to the
legality of the securities being registered.
[LETTERHEAD OF CM LIFE]
April, 1998
C.M. Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
RE: Post-Effective Amendment No. 3 to Registration Statement No. 33-91072 filed
on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 3 to Registration Statement No. 33- 90172 under the Securities Act
of 1933 for C.M. Life Insurance Company's ("CM Life") Executive Benefit Variable
Universal Life Policy (the "Policy"). C.M. Life Variable Life Separate Account I
issues the Policy.
As Counsel for CM Life, I provide legal advice to CM Life in connection with the
operation of its variable products. In such role I am familiar with the
Post-Effective Amendment for the Policy. In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. CM Life is a valid and subsisting corporation, organized and operated under
the laws of the State of Connecticut and is subject to regulation by the
Connecticut Commissioner of Insurance.
2. C.M. Life Variable Life Separate Account I is a separate account validly
established and maintained by CM Life in accordance with Connecticut law.
3. All of the prescribed corporate procedures for the issuance of the Policy
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ Lynn S. Mercier
- -------------------
Lynn S. Mercier
Attorney
8
<PAGE>
Exhibit 99.C.6
Opinion and consent of John M. Valencia
opining as to actuarial matters
pertaining to the securities being registered.
[LETTERHEAD OF MASSMUTUAL]
April, 1998
C.M. Life Insurance Company
140 Garden Street
Hartford, CT 06154
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 3 to
Registration Statement No. 33-91072 for C.M. Life Insurance Company's Executive
Benefit Variable Universal Life Policies (the "Policies") under the Securities
Act of 1933. The prospectus included in the post-effective amendment describes
the Policies. I am familiar with the forms of the Policies and the prospectus.
In my opinion, the illustrations of benefits under the Policies included in the
section entitled "Illustrations" in Appendix A of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies. The age selected in the illustrations is
representative of the manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 3 to Registration Statement No. 33-91072, and to the reference of
my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ John M. Valencia
- --------------------
John M. Valencia, FSA, MAAA
9
<PAGE>
EXHIBIT 99.C.1(a)
Consent of Coopers & Lybrand L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
C.M. Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 3 to the
Registration Statement of C.M. Life Variable Life Separate Account I on Form S-6
(Registration No. 33-91072), of our report, dated February 18, 1998 on our
audits of C.M. Life Variable Life Separate Account I, and our report dated
February 6, 1998 on our audits of the statutory financial statements of C.M.
Life Insurance Company, which includes explanatory paragraphs relating to the
use of statutory accounting practices, which differ from generally accepted
accounting principles. We also consent to the reference to our Firm under the
caption "Experts."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 24, 1998
10
<PAGE>
Exhibit 99.C.1(b)
Consent of Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement for C.M. Life Insurance Company.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
April 24, 1998
11
<PAGE>
Report Of Independent Public Accountants
To the Board of Directors of
C.M. Life Insurance Company
We have audited the accompanying statutory statements of income, changes in
capital stock and surplus and cash flows of C.M. Life Insurance Company (a
Connecticut corporation and a wholly-owned subsidiary of Connecticut Mutual Life
Insurance Company) for the year ended December 31, 1995. 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 audit.
We conducted our audit 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 our audit provides a reasonable basis for our opinion.
In our originally issued report dated February 15, 1996, we expressed an opinion
that the 1995 financial statements, prepared using accounting practices
prescribed or permitted by the Insurance Department of the State of Connecticut,
presented fairly, in all material respects, the financial position of C.M. Life
Insurance Company as of December 31, 1995, and the results of its operations and
its cash flows for the year ended December 31, 1995 in conformity with generally
accepted accounting principles. Pursuant to the provisions of Statement of
Financial Accounting Standards No. 120 (SFAS No. 120), Accounting and Reporting
by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts, financial statements of mutual life
insurance enterprises for periods ending on or before December 15, 1996,
prepared using accounting practices prescribed or permitted by insurance
regulators (statutory financial statements) are no longer considered
presentations in conformity with generally accepted accounting principles when
presented for comparative purposes with the enterprise's financial statements
for periods subsequent to the effective date of SFAS No. 120. Accordingly, our
present opinion on the presentation of the 1995 financial statements in
accordance with generally accepted accounting principles, as presented herein,
is different from that expressed in our previous report.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the results of
operations and cash flows of C.M. Life Insurance Company for the year ended
December 31, 1995.
In our opinion, the financial statements referred to above do present fairly, in
all material respects, the results of operations and cash flows of C.M. Life
Insurance Company for the year ended December 31, 1995 in conformity with
accounting practices prescribed or permitted by the Insurance Department of the
State of Connecticut.
Arthur Andersen LLP
Hartford, Connecticut
February 15, 1996
<PAGE>
Exhibit 1(1)(a)
Resolution of the Board of Directors of C.M. Life
Insurance Company authorizing the establishment
of C.M. Life Variable Life Separate Account I.
ESTABLISHMENT OF C.M. LIFE
VARIABLE LIFE SEPARATE ACCOUNT I
WHEREAS, Section 38A-433 of the Connecticut Insurance Laws permits a
domestic life insurance company to establish one or more separate investment
account;
WHEREAS, the Board of Directors of a domestic life insurance company is
charged with the authority to establish such separate investment accounts;
WHEREAS, it is desired by the Board of Directors of C.M. Life Insurance
Company (the "Company") that the Company create a separate investment account to
fund certain of its variable life insurance products;
NOW THEREFORE, be it known that the Board of Directors of the Company hereby
establishes a separate investment account pursuant to the authority granted to
it under Section 38a-433 of the Connecticut Insurance Laws to be known as and
referred to herein as "C.M. Life Variable Life Separate Account I".
FURTHER, the assets of C.M. Life Variable Life Separate Account I shall be
derived solely from: (a) sale of variable life products, (b) funds corresponding
to dividend accumulation with respect to investment of such assets, and (c)
advances made by the Company in connection with operation of C.M. Life Variable
Life Separate Account I.
FURTHER, the Company shall maintain in C.M. Life Variable Life Separate
Account I assets with a fair market value at least equal to the statutory
valuation reserves for the variable life policies;
FURTHER, the Board of Directors grants to the President, any Vice President,
the Secretary, and the Treasurer, (collectively the "Executive Officers") the
authority to reserve the right, as each may deem appropriate from time to time,
in accordance with applicable laws and regulations: (a) to divide C.M. Life
Variable Life Separate Account I into divisions and subdivisions with each
division or subdivision investing in shares of designated classes of designated
investment companies or other appropriate securities, (b) to modify or eliminate
any such divisions or subdivisions, (c) to designate further any division or
subdivision thereof, and (d) to change the name of C.M. Life Variable Life
Separate Account I to another name.
FURTHER, the Board of Directors for the Company grants to the Executive
Officers the authority to invest cash from the Company's general account in C.M.
Life Variable Life Separate Account I or in any division or subdivision thereof
as the Executive Officers may deem necessary or appropriate to facilitate the
commencement of the operations of C.M. Life Variable Life Separate Account I or
to meet any minimum capital requirements under the Investment Company Act of
1940 and to transfer cash or securities from time to time between the Company's
general account and C.M. Life Variable Life Separate Account I as the Executive
Officers may deem necessary or appropriate so long as such transfers are not
prohibited by law and are consistent with the terms of the variable life
policies issues by the Company providing for allocations to C.M. Life Variable
Life Separate Account I.
FURTHER, the income, gains and losses (whether or not realized) from assets
allocated to C.M. Life Variable Life Separate Account I shall, in accordance
with any variable life policies issued by the Company providing for allocations
to C.M. Life Variable Life Separate Account I be credited to or charged against
C.M. Life Variable Life Separate Account I without regard to the other income,
gains, or losses of the Company;
FURTHER, the Company shall, through its Executive Officers, adopt procedures
providing for, among other things, criteria by which the Company shall provide
for a pass-through of voting rights to the owners of variable life policies
issued by the Company providing for allocation to C.M. Life Variable Life
Separate Account I with respect to the shares of any investment companies which
are presently held by C.M. Life Variable Life Separate Account 1:
FURTHER, the Company shall prepare and execute any necessary agreements to
enable C.M. Life Variable Life Separate Account I to invest or reinvest the
assets of C.M. Life Variable Life Separate Account I in securities issued by
investment companies registered under the Investment Company Act of 1940 or
other appropriate securities as the Executive Officers of the Company may
designate pursuant to the provisions of the variable life policies issued by the
Company providing for allocations to C.M. Life Variable Life Separate Account I;
12
<PAGE>
FURTHER, the fiscal year of C.M. Life Variable Life Separate Account I shall
end on the 31(st) day of December each year;
FURTHER, the Company shall register under the Securities Act of 1933
variable life policies, or units of interest thereunder, under which amounts
will be allocated by the Company to C.M. Life Variable Life Separate Account I
to support reserves for such policies and, in connection therewith, the Company
shall prepare, execute and file with the Securities and Exchange Commission,
registration statements under the Securities Act of 1933, including
prospectuses, supplements, exhibits and other documents relating thereto, and
amendments to the foregoing, in such form as any Executive Officer executing the
same may deem necessary or appropriate;
FURTHER, that the Company take any action necessary to obtain exemptive
relief from the provisions of the Investment Company Act of 1940 to permit the
deduction of Deferred Acquisition cost tax from the Variable Life Contracts, and
that the Company complete any filings with the Securities and Exchange
Commission need to obtain such relief.
FURTHER, the Company shall take all actions necessary to register C.M. Life
Variable Life Separate Account I as a unit in investment trust under the
Investment Company Act of 1940 and to take such related actions as deemed
necessary and appropriate to carry out the foregoing;
FURTHER, the Company shall prepare, execute and file with the Securities and
Exchange Commission, applications and amendments thereto for such exemptions
from or orders under the Investment Company Act of 1940 and the Securities Act
of 1933, and to request from the Securities and Exchange Commission no-action
and interpretative letters as the Executive Officers may from time to time deem
necessary or desirable;
FURTHER, the Officers of the Company shall prepare, execute and file all
periodic reports required under the Investment Company Act of 1940 and the
Securities Exchange Act of 1934 or applicable State insurance or securities laws
or regulations.
FURTHER, the Corporate Secretary of the Company, or such other person as the
Secretary may designate, is appointed as agent for service under any such
registration statement and is duly authorized to receive communications and
notices from the Securities and Exchange Commission with respect thereto, and to
exercise powers given to such agent by the Securities Act of 1933 and the Rules
thereunder and any other necessary Acts;
FURTHER, the Executive Officers of the Company shall effect in the name and
on behalf of the Company, all such registrations, filings, and qualifications
under Blue Sky or other applicable securities laws and regulations and under
applicable insurance laws and regulations of such states and other jurisdictions
as they may deem necessary or appropriate, with respect to the Company, and with
respect to any variable life policies under C.M. Life Variable Life Separate
Account I to support reserves for such policies; such action shall include
registration, filing and qualification of officers, employees and agents of the
Company as brokers, dealers, agents, salesmen, or otherwise; and in connection
therewith, preparation, execution, acknowledgment and filing of all such
applications, applications for exemptions, certificates, affidavits, covenants,
consents to service of process and other instruments, and all such action as the
Executive Officer of the Company executing the same or taking such action may
deem necessary or desirable.
FURTHER, the Board of Directors hereby authorizes the Executive Officers to
establish such other separate investment accounts for the funding of variable
life insurance policies as they deem appropriate and to take such actions as are
consistent with the authority granted to date to Executive Officers herein.
FURTHER, the Board of Directors hereby authorizes the Executive Officers to
establish such other separate investment accounts for the funding of variable
life insurance policies as they deem appropriate and to take such actions as are
consistent with the authority granted to the Executive Officers herein.
FURTHER, the Board of Directors grants to the Executive Officers of the
Company the authority to execute and deliver all such documents and papers and
to do or cause to be done all such acts and things as they may deem necessary to
desirable to carry out the foregoing and the intent and purpose thereof.
Dated at Hartford, Connecticut, this 2nd day of February, 1995.
13
<PAGE>
/s/ Rodney O. Martin
- ------------------------------------------
Rodney O. Martin, Director
/s/ Donald H. Pond, Jr.
- ------------------------------------------
Donald H. Pond, Jr., Director
/s/ David E. Sams, Jr.
- ------------------------------------------
David E. Sams, Jr., Director
14
<PAGE>
Exhibit 99.A3(A)
Underwriting Agreement between C.M. Life
and Connecticut Mutual Financial Services, L.L.C.
PRINCIPAL UNDERWRITING AGREEMENT
--------------------------------
AGREEMENT made as of the 1st day of August, 1995 by and between C.M. Life
Insurance Company, a Connecticut corporation ("C.M. Life"), on its own behalf
and on behalf of C.M. Life Variable Life Separate Account I ("Account"), and
Connecticut Mutual Financial Services, LLC, a Connecticut limited liability
Company ("CMFS").
WHEREAS, the Account was established on February 2, 1995 pursuant to
authority of C.M. Life's Board of Directors in order to set aside and invest
assets attributable to certain variable Life policies ("Policies") issued by
C.M. Life;
WHEREAS, C.M. Life will register the Account under the Investment Company
Act of 1940 and will register the Policies under the Securities Act of 1933;
WHEREAS, CMFS is registered as a broker/dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, C.M. Life and the Account desire to have Policies sold and
distributed through CMFS and CMFS is willing to sell and distribute such
Policies under the terms stated herein; and
WHEREAS, CMFS may desire to appoint C.M. Life, the issuer, as its agent to
receive money and perform other services.
WITNESSETH:
In consideration of the covenants hereinafter contained C.M. Life and
CMFS agree as follows:
1. Underwriter. C.M. Life hereby appoints CMFS as principal underwriter of the
-----------
Policies during the term of this Agreement. C.M. Life reserves the right,
however, to refuse at any time or times to sell any Policies hereunder for
any reason, and C.M. Life maintains ultimate responsibility for Policy
underwriting.
2. Undertakings Regarding Sales. CMFS shall use reasonable efforts to sell the
----------------------------
Policies but does not agree hereby to sell any specific number of Policies
and shall be free to act as underwriter of other securities. All premiums
for Policies shall be held in a fiduciary capacity and remitted promptly
(and in any event with 30 days) in full together with such application,
forms and any other required documentation to C.M. Life. CMFS hereby
appoints C.M. Life as agent of CMFS to receive premiums in CMFS's behalf.
Checks or money orders in payment of premium shall be drawn to the order of
"C.M. Life". CMFS agrees to offer the Policies for sale in accordance with
the prospectus then in effect. CMFS is not authorized to give any
information or to make any representations concerning the Policies other
than those contained in the current prospectus filed with the SEC or in such
sales literature as may be authorized by C.M. Life. C.M. Life shall review
and approve all advertising concerning the Policies.
3. Compliance. CMFS shall conform to the Rules of Fair Practice of the NASD,
----------
and the securities laws of any jurisdiction in which it sells, directly or
indirectly, any Policies. CMFS shall take reasonable steps to ensure that
its associated persons sell Policies to persons for whom the Policy is
suitable. CMFS agrees to make timely filings with the SEC, the NASD, and
such other regulatory authorities as may be required of any sales literature
relating to the Policies and intended for distribution to prospective
investors. CMFS also agrees to furnish to C.M. Life sufficient copies of any
agreements or plans it intends to use in connection with any sales of
Policies. CMFS further agrees to provide information or reports with respect
to its services hereunder pursuant to request by any regulatory authority
having jurisdiction with respect thereto, in order that such regulatory
authority may ascertain whether C.M. Life's variable life insurance
operations are being conducted in a manner consistent with applicable laws
and regulations.
4. Registration and Qualification of Policies. C.M. Life agrees to execute such
------------------------------------------
papers and to do such acts and things as shall from time-to-time be
reasonable requested by CMFS for the purpose of qualifying and maintaining
qualification of the Policies for sale under applicable state law and for
maintaining the registration of the Account and interests therein under the
federal Securities Act of 1933 and the federal Investment Company Act of
1940, as amended; to the end that there will be available for sale from
time-to-time such amount of the Policies as CMFS may reasonably be expected
to sell. C.M. Life shall advise CMFS promptly of (a) any action of the SEC
or any authorities of any state or territory, of which it may be advised,
15
<PAGE>
affecting registration or qualification of the Account, or rights to offer
the Policies for sale, and (b) the happening of any event which makes untrue
any statement or which requires the making of any change in the registration
statement or prospectus in order to make the statements therein not
misleading.
5. CMFS Independent Contract. CMFS shall be an independent contractor. CMFS is
-------------------------
responsible for its own conduct and the employment, control and conduct of
its agents and employees for injury to such agents or employees or to others
through its agent or employees. CMFS assumes full responsibility for its
agents and employees under applicable statutes and agrees to pay all
employer taxes thereunder. All persons selling Policies shall be duly
licensed as insurance producers pursuant to applicable state laws, and
C.M. Life shall have responsibility for arranging for such licensing. CMFS
and C.M. Life may jointly enter into sales agreements with other independent
broker-dealers for the sale of Policies. Notwithstanding the above, C.M.
Life expressly reserves to itself the ultimate responsibility and authority
for direction and control of the underwriting services provided hereunder;
including the ultimate right to appoint and discharge agents selling
Policies, and ultimate control over, and responsibility for, marketing the
Policies.
6. Expenses Paid by C.M. Life. While CMFS continues to act as agent of C.M.
--------------------------
Life to obtain subscriptions for and to sell Policies, and provided CMFS
received no commission for the sales of the Policies, C.M. Life shall pay
the following:
(a) all expenses of printing and distributing any prospectus for use in
offering the Policies for sale, and all other copies of any such
prospectus used by CMFS, and
(b) all other expenses of advertising and of preparing, printing and
distributing all other literature or material for use in connection with
offering the Policies for sale.
7. Interests in and of CMFS. It is understood that any of the policyholders,
------------------------
directors, officers, employees and agents of C.M. Life may be a shareholder,
director, officer, employee or agent of, or be otherwise interested in,
CMFS, any affiliated person of CMFS, any organization in which CMFS may have
an interest or any organization which may have an interest in CMFS; that
CMFS, any such affiliated person or any such organization may have an
interest in C.M. Life; and that the existence of any such dual interest
shall not affect the validity hereof or of any transaction hereunder except
as otherwise provided in the Charter, Articles of Incorporation, or by-laws
of C.M. Life and CMFS, respectively, or by specific provision of applicable
law.
8. Compensation for Sales of Policies and Appointment of C.M. Life as Agent of
---------------------------------------------------------------------------
CMFS.
----
(a) For sales of the Policies by associated persons of CMFS and the
continuing obligations of CMFS set forth herein, C.M. Life shall pay to
full time Life insurance agents of C.M. Life who are also associated
persons of CMFS on behalf of CMFS the commissions set forth in Schedule
A to this Agreement, as such Schedule may be amended from time-to-time.
For Policies sold under agreements that CMFS and C.M. Life enter into
with other broker-dealers, C.M. Life shall pay on behalf of CMFS, the
commissions set forth in Schedule B to this Agreement, as such Schedule
may be amended from time-to-time.
(b) C.M. Life agrees to maintain all required books of account and related
financial records on behalf of CMFS. All such books and records shall be
maintained and preserved pursuant to Rules 17a-3 and 17a-4 under the
Securities Exchange Act (or the corresponding provisions of any future
federal securities laws or regulations). In addition, C.M. Life agrees
to maintain records of all sales commissions paid to the associated
persons of CMFS and any other broker-dealers pursuant to paragraph (a)
above for the sale of the Policies. All such books and records shall be
owned by and under the control of C.M. Life. C.M. Life also agrees to
send to CMFS's customers all required confirmations of customer
transactions, and on behalf of CMFS to pay all sales commissions due and
payable to full time Life insurance agents of C.M. Life who are also
associated persons of CMFS and/or to other broker-dealers duly
authorized by CMFS to sell the Policies.
9. Indemnification
---------------
(a) C.M. Life agrees to indemnify and hold harmless CMFS and each director
or officer thereof and each person, if any, who is associated with CMFS
within the meaning of the Securities Exchange Act of 1934 against any
and all loss, liability, claims, damage, and expenses whatsoever
(including any and all expenses reasonably incurred in investigating or
defending against any litigation commenced or threatened or any claim
whatsoever) arising out of any untrue or alleged untrue registration
statement, or sales material relating to the Policies prepared by C.M.
Life or supplied to CMFS by C.M. Life or in any application
("application") filed in any state in order to qualify the same for sale
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
16
<PAGE>
(b) CMFS agrees to indemnify and hold harmless C.M. Life and each director
or officer thereof, and each person, if any who controls C.M. Life
within the meaning of the Securities Act of 1933, its agents,
subsidiaries and employees, against any and all loss, liability, claims,
damages, and expense whatsoever (including but not limited to any and
all expenses reasonably incurred in investigating or defending against
any litigation commenced or threatened or any claim whatsoever) arising
out of any untrue or alleged untrue statement or representation made
(except as such statements may be made in reliance on the prospectus,
registration statement and sales material supplied by C.M. Life), the
failure to deliver a currently effective prospectus (provided that CMFS
shall be entitled to rely on representations by C.M. Life as to which
prospectus is currently effective at any point in time and CMFS shall
not be liable for delivering a prospectus that is not currently
effective at the time of delivery thereof due to a misrepresentation of
the currency thereof by C.M. Life or other failure by C.M. Life to
notify CMFS that such prospectus was no longer effective) or the use of
any unauthorized sales literature by CMFS (or its employees), in
connection with the sale of the Policies.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any such litigation or claim, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section, notify the
indemnifying party of the commencement thereof, but the omission so to
notify the indemnifying party will not relieve it from any liability,
which it may have to any indemnified party otherwise than under this
Section. In case any such litigation or claim is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than the reasonable cost of
investigation.
