-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VXg0+paZsySZYD9ybt+KH9DgaXi4fRCg92Y/N+ht+ixvivu37ebv9Jn+VeHUkYDb EGr56KSwDAcAsmVGLcUmDg== 0000950109-98-003483.txt : 19980527 0000950109-98-003483.hdr.sgml : 19980527 ACCESSION NUMBER: 0000950109-98-003483 CONFORMED SUBMISSION TYPE: S-6/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19980526 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I CENTRAL INDEX KEY: 0000836249 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-6/A SEC ACT: SEC FILE NUMBER: 333-41657 FILM NUMBER: 98631566 BUSINESS ADDRESS: STREET 1: 1295 STATE ST STREET 2: C/O MASSACHUSETTS MUTUAL LIFE INSURANCE CITY: SPRINGFIELD STATE: MA ZIP: 01111 BUSINESS PHONE: 8609872889 MAIL ADDRESS: STREET 1: 1295 STATE STREET CITY: SPRINGFIELD STATE: MA ZIP: 01111 S-6/A 1 SVUL/MM PRE-EFFECTIVE AMENDMENT NO. 2 TO FORM S-6 Pre-effective Amendment No. 2 to Registration Statement No. 333-41657 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 A. Exact name of Trust: Massachusetts Mutual Variable Life Separate Account I B. Name of Depositor: Massachusetts Mutual Life Insurance Company C. Complete address of 1295 State Street Depositor's principal Springfield, MA 01111 executive offices: APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: May 26, 1998. Pursuant to Rule 24-f-2 of the Investment Company Act of 1940, the Registrant hereby declares that an indefinite amount of its securities is being registered under the Securities Act of 1933. Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until Registrant shall file a further amendment which specifically states that this Registration Statement shall become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said section, may determine. - ---------------------------- STATEMENT PURSUANT TO RULE 24F-2 The Registrant registers an indefinite number or amount of its variable life insurance contracts 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. CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2 Item No. of Form N-8B-2 Caption - ----------- ------- 1 Cover Page; Definition of Terms; The Separate Account 2 Cover Page; MassMutual and the Separate Account 3 Cover Page; MassMutual and the Separate Account 4 Sales and Other Agreements 5 MassMutual and the Separate Account 6 MassMutual and the Separate Account 7 Not Applicable 8 Appendix F. Financial Statement 9 Legal Proceedings 10 Cover Page; Introduction; Detailed Information about the Policy; Transfers; Surrender Charges; Withdrawals; Death Benefit; Voting Rights; Free Look Provision 11 MassMutual and the Separate Account 12 MassMutual and the Separate Account; Sales and Other Agreements 13 MassMutual and the Separate Account; Charges and Deductions 14 Introduction; MassMutual and the Separate Account; Detailed Information About the Policy; The Investment Advisors and Portfolio Managers; MassMutual and the Separate Account; Surrender Charges; Other Charges; Sales and Other Agreements 15 Introduction; Detailed Information About the Policy; Exhibit 11 16 Introduction; MassMutual and the Separate Account 17 Introduction; Account Value and Net Surrender Value; Withdrawal Fee; Exhibit 11 18 MassMutual and the Separate Account 19 Records and Reports 20 Not Applicable 21 Introduction; Policy Loan Privilege 22 Assignment 23 Bonding Arrangement 24 Detailed Information About the Policy; MassMutual and the Separate Account 25 MassMutual and the Separate Account 26 MassMutual; The Investment Advisers 27 Detailed Information About the Policy; MassMutual and the Separate Account 28 Appendix C; Directors and Executive Officers of MassMutual 29 MassMutual and the Separate Account 30 Not Applicable CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2 Item No. of Form N-8B-2 Caption - ----------- ------- 31 Not Applicable 32 Not Applicable 33 Not Applicable 34 Not Applicable 35 Detailed Information about the Policy; Sales and Other Agreements 36 Not Applicable 37 Not Applicable 38 Sales and Other Agreements 39 Sales and Other Agreements 40 Sales and Other Agreements 41 