10. Liability. Each party shall be liable for its own misconduct and negligence
---------
hereunder.
11. Effective Date and Termination. This Agreement shall become effective as of
------------------------------
August 1, 1995 and shall supersede any prior Principal Underwriting
Agreement which may exist between the parties, and:
(a) shall continue in force from year-to-year, subject to prior termination
as provided herein;
(b) may at any time be terminated on sixty days' written notice to CMFS by
C.M. Life;
(c) may any time be terminated by C.M. Life if CMFS fails to perform in a
satisfactory manner;
(d) may be terminated by CMFS on sixty days' written notice to C.M. Life.
Termination of this agreement pursuant to this section shall be without
payment of any penalty. In the event of termination for any reason, C.M.
Life shall retain all records relating hereto, free from any claim or
retention rights by CMFS.
12. Confidentiality. CMFS agrees not to disclose or use any records or
---------------
information obtained hereunder in any manner whatsoever except as expressly
authorized herein, and will keep confidential any information obtained
pursuant hereto, and disclose such information only if C.M. Life has
authorized such disclosure, or if such disclosure is expressly required by
applicable state of federal regulatory authorities.
13. Amendment. This Agreement may be amended only by mutual consent of the
---------
parties by an instrument in writing.
14. Applicable Law and Liabilities. This Agreement is executed and delivered in
------------------------------
the State of Connecticut and shall be governed by and construed in
accordance with the laws of Connecticut.
This Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act. To the
extent that any provisions herein contained conflict with any applicable
provisions of law, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
C.M. Life Insurance Company
By: /s/Ann F. Lomeli
---------------------------------
Title: Corporate Secretary and Counsel
---------------------------------
17
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Connecticut Mutual Financial Services, LLC
By: /s/ Emily M. Bruno
----------------------------------
Title: Financial and Operations Principal
----------------------------------
18
<PAGE>
BYLAWS
C.M. LIFE INSURANCE COMPANY
Article I
Shareholders' Meetings
Section 1. Annual Meeting. The annual meeting of the shareholders for the
--------------
election of Directors and the transaction of such other business as may properly
come before it shall be held at the principal office of the Corporation in the
City of Hartford, State of Connecticut, or at such place within or without the
State of Connecticut as shall be set forth in the notice of the meeting. The
meeting shall be held on a day during the first quarter of each calendar year as
shall be specified by a vote of the Board of Directors and at such hour as shall
be specified in the notice thereof. The Secretary shall give personally or by
mail, not less than ten nor more than 50 days before the date of the meeting to
each shareholder entitled to vote at such meeting, written notice stating the
place, date, and hour of the meeting. If mailed, the notice shall be addressed
to the shareholder at the address as it appears on the record of shareholders of
the Corporation unless there shall have been filed with the Secretary a written
request that notices be mailed to a different address, in which case it shall be
mailed to a different address designated in the request. Any notice of meetings
may be waived by a shareholder by submitting a signed waiver either before or
after the meeting, or by attendance at the meeting.
Section 2. Special Meeting. Special meetings of shareholders may be called for
---------------
any purpose at any time by a majority of the Directors, the President, or the
Secretary and must be called by the President or Secretary upon written request
of the holders of the outstanding shares entitled to vote at such special
meeting. Written notice of such meetings stating the place within or without the
State of Connecticut, the date and hour of the meeting, the purpose or purposes
for which it is called, and the name of the person by whom or at whose direction
the meeting is called shall be given not less than one nor more than 50 days
before the date set for the meeting. The notice shall be given to each
shareholder of record in the same manner as notice of the annual meeting. No
business other than that specified in the notice of meeting shall be transacted
at any such special meeting. Notice of special meeting may be waived by
submitting a signed waiver or by attendance at the meeting.
Section 3. Quorum. The presence, in person or by proxy, of the holders of 30% of
------
the outstanding shares entitled to vote thereat shall be necessary to constitute
a quorum for the transaction of business at all meetings of shareholders. If,
however, such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting to a future
date at which a quorum shall be present or represented. At such adjourned
meeting, any business may be transacted which might have been transacted at the
meeting as originally called.
Section 4. Record Date. The Directors may fix in advance a date not less than
-----------
ten nor more than 70 days, prior to the date of any meeting of the shareholders
or prior to the last day on which the consent or dissent of or action by the
shareholders may be effectively expressed for any purpose without a meeting, as
the record date for the determination of shareholders.
Section 5. Voting. A shareholder entitled to vote at a meeting may vote at such
------
meeting in person or by proxy. Except as otherwise provided by law, all
shareholders, shall be entitled to one vote for each share standing in their
name on the record of shareholders. Except as herein provided, all corporate
action shall be determined by vote of a majority of the votes cast at a meeting
of shareholders by the holders of shares entitled to vote thereon.
Section 6. Proxies. Every proxy must be dated and signed by the shareholder or
-------
by an attorney-in-fact. No proxy shall be valid after the expiration of 11
months from the date of its execution, unless otherwise provided therein. Every
proxy shall be revocable at the pleasure of the shareholder executing it.
Section 7. Consents. Whenever by a provision of statute or of the Charter or by
--------
these bylaws the vote of shareholders is required or permitted to be taken at a
meeting thereof in connection with any corporate action, the meeting and the
vote of shareholders may be dispensed with, if all the shareholders who would
have been entitled to vote upon the action if such meeting were held shall
consent in writing to such corporate action's being taken.
19
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ARTICLE II
Directors
Section 1. Number and Qualifications. The entire Board of Directors shall
-------------------------
consist of not less than three nor more than nine persons all of whom shall be
of full age. The number of Directors may be changed by an amendment to the
Bylaws, adopted by the shareholders.
Section 2. Manner of Election. Except for the initial Directors who shall be
------------------
elected by the Incorporator, the Directors shall be elected at the annual
meeting of shareholders by a plurality vote except as otherwise prescribed by
statute.
Section 3. Duties and Powers. The Board of Directors shall have control and
-----------------
management of the affairs and business of the Corporation. The Directors shall
in all cases act as a board regularly convened, and, in the transaction of
business the act of a majority present at a meeting except as otherwise provided
by law or the Charter shall be the act of the board, provided a quorum is
present. The Directors may adopt such rules and regulations for the conduct of
their meetings and the management of the Corporation as they may deem proper,
not inconsistent with law or these Bylaws.
Section 4. Policies and Contracts. The Board of Directors may provide the terms
----------------------
and conditions upon which policies and other contracts shall be issued by the
corporation including fixing the amount of any rates of interest payable on
funds held by the Corporation, but it may delegate such authority to whatever
officers it designates. The Board of Directors shall fix the amount of any
dividends on any policies or other contracts issued by the Corporation.
Section 6. Meetings. The Board of Directors shall meet for the election or
--------
appointment of officers and for the transaction of any other business as soon as
practicable after the adjournment of the annual meeting of the shareholders, and
other regular meetings of the Board shall be held at such times as the Board may
from time to time determine.
Special meetings of the Board of Directors may be called by the President for
any purpose at any time; and he must, upon the written request of any two
Directors, call a special meeting to be held not more than seven days after the
receipt of such request.
Section 7. Notice of Meetings. No notice need be given of any regular meeting of
------------------
the board. Notice of special meetings shall be served upon each Director in
person or by mail addressed to him at his last known post office address, at
least four hours prior to the date of such meeting, specifying the time and
place of the meeting and the business to be transacted thereat. At any meeting
at which all of the Directors shall be present, although held without notice,
any business may be transacted which might have been transacted if the meeting
had been duly called.
Section 8. Place of Meeting. The Board of Directors shall hold its meeting at
----------------
the principal office of the corporation or at such place within or without the
State of Connecticut, as may be designated in the notice of any such meeting.
Section 9. Quorum. At any meeting of the Board of Directors, the presence of a
------
majority of the Board shall be necessary to constitute a quorum for the
transaction of business. However, should a quorum not be present, a lesser
number may adjourn the meeting to some further time, not more than seven days
later.
Section 10. Voting. At all meetings of the Board of Directors, each Director
------
shall have one vote.
Section 11. Compensation. Each Director shall be entitled to receive for
------------
attendance at each meeting of the Board or of any duly constituted committee
thereof which he attends such fee as is fixed by the Board.
Section 12. Vacancies. Any vacancy occurring in the board of directors by death,
---------
resignation, or otherwise shall be filled by a majority vote of the remaining
Directors even if less than a quorum, at a regular meeting or at a special
meeting which shall be called for that purpose within 60 days after the
occurrence of the vacancy. The Director thus chosen shall hold office for the
unexpired term of his predecessor and the election and qualification of his
successor.
Section 13. Removal of Directors. Any Director may be removed either with or
--------------------
without cause, at any time, by a vote of the shareholders holding a majority of
the shares then issued and outstanding and who were entitled to vote for the
election of the Director sought to be removed, at any special meeting of
shareholders called for that purpose, or at the annual meeting of shareholders.
20
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Section 14. Resignation. Any Director may resign his office at any time, such
-----------
resignation to be made in writing and to take effect immediately without
acceptance.
Section 15. Conflicts of Interest. No contract or other transaction between the
---------------------
corporation and any other corporation and no other act of the corporation with
relation to any other corporation shall, in the absence of fraud, in any way be
invalidated or otherwise affected by the fact that any one or more of the
Directors of the corporation are pecuniarily or otherwise interested in, or are
directors or officers, of such other corporation. Any Director of the
corporation may vote upon any contract or other transaction between the
corporation and any subsidiary or affiliated corporation without regard to the
fact that he is also a director or officer of such subsidiary or affiliated
corporation. Any Director of the corporation individually, or any firm or
association of which any Director may be a member, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
corporation, provided that the fact that he individually or as a member of such
firm or association is such a party or so interested shall be disclosed or shall
have been known to the Board of Directors or a majority of such members thereof
as shall be present at any meeting of the Board of Directors at which action
upon any such contract or transaction shall be taken; and in any case described
in this paragraph, any such Director may be counted in determining the existence
of a quorum at any meeting of the Board of Directors which shall authorize any
such contract or transaction and may vote thereat to authorize any such contract
or transaction.
Section 16. Consents. Whenever by a provision of statute or of the Charter or by
--------
these bylaws the vote of Directors is required or permitted to be taken at a
meeting thereof in connection with any corporate action, the meeting and the
vote of Directors may be dispensed with, if all the Directors who would have
been entitled to vote upon the action if such meeting were held shall consent in
writing to such corporate action's being taken.
Article III
Officers
Section 1. Officers and Qualifications. The officers of the corporation shall be
---------------------------
a President, Vice President, Secretary, a Treasurer, and such other officers as
the Board of Directors or the President may determine. Any two offices, except
the offices of President and Secretary, may be held by the same person. Any
vacancy occurring in any office of the corporation may be filled by the Board of
Directors, if such officer was appointed by the Directors. Any vacancy occurring
in any other office may be filled by the President.
Section 2. Term of Office. All officers shall hold office until their successors
--------------
have been duly elected and have qualified, or until removed as hereinafter
provided.
Section 3. Removal of Officers. Any officer appointed by the Directors may be
-------------------
removed either with or without cause by the vote of a majority of the Board of
Directors. Any officer appointed by the President may be removed either with or
without cause by the President.
Section 4. Duties of officers. The duties and powers of the officers of the
------------------
corporation designated below shall be as follows and as shall hereafter be set
by resolution of the Board of Directors:
President
The President shall:
A. preside at all meeting of the Board of Directors. He shall also
preside at all meetings of the shareholders;
B. present at each annual meeting of the shareholders and Directors a
report of the condition of the business of the corporation;
C. cause to be called regular and special meetings of the shareholders
and Directors;
D. appoint, discharge, and fix the compensation of all employees and
agents of the corporation other than officers duly elected by the Board of
Directors;
E. sign and execute all contracts including insurance policies and
annuity contracts in the name of the corporation, and all notes, drafts, or
other orders for the payment of money, and may designate such persons to do so
on behalf of the corporation as he may determine subject to whatever limitations
the Board of Directors may choose to impose;
21
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F. sign all certificates representing shares;
G. cause all books, reports, statements, and certificates to be properly
kept and filed as required by law; and
H. enforce these bylaws and perform all the duties incident in his
office and which are required by law, and, generally, he shall supervise and
control the business and affairs of the corporation.
Vice President
During the absence, incapacity or at the request of the President, the Vice
President in order of seniority of election shall perform the duties of the
President, and when so acting, he shall have all the powers and be subject to
all the responsibilities of the office of the President and shall perform such
other duties and functions as the Board of Directors or the President prescribe.
Secretary
The Secretary shall:
A. Keep the minutes of the meetings of the Board of Directors and of the
shareholders in appropriate books;
B. Cause to be called regular and special meetings of the shareholders;
C. Attend to the giving of notice of special meetings of the Board of
Directors and of all the meetings of the shareholders of the corporation;
D. be custodian of the records and seal of the corporation and shall
affix the seal to corporate papers when required;
E. keep at the principal office of the corporation a book or record
containing the names, alphabetically arranged, of all persons who are
shareholders of the corporation, showing their places of residence, the number
and class of shares held by them respectively, and the dates when they
respectively became the owners of record thereof. He shall keep such book or
record and the minutes of the proceedings of its shareholders open daily during
the usual business hours, for inspection, within the limits prescribed by law,
by any person duly authorized to inspect such records. At the request of the
person entitled to an inspection thereof, he shall prepare and make available a
current list of the officers and directors of the corporation and their resident
addresses;
F. sign all certificates representing shares and affix the corporate
seal thereof;
G. sign all insurance policies and contracts;
H. attend to all correspondence and present to the Board of Directors at
its meetings all official communications received by him; and
I. perform all duties incident to the officer of Secretary of the
corporation.
Treasurer
The Treasurer shall:
A. have charge and custody of and be responsible for all funds and
securities of the corporation;
B. keep full and accurate accounts of assets, liabilities, receipts and
disbursements and other transactions of the corporation in books belonging to
the corporation, and shall cause regular audits of such books to be made;
C. deposit all moneys and other valuable effects in the name of and to
the credit of the corporation in such banks or other depositories;
D. disburse funds and take necessary and proper vouchers;
E. render to the President and to the Directors at the meetings of the
Board of Directors or whenever they may require it, a statement of all his
transactions and an account of the financial condition of the corporation;
22
<PAGE>
F. be responsible for compliance with all Federal and State requirements
having to do with matters of a fiscal or financial nature; and
G. perform all duties incident to the office of Treasurer of the
corporation.
Section 5. Other Officers. Other officers shall perform such duties and have
--------------
such powers as may be assigned to them by the Board of Directors or the
President.
Section 6. Vacancies. All vacancies in the office of President, Vice President,
---------
Secretary or Treasurer may be filled by the Board of Directors, either at
regular meetings or at a meeting specially called for that purpose. Vacancies in
other offices may be filled by the Board of Directors, either at regular
meetings or at a meeting specially called for that purpose, or by the President.
Section 7. Compensation of Officers. The officers elected by the Board of
------------------------
Directors shall receive such salary or compensation as may be fixed by the Board
of Directors. Other officers shall receive such salary or compensation as may be
fixed by the President.
Article IV
Seal
Section 1. Seal. The seal of the corporation shall be as follows:
----
Article V
Shares
Section 1. Certificates. The shares of the corporation shall be represented by
------------
certificates prepared by the Board of Directors and signed by the President, and
the Secretary, and sealed with the seal of the corporation or a facsimile. The
certificates shall be numbered consecutively and in the order in which they are
issued; they shall be bound in a book and shall be issued in consecutive order
therefrom, and in the margin thereof shall be entered the name of the person to
whom the shares represented by each such certificate are issued; the number and
class or series of such shares, and the date of issue. Each certificate shall
state the registered holder's name, the number of shares represented thereby,
the date of issue, and that they are with par value.
Section 2. Subscriptions. Subscriptions to the share shall be paid at such times
-------------
and in such installments as the Board of Directors may determine.
Section 3. Transfer of Shares. The shares of the corporation shall be assignable
------------------
and transferable only on the books and records of the corporation by the
registered owner, or a duly authorized attorney, upon surrender of the
certificate duly and properly endorsed with proper evidence of authority to
transfer. The corporation shall issue a new certificate for the shares
surrendered to the person or persons entitled thereto.
Section 4. Return Certificates. All certificates for shares changed or returned
-------------------
to the corporation for transfer shall be marked by the Secretary "canceled,"
with the date of cancellation, and the transaction shall be immediately recorded
in the certificate book opposite the memorandum of their issue. The returned
certificate may be inserted in the certificate book.
Article VI
Dividends
Section 1. Declaration of Common Stock Dividends. The Board of Directors at any
-------------------------------------
regular or special meeting may declare dividends payable out of the surplus of
the corporation, whenever in the exercise of its discretion it may deem such
declaration advisable. Such dividends on common stock may be paid in cash,
property, or shares of the corporation.
Section 2. Declaration of Participating Policy Dividends. Annually the Board of
---------------------------------------------
Directors at any regular or special meeting may declare payable a dividend
representing a share in the divisible surplus to each person or corporation
owning a participating policy entitled thereto, which dividend may exceed the
total premium paid for a year on a particular policy or contract, provided,
however, in no event shall the directors be required to pay or credit a dividend
until there has been payment of the full premium for the second year.
23
<PAGE>
Article VII
Bills, Notes, Etc.
Section 1. Execution. All bills payable, notes, checks, drafts, warrants, or
---------
other negotiable instruments of the corporation shall be made in the name of the
corporation or a nominee and shall be signed by such officer or officers as the
Board of Directors shall from time to time by resolution direct.
Except as herein expressly prescribed and provided, no officer or agent of the
corporation, either singly or jointly with others, shall have the power to make
any bill payable, note, check, draft, or warrant, or other negotiable
instrument, or endorse the same in the name of the corporation or any nominee
thereof.
Section 2. Premium Payments. The corporation may, when authorized by the
----------------
resolution of the board, accept promissory notes or other obligations for the
payment of premiums.
Article VIII
Principal and Other Offices
The principal office of the corporation shall be located in the City of
Hartford, County of Hartford, State of Connecticut. The Board of Directors may
change the location of the principal office of the corporation and may, from
time to time, designate other offices within or without the State as the
business of the corporation may require.
Article IX
Amendments
Manner of amending. These bylaws may be altered, amended, repealed, or added to
- ------------------
by the affirmative vote of a majority of the shareholders entitled to vote in
the election of any Director at an annual meeting or at a special meeting called
for that purpose, provided that a written notice shall have been sent to each
shareholder of record entitled to vote at such meeting at his last known post
office address at least one day before the date of such annual or special
meeting, which notice shall state the alterations, amendments, additions, or
changes which are proposed to be made in such bylaws. Only such changes shall be
made as have been specified in the notice. The bylaws may also be altered,
amended, repealed, or new bylaws adopted by a majority of the entire Board of
Directors at a regular or special meeting of the Board. However, any bylaws
adopted by the Board may be altered, amended, or repealed by the shareholders.
Article X
Waiver of Notice
Authority to Waive Notice. Whenever under the provisions of these bylaws or of
- -------------------------
any statute any shareholder or Director is entitled to notice of any regular or
special meeting or of any action to be taken by the corporation, such meeting
may be held or such action may be taken without the giving or such notice,
provided every shareholder or Director entitled to such notice in writing waives
the requirements of these bylaws in respect thereto.
24
<PAGE>
Substitute House Bill No. 5252
SPECIAL ACTION NO. 80-4
AN ACT CONCERNING INCORPORATION OF THE C.M. LIFE INSURANCE COMPANY
Be it enacted by the Senate and House of Representatives in General Assembly
convened:
Section 1. C.M. Life Insurance Company is created a body politic and corporate
and under that name shall have all the powers granted by the general statutes,
as now enacted or hereafter amended, to corporations formed under the Stock
Corporation Act. Connecticut Mutual Life Insurance Company of Hartford shall be
the sole incorporator.
Section 2. The corporation shall have the power to write life insurance,
endowments, annuities, accident, disability and health insurance and any and all
other forms of insurance which any other corporation now or hereafter chartered
by Connecticut and empowered to do a life insurance business may now or
hereafter lawfully do; to write policies and contracts on an individual or group
basis, providing for benefits on either a fixed or variable basis; to accept and
to cede reinsurance; to issue policies and contracts for any kind or combination
of kinds of insurance herein authorized; to issue policies or contracts either
with or without participation in profits, earnings or surplus; to acquire and
hold any or all of the shares or other securities of any insurance corporation
or any other kind of corporation; to invest in and to establish or manage, one
or more investment companies; and to engage in any lawful act or activity for
which corporations may be formed under the Stock Corporation Act. The
corporation may exercise such powers outside of Connecticut to the extent
permitted by the laws of the particular jurisdiction.
Section 3. The capital with which the corporation shall commence business shall
be an amount not less than one thousand dollars. The authorized capital shall be
ten million dollars divided into fifty thousand shares of common capital stock
with a par value of two hundred dollars each.
Section 4. The incorporator named in section 1 of this act shall form the
corporation in the manner provided for specially chartered corporations in the
Stock Corporation Act.
Section 5. The corporation shall obtain a license from the insurance
commissioner prior to the commencement of business and shall be subject to all
the general statutes applicable to insurance companies.
25
<PAGE>
Section 6. Notwithstanding the provisions of Section 33-391 of the general
statutes, the corporate charter granted by this act shall be void unless said
corporation is organized and licensed on or before January 1, 1982.
Approved April 25, 1980
---------------------------------------------
26
<PAGE>
Senate Bill No. 696
SPECIAL ACT NO. 81-2
AN ACT EXTENDING THE TIME FOR ORGANIZATION OF THE C.M. LIFE INSURANCE COMPANY.
Be it enacted by the State and House of Representatives in General Assembly
convened:
Section 6 of special act 80-4 is amended to read as follows:
Section 6. Notwithstanding the provisions of section 33-391 of the general
statutes, the corporate charter granted by this act shall be void unless said
corporation is organized and licensed on or before January 1, [1982] 1984.
Approved April 22, 1981
---------------------------------------------
27
<PAGE>
Exhibit 1(A)(5)
Form of Flexible Premium Variable Life Insurance Company
C.M. Life Insurance Company
A STOCK COMPANY
Hartford, Connecticut
INSURED JOHN DOE 123456789 POLICY NUMBER
POLICY DATE MAY 1, 1995 35 UNISEX AGE AND SEX
DATE OF ISSUE MAY 1, 1995 $50,000 INITIAL SPECIFIED
AMOUNT
This Policy is issued by the Company at its Service Center, 140 Garden Street,
Hartford, Connecticut, on the Date of Issue. It is a legal contract between the
Policyowner and the Company.
The Company will pay the death Proceeds to the Beneficiary when We receive at
Our Service Center due proof of the Insured's death while this Policy was In
Force.
Payment will be subject to all provisions of this Policy. This Policy may
terminate before the Maturity Date if the premiums paid are not sufficient to
continue it to that date.
THE AMOUNT OF THE DEATH BENEFIT, THE DURATION OF THE DEATH BENEFIT, OR BOTH, MAY
BE VARIABLE OR FIXED AS DESCRIBED IN THIS POLICY. POLICY VALUES MAY INCREASE OR
DECREASE IN ACCORDANCE WITH THE EXPERIENCE OF THE SEPARATE ACCOUNT.
The Policy Value in the Fixed Account will accumulate interest at a minimum
guaranteed annual rate as shown in the Policy Specifications. Interest in excess
of the guaranteed rate may be credited at the Company's sole discretion.
READ YOUR POLICY CAREFULLY
PRESIDENT SECRETARY
REGISTRAR
RIGHT TO EXAMINE THE POLICY
You may cancel this Policy by mailing or delivering it to the Service Center or
by delivering it to the agent of the Company on or before the later of: ten (10)
days after You receive it; or ten (10) days after the Company mails You a Notice
of Withdrawal Right. Upon its return, the Policy will be considered void from
its inception. You will receive a refund equal to the sum of:
(1) the difference between any payments made, including fees and charges, and
the amounts allocated to the Separate Account;
(2) the Surrender Value (on the date the cancellation request is received by
the Company) attributable to the amounts allocated to the Separate Account; and
(3) any fees or charges imposed on amounts in the Separate Account.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
. Adjustable Death Benefit Payable at the Death of the Insured, if the
Insured Dies Before the Maturity Date and While the Policy is In Force.
. Flexible Premiums Payable During the Lifetime of the Insured Until the
Maturity Date.
. Surrender Value Payable on the Maturity Date if the Policy has not
Terminated.
. Nonparticipating - No Dividends.
TABLE OF CONTENTS
Part Page
POLICY SPECIFICATIONS
DEFINITIONS .............................................................1
GENERAL PROVISIONS ......................................................2
The Policy
Policy Specifications
Maturity Date
Policyowner
28
<PAGE>
Beneficiary
Change of Policyowner or Beneficiary
Misstatement of Age
Incontestability
Suicide
Assignment
Termination
Nonparticipation
Annual Statement
Illustration of Benefits and Values
PREMIUM PROVISIONS ......................................................5
Premiums
Maximum Premium
Premium Charge
Tax Expense Charge
Net Premium and Allocation of Net Premiums
Allocation
Planned Periodic Premiums
Unscheduled Premiums
Grace Period
Reinstatement
PROCEEDS ................................................................7
General
Policy Settlement
DEATH BENEFIT PROVISIONS ................................................8
Death Benefit
Changing the Death Benefit Option
Changing the Specified Amount
DEFINITION OF LIFE INSURANCE TEST .......................................9
POLICY VALUE PROVISIONS .................................................9
Calculation of Policy Value
Accumulation Unit
Net Investment Factor
Fixed Account
Separate Account
Monthly Deductions
Monthly Cost of Insurance Rates
Basis of Computation
Transfers
SURRENDER PROVISIONS ...................................................13
Surrender Value
Surrender of the Policy
Partial Withdrawals
POSTPONEMENT OF PAYMENTS ...............................................13
CONVERSION PROVISION ...................................................14
TABLE OF CONTENTS (Continued)
Part Page
POLICY LOANS............................................................14
General
Loan Interest Rate
Preferred Loan
Federal Tax Considerations
INCOME SETTLEMENT OPTIONS ..............................................15
Alternate Life Income
Payment Provisions
29
<PAGE>
- --------------------------------------------------------------------------------
POLICY SPECIFICATIONS
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE
INSURED JOHN DOE ISSUE AGE 35
POLICY DATE MAY 1, 1995 SEX UNISEX
DATE OF ISSUE MAY 1, 1995 POLICY NUMBER 123456789
UNDERWRITING CLASS PREFERRED GUARANTEED ISSUE NON-TOBACCO
MONTHLY ANNIVERSARY 1ST DAY OF EACH MONTH
MATURITY DATE MAY 1, 2055
INITIAL SPECIFIED AMOUNT $50,000
DEATH BENEFIT OPTION 1
LOAN INTEREST RATE VARIABLE
LOAN INTEREST SPREAD 1.5%
FIXED ACCOUNT GUARANTEED INTEREST RATE 4.0% ANNUAL EFFECTIVE RATE
PLANNED PERIODIC PREMIUM $500.00
INITIAL PREMIUM $500.00
PREMIUM MODE ANNUAL
TARGET PREMIUM $2,098.00
MINIMUM SPECIFIED AMOUNT $50,000
MINIMUM INCREASE AMOUNT $10,000
MAXIMUM MONTHLY PER POLICY CHARGE $10.00
MAXIMUM MONTHLY PER THOUSAND CHARGE $0.10
CURRENT TAX EXPENSE CHARGE 2% OF ALL PREMIUMS
MAXIMUM PREMIUM CHARGE 6% UP TO TARGET PREMIUM IN THE FIRST 7 POLICY
YEARS; 0% IN EXCESS OF TARGET PREMIUM
PARTIAL SURRENDER FEE $25.00
NUMBER OF FREE TRANSFERS PER POLICY YEAR 12
TRANSFER CHARGE $25.00
MAXIMUM SEPARATE ACCOUNT GUARANTEED .90% EQUIVALENT ANNUAL RATE
MORTALITY AND EXPENSE RISK CHARGE
MAXIMUM SEPARATE ACCOUNT .25% EQUIVALENT ANNUAL RATE
ADMINISTRATIVE CHARGE
NOTE: COVERAGE MAY EXPIRE PRIOR TO THE MATURITY DATE IF NO PREMIUMS ARE PAID
AFTER THE FIRST OR SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE. IF
THE CURRENT ASSUMPTIONS FOR THIS POLICY CHANGE, COVERAGE WILL ALSO BE AFFECTED.
THIS POLICY IS ADJUSTABLE. IF IT IS ADJUSTED THEN NEW POLICY SPECIFICATIONS WILL
BE ISSUED AND WILL REPLACE THESE POLICY SPECIFICATIONS.
30
<PAGE>
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE (continued for)
INSURED JOHN DOE POLICY NUMBER 123456789
DATE OF ISSUE MAY 1, 1995 POLICY DATE MAY 1, 1995
- --------------------------------------------------------------------------------
TABLE OF MAXIMUM MONTHLY COST OF INSURANCE RATES
PER THOUSAND OF NET AMOUNT AT RISK
UNDERWRITING CLASS: PREFERRED GUARANTEED ISSUE NON-TOBACCO
SEX: UNISEX
INSURED'S MONTHLY INSURED'S MONTHLY
--------- ------- --------- -------
AGE RATE AGE RATE
--- ---- --- ----
35 0.20527 68 3.35189
36 0.21655 69 3.68947
37 0.22908 70 4.07332
38 0.24539 71 4.57175
39 0.26294 72 5.02137
40 0.28176 73 5.62137
41 0.30435 74 6.29926
42 0.32568 75 7.04201
43 0.35205 76 7.84175
44 0.37717 77 8.69316
45 0.40858 78 9.58798
46 0.44000 79 10.55482
47 0.47395 80 11.63402
48 0.51295 81 12.85963
49 0.55323 82 14.27298
50 0.59731 83 15.90706
51 0.65024 84 17.73611
52 0.70951 85 19.74902
53 0.77766 86 21.89940
54 0.85599 87 24.21426
55 0.94072 88 26.65196
56 1.03315 89 29.26000
57 1.13330 90 32.08494
58 1.23993 91 35.20203
59 1.35562 92 38.73243
60 1.48931 93 42.91884
61 1.63729 94 48.57907
62 1.80858
63 2.00847
64 2.23462
65 2.48337
66 2.75365
67 3.04309
THE ABOVE RATES ARE BASED ON THE 1980 COMMISSIONER'S STANDARD ORDINARY MORTALITY
TABLE B NONSMOKER
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE (continued for)
INSURED JOHN DOE POLICY NUMBER 123456789
DATE OF ISSUE MAY 1, 1995 POLICY DATE MAY 1, 1995
- --------------------------------------------------------------------------------
DEFINITION OF LIFE INSURANCE TEST
TEST CHOSEN: GUIDELINE PREMIUM TEST
DEATH BENEFIT FACTORS
31
<PAGE>
INSURED'S INSURED'S
--------- ---------
AGE FACTOR AGE FACTOR
--- ------ --- ------
35 2.50 68 1.17
36 2.50 69 1.16
37 2.50 70 1.15
38 2.50 71 1.13
39 2.50 72 1.11
40 2.50 73 1.09
41 2.43 74 1.07
42 2.36 75 1.05
43 2.29 76 1.05
44 2.22 77 1.05
45 2.15 78 1.05
46 2.09 79 1.05
47 2.03 80 1.05
48 1.97 81 1.05
49 1.91 82 1.05
50 1.85 83 1.05
51 1.78 84 1.05
52 1.71 85 1.05
53 1.64 86 1.05
54 1.57 87 1.05
55 1.50 88 1.05
56 1.46 89 1.05
57 1.42 90 1.05
58 1.38 91 1.04
59 1.34 92 1.03
60 1.30 93 1.02
61 1.28 94 1.01
62 1.26
63 1.24
64 1.22
65 1.20
66 1.19
67 1.18
THE DEATH BENEFIT OTHERWISE DETERMINED UNDER THE TERMS OF THIS POLICY MUST BE AT
LEAST AS LARGE AS THE PRODUCT OF THE DEATH BENEFIT FACTOR AT THE INSURED'S
ATTAINED AGE AT DEATH AND THE POLICY VALUE ON THAT DATE.
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE (continued for)
INSURED JOHN DOE POLICY NUMBER 123456789
DATE OF ISSUE MAY 1, 1995 POLICY DATE MAY 1, 1995
- --------------------------------------------------------------------------------
MAXIMUM PREMIUM LIMITATIONS:
UNDER CURRENT TAX LAW, THE SUM OF THE PREMIUMS PAID UNDER THIS POLICY MAY NOT,
AS OF ANY DATE, EXCEED THE GREATER OF A AND B DESCRIBED BELOW. THESE LIMITS MAY
CHANGE IF THE POLICY IS MODIFIED.
A. 7,861.50
B. 704.00 MULTIPLIED BY ONE PLUS THE NUMBER OF FULL POLICY YEARS ELAPSED
32
<PAGE>
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE (continued for)
INSURED JOHN DOE POLICY NUMBER 123456789
DATE OF ISSUE MAY 1, 1995 POLICY DATE MAY 1, 1995
- --------------------------------------------------------------------------------
INITIAL NET PREMIUM ALLOCATION SELECTION
FIXED ACCOUNT XX.X%
MONEY MARKET SUB-ACCOUNT** XX.X%
INCOME SUB-ACCOUNT**** XX.X%
HIGH INCOME SUB-ACCOUNT** XX.X%
TOTAL RETURN SUB-ACCOUNT* XX.X%
GROWTH SUB-ACCOUNT* XX.X%
INTERNATIONAL EQUITY SUB-ACCOUNT* XX.X%
INDEX 500 SUB-ACCOUNT*** XX.X%
LIFESPAN DIVERSIFIED INCOME SUB-ACCOUNT* XX.X%
LIFESPAN BALANCED SUB-ACCOUNT* XX.X%
LIFESPAN CAPITAL APPRECIATION SUB-ACCOUNT* XX.X%
TOTAL 100.0%
INFORMATION ON CHANGES TO THESE ALLOCATIONS OR ADDITIONAL FUNDS WILL BE PROVIDED
TO YOU.
* THESE SUB-ACCOUNTS EACH INVEST IN CORRESPONDING SHARES OF CERTAIN
PORTFOLIOS OF PANORAMA SERIES FUND 1, INC. (THE C.M. FUND).
** THESE SUB-ACCOUNTS EACH INVEST IN CORRESPONDING SHARES OF CERTAIN
PORTFOLIOS OF VARIABLE INSURANCE PRODUCTS FUND (VIP FUND) ADVISED BY
FIDELITY MANAGEMENT AND RESOURCE COMPANY.
*** THESE SUB-ACCOUNTS EACH INVEST IN CORRESPONDING SHARES OF CERTAIN
PORTFOLIOS OF VARIABLE INSURANCE PRODUCTS FUND I (VIP FUND I) ADVISED BY
FIDELITY MANAGEMENT AND RESOURCE COMPANY.
**** THESE SUB-ACCOUNTS EACH INVEST IN CORRESPONDING SHARES OF CERTAIN
PORTFOLIOS OF OPPENHEIMER VARIABLE ACCOUNT FUNDS (OVAF).
SERVICE CENTER
C.M. LIFE'S HOME OFFICE, LOCATED AT 140 GARDEN STREET, HARTFORD, CONNECTICUT
06154.
- --------------------------------------------------------------------------------
BENEFICIARY INFORMATION
INSURED JOHN DOE POLICY NUMBER 123456789
- --------------------------------------------------------------------------------
33
<PAGE>
- --------------------------------------------------------------------------------
DATE OF ISSUE MAY 1, 1995 POLICY DATE MAY 1, 1995
- --------------------------------------------------------------------------------
BENEFICIARY
- -----------
THE EXECUTORS OR ADMINISTRATORS OF THE INSURED.
- --------------------------------------------------------------------------------
OWNER INFORMATION
INSURED JOHN DOE POLICY NUMBER 123456789
DATE OF ISSUE MAY 1, 1995 POLICY DATE MAY 1, 1995
- --------------------------------------------------------------------------------
OWNER
- -----
THE INSURED
34
<PAGE>
DEFINITIONS
ACCUMULATION UNIT - A measure of Your interest in a Sub-Account.
AGE - The Insured's age as of the nearest birthday.
BENEFICIARY - The person(s) or entity(ies) designated to receive the Proceeds
upon the death of the Insured.
COMPANY - C.M. Life Insurance Company, a stock life insurance company
incorporated under the laws of the State of Connecticut, and a wholly-owned
subsidiary of Connecticut Mutual Life Insurance Company.
DELIVERY RECEIPT - An acknowledgment, signed by the Policyowner and returned to
C.M. Life's Service Center, stating that the Policyowner has received the
Policy.
FIXED ACCOUNT - An account that bears interest at an effective annual rate
determined by C.M. Life, but guaranteed to be no lower than as shown in the
Policy Specifications. Amounts allocated to the Fixed Account will be part of
the General Account of C.M. Life.
GENERAL ACCOUNT - All assets of C.M. Life other than those held in a separate
investment account.
GUIDELINE MINIMUM DEATH BENEFIT - The minimum Death Benefit required to qualify
the Policy as life insurance under Federal Tax laws.
IN FORCE - The status of this Policy after coverage has begun and prior to
termination.
LOAN VALUE - The maximum amount that may be borrowed under the Policy. The Loan
Value equals the Policy Value as of the date of the loan less any outstanding
Policy Debt and less loan interest projected to the next Policy Anniversary at
the then current Loan Interest Rate.
MODE, PREMIUM MODE - The frequency Planned Periodic Premiums are billed.
MONTHLY DEDUCTION - Charges deducted monthly from the Policy Value prior to the
Maturity Date. The charges include the monthly cost of insurance, the monthly
cost of any benefits provided by riders, and the monthly administrative charge.
NET PREMIUM - An amount equal to the premium payment made less a tax expense
charge and any applicable premium charge.
POLICY CHANGE - Any change in the Specified Amount, the addition or deletion of
a rider, or a change in the Death Benefit Option and certain changes in
Underwriting Class.
POLICY DATE - The date set forth in the Policy used to determine the Monthly
Payment Date, Policy Months, Policy Years, and Policy Anniversaries.
POLICY DEBT - All unpaid Policy loans plus interest currently due or accrued on
such loans.
POLICY VALUE - The total amount available for allocation under this Policy at
any time. It is equal to the sum of (a) the value of the Accumulation Units
credited to a Policy in the Sub-Accounts and (b) the value held in the Fixed
Account credited to that Policy.
POLICY YEAR, POLICY ANNIVERSARY, POLICY MONTH, MONTHLY ANNIVERSARY - Are
computed from the Policy Date.
Example:
Assume the Policy Date is September 15 of a given year. Then:
. the first Policy Month begins on September 15.
. the 15th of each succeeding month will be a Monthly Anniversary and the
beginning of a new Policy Month.
. the first Policy Year begins on September 15.
. the first Policy Anniversary is September 15 of the following year.
PROCEEDS - Prior to the Maturity Date, upon the death of the Insured, the
Proceeds equal the amount calculated under the chosen Death Benefit Option (two
Death Benefit Options, referred to throughout as "Option 1" or "Option 2", are
available), less
35
<PAGE>
Policy Debt outstanding at the time of the Insured's death and less any due and
unpaid Monthly Deductions. On the Maturity Date, or upon surrender, the Proceeds
will equal the Surrender Value of the Policy.
PRO RATA ALLOCATION - A method of allocating amounts to or from the Fixed
Account and the Sub-Accounts that contain Policy Value. Each account will be
allocated a percentage of the total amount to be allocated, and that percentage
will be equal to the percentage of the total Policy Value less Policy Debt that
is contained in that account.
SEPARATE ACCOUNT - The separate investment account called "C.M. Life Variable
Life Separate Account I." Established by C.M. Life under the laws of the State
of Connecticut, the Separate Account is registered as a unit investment trust
under the Investment Act of 1940, as amended. The Separate Account will be used
to receive and invest premiums for the Policy and it may also be used for other
variable life insurance policies that C.M. Life may issue.
SERVICE CENTER - the location where this Policy is administered as shown in the
Policy Specifications.
SPECIFIED AMOUNT - the Specified Amount of this Policy is shown in the Policy
Specifications.
SUB-ACCOUNT - A division of the Separate Account. Each Sub-Account invests
exclusively in the shares of a corresponding underlying fund.
SURRENDER VALUE - The Policy Value less Policy Debt.
TARGET PREMIUM - A premium amount used to determine premium charges for the
Policy. Target Premiums vary by the Insured's Age, Underwriting Class, and
tobacco status.
VALUATION DATE - A day on which the net asset value of the shares of the
underlying funds of the Separate Account We offer under the Policy is determined
and Accumulation Unit values of the Sub-Accounts are determined. Valuation Dates
generally occur on each day on which the New York Stock Exchange is open for
trading and such other days (other than a day during which no payment, partial
withdrawal or surrender of the Policy is received) when there is a sufficient
degree of trading in the securities of any of the funds (or unless the
Securities and Exchange Commission determines that an emergency exists), such
that the current asset value of the Sub-Accounts may be materially affected.
VALUATION PERIOD - The interval between two consecutive Valuation Dates.
WE, OUR, US - The Company.
WRITTEN REQUEST - A request by the Policyowner in writing in a form satisfactory
to C.M. Life.
YOU, YOUR - The Policyowner, as shown in the application for this Policy.
GENERAL PROVISIONS
The Policy
The Policy and the application, including subsequent applications requesting
changes in the Policy, constitute the entire contract. A copy of the initial
application is attached to and made a part of this Policy. Any subsequent
applications will be mailed to You for attachment to this Policy. This contract
is made in consideration of the application(s) and the payment of premiums as
provided in this Policy.
. All statements in the application will be deemed representations and not
warranties.
. No statement will be used to void this Policy or to defend against a claim
under it unless contained in the application.