Sales and Other Agreements 42 Not Applicable 43 Sales and Other Agreements 44 Detailed Information About the Policy; MassMutual and the Separate Account; Charges for Federal Taxes; 45 Not Applicable 46 Account Values; MassMutual and the Separate Account 47 MassMutual and the Separate Account 48 MassMutual and the Separate Account 49 Detailed Information About the Policy 50 MassMutual and the Separate Account 51 Cover Page; Detailed Information About the Policy; Additional Information 52 MassMutual and the Separate Account; Reservation of Rights 53 Federal Income Tax Considerations 54 Not Applicable 55 Not Applicable 56 Not Applicable 57 Not Applicable 58 Not Applicable 59 Appendix F SURVIVOR FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICIES* ISSUED BY MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY This Prospectus describes a survivorship flexible premium adjustable variable life insurance policy (the "Policy") offered by Massachusetts Mutual Life Insurance Company ("MassMutual"). The Policy, for as long as it remains in force, provides lifetime insurance protection on the two Insureds named in the Policy, and pays a Death Benefit at the death of the last surviving Insured (the "second death"). The minimum Initial Face Amount which may be purchased is $500,000 currently. The Policy is designed to provide flexibility of premium payments and Death Benefits by permitting the Owner, subject to certain restrictions, to vary the frequency and amount of premium payments and to increase or decrease the Death Benefit payable under the Policy. This flexibility allows an Owner to provide for changing insurance needs under a single insurance policy. A Policy also may be surrendered for its Net Surrender Value. The Owner may allocate Net Premiums and Account Value among the divisions (the "Divisions") of the designated segment of MassMutual Variable Life Separate Account I (the "Separate Account") and a Guaranteed Principal Account (the "GPA"). The assets of each Division will be used to purchase, at net asset value, shares of a designated investment fund. Currently, the available funds include six funds of MML Series Investment Fund (the "MML Trust"), four funds of Oppenheimer Variable Account Funds (the "Oppenheimer Trust"), one fund of the Variable Insurance Products Fund II (VIP II managed by Fidelity Management & Research Company), one fund of the T. Rowe Price Equity Series, Inc., and one fund of American Century Variable Portfolios, Inc. The individual funds are as follow.
MML TRUST OPPENHEIMER TRUST VARIABLE INSURANCE PRODUCTS FUND II - ----------------------- ---------------------------------- -------------------------------------- MML Equity Fund Oppenheimer Aggressive Growth Fund VIP II Contrafund Portfolio MML Money Market Fund Oppenheimer Global Securities Fund MML Managed Bond Fund Oppenheimer Growth Fund T. ROWE PRICE EQUITY SERIES, INC. MML Blend Fund Oppenheimer Strategic Bond Fund -------------------------------------- MML Equity Index Fund T. Rowe Price Mid-Cap Growth Portfolio MML Small Cap Value Equity Fund AMERICAN CENTURY VARIABLE PORTFOLIOS, INC ----------------------------------------- American Century VP Income & Growth
The Owner bears the investment risk of any Account Value allocated to the Separate Account. The Death Benefit may, and the Net Surrender Value will, vary depending on the investment performance of the Divisions. While there is no guaranteed minimum Net Surrender Value for funds invested in the Separate Account, as long as a Policy is in force, the Policy's Death Benefit will never be less than the Face Amount less any Policy Debt and any unpaid premiums. Furthermore, the Policy will not terminate if the Policy Value is sufficient to pay the Monthly Charges or if the Safety Test has been met during a Guarantee Period. All Policies are serviced through MassMutual's Administrative Office, located at 1295 State Street, Springfield, Massachusetts 01111-0001. The telephone number is (413) 788-8411. 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. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE PROSPECTUSES FOR THE INDIVIDUAL INVESTMENT FUNDS. THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FURTHER REFERENCE. THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION. WE DO NOT CLAIM THE POLICY IS IN ANY WAY SIMILAR TO OR COMPARABLE WITH A MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN. REPLACING EXISTING INSURANCE WITH THE POLICY DESCRIBED IN THIS PROSPECTUS MAY NOT BE TO YOUR ADVANTAGE. EFFECTIVE MAY 26, 1998 This Prospectus does not constitute an offer or solicitation to acquire any interest or participation in the survivorship flexible premium adjustable variable life insurance policies offered by this Prospectus in any jurisdiction to anyone to whom it is unlawful to make such an offer or solicitation in such jurisdiction. *Title may vary in some jurisdictions. Table of Contents. I. INTRODUCTION 3 II. DETAILED DESCRIPTION OF THE POLICY Availability of Policy 4 Death Benefit 4 Premiums 5 Transfers 7 Policy Termination and Reinstatement 7 Charges and Deductions 8 Deductions from Premiums 8 Monthly Charges Against the Account Value 9 Daily Charges Against the Separate Account 9 Surrender Charges 9 Other Charges 10 Account Value and Net Surrender Value 10 Policy Loan Privilege 10 Free Look Provision 11 The Guaranteed Principal Account 11 When We Pay Proceeds 12 Federal Income Tax Considerations 12 Your Voting Rights 14 Reservation of Rights 15 Additional Benefits You Can Get by Rider 15 Payment Options 15 Beneficiary 16 Assignment 16 Limits on Our Right to Challenge the Policy 17 Error of Age or Sex 17 Suicide 17 Sales and Other Agreements 17 Compensation 17 Bonding Arrangement 18 Legal Proceedings 18 Experts 18 III. ADDITIONAL INFORMATION MassMutual 18 Records and Reports 19 The Separate Account 19 MML Trust and Oppenheimer Trust 19 Variable Insurance Products Fund II 20 T. Rowe Price Equity Series, Inc. 20 American Century Variable Portfolios 20 The Investment Advisers 22 APPENDIX A Definition of Terms 23 APPENDIX B Examples of Death Benefit Option Changes 25 APPENDIX C Rates of Return 26 APPENDIX D Illustration of Death Benefits, Net Surrender Values, and Accumulated Premiums 30 APPENDIX D Rates of Return 26 APPENDIX E Directors of MassMutual 43 Executive Vice Presidents 44 APPENDIX F Financial Statements 46
2 I. INTRODUCTION Note: Please refer to Appendix A, Glossary for definitions of the terms contained in this Prospectus. You should consult Your Policy for further understanding of its term and conditions and for any state-specific provisions and variances that may apply to Your Policy. The Policy is a life insurance contract providing a Death Benefit, an Account Value, surrender rights, policy loan privileges, and other features traditionally associated with life insurance. The Policy is a "survivorship" policy because it provides life insurance on two insured lives and pays a death benefit at the time of the second death. The Policy is a "flexible premium" policy because there is no fixed schedule of premium payments. Although the Owner may establish a schedule of premium payments ("Planned Premium Payments"), failure to make a Planned Premium Payment will not necessarily cause a Policy to terminate nor will making the Planned Premium payments guarantee a Policy will remain in force. The flexibility of premium payment timing and amount allows an Owner to match premium payments to income flows or other financial decisions. The Policy is "adjustable" because the Owner may choose to increase or decrease the Death Benefit and to change the Death Benefit Option under the Policy. The Policy is "variable" because the Death Benefit may, and the Net Surrender Value will, vary in relation to the investment experience of the Divisions of the Separate Account to which an Owner has allocated Net Premiums. Additionally, the GPA's crediting interest rate may be adjusted periodically, although it will not drop below 3%. The following diagram summarizes the elements of this Policy, and how the Policy works.