. Our agents have no authority to alter or modify any of the terms of this
Policy. They have no authority to waive any of its provisions.
. Only the President or the Secretary of the Company may modify the provisions
of this Policy, and then only in writing.
Policy Specifications
The initial Policy Specifications are attached to this Policy at issue. When
needed, due to a Policy Change, We will mail to You, for attachment to this
Policy, new Policy Specifications.
Maturity Date
36
<PAGE>
The Maturity Date is the Policy Anniversary nearest the Insured's 95th birthday.
The Maturity Date is the latest date on which a premium payment may be made.
However, this Policy may terminate prior to the Maturity Date, as provided in
the Termination provision.
Policyowner
The Policyowner has the exclusive right to exercise all rights and privileges
and to receive all benefits under the Policy during the lifetime of the Insured.
If the Policyowner is an individual and if no Policyowner designated under this
Policy is living and if the Policy does not provide otherwise, the Policyowner
will be the estate of the last Policyowner to die.
Beneficiary
. If no Beneficiary designated under this Policy survives the Insured, the
Beneficiary will be the Policyowner.
. The interest of any Beneficiary will be subject to:
(1) Any assignment of this Policy which is binding on Us.
(2) Any optional settlement agreement in effect at the Insured's death.
Change of Policyowner or Beneficiary
. While the Insured is alive, You can change the Policyowner or Beneficiary by
Written Request.
. The change will take effect on the date You signed the request whether or
not the Insured is living when We receive the request at the Service Center.
However, the change will be subject to any payment made or actions taken by
Us before receiving the request.
Misstatement of Age
The Insured's Age may be adjusted at any time to correct a misstatement of Age.
Any benefit provided by this Policy will be determined based on the Insured's
correct Age. The future charges for this Policy will also be adjusted to reflect
the Insured's correct Age.
Incontestability
. With respect to statements made in the initial application: this Policy will
be incontestable after it has been In Force during the lifetime of the
Insured for a period of two years from its Date of Issue.
. With respect to statements made in a subsequent application: any increase in
Death Benefit based on such application will be incontestable after this
Policy has been In Force during the lifetime of the Insured for two years
following the Date of Issue of such increase.
. With respect to any statements made in an application for any extra benefit
rider: the incontestability pro-visions of the rider
will apply.
. With respect to statements made in the reinstatement application: this
Policy will be incontestable after it has been In Force during the lifetime
of the Insured for a period of two years from the date of reinstatement.
Suicide
. If the Insured dies by suicide, while sane or insane, within two years from
the Date of Issue, We will return to the Policy-owner premiums paid less any
Policy Debt outstanding on the date of death.
. If the Insured dies by suicide, while sane or insane, within two years of
the date of reinstatement of this Policy, the refund will be limited to the
premiums paid since reinstatement less any Policy Debt outstanding on the
date of death, and less any partial withdrawals made since the date of
reinstatement.
. If the Insured dies by suicide, while sane or insane, more than two years
from the Date of Issue, but within two years from the date of any Policy
Change resulting from a subsequent application, the refund, with respect to
any increase in Death Benefit arising from such change, will be limited to
the Cost of Insurance attributable to such increase.
Assignment
37
<PAGE>
Written notice of the terms of a transfer or a copy of any assignment must be
filed at Our Service Center. Until We receive such notice, We will not be
required to take notice of, or be responsible for, any transfer of interest in
this Policy by an assignment, agreement or otherwise.
. We will not be responsible for the validity of any assignment.
. Any assignment made after the Insured's death will be valid only with Our
consent.
Termination
All coverage under this Policy will terminate when any one of the following
events occurs:
(1) the Policy is surrendered;
(2) the Insured dies;
(3) the Policy matures; or
(4) the required premium is not paid as described in the Grace Period provision.
When this Policy terminates, any Proceeds due will be paid to the Owner or
Beneficiary in full settlement of Our liability under this Policy. We may
require return of this Policy.
Nonparticipation
This Policy is nonparticipating and will not share in Our profits or surplus
earnings. We will pay no dividends on this Policy.
Annual Statement
At least once a year We will mail an annual report to You at Your last known
address. This report will include the following information as of the Policy
Anniversary:
(1) the Policy Value in the Fixed Account and in each Sub-Account of the
Separate Account; (2) any transfers and withdrawals;
(2) the Surrender Value;
(3) premiums paid and Monthly Deductions made during the Policy Year;
(4) existing Policy Debt;
(5) changes in the Guideline Premiums, if applicable; and
(6) any other information required by law.
Illustration of Benefits and Values
Upon Written Request We will send You an illustration of projected future
benefits and values under the Policy. This illustration will be based upon such
assumptions as You may specify, as may be permitted by law. We may limit the
number of such illustrations in any Policy Year. We reserve the right to charge
a reasonable fee to produce an illustration.
PREMIUM PROVISIONS
Premiums
Premiums are payable directly to the Company. Premiums may be paid at any time
prior to the Maturity Date to the Service Center. This Policy will not be In
Force until the first premium is paid. No premium payment may be less than $100
without the Company's consent.
Maximum Premium
The maximum premium will depend on the Definition of Life Insurance Test elected
in the application for this Policy. We reserve the right to refuse any premium
payment that would increase the net amount at risk.
If the Guideline Premium Test is chosen, the sum of the premiums paid less any
partial withdrawals may not exceed the greater of:
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. the guideline single premium; or
. the sum of the guideline level premiums to the date of payment.
The amount of the guideline premiums are shown in the Policy Specifications. The
guideline premiums will change whenever there is a Policy Change. If the
guideline premiums change, We will send new Policy Specifications showing the
new guideline premiums. These premium limitations do not apply to the extent
premiums are necessary to prevent lapse of the Policy during the Policy Year.
The guideline premiums are determined according to the rules set forth in the
Federal tax law. The guideline premiums will be adjusted to conform to any
changes in the Federal tax law.
The total planned and unscheduled premium payments cannot exceed limits set by
the Company. Premiums received in excess of the Company's limits will be
returned to You no later than 60 days after the end of the applicable Policy
Year. If this excess amount plus interest is not refunded by then, the Death
Benefit under the Policy shall be increased retroactively so that at no time is
the Death Benefit ever less than the amount needed to ensure qualification as a
life insurance contract for Federal tax purposes.
Premium Charge
A premium charge will be applied to premiums received during the first seven
Policy Years after the issuance of the Policy or an increase in Specified
Amount. The maximum premium charge for this Policy is shown in the Policy
Specifications. During the first seven Policy Years, after the issuance of the
Policy or an increase in Specified Amount, the premium charge will be assessed
against premiums received during the Policy Year, up to the annual Target
Premium for the Policy or the increase. If more than the Target Premium for the
Policy or the increase is paid in a Policy Year, there will be no premium charge
applied to the premium in excess of the Target Premium.
In the event of an increase in Specified Amount, premium payments will be pro
rated between the original Specified Amount and the increase in Specified Amount
using the Target Premium for each to determine the pro rata split.
Tax Expense Charge
A tax expense charge will be deducted from each premium payment. The current tax
expense charge is shown in the Policy Specifications. The charge is to
compensate the Company for state and local premium taxes assessed in connection
with this Policy. Since state and local premium taxes vary by jurisdiction, the
charge is meant to approximate an overall average tax rate paid by the Company.
We reserve the right to increase or decrease the tax expense charge to reflect
changes in the premium taxes paid by the Company. We also reserve the right to
charge for deferred acquisition tax charges.
Net Premium and Allocation of Net Premiums
The Net Premium equals the premium paid less the current tax expense charge and
any applicable premium charge. In the application for this Policy, You indicate
the initial allocation of Net Premiums among the Fixed Account and the Sub-
Accounts of the Separate Account. There are no limitations concerning the number
of Sub-Accounts to which Net Premiums may be allocated. Allocation percentages
must be in whole numbers and must total 100%. You may change the allocation of
future Net Premiums at any time pursuant to written or telephone request. If
allocation changes by telephone are elected by the Policyowner, a properly
completed authorization form must be on file at Our Service Center before
telephone requests will be honored. C.M. Life and its agents and affiliates will
not be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. C.M. Life will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. Otherwise,
We may be liable for any losses due to unauthorized or fraudulent instructions.
The procedures We follow for transactions initiated by telephone include
requirements that a Policyowner wanting to make such a change identify
themselves by name and identify a personal identification number. All transfer
instructions by telephone may be tape recorded as an additional safeguard.
The Company reserves the right the charge a fee of $25 for transfers.
Allocation
If a premium is paid with the application or at any time prior to delivery of
the Policy, the Net Premium will be placed in the General Account on the date it
is received at Our Service Center. Upon issuance of the Policy the Net Premium
in the General Account will be allocated to one or more of the Sub-Accounts of
the Separate or Fixed Account, or to any combination of these accounts in
accordance with Your premium allocation instructions.
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Planned Periodic Premiums
We will send reminder notices for the Planned Periodic Premiums based on the
amount and mode of such premiums as indicated in the Policy Specifications. We
may suspend the notices if premiums are not being paid. We will also suspend the
notices upon Your Written Request. With Our consent, You may change the mode or
the amount of these premiums by filing a Written Request. Any change in the
Planned Periodic Premium amount is subject to the minimum required by Company
rules. We may also limit the amount of an increase.
If premiums are discontinued, We will continue to make Monthly Deductions from
the Policy Value and this Policy will stay In Force subject to the Grace Period
provision.
Unscheduled Premiums
Any premium We receive under this Policy in an amount different from the Planned
Periodic Premium will be considered an unscheduled premium. Unscheduled premium
payments can be made at any time while this Policy is In Force.
Grace Period
If on any Monthly Anniversary, the Policy Debt is greater than the Policy Value,
or the Policy Value is less than or is equal to zero, then this Policy will
enter the Grace Period. This Policy will not enter the Grace Period, if on any
Monthly Anniversary, the Policy Debt is less than or equal to the Policy Value,
and the Policy Value is greater than zero.
If this Policy enters the Grace Period on any Monthly Anniversary, a premium
will be due 62 days after such Monthly Anniversary. During this 62 day period,
the Policy will stay In Force. Notice of the required premium will be mailed to
You at Your last known address and, if You have so requested, to any assignee of
record. If the required premium is not paid by the due date, this Policy will
lapse without value on the later of:
(1) 62 days after the written notice is mailed; or
(2) 62 days after this Policy enters the Grace Period.
Reinstatement
If this Policy terminates other than by maturity, surrender or death of the
Insured, You may reinstate it prior to the Maturity Date within 3 years after
default in premium payment. We must receive:
(1) a written application for reinstatement;
(2) evidence of insurability satisfactory to Us; and
(3) the greater of one planned periodic premium or a Net Premium sufficient to
cover 3 Monthly Deductions at an amount equal to the last Monthly Deduction
just prior to the lapse of this Policy.
This Policy will be reinstated on the Monthly Anniversary following Our
approval. The Policy Value on the date of reinstatement will be:
(1) the Net Premium paid to reinstate the Policy increased by interest from the
date the payment is received at Our Service Center; plus
(2) an amount equal to the Policy Value less any Policy Debt on the lapse date;
less
(3) the Monthly Deduction due on the date of reinstatement.
You may not reinstate any Policy Debt outstanding on the lapse date.
The premium paid on reinstatement will be allocated to the Fixed Account and the
Sub-Accounts of the Separate Account in accordance with Your most recent premium
allocation request.
PROCEEDS
General
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Proceeds means the amount payable under this Policy on the Maturity Date, upon
its prior surrender, or at the death of the Insured.
. If the Insured is alive on the Maturity Date, or this Policy is surrendered
before the Maturity Date, the Proceeds will be the Surrender Value on that
Date.
. The Proceeds on the death of the Insured will be the Death Benefit less any
Policy Debt and less due and unpaid Monthly Deductions. The Death Benefit is
described in the Death Benefit provision.
The Company will pay the death Proceeds to the Beneficiary when We receive at
Our Service Center due proof of the Insured's death while this Policy was In
Force.
Policy Settlement
. All amounts payable by Us are payable only at Our Service Center.
. Unless an optional settlement agreement is elected, Proceeds will be paid in
a single sum.
. We may require the return of the Policy before paying Proceeds.
. Interest will be paid on lump sum death Proceeds at a rate not less than 3%
per year or the minimum rate set by law, if greater. Interest will be paid
from the date of death to the payment date except, when Option 2 is elected,
interest will be calculated on the Policy Value portion of the death
Proceeds from the date the Company receives due proof of death to the
payment date.
DEATH BENEFIT PROVISIONS
Death Benefit
The Death Benefit depends on the Death Benefit Option in effect on the date of
death.
Option 1:
The Death Benefit is the Specified Amount on the date of death, or if
greater, the Guideline Minimum Death Benefit.
Option 2:
The Death Benefit is the Specified Amount on the date of death plus the
Policy Value on the date of receipt of due proof of death at the Service Center,
or if greater, the Guideline Minimum Death Benefit.
The Death Benefit is the Specified Amount on the date of death plus the Policy
Value on the date of receipt of due proof of death at the Service Center, or if
greater, the Guideline Minimum Death Benefit.
The Death Benefit Option and initial Specified Amount elected in the application
are shown in the Policy Specifications. Either or both may be changed as
described below.
Changing the Death Benefit Option
You may change the Death Benefit Option in effect by Written Request. Any change
will be effective on the Monthly Anniversary on or next following the date We
approve the request. You may specify a later effective date. A change in the
Death Benefit Option is subject to the following conditions:
(1) If the change is from Option 1 to Option 2, the Specified Amount will be
reduced by an amount equal to the Policy Value as of the effective date of
change. The Specified Amount in effect after any reduction must be at least
as great as the minimum Specified Amount shown in the Policy Specifications.
(2) If the change is from Option 2 to Option 1, the Specified Amount will be
increased to equal the Death Benefit which would have been payable under
Option 2 on the effective date of change.
(3) We may limit the number of Death Benefit Option changes in any Policy Year.
We may require evidence of insurability satisfactory to Us for any Death Benefit
Option change. Also, We may charge up to $25 for any change.
Changing the Specified Amount
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The existing Specified Amount may be increased or decreased by Written Request.
Any change will be effective on the Monthly Anniversary on or next following the
date We approve the request, unless You specify a later date. We may limit the
number and size of changes in a Policy Year.
. A decrease in the Specified Amount is subject to the following conditions:
(1) No decrease is permitted prior to the third Policy Anniversary.
(2) No decrease is permitted within three years following the effective
date of any increase.
(3) The Specified Amount in effect after any decrease must be at least as
great as the Minimum Specified Amount shown in the Policy
Specifications.
(4) Any decrease will reduce the Specified Amount in the following order:
(a) first, it will reduce the most recent increase;
(b) next, it will reduce the next most recent increase(s) successively;
and
(c) finally, it will reduce the Specified Amount.
. An increase in the Specified Amount is subject to the following conditions:
(1) Submission of an application for increase and satisfactory evidence of
insurability of the Insured.
(2) If the Surrender Value is insufficient to continue the Policy In Force
for three months at current rates of mortality and interest, a Net
Premium sufficient to increase the Surrender Value to an amount equal to
three Monthly Deductions is required.
(3) No increase may be made after the Policy Anniversary on or next
following the Insured's Age 75.
(4) The minimum amount of any increase in Specified Amount is shown in the
Policy Specifications.
DEFINITION OF LIFE INSURANCE TEST
At application for this Policy, the Policyowner must choose one of two tests to
be used to determine if the Policy qualifies as life insurance under Section
7702 of the Internal Revenue Code. The test cannot be changed once the Policy is
issued. Currently, the two tests are:
(1) the Guideline Premium Test; and
(2) the Cash Value Accumulation Test.
Under the Guideline Premium Test, the Death Benefit must be greater than or
equal to the product of the Policy Value and the Death Benefit Factor for the
Insured's Age. If this test is chosen, the Death Benefit Factor will be shown in
the Policy Specifications. If this is chosen, there are maximum premium
limitations described in detail in the Policy Specifications.
Under the Cash Value Accumulation Test, the Policy Value can never be greater
than the net single premium, calculated using guaranteed cost of insurance rates
and 4% interest, for the Death Benefit otherwise calculated under the Policy.
There are no maximum premium limitations imposed under this test.
Under both tests, if the Death Benefit is not sufficient to satisfy the test, it
will be increased to the amount necessary to satisfy the test. That Death
Benefit amount will be referred to as the Guideline Minimum Death Benefit. The
Definition of Life Insurance Test chosen is shown in the Policy Specifications.
POLICY VALUE PROVISIONS
The Policy Value is the total amount available for allocation and is equal to
the sum of the accumulation in the Fixed Account and the value of the
Accumulation Units in the Sub-Accounts. There is no guaranteed minimum Policy
Value. Because Policy Value on any date depends upon a number of variables, it
cannot be predetermined.
Policy Value and Surrender Value will reflect frequency and amount of Net
Premiums paid, interest credited to accumulation in the Fixed Account, the
investment performance of the chosen Sub-Accounts, any partial withdrawals, any
loans, any loan repayments, any loan interest paid or credited, and any charges
assessed in connection with this Policy.
Calculation of Policy Value
The Policy Value is determined first on the Date of Issue and thereafter on each
Valuation Date. On the Date of Issue, the Policy Value will be the Net Premiums
received, plus any interest earned during the period when premiums are held in
the General Account (before being transferred to the Separate Account or the
Fixed Account), less any Monthly Deductions due.
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On each Valuation Date after the Date of Issue the Policy Value will be:
(1) the aggregate of the values in each of the Sub-Accounts on the Valuation
Date, determined for each Sub-Account by multiplying the value of an
Accumulation Unit in that Sub-Account on that date by the number of such
Accumulations Units allocated to the Policy; plus
(2) the value in the Fixed Account allocated to the Policy.
Thus, the Policy Value is determined by multiplying the number of Accumulation
Units in each Sub-Account by the value of the applicable Accumulation Units on
the particular Valuation Date, adding the results, and adding the amount in the
Fixed Account allocated to this Policy, if any.
Accumulation Unit
Each Net Premium payment is allocated to either the Sub-Account(s) or the Fixed
Account in accordance with Your instruction. Allocations to the Sub-Accounts are
credited to the Policy in the form of Accumulation Units. Accumulation Units are
credited separately for each Sub-Account.
The number of Accumulation Units for each Sub-Account credited to the Policy is
equal to the portion of the Net Premium allocated to the Sub-Account, divided by
the dollar value of the applicable Accumulation Unit as of the Valuation Date
the payment is received at Our Service Center. The number of Accumulation Units
will remain fixed unless changed by a subsequent split of Accumulation Unit
value, transfer, partial withdrawal or surrender. In addition, if C.M. Life is
deducting the Monthly Deduction or other charges from a Sub-Account, each such
deduction will result in cancellation of a number of Accumulation Units equal in
value to the amount deducted.
The dollar value of an Accumulation Unit of each Sub-Account varies from
Valuation Date to Valuation Date based on the investment experience of that
Sub-Account. That experience, in turn, will reflect the investment performance,
expenses and charges of the respective Funds. The dollar value of an
Accumulation Unit on a given Valuation Date is determined by multiplying the
dollar value of the corresponding Accumulation Unit as of the immediately
preceding Valuation Date by the appropriate net investment factor.
Net Investment Factor
The net investment factor measures the investment performance of a Sub-Account
of the Separate Account during the Valuation Period just ended. The net
investment factor for each Sub-Account is equal to 1.0000 plus the number
arrived at by dividing (a) by (b) and subtracting (c) and (d) from the result,
where:
(a) is the investment income of that Sub-Account for the Valuation Period, plus
capital gains, realized or unrealized, credited during the Valuation Period;
minus capital losses, realized or unrealized, charged during the Valuation
Period; adjusted for provisions made for taxes, if any;
(b) is the value of that Sub-Account's assets at the beginning of the Valuation
Period;
(c) is a charge for each day in the Valuation Period for mortality and expense
risks. This charge may be increased or decreased by C.M. Life, but may not
exceed, on an annual basis, the amount shown in the Policy Specifications of
the daily net asset value of the Sub-Account; and
(d) is the Separate Account administrative charge for each day in the Valuation
Period equal, on an annual basis, to the percentage shown in the Policy
Specifications of the daily net asset value of that Sub-Account. This charge
is applicable only during the first twenty Policy Years.
The net investment factor may be greater or less than one (1). Therefore, the
value of an Accumulation Unit may increase or de-crease. You bear the investment
risk.
Fixed Account
Amounts allocated to the Fixed Account will be part of the General Account.
On the date of receipt of an amount to be allocated, We will credit interest
separately to that portion of the Policy Value equal to any existing Policy Debt
and to the balance of the Policy Value in the Fixed Account. The balance of the
Policy Value in the Fixed Account will be credited with interest at rates to be
declared by Us. They will be declared in advance and will not be less than the
Guaranteed Interest Rate which is shown in the Policy Specifications.
All interest rates stated are effective annual rates. They will be applied to
properly reflect the date of receipt of any Planned Periodic Premiums,
unscheduled premiums and any changes in Policy Debt during a Policy Month.
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The interest credited on the portion of the value in the Fixed Account equal to
the Policy Debt, is the loan rate less the Loan Interest Spread shown in the
Policy Specifications or the Fixed Account guaranteed rate, whichever is
greater.
Separate Account
The Policy Value may vary if allocated to the Sub-Accounts of the Separate
Account. The Separate Account is separate from the Company's General Account and
the Fixed Account. That portion of the assets of the Separate Account equal to
the reserves and other liabilities of the Policies which are supported by the
Separate Account will not be charged with liabilities that arise from any other
business the Company conducts.
The Company established the Separate Account to support variable life insurance
contracts. The Separate Account is registered with the Securities and Exchange
Commission (SEC) as a unit investment trust under the Investment Company Act of
1940. It also is governed by the laws of the State of Connecticut.
The Separate Account has several Sub-Accounts. The Company reserves the right,
subject to compliance with applicable law, to change the names of the Separate
Account or its Sub-Accounts. The Sub-Accounts in which You initially chose to
invest are shown in Your Initial Net Premium Allocation Form attached to this
Policy.
Each Sub-Account invests its assets in a separate registered investment company
or a separate series of a registered investment company or fund.
We reserve the right to add new sub-accounts and to restrict investments in
Sub-Accounts that We deem unsuitable for investment.
Income and realized and unrealized gains or losses from the assets of each
Sub-Account of the Separate Account are credited to or charged against that
Sub-Account without regard to income, gains, or losses in the other Sub-Accounts
of the Separate Account, the General Account or any other separate accounts.
Monthly Deductions
The Monthly Deduction will be made pro rata from the Fixed Account and
Sub-Accounts in which You have Policy Value on the Monthly Calculation Date.
. The Monthly Deduction consists of:
(1) the Monthly Cost of Insurance; plus
(2) the Monthly Administrative Charge; plus
(3) any monthly charge for certain Riders attached to the Policy.
. The Monthly Cost of Insurance is (1 x (2 - 3)) + (4 x 5) where:
(1) is the Monthly Cost of Insurance Rate per $1,000 divided by 1,000. (The
Monthly Cost of Insurance Rate per $1,000 will not exceed the Maximum
Monthly Cost of Insurance Rate per $1,000 of Net Amount at Risk shown in the
Policy Specifications).
(2) is the Death Benefit on the Monthly Anniversary;
(3) is the Policy Value on the Monthly Anniversary;
(4) is any flat extra charge shown in the Policy Specifications divided
by 12.
(5) is the Specified Amount of this Policy as shown in the Policy
Specifications divided by 1,000.
. The Monthly Administrative Charge is (1) + (2) where:
(1) is the Monthly Per Policy Charge (the Monthly Per Policy Charge will not
exceed the Maximum Monthly Per Policy Charge shown in the Policy
Specifications); and
(2) is the Monthly Per Thousand Charge. The Monthly Per Thousand Charge is
(a) times (b) where:
(a) is the Specified Amount of this Policy as shown in the Policy
Specifications divided by 1,000.
(b) is the Monthly Per Thousand Rate (The Monthly Per Thousand Rate
will not exceed the Maximum Monthly Per Thousand Rate shown in
the Policy Specifications).
Monthly Cost of Insurance Rates
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Monthly Cost of Insurance Rates are determined by Us based on Our expectations
as to Our future mortality, investment, lapse and expense experience. For the
initial Specified Amount they will never be greater than those shown in the
Table of Maximum Monthly Cost of Insurance Rates in the Policy Specifications.
If there has been an increase in the Specified Amount, a different Monthly Cost
of Insurance Rate may apply to the increase.
Basis of Computation
Maximum Monthly Cost of Insurance Rates are based on the 1980 CSO Mortality
Table B, and the Insured's tobacco and underwriting class stated in the Policy
Specifications.
Transfers
Subject to the Company's then current rules, You may at any time transfer Policy
Value among the Sub-Accounts or between a Sub-Account and the Fixed Account. The
Policy Value held in the Fixed Account to secure a Policy loan, however, may not
be transferred.
All requests for transfers must be made to the Service Center. The amount
transferred will be based on the Policy Value in the Account(s) next computed
after receipt of the transfer order. C.M. Life will make transfers pursuant to
valid written or telephone request. As discussed in the Net Premium and
Allocation of Net Premiums provision of this Policy, a properly completed
authorization form must be on file at the Service Center before telephone
requests will be honored.
Only one transfer from the Fixed Account to the Separate Account may be made per
Policy Year. The transfer may not exceed Our percentage limit as shown in the
Policy Specifications. There will also be a ninety (90) day waiting period
between transfers out of the Fixed Account.
The Fixed Account and the Money Market Portfolio are competing investment
options. Transfers between these competing options will not be permitted. For a
period of ninety (90) days following a transfer from one competing option, no
transfer can be made to the other competing option. For a period of 90 days
following a transfer to one competing option, no transfer can be made from the
other competing option.
The transfer privilege is subject to the consent of C.M. Life. We reserve the
right to impose limitations on transfers including, but not limited to:
(1) the minimum amount that may be transferred;
(2) the minimum amount that may remain in a sub-account from which the transfer
is being made;
(3) the minimum period of time between transfers involving the
Fixed Account; and
(4) the maximum amount that may be transferred each time to
or from the Fixed Account.
You may make in any Policy Year, a number of transfers without charge. This
number is shown in the Policy Specifications. After the last transfer made
without charge, a charge of no more than the charge shown in the Policy
Specifications will be deducted from the amount transferred for each transfer in
that Policy Year. Any transfer made with respect to a conversion privilege,
Policy loan or material change in investment policy will not incur a charge and
will not count towards Your number of free transfers.
SURRENDER PROVISIONS
Surrender of the Policy
You may at any time surrender this policy and receive its Surrender Value. The
Surrender Value will be calculated as of the Valuation Date on which a Written
Request for surrender and this Policy are received at the Service Center. The
Surrender Value may be paid in a single lump sum or under one or more payment
options currently offered by the Company, subject to any state limitations. We
will normally pay the Surrender Value within seven days following receipt of the
surrender request, but We may delay payment under the circumstances described in
the Postponement of Payments provision in this Policy.
This Policy will terminate as of the date of surrender.
Partial Withdrawals
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You may make a partial withdrawal from the Policy Value by sending Us Your
Written Request. The date of the partial withdrawal will be the date the request
is received at Our Service Center.
. Partial withdrawals are subject to the following conditions:
(1) No partial withdrawals are permitted in the first three (3) Policy
Years.
(2) A maximum partial withdrawal may not exceed 90% of the Surrender Value.
(3) Only one partial withdrawal is permitted per Policy Year.
(4) The minimum partial withdrawal is $1000.
(5) A fee will be charged for each partial withdrawal. The Partial
Withdrawal Charge is shown in the Policy Specifications.
(6) The Surrender Value after a partial withdrawal must be at least $1,000.
. The Policy Value on the date of a partial withdrawal is reduced by:
(1) The amount paid to You; plus
(2) The Partial Withdrawal Charge.
. If the Death Benefit Option in effect on the date of a partial withdrawal is
Option 1, the Specified Amount will be reduced by the reduction in Policy
Value. The Specified Amount after the reduction cannot be less than the
minimum required by Company rules.
POSTPONEMENT OF PAYMENTS
Payments of any amount due from the Separate Account upon surrender, partial
withdrawals, or death of the Insured, as well as payments of a Policy Loan and
transfers may be postponed whenever:
(1) the New York Stock Exchange is closed other than customary weekend and
holiday closings; or
(2) trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; or
(3) an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of
the Separate Account's net assets.
Payments under the Policy of any amounts derived from the premiums paid by check
may be delayed until such time as the check has cleared Your bank.
We also reserve the right to defer payments of any amount due from the Fixed
Account upon surrender, partial withdrawal or death of the Insured, as well as
payments of Policy loans and transfers from the Fixed Account, for a period not
to exceed six months.
CONVERSION PROVISION
Upon Your Written Request, while this Policy is In Force, You may convert it to
a flexible premium adjustable life insurance policy currently offered by Us
during the first 24 months after the Date of Issue or after the effective date
of an increase in the Specified Amount.
. The new policy will be issued:
(1) on the life of the Insured of this Policy;
(2) without evidence of insurability;
(3) with the underwriting class We then offer that is most similar to the
original policy;
(4) with the same Issue Age and Date of Issue as this
Policy;
(5) with the same Specified Amount as this Policy;
(6) with fixed and guaranteed minimum benefits which had been offered by the
Company on the Date of Issue of the original policy or on the effective
date of an increase in Specified Amount, whichever is applicable.
. The periods in the suicide and incontestability provision of the new policy
will expire on the same date as such provisions in this policy would have
expired.
. Any extra benefit rider will be available only with Our consent.
. If this Policy is converted within 24 months after the Date of Issue, You
can transfer, without a charge, the Policy Value in the Separate Account to
the Fixed Account and simultaneously change Your premium allocation
instructions to allocate future premium payments to the Fixed Account.
. If this Policy is converted within 24 months after the effective date of an
increase, You can transfer, without charge, all or part of the Policy Value
in the Separate Account to the Fixed Account and simultaneously change Your
premium allocation instructions to allocate all or part of future premium
payments to the Fixed Account.
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POLICY LOANS
General
At any time You may, by Written Request, borrow against this Policy. We will
lend You any sum up to the Policy's maximum loan value. The maximum loan value
is the Surrender Value on the date of the Policy loan less projected interest,
at the loan interest rate, to the end of the Policy Year.
. We reserve the right to inspect or endorse the Policy before making the
loan.
. We may defer making a loan against the Policy Value in the Fixed Account for
a period not exceeding six months after You apply for it. However, We will
not defer the loan if it is to be used to pay any premiums to Us.
. The Policy will be the sole security for the loan. Lack of endorsement will
not indicate that the Policy is free of loans. ' Any interest not paid when
due will be added to the loan. Interest is due and payable on the Policy
Anniversary.
. Any Policy Debt may be repaid in whole or in part at any time while this
Policy is In Force.
. Principal and interest are payable at Our Service Center.
. Every payment to the Company will be considered a premium payment unless
clearly marked for Policy Debt repayment.
. Policy Value equal to the Policy loan will be held in the Fixed Account to
secure the Policy loan. The amount will be transferred from each
Sub-Account on a pro rata basis, less the pro rata share of
the Policy Value in the Fixed Account.
. As described in the Policy Value Provisions, We may credit interest at
different rates to that portion of the Policy Value equal to any existing
Policy Debt and to the balance of the Policy Value.
Loan Interest Rate
Interest on any loan is at an effective annual rate. This rate will apply to all
Policy Debt under this Policy. This rate may change. Changes will be made only
on a Policy Anniversary and will remain in effect for the following Policy Year.
. The loan interest rate is based on a published Monthly Average. That Average
will be:
(1) the Composite Yield on Seasoned Corporate Bonds as published by Moody's
Investors Service, Inc. or any successor to the Service; or
(2) If that Monthly Average is no longer published, a substantially similar
average, established by regulation issued by the insurance supervisory
official of the state where this Policy was delivered.
. The loan interest rate for a Policy Year is the Published Monthly Average
for the calendar month ending two months before the calendar month in which
that Policy Year begins or the guaranteed interest rate for the Fixed
Account plus the Loan Interest Spread shown in the Policy Specifications,
whichever is higher.
. The following restrictions apply to the loan interest rate as described
above:
(1) We may increase the rate whenever the maximum rate is at least 1/2%
higher than the rate in effect for the previous Policy Year.
(2) We will reduce the rate whenever the maximum rate is at least 1/2% lower
than the rate in effect for the prior Policy Year.
(3) If the rate is changed, the new rate will become effective on Your
Policy Anniversary.
(4) The loan interest rate may not exceed the maximum loan interest rate
allowed by the state in which this Policy was delivered.
. We will notify You of the current loan interest rate:
(1) upon Your Written Request; and
(2) at the time a Policy loan is made.
. We will send You notice 30 days in advance of any increase in the loan
interest rate, if a Policy loan is then outstanding. We will also notify You
of any decreases.
. Any notice will state that the rate may vary and will state the frequency at
which the rate will be determined.
Preferred Loan
After the tenth Policy Year, the Policyowner may take loans against the Policy
Value at a rate that is equal to the Loan Interest Rate then in effect for the
Policy, less the Loan Interest Spread shown in the Policy Specifications. We
reserve the right to adjust this preferred rate on each Policy Anniversary when
the Loan Interest Rate for the coming Policy Year is determined. The maximum
Preferred Loan Amount is 10% of the Policy Value at the time of the Preferred
Loan request.
Federal Tax Considerations
47
<PAGE>
The Company intends to make a charge for any effect which the income, assets or
existence of the Separate Account may have upon its tax. The Separate Account
presently is not subject to tax, but the Company reserves the right to assess a
charge for taxes of the Separate Account at any time it becomes subject to tax.
48
<PAGE>
INCOME SETTLEMENT OPTIONS
Rather than pay Proceeds in a single sum as provided in this Policy, We will pay
them based on the terms of an optional settlement agreement, if elected. Under
such an agreement You may elect one of the following options:
Option 1. Installments for a Specified Period. Equal payments for a stated
number of years, not more than 30. The amount is shown in the Option 1 Table on
the following page.
Option 2. Life Income. Equal monthly payments while the payee is alive, as shown
in the Option 2 Table on the following page. Payments with or without
installments certain may be elected. This benefit may be in-creased by the
Alternative Life Income provision.
Option 3. Interest. Interest payments while the payee is alive or for a shorter
period. Interest will be paid at an effective interest rate of 3% compounded
annually. Payments are increased by any additional interest earnings We may
apportion.
Option 4. Installments of Specified Amount. Equal annual, semiannual, quarterly
or monthly payments for a stated amount. Payments will be made until the
proceeds and interest are all paid out. The total yearly amount paid must be at
least 6% of the original proceeds. Any unpaid balance left with Us will be
increased by an effective interest rate of 3% compounded annually.
We will also add any additional interest earnings We may apportion.
Option 5. Life Income With Installment Refund. Equal monthly payments as shown
in the Option 5 Table on the following page. Payments will be made until the
total amount paid equals the proceeds, and as long thereafter as the payee
lives.
Option 6. Joint Life Income for the Payee and One Other Person with Two-Thirds
to Survivor (One Hundred and Twenty Months Certain). Based on the Option 6
table, We will pay a joint monthly income to the payee and one other person
designated at exercise of this option. We will pay the income for 120 months
certain, and as long afterwards as both payees are living. After the death of
either payee, and following payment of any remaining income certain, monthly
payments equal to two-thirds of monthly income will be continued to the
surviving payee for life.
Alternate Life Income
If Option 2, 5 or 6 is elected, the payee can elect to receive an alternate life
income. This is instead of receiving income based on the rates shown in the
following tables. The election must be made at the time the in-come is to begin.
The alternate life monthly income will at least be equal to the monthly income
provided by a new single premium immediate annuity (first payment immediate),
based on Our published rates then in use when the income settlement option is
elected.
Payment Provisions
. If an optional settlement agreement becomes effective, We will issue a
supplementary contract in ex-change for the Policy and agreement. The
contract will show the rights and benefits provided by the agreement.
. We may change the payment basis to quarterly, semiannual, or annual if any
payment is less than $50.
. We may pay Proceeds in one sum if they are less than $5,000. The payment
will be paid to the then payee of income named in the optional settlement
agreement.
. Payments under Options 2, 5, and 6 will be subject to proof of the payee's
ages.
. The first installment under Options 1, 2, 4, 5 and 6 is due as of the date
the Proceeds become payable.
. Installments certain under Options 1, 2, 5 and 6 are computed at an
effective interest rate of 3% com-pounded annually. This does not apply when
alternate life income is elected.
. Installments certain, after the first, will be increased by any additional
interest earnings We may apportion. If the alternate life income is elected,
We will not increase payments certain by additional interest earnings. No
endorsements of the Policy are required when an optional settlement
agreement is completed.
. If the same income would be payable for various periods of time at a given
age, We will automatically pay income for the longest period.
49
<PAGE>
-------------------------------------------
OPTION 1. INSTALLMENTS FOR
A SPECIFIED PERIOD -
SETTLEMENT OPTION RATES
-------------------------------------------
MONTHLY INCOME PER
$1,000 OF PROCEEDS
-------------------------------------------
Years Monthly Income
1 $ 84.47
2 42.86
3 28.99
4 22.06
5 17.91
6 15.14
7 13.16
8 11.68
9 10.53
10 9.61
11 8.86
12 8.24
13 7.71
14 7.26
15 6.87
16 6.53
17 6.23
18 5.96
19 5.73
20 5.51
21 5.32
22 5.15
23 4.99
24 4.84
25 4.71
26 4.59
27 4.47
28 4.37
29 4.27
30 4.18
-------------------------------------------
The first Income Payment is made on the
contract's Income Date.
-------------------------------------------
50
<PAGE>
- --------------------------------------------------------------------------------
OPTION 2. LIFE INCOME - SETTLEMENT OPTION RATES
OPTION 5. LIFE INCOME WITH INSTALLMENT REFUND - SETTLEMENT OPTION RATES
- --------------------------------------------------------------------------------
MONTHLY LIFE INCOME PER $1,000 OF PROCEEDS
UNISEX
- --------------------------------------------------------------------------------
LIFE 5 Yrs 10 Yrs 20 Yrs Instl
AGE ONLY C & L(*) C & L C & L Refnd AGE
- --------------------------------------------------------------------------------
50 $3.76 $3.75 $3.74 $3.70 $3.68 50
51 3.81 3.81 3.80 3.74 3.72 51
52 3.87 3.87 3.85 3.79 3.77 52
53 3.93 3.93 3.91 3.84 3.83 53
54 3.99 3.99 3.97 3.90 3.88 54
55 4.06 4.05 4.04 3.95 3.94 55
56 4.13 4.12 4.10 4.01 4.00 56
57 4.21 4.20 4.18 4.07 4.06 57
58 4.29 4.28 4.25 4.13 4.12 58
59 4.37 4.36 4.33 4.19 4.19 59
60 4.46 4.45 4.41 4.25 4.26 60
61 4.55 4.54 4.50 4.32 4.34 61
62 4.65 4.64 4.60 4.39 4.42 62
63 4.76 4.75 4.69 4.45 4.50 63
64 4.88 4.86 4.80 4.52 4.59 64
65 5.00 4.98 4.91 4.59 4.68 65
66 5.13 5.10 5.02 4.66 4.78 66
67 5.27 5.24 5.14 4.73 4.88 67
68 5.41 5.38 5.27 4.80 4.99 68
69 5.57 5.53 5.41 4.87 5.10 69
70 5.74 5.70 5.55 4.93 5.22 70
71 5.92 5.87 5.69 4.99 5.35 71
72 6.12 6.05 5.85 5.05 5.48 72
73 6.33 6.25 6.00 5.11 5.62 73
74 6.55 6.46 6.17 5.16 5.77 74
75 6.79 6.68 6.34 5.21 5.93 75
76 7.05 6.92 6.52 5.26 6.09 76
77 7.33 7.17 6.70 5.30 6.26 77
78 7.62 7.43 6.88 5.33 6.44 78
79 7.94 7.71 7.06 5.36 6.63 79
80 8.28 8.00 7.25 5.39 6.84 80
81 8.65 8.31 7.44 5.42 7.05 81
82 9.04 8.64 7.62 5.44 7.27 82
83 9.46 8.98 7.80 5.45 7.51 83
84 9.92 9.34 7.98 5.47 7.75 84
85 10.41 9.72 8.15 5.48 8.01 85
- --------------------------------------------------------------------------------
Rates for other ages are available upon request.
Age of annuitant is determined on an age-nearest-birthday basis.
The first Income Payment is made on the contract's Income Date.
(*) C & L is an abbreviation for certain and life
- --------------------------------------------------------------------------------
51
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
OPTION 6. JOINT LIFE INCOME AND 2/3 SURVIVOR,
10 YEARS CERTAIN BENEFITS - SETTLEMENT OPTION RATES
- ------------------------------------------------------------------------------------------------------------------------
MONTHLY LIFE INCOME PER $1,000 OF PROCEEDS
JOINT ANNUITANTS: UNISEX1 & UNISEX2
- ------------------------------------------------------------------------------------------------------------------------
UNISEX2 IS YOUNGER THAN UNISEX1 BY:
UNISEX1 ---------------------------------------------------------------------------------------------------------------
AGE 10 Yr 9 Yr 8 Yr 7 Yr 6 Yr 5 Yr 4 Yr 3 Yr 2 Yr 1 Yr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 $3.62 $3.64 $3.67 $3.69 $3.72 $3.74 $3.77 $3.80 $3.83 $3.86
56 3.66 3.69 3.72 3.74 3.77 3.80 3.83 3.86 3.89 3.92
57 3.71 3.74 3.77 3.80 3.83 3.85 3.89 3.92 3.95 3.98
58 3.76 3.79 3.82 3.85 3.88 3.91 3.95 3.98 4.01 4.05
59 3.82 3.85 3.88 3.91 3.94 3.98 4.01 4.04 4.08 4.12
60 3.88 3.91 3.94 3.97 4.01 4.04 4.08 4.11 4.15 4.19
61 3.94 3.97 4.00 4.04 4.07 4.11 4.15 4.19 4.23 4.27
62 4.00 4.04 4.07 4.11 4.15 4.18 4.22 4.26 4.31 4.35
63 4.07 4.10 4.14 4.18 4.22 4.26 4.30 4.35 4.39 4.43
64 4.14 4.18 4.22 4.26 4.30 4.34 4.39 4.43 4.48 4.53
65 4.21 4.25 4.29 4.34 4.38 4.43 4.48 4.52 4.57 4.62
66 4.29 4.33 4.38 4.42 4.47 4.52 4.57 4.62 4.67 4.73
67 4.37 4.42 4.46 4.51 4.56 4.62 4.67 4.72 4.78 4.83
68 4.46 4.50 4.56 4.61 4.66 4.72 4.77 4.83 4.89 4.95
69 4.55 4.60 4.65 4.71 4.76 4.82 4.88 4.94 5.00 5.07
70 4.64 4.70 4.75 4.81 4.87 4.94 5.00 5.06 5.13 5.19
71 4.74 4.80 4.86 4.92 4.99 5.05 5.12 5.19 5.26 5.33
72 4.85 4.91 4.97 5.04 5.11 5.18 5.25 5.32 5.39 5.46
73 4.96 5.03 5.09 5.16 5.24 5.31 5.38 5.46 5.53 5.61
74 5.07 5.15 5.22 5.29 5.37 5.45 5.52 5.60 5.68 5.76
75 5.20 5.27 5.35 5.43 5.51 5.59 5.67 5.76 5.84 5.92
76 5.33 5.41 5.49 5.57 5.65 5.74 5.83 5.92 6.00 6.09
77 5.46 5.54 5.63 5.72 5.81 5.90 5.99 6.08 6.17 6.26
78 5.60 5.69 5.78 5.87 5.97 6.06 6.16 6.25 6.35 6.44
79 5.75 5.84 5.94 6.03 6.13 6.23 6.33 6.43 6.53 6.62
80 5.90 6.00 6.10 6.20 6.30 6.41 6.51 6.61 6.71 6.81
81 6.06 6.16 6.26 6.37 6.48 6.58 6.69 6.80 6.90 7.00
82 6.22 6.33 6.44 6.55 6.66 6.77 6.88 6.99 7.09 7.19
83 6.39 6.50 6.61 6.73 6.84 6.95 7.07 7.18 7.28 7.39
84 6.56 6.67 6.79 6.91 7.03 7.14 7.26 7.37 7.47 7.58
85 6.73 6.85 6.97 7.09 7.21 7.33 7.45 7.56 7.66 7.76
- ------------------------------------------------------------------------------------------------------------------------
Rates for other ages are available upon request.
Age of annuitant is determined on an age-nearest-birthday basis.
The first Income Payment is made on the contract's Income Date.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
- --------------------------------------------------------------------------------
OPTION 6. JOINT LIFE INCOME AND 2/3 SURVIVOR,
10 YEARS CERTAIN BENEFITS - SETTLEMENT OPTION RATES CONT.
- --------------------------------------------------------------------------------
MONTHLY LIFE INCOME PER $1,000 OF PROCEEDS
JOINT ANNUITANTS: UNISEX1 & UNISEX2
- --------------------------------------------------------------------------------
UNISEX1 UNISEX2 IS OLDER THAN UNISEX1 BY:
-----------------------------------------------------------------------
AGE SAME AGE 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr
- --------------------------------------------------------------------------------
55 $3.89 $3.92 $3.95 $3.98 $4.01 $4.04
56 3.95 3.98 4.01 4.04 4.08 4.11
57 4.01 4.05 4.08 4.11 4.15 4.18
58 4.08 4.12 4.15 4.19 4.22 4.26
59 4.15 4.19 4.23 4.26 4.30 4.34
60 4.23 4.27 4.31 4.35 4.39 4.43
61 4.31 4.35 4.39 4.43 4.48 4.52
62 4.39 4.43 4.48 4.52 4.57 4.62
63 4.48 4.53 4.57 4.62 4.67 4.72
64 4.57 4.62 4.67 4.72 4.77 4.82
65 4.67 4.73 4.78 4.83 4.88 4.94
66 4.78 4.83 4.89 4.94 5.00 5.05
67 4.89 4.95 5.00 5.06 5.12 5.18
68 5.01 5.07 5.13 5.19 5.25 5.31
69 5.13 5.19 5.26 5.32 5.38 5.45
70 5.26 5.33 5.39 5.46 5.52 5.59
71 5.39 5.46 5.53 5.60 5.67 5.74
72 5.54 5.61 5.68 5.76 5.83 5.90
73 5.69 5.76 5.84 5.92 5.99 6.06
74 5.84 5.92 6.00 6.08 6.16 6.23
75 6.01 6.09 6.17 6.25 6.33 6.41
76 6.18 6.26 6.35 6.43 6.51 6.58
77 6.35 6.44 6.53 6.61 6.69 6.77
78 6.53 6.62 6.71 6.80 6.88 6.95
79 6.72 6.81 6.90 6.99 7.07 7.14
80 6.91 7.00 7.09 7.18 7.26 7.33
81 7.10 7.19 7.28 7.37 7.45 7.52
82 7.29 7.39 7.47 7.56 7.63 7.70
83 7.48 7.58 7.66 7.74 7.82 7.88
84 7.67 7.76 7.85 7.92 7.99 8.06
85 7.86 7.94 8.02 8.10 8.17 8.23
- --------------------------------------------------------------------------------
Rates for other ages are available upon request.
Age of annuitant is determined on an age-nearest-birthday basis.
The first Income Payment is made on the contract's Income Date.
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
53
<PAGE>
. Adjustable Death Benefit Payable at the Death of the Insured, if the Insured
Dies Before the Maturity Date and While the Policy is In Force.
. Flexible Premiums Payable During the Lifetime of the Insured Until the
Maturity Date.
. Policy Value Payable on the Maturity Date if the Policy has not Terminated.
. Nonparticipating - No Dividends.
54
<PAGE>
Exhibit 1(8)(a)
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND,
---------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
C. M. LIFE INSURANCE COMPANY
----------------------------
THIS AGREEMENT, made and entered into as of the 1st day of April,
1995 by and among C. M. LIFE INSURANCE COMPANY, (hereinafter the "Company"), a
Connecticut corporation, on its own behalf and on behalf of each segregated
asset account of the Company set forth on Schedule A hereto as may be amended
from time to time (each such account hereinafter referred to as the "Account"),
and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter the
"Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
com any under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and/or variable annuity contracts under the 1933 Act,
said Contracts being listed in Schedule A, which may be amended from time to
time; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company (or the Board's lawfully empowered designee), on the date shown for
such Account on Schedule A hereto, to set aside and invest assets attributable
to the aforesaid variable annuity contracts; and
55
<PAGE>
WHEREAS, the Company has registered or will register each Account as
a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter, is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios on behalf of each Account to fund certain of the aforesaid variable
life and variable annuity contracts and the Underwriter is authorized to sell
such shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1 The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such Designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 11:00 a.m. Boston time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Fund calculates
its net asset value pursuant to the rules of the Securities and Exchange
Commission.
1.2 The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use its
best efforts to calculate such net asset value on each day which the New York
Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
The Fund and the Underwriter represent and warrant that no shares of any
Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6 The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available under the variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated herein
by this reference, as such Schedule A may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in
56
<PAGE>
such other Funds advised by the Adviser as may be mutually agreed to in writing
by the parties hereto, in the Company's general account, or in other investment
companies advised by an affiliate of the Company. Amounts may also be invested
in other investment companies provided (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Portfolios of
the Fund; or (b) the Company gives the Fund and the Underwriter 30 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Schedule C to this
Agreement); (d) the Fund or Underwriter consents to the use of such other
investment company; or (e) such investment company is advised by an affiliate of
the Company, and Company informs the Underwriter prior to use of such investment
company.
1.7 The Company shall pay for Fund shares on the next Business Day
after a net order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate sub-account of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Funds shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
------------------------------
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 38a-433 of the Connecticut Insurance Laws and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Connecticut and
all applicable federal and state laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states if and to the extent required by law.
2.3 The Fund represents that it is currently qualified as a
Regulated Investment Company under Sub-chapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will maintain such qualification
(under Subchapter M or any successor or similar provision) and that it will
notify the Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the future.
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2.4 The Company represents, assuming that the Fund qualifies for
favorable treatment under section 817 of the Code and Regulation 817-5
thereunder, that the Contracts will be treated as annuity or life insurance
contracts, under applicable provisions of the Code and that it will make every
effort to maintain such treatment and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.5 The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Connecticut and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Connecticut to the extent required to perform this
Agreement.
2.7 The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Connecticut and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Connecticut and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, in an amount not less $1
million. The aforesaid includes coverage for larceny and embezzlement is 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 Fund and the Underwriter in the event
that such coverage no longer applies.
2.12 The Fund will provide the Company with as much advance notice
as is reasonably practicable of any material change affecting the Fund,
including, but not limited to, a material change in the Fund's registration
statement or prospectus, or the existence of any upcoming proxy solicitation.
The Fund will take into consideration before implementing any such changes the
effects on the Company, including the expenses that will be incurred by the
Company, and will use reasonable efforts in relation to both the content and the
timing of the implementation of any material changes so as not to cause the
Company unreasonable additional expense.
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ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1 The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements of additional information. Except as provided in the following
three sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the
Fund. If the Company chooses to receive camera-ready film or computer diskettes
in lieu of receiving printed copies of the Fund's prospectus, the Fund will
reimburse the Company in an amount equal to the product of A and B where A is
the number of such prospectuses distributed to owners of the Contracts, and B is
the Fund's per unit cost of typesetting and printing the Fund's prospectus. The
same procedures shall be followed with respect to the Fund's Statement of
Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3 The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpre-
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tation of the requirements of Section 16(a) with respect to periodic elections
of trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or is designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature or other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers of the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials distributed or made generally available to some or all agents
or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
-----------------
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5.1 The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
Underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
---------------
6.1 The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach, and (b) to adequately diversify the
Fund so as to achieve compliance with the grace period afforded by Regulation
817-5. The Fund will notify the Company immediately upon having a reasonable
basis for believing that the Fund may not in the future comply with the
diversification requirements of Section 817(h) or Treasury Regulation 1.817-5
thereunder.
ARTICLE VII. Potential Conflicts
-------------------
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2 The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the
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assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a vote of all
affected Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
----
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
---------------
8.1 Indemnification By The Company
------------------------------
8.l (a) The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (provided such person is
associated with a company, or is a company, that is part of the group of
companies commonly
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known as "Fidelity Investments") (collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Underwriter or the Fund for use in the Registration
Statement or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not
supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1 (c) hereof.
8.1 (b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, the Underwriter, or the Adviser, whichever is applicable.
8.1 (c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such 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 as-
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sume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1 (d) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2 Indemnification by the Underwriter
8.2 (a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter, the Fund or the Adviser, or
persons under their control) or wrongful conduct of the Fund, Adviser
or Underwriter or persons under their control, with respect to the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts and/or the
Accounts, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of
the Fund; or
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials under
the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
qualification and diversification requirements specified in Article VI
and the qualification requirements specified in Section 2.3 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
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breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification By the Fund
---------------------------
8.3(a) The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
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8.3(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1 This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties, or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts;
or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any of
the Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any successor or
similar provision, or if the Company reasonably believes that the
Fund may fail to so qualify; or
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(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that
such Portfolio fails to meet the diversification requirements
specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
reasonably exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(h) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the Underwriter
the written notice specified in Section 1.6(b) hereof and at the
time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement;
provided, however any termination under this Section 10.1(h)
shall be effective thirty (30) days after the notice specified in
Section 1.6(b) was given.
10.2 Effect of Termination Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement. Each party's indemnification obligations under Article VIII shall
survive termination of this Agreement and shall not be affected thereby. In
addition, with respect to Existing Contracts, the following provisions shall
also survive and not be affected by any termination: Article I, Article II,
Section 3.3, Section 3.4, Article VI, Section 12. 1, Section 12.2, and Section
12.6.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by a substitution order granted by the SEC pursuant to Section 26(b)
of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and
the Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
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Attention: Treasurer
If to the Company:
C. M. Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Attention: Corporate Secretary
If to the Underwriter
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII: Miscellaneous
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8 This Agreement or any of the rights and obligations hereunder
may, not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
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12.9 The Company shall furnish, or shall cause to be furnished to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles), as soon as practical and in any event
within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) as soon as
practical and in any event within 45 days after the end of
each quarterly period:
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as
soon as practical after the delivery thereof to stockholders;
(d) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof, provided that this
requirement shall not compel the Company to divulge
information which is otherwise confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
C. M. LIFE INSURANCE COMPANY
By its authorized officer,
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
VARIABLE INSURANCE PRODUCTS FUND
By its authorized officer,
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
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<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
C. M. Life Variable Life Executive Benefits Variable
Universal Life
Separate Account I (February 2, 1995)
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SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding
responsibilities for the handling of proxies relating to the Fund by
the Underwriter, the Fund and the Company. The defined terms herein
shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or
third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the
Underwriter as early as possible before the date set by the
Fund for the shareholder meeting to facilitate the
establishment of tabulation procedures. At this time the
Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately
two months before meeting.
2. Promptly after the Record Date, the Company will perform a
"tape run", or other activity, which will generate. the
names, addresses and number of units which are attributed to
each contract owner/policyholder (the "Customer") as of the
Record Date. Allowance should be made for account adjustments
made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the
activities described in Step #2. The Company will use its best
efforts to call in the number of Customers to Fidelity, as
soon as possible, but no later than two weeks after the Record
Date.
3. The Fund's Annual Report no longer needs to be sent to each
Customer by the Company either before or together with the
Customers' receipt of a proxy statement. Underwriter will
provide the last Annual Report to the Company pursuant to the
terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards"
or "Card") is provided to the Company by the Fund. The
Company, at its expense, shall produce and personalize the
Voting Instruction Cards. The Legal Department of the
Underwriter or its affiliate ("Fidelity Legal") must approve
the Card before it is printed. Allow approximately 2-4
business days for printing information on the
Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological
process due to possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and
the Fund will pay for the Notice of Proxy and the Proxy
Statement (one document). Printed and folded notices and
statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent
to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage prepaid by Company)
addressed to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This
a small, single sheet of paper that requests
Customers to vote as
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<PAGE>
quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and
reviewed and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company
approximately 3-5 business days before mail date. Individual
in charge at Company reviews and approves the contents of the
mailing package to ensure correctness and completeness. Copy
of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation
time to the Company as the shareowner. (A 5 week
period is recommended.) Solicitation time is
calculated as calendar days from (but not including)
the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending
on process used. An often used procedure is to sort Cards on
arrival by proposal into vote categories of all yes, no, or
mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an in surance company's internal
procedure and has not been required by Fidelity in the past
9. Signatures on Card checked against legal name on account
registration which was printed on the Card.
Note: For example, if the account registration is under
"Bertram C. Jones, Trustee", then that is the exact legal name
to be printed on the Card and is the signature needed on the
Card.
10. If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to Customer with an
explanatory letter, a new Card and return envelope. The
mutilated or illegible Card is disregarded and considered to
be not received for purposes of vote tabulation. Any Cards
that have "kicked out" (e.g. mutilated, illegible) of the
procedure are "hand verified," i.e., examined as to why they
did not complete the system. Any questions on those Cards are
usually remedied individually.
11. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the
vote is progressing may then be calculated. If the initial
estimates and the actual vote do not coincide, then an
internal audit of that vote should occur. This may entail a
recount.
12. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Fund
receives the tabulations stated in terms of a percentage and
the number of shares.) Fidelity Legal must review and approve
tabulation format.
13. Final tabulation in shares is verbally given by the Company to
Fidelity Legal on the morning of the meeting not later than
10:00 a.m. Boston time. Fidelity Legal may request an earlier
deadline if required to calculate the vote in time for the
meeting.
14. A Certification of Mailing and Authorization to Vote Shares
will be required from the Company as well as an original copy
of the final vote. Fidelity Legal will provide a standard form
for each Certification.
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15. The Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is
challenged or if otherwise necessary for legal, regulatory, or
accounting purposes, Fidelity Legal will be permitted
reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must
always be followed up in writing.
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SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
1. Connecticut Mutual Financial Services Series Fund I.
74
<PAGE>
Exhibit 1(8)(b)
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND II,
------------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
-----------------------------------------
THIS AGREEMENT, made and entered into as of the 1st day of April,
1995 by and among CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a Connecticut corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17,1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions, from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the " 1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
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<PAGE>
WHEREAS, the Company has registered or will register certain
variable life insurance and/or variable annuity contracts under the 1933 Act,
said Contracts being listed in Schedule A, which may be amended from time to
time; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company (or the Board's lawfully empowered designee), on the date shown for
such Account on Schedule A hereto, to set aside and invest assets attributable
to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as
a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the " 1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios on behalf of each Account to fund certain of the aforesaid variable
life and variable annuity contracts and the Underwriter is authorized to sell
such shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1. 1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 11:00 am. Boston time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use its
best efforts to calculate such net asset value on each day which the New York
Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
The Fund and the Underwriter represent and warrant that no shares of any
Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt
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<PAGE>
by the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemption's of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available under the variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated herein
by this reference, as such Schedule A may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, in the Company's general
account, or in other investment companies advised by an affiliate of the
Company. Amounts may also be invested in other investment companies provided (a)
such other investment company, or series thereof, has investment objectives or
policies that are substantially different from the investment objectives and
policies of all the Portfolios of the Fund; or (b) the Company gives the Fund
and the Underwriter 30 days written notice of its intention to make such other
investment company available as a funding vehicle for the Contracts; or (c) such
other investment company was available as a funding vehicle for the Contracts
prior to the date of this Agreement and the Company so informs the Fund and
Underwriter prior to their signing this Agreement (a list of such funds
appearing on Schedule C to this Agreement); (d) the Fund or Underwriter consents
to the use of such investment company; or (e) such investment company is advised
by an affiliate of the Company, and Company informs the Underwriter prior to use
of such investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after a net order to purchase Fund shares is made in accordance with the
provisions of Section 1. 1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2. 10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
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<PAGE>
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; tat the Contracts will be issued and sold
in compliance in all material respects with all applicable Federal and State
laws and that the sale of the Contracts shall comply in all material respects
with state insurance suitability requirements. The Company further represents
and warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 38a-433 of the Connecticut Insurance Laws and has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Connecticut and
all applicable federal and state laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states if and to the extent required by law.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Sub-chapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will maintain such qualification
(under Subchapter M or any successor or similar provision) and that it will
notify the Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify, in the future.
2.4. The Company represents, assuming that the Fund qualifies for
favorable treatment under section 817 of the Code and Regulation 817-5
thereunder, that the Contracts will be treated as annuity or life insurance
contracts, under applicable provisions of the Code and that it will make every
effort to maintain such treatment and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b- I under the 1940 Act or
otherwise, although it may make such payments in the future.. The Fund has
adopted a "no fee" or "defensive" Rule 12b-t. Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule l2b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-I to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the -various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Connecticut and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Connecticut to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Connecticut and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its obliga-
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tions for the Fund in compliance in all material respects with the laws of the
State of Connecticut and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, in an amount not less than
$1 million. The aforesaid includes coverage for larceny and embezzlement is
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 Fund and the Underwriter in the event
that such coverage no longer applies.
2.12 The Fund will provide the Company with as much advance notice
as is reasonably practicable of any material change affecting the Fund,
including, but not limited to, a material change in the Fund's registration
statement or prospectus, or the existence of any upcoming proxy solicitation.
The Fund will take into consideration before implementing any such changes the
effects on the Company, including the expenses that will be incurred by the
Company, and will use reasonable efforts in relation to both the content and the
timing of the implementation of any material changes so as not to cause the
Company unreasonable additional expense.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1 The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements of additional information. Except as provided in the following
three sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the
Fund. If the Company chooses to receive camera-ready film or computer diskettes
in lieu of receiving printed copies of the Fund's prospectus, the Fund will
reimburse the Company in an amount equal to the product of A and B where A is
the number of such prospectuses distributed to owners of the Contracts, and B is
the Fund's per unit cost of typesetting and printing the Fund's prospectus. The
same procedures shall be followed with respect to the Fund's Statement of
Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
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3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right to the extent permitted by
law. Participating Insurance Companies shall be responsible for -assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as With Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect
to periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material. in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the per mission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
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4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature or other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other. periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials distributed or made generally available to some or all agents
or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund"',
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Regulation 817-5. The Fund will notify the Company immediately upon
having a reasonable basis for believing that the Fund may not in the future
comply with the diversification requirements of Section 817(h) or Treasury
Regulation 1.817-5 thereunder.
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ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an. action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance; tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to, remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a
vote of all affected Contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to
the affected contract owners the option of making such a change; and (2),
establishing a new registered management investment company or managed separate
account.
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7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six. months after the Board
informs the Company in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and Fund shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6c-2 and Rule 6c-3(T) are
amended, or Rule 6c-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7. 1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
------------------------------
8.1 (a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, Who controls
the Fund within the meaning of Section 15 of the 1933 Act (provided such person
is associated with a company, or is a company, that is part of the group of
companies commonly known as "Fidelity Investments") (collectively, the
"Indemnified Parties" for purposes of this Section 8. 1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
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(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the Registration
Statement or prospectus for- the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Underwriter or the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not supplied
by the Company, or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or distribution of the
Contracts of Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement, prospectus,
or sales literature of the Fund or any amendment thereof or supplement thereto
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company; or
(iv) arise as a result of any material failure by the Company
to provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Company, as limited by and in accordance with the provisions of Sections 8. l(b)
and 8. l(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to the Fund, the Underwriter, or the Adviser, whichever
is applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party, unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after 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.
8.1(d). The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them In connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwrite
---------------------------------
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8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and. officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this -Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company for use in the Registration
Statement or prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use m connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or
representations, (other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the Contracts not
- -supplied by the Underwriter, the Fund or the Adviser, or persons under their
control),or wrongful conduct of the Fund, Adviser or Underwriter or persons
under their control, with respect to the sale or distribution of the Contracts
or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement, prospectus,
or sales literature covering the Contracts and/or the Accounts, 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 statements or omission
was made in reliance upon information furnished to the Company by or on behalf
of the Fund; or
(iv) arise as a result of any failure by the Fund or the
Underwriter 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 and diversification requirements
specified in Article VI and the qualification requirements specified in Section
2.3 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 any other material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Parry's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any -designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice
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<PAGE>
from the Underwriter to such party of the Underwriters election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who Controls the
Company Within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide
the services and to comply with the diversification requirements specified in
Article VI of this Agreement);or
(ii) arise out of or. result from any material breach of any
- -representation and/or warranty made by the Fund in this Agreement or arise out
of or result from any other material breach of this Agreement by the Fund; as
limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c)
hereof
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with. this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
86
<PAGE>
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall. continue in full force and effect until
the first to occur of.
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's determination
that shares of such Portfolio are not reasonably available to meet the
requirements of the Contracts or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the Portfolio's
shares are not registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by the
Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio fails
to meet the diversification requirements specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the Underwriter
respectively. shall determine, in their sole judgment reasonably exercised in
good faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised in
good faith, that either the Fund or the Underwriter has suffered a material
adverse change in its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material adverse
publicity; or
(h) termination by the Fund or the Underwriter by written notice to
the Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was given
there was no notice of termination outstanding under any other provision of this
Agreement; provided, however any termination under this Section 10.1(h) shall be
effective thirty (30) days after the notice specified in Section 1.6(b) was
given.
10.2. Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this
87
<PAGE>
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article II of this agreement. Each party's indemnification
obligations under Article VIII shall survive termination of this. Agreement and
shall not be affected thereby: In addition with respect to Existing Contracts,
the following provisions shall also survive and not be affected by any
termination: Article I Article II, Section 3.3, Section 3.4, Article VI, Section
12. 1, Section 12.2, and Section 12.6.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i). as necessary to implement Contract Owner initiated
or approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by a substitution order granted by the SEC pursuant to Section 26(b)
of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and
the Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Connecticut Mutual Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Attention: Corporate Secretary
If to the Underwriter
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
88
<PAGE>
ARTICLE XII Miscellaneous
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.9 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles), as soon as practical and in any
event within 90 days, after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) as soon as
practical and in any event within 45 days after the end of
each quarterly period:
(c) any financial statement, proxy statement, notice or report
of the Company sent to stockholders and/or policyholders,
as soon as practical after the delivery thereof to
stockholders;
89
<PAGE>
(d) any other report submitted to the Company by independent
accountants in connection with any annual, interim or
special audit made by them of the books of the Company, as
soon as practical after the receipt thereof, provided that
this requirement shall not compel the Company to divulge
information which is otherwise confidential.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
By its authorized officer,
By:
--------------------------------
Name:
------------------------------
Title
------------------------------
VARIABLE INSURANCE PRODUCTS FUND II
By its authorized officer,
By:
--------------------------------
Name:
------------------------------
Title
------------------------------
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
By:
--------------------------------
Name:
------------------------------
Title
------------------------------
90
<PAGE>
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
Connecticut Mutual Variable Life Blue Chip Variable Universal
Separate Account I (March 3, 1994) Life Policy
91
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, Addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be. made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2The Company will use its best efforts to call in. the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this
Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 24 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Insurance Company).
Contents of envelope sent to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible
92
<PAGE>
and that their vote. is important. One copy will be supplied by
the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but not including) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance com- pany's internal procedure and has not
been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. most prevalent is to sort the Cards
as they first arrive into categories depending upon their vote; an estimate
of how the vote is progressing may then be calculated. If the initial
estimates and the actual vote do not coincide, then an internal audit of
that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
93
<PAGE>
16. All approvals and "signing-off " maybe done orally, but must always be
followed up in writing.
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
1. Connecticut Mutual Financial Services Series Fund I.
94
<PAGE>
Exhibit 1(A)(10)
Form of Application
CM Life Company/Owner Master Application
Insurance Company For Executive Benefit Variable Universal Life Insurance
- --------------------------------------------------------------------------------
1. Name of Company (please print) 2. Tax Identification Number
- --------------------------------------------------------------------------------
3. Street Address City, State Zip Code
- --------------------------------------------------------------------------------
4. Policy Applied For
A. Plan Name B. Group Charge C. Underwriting Class
Adjustment ____%
5. Definition of Life Insurance Test
/__/ Cash Value Accumulation Test
/__/ Guideline Premium Test
- --------------------------------------------------------------------------------
6. Riders
Disability Waiver of Monthly Deductions____ Other____________________
- --------------------------------------------------------------------------------
7. Premium Billing
____Annual ____Semiannual ____Quarterly
- --------------------------------------------------------------------------------
8. Policy Dating
Indicate specific date desired _________________________
(only date to the 28(th))
- --------------------------------------------------------------------------------
9. Beneficiary and Relationship to Proposed Insured
/__/ Company listed #1, employer of the insured
/__/ _________________________________
- --------------------------------------------------------------------------------
10. Owner
/__/ Company listed #1 above.
/__/__________________________________
- --------------------------------------------------------------------------------
11. Is this insurance to replace or will it cause a change in, or involve a loan
under, any insurance or annuity policy on any Proposed Insured's life or
owned by this Owner? If "yes" give name, company and details.
Yes No
/__/ /__/
- --------------------------------------------------------------------------------
12. If Rider benefit applied for is not approved, should the policy be issued
without it?
Yes No
/__/ /__/
- --------------------------------------------------------------------------------
I agree that the Insurance Schedule and Proposed Insured Applications shall
form part of the application for insurance. This Application shall be attached
to and form a part of any policy of insurance issued. Application includes any
amendments. No agent may change the terms of the Application or of any policy
issued by C.M. Life Insurance Company and no agent may waive any of C.M. Life
Insurance Company's rights or requirements.
I understand that the insurance under any policy issued on the Application
will become effective only when the first premium has been paid in full and the
policy has been delivered provided that at the time of delivery there has been
no change in the insurability of any proposed insured as stated on the
Application, since the date of the Application.
I represent that the answers and statements in this Application, the
Insurance Schedule and the Proposed Insured Applications are true and complete
to the best of my knowledge and belief. The proposed insureds have been advised
of the company's underwriting rules to determine insurability. Under the
penalties of perjury, I certify that my correct taxpayer identification number
is shown and that I am not subject to back up withholding.
Signed At _________________________________ Date:_________________________
Signature of Owner's Print Authorized
Authorized Officer_______________________ Officer's Name & Title______________
Witness __________________________________
Registered Representative/Licensed Resident Agent (where required by law)
95
<PAGE>
CM LIFE Proposed Life Insured Application
Insurance Company For Executive Benefit Variable Universal Life Insurance
- --------------------------------------------------------------------------------
1. Name of Company/Policyowner
- --------------------------------------------------------------------------------
2. Proposed Insured Last Name (please print) First Name Middle Initial
- --------------------------------------------------------------------------------
3. Social Security Number
- --------------------------------------------------------------------------------
4. Have you used any tobacco products in the past 12 months? If "yes", specify.
/__/ Yes /__/ No
- --------------------------------------------------------------------------------
I agree to the purchase of life insurance on my life by the Policyowner
listed in #1 above and in accordance with the Master Application Insurance
Schedule which is part of this Application. I understand and agree that the
Policyowner will be the owner and beneficiary of the policy.
This Application includes any amendments. No agent may change the terms of
the Application or of any policy issued by C.M. life Insurance Company and no
agent may waive any of C.M. Life Insurance Company's rights or requirements.
I represent that the answers and statements in this Application are true and
complete to the best of my knowledge and belief. This Application shall be
attached to and form a part of any policy of insurance issued.
I authorize the Policyowner listed in #1 above to release any information it
has of me or my health to C.M. Life Insurance Company. This information will be
used to determine eligibility for life insurance.
Proposed Insured
Signature Date
----------------------------- ---------------------------
Witness
-------------------------
96
<PAGE>
CM LIFE Proposed Life Insured Application
Insurance Company For Executive Benefit Variable Universal Life Insurance
- --------------------------------------------------------------------------------
PART I
1. Name of Company/Policyowner
- --------------------------------------------------------------------------------
2. Proposed Insured Last Name (please print) First Name Middle Initial
- --------------------------------------------------------------------------------
3. Social Security Number 4. Date of Birth (MO/DAY/YR) 5. Male Female
/--/ /--/
- --------------------------------------------------------------------------------
6. Are you actively at work on the date this application is signed and have you
been actively at work for an average of 30 hours per week for the past 90
day? If "No", give reasons for absence below. (Disregard vacation days,
normal non-working days and any absence that totals less than seven days.)
- --------------------------------------------------------------------------------
7. Do you plan any foreign travel or foreign residence? If yes, Yes No
submit Foreign Travel/Foreign Residence Supplement F257 /__/ /__/
- --------------------------------------------------------------------------------
8. In the past three years have you taken part in any avocation Yes No
such as motor vehicle racing parachute jumping, hang /__/ /__/
gliding, skin or scuba diving or is such activity planned?
If yes, submit Avocation Supplement F1093.
- --------------------------------------------------------------------------------
9. Within the past three years have you flown as a pilot or Yes No
crew member? If yes, submit Aviation Supplement /__/ /__/
F1093.
- --------------------------------------------------------------------------------
10. In the past three years have you been in a motor vehicle Yes No
accident, or charged with a "moving" violation of any motor /__/ /__/
vehicle law or has your driver's license ever been suspended?
State Operator's license number
--------------------- ----------------------
- --------------------------------------------------------------------------------
PART II - NON-MEDICAL Questions 11-18 - Complete only if Medical/Paramedical
Examination will not be Completed
11. Have you used any tobacco products in the past 12 months? Yes No
If "yes", specify: /__/ /__/
--------------------
12. Current height and weight: ft inches pounds
--- --- ----
13. Name and address of personal physician:
----------------------------
Date and reason last consulted:
------------------------------------
Diagnosis and treatment:
14. Have you ever received treatment for or been diagnosed as Yes No
having or had any of the following? /__/ /__/
(If yes, circle condition(s) and give details below).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Chest Pain Acquired Immune Deficiency Emphysema Paralysis
High Blood Pressure Syndrome (AIDS) Arthritis Hepatitis
Heart Attack Tumor Physical Impairment Venereal Disease
Stroke Cancer AIDS Related Complex (ARC) Depression
Diabetes Asthma Seizure Emotional Disorder
Pneumonia
</TABLE>
- --------------------------------------------------------------------------------
15. Have you had any disorder of the following? (If yes,
circle condition(s) and give details below.) Yes No
/__/ /__/
Blood Neck Joints Lungs Gastrointestinal System
Lymph Nodes Back Eyes Breasts Genitourinary System
Blood Vessels Spine Ears Liver Immune System
Skin Bones Heart Kidney Nervous System
- --------------------------------------------------------------------------------
<PAGE>
CM Life Master Application
Insurance Schedule
Insurance Company For Executive
Benefit Variable Universal Life Insurance
- --------------------------------------------------------------------------------
1. Name of Company/Policyowner (please print) 2. Tax Identification Number
- --------------------------------------------------------------------------------
3. This Insurance Schedule showing Social Security Number, Name, Date of Birth,
Sex (Male/Female), Tobacco or NonTobacco Rate Applied For, Actively-at-Work
Status, Specified Amount, Death Benefit Option and Net Premium Allocation
Selection for each Proposed Insured shall form part of the Company/Owner
Master Application. Actively-at-work is defined as being actively at work on
the date this application is signed and having been actively at work for an
average of 30 hours per week for the past 90 days (disregarding vacation
days, normal non-working days and any absence that totals less than seven
days).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Social Name Date of Sex Rate Applied for: Actively- Specified Death Net Premium
Security (Last, Birth M/F Tobacco at- Coverage Benefit Allocation(*)
Number First, MI) (Mo/Dy/Yr) Non-Tobacco Work? Y/N Amount Option
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(*)If Form F60C is completed by each individual, enter F60C in this box. -OR-
If Form F60B is completed, enter Net Premium Allocation Selection Letter (A-
E) from that form for each individual.
I acknowledge receipt of the Prospectuses for the C.M. Life Flexible Premium
Variable Life Insurance Policy, C.M. Fund, VIP Fund and VIP Fund II. I
UNDERSTAND THAT THE DEATH BENEFIT AND DURATION OF COVERAGE FOR THE FLEXIBLE
PREMIUM VARIABLE LIFE INSURANCE POLICY APPLIED FOR MAY INCREASE OR DECREASE TO
REFLECT THE INVESTMENT EXPERIENCE OF THE SUB-ACCOUNTS OF THE C.M. LIFE VARIABLE
LIFE SEPARATE ACCOUNT. I UNDERSTAND THAT THE POLICY VALUE(S) FOR THE FLEXIBLE
PREMIUM VARIABLE LIFE INSURANCE POLICY(IES) APPLIED FOR MAY INCREASE OR DECREASE
TO REFLECT THE INVESTMENT EXPERIENCE OF THE SUB-ACCOUNTS OF THE C.M.LIFE
VARIABLE LIFE SEPARATE ACCOUNT, AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT,
THERE IS NO GUARANTEED MINIMUM POLICY VALUE. I believe that a Flexible Premium
Variable Life Insurance policy(ies) is consistent with my investment objectives
and financial needs. I represent that the answers and statements in this
Application, the Insurance Schedule and the Proposed Insured Applications are
true and complete to the best of my knowledge and belief.
Signed at Date
------------------------------ -------------------------
Signature of Owner's Print Authorized
Authorized Officer Officer's Name & Title
----------------------
- ------------------------------
I CERTIFY THAT THE PROSPECTUSES WERE DELIVERED, AND THAT NO WRITTEN SALES
MATERIALS WERE USED OTHER THAN THOSE FURNISHED OR APPROVED BY THE PRINCIPAL
OFFICE.
Signature of Licensed Agent
----------------------------------
98
<PAGE>
Exhibit 1(A)(11)
Description of Issuance, Transfer and Redemption Procedures for Policies Offered
by
C. M. LIFE VARIABLE LIFE SEPARATE ACCOUNT - I
of C.M. Life Insurance Company
Pursuant to Rule 6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940
C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT - I ("the Separate Account") of
C.M. Life Insurance Company ("Company") is registered or will register under the
Investment Company Act of 1940 (" 1940 Act") as a unit investment trust. The
following sets forth the standards and procedures to be followed in connection
with the on-going operation of the Separate Account. Please note that certain
terms used herein will have the same definitions as are set forth in the
prospectus for the Policies. Within the Separate Account are eleven
Sub-Accounts. Procedures apply equally to each Sub-Account and for purposes of
this description are defined in terms of the Separate Account, except where a
discussion of both the Separate Account and the individual Sub-Accounts is
necessary. Currently, each Sub-Account invests in shares of a corresponding
investment division of the Connecticut Mutual Financial Services Series Fund 1,
Inc. ("C.M. Fund"), the Variable Insurance Products Fund ("VIP Fund"), or the
Variable Insurance Products Fund II ("VIP Fund II"), each of which is an
open-end management investment company registered with the Securities and
Exchange Commission ("SEC") as such under the 1940 Act. The investment
experience of a Sub-Account of the Separate Account depends on the market
performance of its corresponding underlying fund. Although flexible premium
variable life insurance policies funded through the Separate Account may also
provide for fixed benefits through a fixed account (the "Fixed Account")
supported by the Company's General Account, this description assumes that net
premiums are allocated exclusively to the Separate Account and that all
transactions involve only the Sub-Accounts of the Separate Account, except as
otherwise explicitly stated herein.
1. "Public Offering Price": Purchase and Related Transactions -- Section 22(d)
---------------------------------------------------------------------------
and Rule 22c-1
--------------
This section outlines Policy provisions and administrative procedures which
might be deemed to constitute, either directly or indirectly, a "purchase"
transaction. Because of the insurance nature of the Policies, the
procedures involved necessarily differ in certain significant respects from
the purchase procedures for investment companies (i.e. mutual funds) and
annuity contracts. The chief differences revolve around the structure of
the cost of insurance charges and the insurance underwriting process.
Certain Policy provisions, such as reinstatement and loan repayment, do not
result in the issuance of a Policy but may require certain payments by the
Policyowner and may involve a transfer of assets supporting Policy reserves
into the Separate Account.
a. Insurance Charges and Underwriting Standards
--------------------------------------------
The Policy provides for flexible premiums. Notices will be sent on a
quarterly, semiannual or annual basis to remind Policyowners; of
their Planned Periodic Premium amount and payment date. However,
payment of the Planned Periodic Premium is not necessary, nor does it
guarantee that the Policy will remain in force. The Policy will
remain in force so long as the Policy Value less any outstanding
Policy Debt is sufficient to pay the Monthly Deductions charged in
connection with the Policy. The cost of insurance charges are
contained in the Monthly Deductions.
Cost of insurance charges for the policies will not be the same for
all Policyowners. The charges are based on the Company's expectations
as to future mortality, investment, expense and persistency
experience. Those expectations are actuarially determined based on
factors including age, health, tobacco status, and the type of
underwriting that was done to assess the Insured's risk.
Additionally, this Policy is available for sale to Corporations or
other multiple life groups or sponsoring associations. To the extent
that such a sale may offer expense savings or reduced risk for the
Insured's in the group, the cost of insurance charges may be adjusted
to reflect such efficiencies. The policies will be offered and sold
pursuant to the Company's underwriting standards and in accordance
with state insurance laws. Such laws prohibit unfair discrimination
among Insureds, but recognize that cost of insurance charges must be
based upon the Company's expectation as to future mortality,
investment, expense and persistency for each Insured. Tables showing
the maximum cost of insurance charges will be delivered as part of
the Policy.
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While premium payments under the Policy are flexible, there are
limitations as to amount. No premium payment may be for less than
$100 without the Company's consent. If the Guideline Premium Test is
chosen by the Policyowner at issue, the total of all premiums paid
can never exceed the then current maximum premiums determined by
Internal Revenue Service rules governing that test. Under the
Guideline Premium Test, if a premium is paid that would result in
total premiums exceeding the current maximum premium limitations,
the Company will return the amount in excess of such maximums to the
Policyowner. Under the Cash Value Accumulation Test, there is no
preset maximum to the premiums that may be paid into the Policy.
b. Application and Initial Premium Processing
------------------------------------------
Upon receipt at its Service Center (which is currently the Company's
Principal Office) of an application, in good order, from a
prospective Policyowner, C.M. Life will follow certain insurance
underwriting procedures designed to determine whether the proposed
Insured is insurable. This process may involve verification
procedures such as medical examinations and may require that further
information be provided by the proposed Policyowner before a
determination of insurability can be made. In some cases, an entire
group of Insureds will be pre-approved for guaranteed issue
underwriting based on information provided by the common Policyowner
on a master application. This process will also include an assessment
of whether the Policyowner has a sufficient insurable interest in the
Insured to support ownership of the Policy under applicable state
insurance laws. A Policy cannot be issued until this underwriting
procedure has been completed.
If, at the time of application, a prospective Policyowner pays at
least the Planned Periodic Premium, pending underwriting approval,
C.M. Life will provide fixed conditional insurance pursuant to a
Conditional Insurance Agreement in the amount of insurance applied
for, up to a maximum of $1,000,000 per Insured. This coverage will
generally continue for a maximum of ninety (90) days from the date of
the application or the completion of a medical exam, should one be
required. In no event will any insurance proceeds be paid under the
Conditional Insurance Agreement if death is by suicide.
If the application is approved, the Policy will be in force as of the
date the terms of the Conditional Insurance Agreement were met. If no
Conditional Insurance Agreement is in effect because the prospective
Policyowner did not wish make a payment at least equal to the Planned
Periodic Premium, upon delivery of the Policy, C.M. Life will require
payment of sufficient premium to place the insurance in force.
Pending completion of insurance underwriting and other Policy
issuance procedures, initial premium will be held in the Company's
General Account. If the application is approved and the Policy is
issued and accepted, the Net Premium (the premium payment less the
tax expense charge and any applicable premium charge) held in the
General Account will be credited with interest at a specified rate
(no less than 3%) beginning not later than the date of receipt of the
premium at the Company's Service Center. If a policy is not issued
and accepted, the initial premiums will be returned to the
Policyowner without interest.
If the application is approved, the Policy Value will be allocated
according to the Policyowner's instructions upon issuance and
acceptance of the Policy. If the Policy provides for a full refund of
the initial purchase payment under its "Right to Examine Policy"
provision, the portion of the Policy Value which was instructed to be
allocated to the Separate Account will be allocated to the Money
Market Sub-Account. After the expiration of the "Right to Examine
Policy" provision, the Policy Value will be allocated to the
Sub-Accounts and the Fixed Account according to the Policyowner's
instructions.
Subject to the approval of the Company, a Policy may be backdated no
more than six months prior to the date of the application if the
Insured's lower Age on the date of issue results in lower cost of
insur-
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ance rates. The Company will require the payment of all charges which
would have been due had the application date coincided with the
back-dated issue date.
These processing procedures are designed to provide insurance,
starting with the date of the application, to the proposed
Policyowner in connection with payment of the initial premium. Such
procedures are designed to not dilute any benefit payment to any
existing Policyowner. Although a Policy cannot be issued until the
underwriting process has been completed, the proposed Policyowner
will receive immediate insurance coverage, if a sufficient initial
premium is received, the Insured proves to be insurable, and a
sufficient insurable interest is found to exist.
The Company will require that the Policy be delivered within a
specific delivery period to protect itself against anti-selection by
the prospective Policyowner resulting from a deterioration of the
health of the proposed Insured. Generally, the period will not exceed
the shorter of 30 days from the date the Policy is issued and 75 days
from the date of Part 2 of the Application.
c. Premium Allocation
------------------
Net Premiums are credited to the Policy as of the date the premium
payments are received by the Company, with the possible exception of
the first Net Premium. Net Premiums are equal to the gross premiums
minus the tax expense charge and any applicable premium charge.
Currently, the tax expense charge compensates the Company for state
and local taxes imposed on premiums paid for the Policy. Although the
premium taxes may vary by jurisdiction, the tax expense charge
reflects an average charge. It may be adjusted to reflect any
increase or decrease in the applicable state or local premium tax
rate. The Company makes no adjustment for deferred acquisition cost
tax expenses, although it reserves the right to do so in the future.
The premium charge helps to compensate the Company for the costs
associated with the sale of the Policy. Premium charges will be
assessed against premium payments received during the first seven
Policy years after the issue of the Policy or the effective date of
an increase in Specified Amount. During that period, premium charges
will only be assessed against premium payments received during a
Policy year up to the annual Target Premium for the Policy or the
increase in Specified Amount. No premium charge will be assessed
against premiums received during a Policy year in excess of the
applicable Target Premium. For an increase in Specified Amount,
premium payments will be prorated between the original Specified
Amount and the increase using the Target Premiums for each to
calculate the pro rata split.
The Policyowner may allocate Net Premiums among the Fixed Account and
the Sub-Accounts for the Separate Account. The Policyowner may change
the allocation of Net Premiums without charge at any time by
providing written notice to the Service Center. The change will be
effective as of the date of receipt of the notice at the Service
Center. The Policyowner may transfer amounts among the Sub-Accounts
and the Fixed Account, subject to certain restrictions.
d. Repayment of Loan
-----------------
A Loan made under this Policy may be repaid with an amount equal to
the original Loan plus Loan Interest.
When a Loan is made, the Company will transfer Policy Value from each
Sub-Account to the Fixed Account. The Policy Value transferred from
each Sub-Account will equal the amount of the Loan allocated to that
Sub-Account. Since the Company will credit interest on Policy Value
so transferred at a rate equal to the Loan Interest Rate less 1.5%,
the Company will retain the difference between these rates in order
to cover certain expenses and contingencies. Upon repayment of Policy
Debt, the Company will reduce the Policy Value in the Fixed Account
attributable to the Loan and transfer the reduction in Policy Value
to the Sub-Accounts according to either the Policyowner's instruction
or, if no
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allocation instructions have been received, the premium payment
allocation percentages then in effect. Loan repayments allocated to
the Separate Account cannot exceed Policy Value previously
transferred from the Separate Account to secure the Policy Debt.
e. Policy Reinstatement
--------------------
Pursuant to applicable state law, if the Policy has not been
surrendered and the Insured is alive, a terminated Policy may be
reinstated anytime within three years after the lapse date and before
the Maturity Date. The reinstatement will be effective on the monthly
payment date following the date the Policyowner submits the following
to the Company: (1) a written application for reinstatement; (2)
evidence of insurability showing that the Insured is insurable
according to the Company's underwriting rules; and (3) a premium
payment at least equal to the greater of the Planned Periodic Premium
or a premium sufficient to cover three Monthly Deductions using the
last monthly deduction amount prior to the lapse of the Policy.
The Policy Value on the date of reinstatement is:
(a) the Net Premium paid to reinstate the Policy increased for
interest, at a rate determined by the Company and guaranteed to
be no less than 3% annually, from the date the payment for
reinstatement was received at the Company's Service Center;
(b) plus an amount equal to the Policy Value less Policy Debt on the
lapse date;
(c) less the Monthly Deduction due on the date of reinstatement.
The Policyowner may not repay or reinstate any Policy Debt
outstanding on the lapse date or termination date.
f. Correction of Misstatement of Age
---------------------------------
If the Insured's Age as stated in the application for a Policy is not
correct, benefits under a Policy will be adjusted to reflect the
correct Age. The adjusted benefit will be equal to the benefit which
the most recent cost of insurance charge would have purchased for the
correct Age.
g. Contestability
--------------
The Company will not contest the validity of a Policy after it has
been in force during the Insured's lifetime for two years from the
date of issue. The Company will not contest the validity of any
increase in the Specified Amount after such increase has been in
force during the Insured's lifetime for two years from its effective
date.
If the Policy is reinstated, the Policy cannot be contested after it
has been in force during the Insured's lifetime for two years from
the date of reinstatement. The Company can contest statements
contained in the initial or reinstatement application within the
two-year period following the date of receipt of such application.
h. Reduction in Cost of Insurance Rate Classification
--------------------------------------------------
By administrative practice, the Company will reduce the cost of
insurance rate classification for an Insured if evidence of
insurability is submitted in a form satisfactory to the Company to
demonstrate that the Insured qualifies for a lower classification.
After the reduced rating is determined, the Policyowner will pay a
lower cost of insurance charge for each Monthly Deduction. If new
evidence of insurability provided in connection with an increase in
Specified Amount demonstrates that the Insured is in a
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higher risk classification, the higher cost of insurance rate will
apply only to the charges associated with the increase in Specified
Amount.
i. Reduction in Charges
--------------------
While this Policy is available for sale to individuals, it will also
be sold to corporations and to other multiple life groups or
sponsoring organizations. Depending on the size of the group, the
nature of the sale, and the premium volume, there may be expense
savings that could be passed on to the customer. We reserve the right
to reduce the premium charge, cost of insurance charge, or any other
charge that we feel is appropriate to reflect any expense savings.
Sales expenses, underwriting expenses and administrative expenses are
examples of potential areas where savings may be realized.
II. "Redemption Procedures": Surrender and Related Transactions
-----------------------------------------------------------
The policies provide for the payment of moneys to a Policyowner or
Beneficiary upon presentation of a Policy. The amount received by the payee
will depend upon the particular benefit for which the Policy is presented,
including, for example, the Surrender Value or Death Benefit. There are
also certain Policy provisions (e.g., partial withdrawals or the loan
privilege) under which the Policy will not be presented to the Company but
which will affect the Policyowner's benefits and may involve a transfer of
the assets supporting the Policy reserve out of the Separate Account. Any
combined transactions on the same day which counteract the effect of each
other will be allowed. The Company will assume the Policyowner is aware of
the possible conflicting nature of the transactions and desires their
combined result. If a transaction is requested which the Company will not
allow (e.g., a request for a decrease in the Specified Amount which lowers
the face amount below the stated minimum) the Company will reject the whole
transaction and not just the portion which causes the disallowance. The
Policyowner will be informed of the rejection and will have an opportunity
to give new instructions.
a. Surrender for Surrender Value
The Company will normally pay the Surrender Value within seven days
after receipt (unless a shorter period is required under applicable
law or regulation), at its Service Center, of the Policy and signed
request for surrender. Normally, computations with respect to the
investment experience of each Sub-Account will be made as of the
close of trading of the New York Stock Exchange. This will enable the
Company to pay a Surrender Value on surrender based on the next
computed value after the surrender request is received. For valuation
purposes, the surrender is effective on the date the Company receives
the request at its Service Center (although insurance coverage ends
the day the request is mailed).
The Policy Value (equal to the value of all accumulations in the
Separate Account) may increase or decrease from day to day depending
on the investment experience of the Separate Account. Calculations of
the Policy Value for any given day will reflect the actual premiums
paid, expenses charged and deductions taken. The Company will deduct
a tax expense charge and any applicable premium charge from each
premium payment. The balance (Net Premium) is allocated to the
Separate Account and the Fixed Account according to Policyowner's
instructions. The Company will also make monthly deductions from a
Policy to cover the cost of insurance and administrative expenses for
the following month. The monthly administrative charge is $10 per
policy and $0. 10 per thousand of Specified Amount, on a guaranteed
basis. Current charges reflect actual administrative expenses and are
equal to $5 per policy and $0.05 per thousand of Specified Amount for
the first twenty years, and $5 per policy for years twenty-one and
later. The monthly administrative charge is designed to compensate
the Company for administering and maintaining a Policy. Other
possible deductions from the Policy include a transaction charge for
partial withdrawals and a charge for certain transfers.
There are no charges on the surrender of the Policy.
b. Charges on Partial Withdrawal
-----------------------------
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Partial withdrawals may be made against the Surrender Value of the
Policy. The minimum withdrawal is $1,000. Under Death Benefit Option
1, the Specified Amount is reduced by the amount of the partial
withdrawal, and a partial withdrawal will not be allowed if it would
reduce the Specified Amount below $50,000. A transaction charge may
be assessed on each partial withdrawal.
c. Proceeds
--------
Proceeds may be payable under the Policy upon the death of the
Insured, the maturity of the Policy, or the surrender of the Policy
prior to the Maturity Date. Prior to the Maturity Date, the Proceeds
payable upon the full surrender of the Policy will be equal to the
Surrender Value. On or after the Maturity Date, the Proceeds payable
will also be equal to the Surrender Value.
The Proceeds payable upon the death of the Insured will equal the
Death Benefit payable under the Death Benefit Option selected by the
Policyowner, less Policy Debt and any due and unpaid monthly
deductions. Under Death Benefit Option 1, the Death Benefit is the
greater of either the Specified Amount or the Guideline Minimum Death
Benefit. Under Death Benefit Option 2, the Death Benefit is the
greater of either the Specified Amount plus the Policy Value or the
Guideline Minimum Death Benefit. The Guideline Minimum Death Benefit
will vary between the Guideline Premium Test and the Cash Value
Accumulation Test.
Upon the death of the Insured, the Company will pay Proceeds to the
Beneficiary normally within seven days after receipt, at its Service
Center, of: the Policy, due proof of death of the Insured, and all
other requirements necessary to make payment. The Company may delay
payments under certain circumstances as described in the prospectus.
The Company will make payment of the Proceeds out of its General
Account, and will transfer assets from the Separate Account to the
General Account in an amount equal to the reserve in the Separate
Account attributable to the Policy. The excess, if any, of the
Proceeds over the amount transferred will be paid out of the General
Account.
d. Termination
-----------
The failure to make premium payments will not cause the Policy to
lapse unless: (a) the Surrender Value is insufficient to cover the
next Monthly Deduction; or (b) Policy Debt exceeds the Policy Value.
If one of these situations occurs, the Policy will be in default. The
Policyowner will then have a grace period of 62 days, measured from
the date of default, to make sufficient payments to prevent
termination. On the date of default, the Company will send notice to
the Policyowner and to any assignee of record. The notice will state
the amount of premium due and the date on which it is due.
Failure to make a sufficient payment within the grace period will
result in termination of the Policy. If the Insured dies during the
grace period, the Proceeds will still be payable, but any monthly
deductions due and unpaid through the policy month in which the
Insured dies and any other overdue charge will be deducted from the
Proceeds.
e. Policy Loan
-----------
Policy Loans may be taken against the Policy Value at any time. The
total amount which may be borrowed is the Loan Value. The Loan Value
is an amount equal to the Policy Value less existing Policy Debt and
less projected interest to the next Policy Anniversary at the then
applicable Loan Interest Rate. Currently, there is no minimum limit
on the amount of the loan. The Policy Value for this purpose will be
that next computed after receipt of a loan request. The Loan amount
will be paid normally within seven days after the Company receives
request at its Service Center, but the Company may delay payments
under certain circumstances as described in the prospectus.
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A Policy Loan will be subject to a Loan Interest Rate which is
calculated based on the current rate specified as the monthly average
of the Composite Yield on Seasoned Corporate Bonds as published by
Moody's Investors Service. The rate will be calculated two months
prior to the Policy's Anniversary Date, and will remain in force for
the entire Policy Year. The rate will only be increased on the next
Policy Anniversary if the calculated increase is greater than or
equal to 1/2%. Where required by State law, a fixed interest rate
will be available at a rate of 8%, unless a different rate is
required under applicable state law. Further, the variable interest
rate will not exceed the maximum interest rate permitted in the
Policy's Contract State.
The amount of any outstanding Policy Loan plus accrued interest is
called "Policy Debt". When a Policy Loan is made, the portion of the
assets in the Separate Account (which is a portion of the Policy
Value and which also constitutes a portion of the reserves for the
Death Benefit) equal to the Policy Debt created thereby is
transferred by the Company from the Separate Account to the Fixed
Account. Allocation of the Policy Loan among Sub-Accounts will be
according to the Policyowner's request. If this allocation is not
specified or not possible, the Policy Loan will be allocated based on
the proportion the Policy Value in the Fixed Account, less Policy
Debt, and the Policy Value in each Sub-Account bears to the total
Policy Value, less Policy Debt. Policy Value in each Sub-Account
equal to the Policy Loan allocated to such Sub-account will be
transferred to the Fixed Account, and the number of Accumulation
Units equal to the Policy Value so transferred will be canceled.
Because of the transfer, a portion of the Policy is not variable
during the Policy Loan period and, therefore, the Death Benefit and
the Surrender Value are permanently affected by any Policy Debt
whether or not repaid in whole or in part. The Company credits the
Policy Value in the Fixed Account attributable to the Policy Loan
with a rate of return equal to the effective Loan Interest Rate less
1.5%. Upon repayment of the Policy Loan, the Policy Value held in the
Fixed Account as collateral will be reallocated to the Sub-Accounts
according to the Policyowner's instructions or, if none, according to
the most recent Net Premium allocation instructions.
Interest is accrued daily and payable in arrears at the Loan Interest
Rate. Interest is payable at the end of each Policy Year or on a pro
rata basis for such shorter period as the Policy Loan may exist. Loan
interest is due on each Policy anniversary. If not paid when due, it
is added to the Policy Loan principal and bears interest at the same
rate of interest. If the resulting Policy Loan principal exceeds the
Policy Value in the Fixed Account, the Company will transfer Policy
Value equal to the excess Policy Debt from the Policy Value in each
Sub-Account to the Fixed Account; as security for the excess Policy
Debt. The Company will allocate the amount transferred among the
Sub-Accounts in the same proportion that the Policy Value in each
Sub-Account bears to the total Policy Values in all Sub-Accounts.
After the tenth Policy Year, and where permitted by applicable law,
Preferred Loans may be taken against the Policy. The Preferred Loan
provision permits the Policyowner to take loans against the Policy
Value at a rate that is 1.5% less than the Loan Interest Rate then in
effect for the Policy. The maximum Preferred Loan Amount is 10% of
the Policy Value at the time of the Preferred Loan request.
Failure to repay a loan will not necessarily terminate the Policy. If
the Surrender Value is not sufficient to cover the monthly deductions
for the cost of insurance and administrative expenses, the Policy
will go into a 62 day grace period as described above.
f. Transfers Among Sub-Accounts
----------------------------
Currently, Policy Value may be transferred among the Sub-Accounts at
any time. Policy Value may also be transferred between the
Sub-Accounts and the Fixed Account, but that privilege is subject to
certain limitations.
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<PAGE>
All requests for transfers must be made in good order to the Service
Center. The amount transferred will be based on the Policy Value in
the Account(s) next computed after receipt of the transfer order.
C.M. Life will make transfers pursuant to valid written or telephone
request. A properly completed authorization form must be on file at
the Service Center before telephone requests will be honored. C.M.
Life will take reasonable measures to make certain that telephone
requests are genuine. This may include use of a personal
identification number, and recording of telephone calls. Failure to
follow such procedures may result in liability to C.M. Life.
Only one transfer from the Fixed Account to the Separate Account may
be made per Policy Year. The one transfer permitted may not exceed
25% of the Policy Value held in the Fixed Account at the time of
transfer request. There will also be a 90 day waiting period between
transfers out of the Fixed Account. The Policy Value held in the
Fixed Account to secure a Policy loan may not be transferred.
The Fixed Account and the Money Market Portfolio are competing
investment options. Transfers between these competing options will
not be permitted. For a period of ninety (90) days following a
transfer from one competing option, no transfer can be made to the
----
other competing option. For a period of 90 days following a transfer
to one competing option, no transfer can be made from the other
competing option.
The transfer privilege is subject to the consent of C.M. Life. C.M.
Life reserves the right to impose limitations on transfers including,
but not limited to: (1) the minimum amount that may be transferred;
(2) the minimum amount that may remain in a Sub-Account following a
transfer from that Sub-Account; (3) the minimum period of time
between transfers involving the Fixed Account; and (4) the maximum
amount that may be transferred each time to or from the Fixed
Account.
Currently, the first twelve transfers in a Policy Year are free of
any charge. Thereafter a $25 transfer charge will be deducted from
the amount transferred for each transfer in that Policy Year. Any
transfers made with respect to a conversion privilege, Policy Loan,
material change in investment policy, or reallocation of Policy Value
within 20 days of issue will not count towards the twelve free
transfers. The Company reserves the right to change the number of
free transfers allowed in a Policy Year or to adjust the charge that
will be deducted for transfers that are not free.
An Account Rebalancing option is also available. This option
maintains a specified allocation of Policy Value among selected
Sub-Accounts by automatically transferring Policy Value on a monthly,
quarterly, semiannual or annual basis in accordance with the
allocation selected by the Policyowner. Generally, account
rebalancing will be processed on the 15th of each scheduled month
unless the 15th is not a business day, in which case the rebalancing
will be processed on the next business day. Transfers made in
connection with Account Rebalancing are without charge and do not
count toward the twelve free transfers allowed per Policy Year.
Transfer charges will be deducted from the Policy Value transferred,
and will be allocated Pro Rata to the Sub-Accounts, and if applicable
the Fixed Account, from which the transfers were made.
g. Right of Withdrawal Procedures
------------------------------
The Policy provides that the Policyowner may cancel it by mailing or
delivering the Policy to the Service Center or an agent of the
Company on or before the latest of (1) 10 days after the Policyowner
receives the Policy (or longer where required by state law), or (2)
10 days after the Company mails or personally delivers to the
Policyowner a written Notice of Withdrawal Right. If the Policy
provides for a full refund of the initial payment under its "Right to
Examine Policy" provision, the Policyowner will receive on
cancellation the greater of (1) the entire payment, or (2) the Policy
Value plus any amounts deducted under the Policy for taxes, charges
or fees. If the Policy does not provide for a full refund of the
initial payment, the Policyowner will receive upon cancellation the
sum of (1) the difference between any payments made, including fees
and charges, and the amounts allocated to the Separate Ac-
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<PAGE>
count, (2) the Policy Value (on the date the cancellation request is
received by the Company) attributable to the amounts allocated to the
Separate Account, and (3) any fees or charges imposed on the amounts
in the Separate Account.
A free look privilege also applies after a requested increase in
Specified Amount. After an increase, the Company will mail or deliver
notice of the "Free Look" with respect to the increase. The
Policyowner will have the right to cancel the increase before the
latest of (a) 45 days after the application for the increase is
signed, (b) 10 days after the Policyowner receives the new
specification pages issued for the increase (or longer where required
by state law), or (c) 10 days after the Company mails or delivers a
notice of withdrawal rights to the Policyowner, and receive a credit
to the Policy Value for charges which would not have been deducted
but for the increase. The amount to be credited will be refunded if
the Policyowner so requests.
h. Conversion Privileges
---------------------
Once during the first 24 months after the Date of Issue or after the
effective date of an increase in Specified Amount, while the Policy
is in force, the Company will allow the Policy to be converted
without Evidence of Insurability to any flexible premium adjustable
life insurance Policy with fixed and guaranteed minimum benefits
which had been offered by the Company on the Date of Issue or on the
effective date of an increase in Specified Amount, whichever is
applicable. Assuming that there have been no increases in the initial
Specified Amount, this can be accomplished within 24 months after the
Date of Issue by transferring, without charge, the Policy Value in
the Separate Account to the Fixed Account and by simultaneously
changing the premium allocation instructions to allocate future
premium payments to the Fixed Account. Within 24 months after the
effective date of each increase, the Company will also allow the
Policyowner to transfer, without charge, all or part of the Policy
Value in the Separate Account to the Fixed Account and simultaneously
change the premium allocation instructions to allocate all or part of
future premium payments to the Fixed Account.
Where required by state law, and at a Policyowner's request, C.M.
Life will issue a flexible premium adjustable life insurance policy.
The new Policy will have the same Specified Amount, issue ages, and
dates of issue as the original policy, and will have the underwriting
classification we then offer that is most similar to the original
Policy.
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