HOW THE POLICY WORKS ----------------------------------------- PREMIUM PAYMENT ----------------------------------------- A Premium Expense Charge is deducted from each Premium Payment (graphic arrow to "Net Premium") ----------------------------------------- NET PREMIUM ----------------------------------------- Net Premium and Account Value are allocated among the Divisions of the Separate Account and the GP (graphic arrow to "Account Value") - ----------------------------------------- ------------------------------------------ --------------------------------------------- INVESTMENT EARNINGS ACCOUNT VALUE ACCOUNT VALUE CHARGES - ----------------------------------------- ------------------------------------------ --------------------------------------------- Investment earnings of the Divisions of Monthly deductions for administrative, the Separate Account less fund Insurance, and rider expenses are investment management fees and separate The Account Value is allocated among the deducted each month account fees are credited/ debited daily available investment options. (graphic arrows to "Death Benefit", --------------------------------------------- Interest is credited on values in the "Account Value Charges", "Owner Access Guaranteed Principal Account to Account Value" and "Policy Surrender") OWNER ACCESS TO ACCOUNT VALUE --------------------------------------------- (graphic arrow to "Account Value") You may access Account Values through loans and withdrawals - ----------------------------------------- --------------------------------------------- DEATH BENEFIT POLICY SURRENDER - ----------------------------------------- --------------------------------------------- A choice of 3 Death Benefit Options is In the first 10 years of coverage, if available. The Option chosen may be coverage is surrendered, a surrender changed at a later date charge will be deducted from the surrender proceeds
3 II. DETAILED DESCRIPTION OF THE POLICY AVAILABILITY OF THE POLICY Individuals wishing to purchase a Policy must send a completed application to MassMutual's Administrative Office. Under our current rules, which can be changed at our sole discretion, the minimum Initial Face Amount of a Policy is $500,000. The Policy can be issued for two Insureds where the older Insured is between the ages 18 and 90 inclusive, and the younger Insured is between the ages 18 and 85 inclusive. Before issuing a Policy, MassMutual will require satisfactory evidence of insurability, which usually will include a medical examination. The Policy is available to individuals who are purchasing a Policy in connection with employee benefit plans that qualify for tax benefits under the Internal Revenue Code (the "qualified market") and to other individuals (the "nonqualified market"). UNISEX Policies issued in states requiring "unisex" policies (currently only Montana) provide policy values that do not vary by the sexes of the Insureds. In addition, Policies issued in conjunction with employee benefit plans provide policy values that do not vary by sex. Thus, references in the Prospectus to sex-distinct policy values are not applicable to Policies issued in Montana or issued in conjunction with employee benefit plans. Illustrations showing the effect of these unisex rates on premiums, Net Surrender Values and Death Benefits are available from MassMutual on request. DEATH BENEFIT As long as the Policy remains in force, MassMutual will, upon due proof of the deaths of both Insureds, pay the Death Benefit of the Policy to the named Beneficiary. Although MassMutual normally will pay the Death Benefit within seven days of receiving satisfactory proof of the Insureds' deaths, the Company may delay payments under certain circumstances. All or part of the Death Benefit can be paid in cash or under one or more of the payment options set forth in the Policy. MINIMUM DEATH BENEFIT. In order to qualify as life insurance pursuant to I.R.C. Section 7702, the Policy has a Minimum Death Benefit. The Minimum Death Benefit is determined using one of two allowable Death Benefit Compliance Tests. The applicable Test is chosen at the time of application and cannot be changed after the Policy is issued. Under one of the tests, the Cash Value Test, the Minimum Death Benefit is equal to an applicable percentage of the Account Value. The applicable percentage depends on the sexes (male, female, unisex), tobacco classifications, and Attained Ages of both Insureds. Under the other test, the Guideline Premium Test, the Minimum Death Benefit also is equal to an applicable percentage of the Account Value, but the percentage varies only by the Attained Age of the younger Insured. The applicable percentages are set forth in the Policy. The choice of the Guideline Premium Test or the Cash Value Test will depend on how You intend to pay premiums. In general, if You intend to pay premiums in early policy years only, the Cash Value Test may be more appropriate. If You intend to pay level premiums over a long period of years, the Guideline Premium Test may be more appropriate. It is important You see policy illustrations of both approaches to determine how the policy works under each approach, and which is best for You. DEATH BENEFIT OPTIONS. The Death Benefit is the amount of the benefit provided under the Death Benefit Option in effect on the date of the second death, less any outstanding Policy Debt and less any unpaid premium needed to avoid termination under the grace period provision. The Owner may choose one of three Death Benefit Options: Option 1 (a level amount option) or Options 2 or 3 (variable amount options). The Death Benefit Option is chosen in the application and subsequently may be changed subject to certain restrictions described in CHANGES IN THE DEATH BENEFIT OPTION. Options 1, 2 and 3 provide the following benefits. OPTION 1 - Under Option 1, the benefit provided is the greater of: (a) the Face Amount on the date of the second death; and (b) the Minimum Death Benefit on the date of the second death. OPTION 2 - Under Option 2, the benefit provided is the greater of: (a) the Face Amount plus the Account Value on the date of the second death; and (b) the Minimum Death Benefit on the date of the second death. OPTION 3 - Under Option 3, the benefit provided is the greater of: (a) the Face Amount plus the premiums paid less any premiums refunded (See PREMIUM LIMITATIONS) under the Policy to the date of the second death; and (b) the Minimum Death Benefit on the date of the second death. The following examples illustrate how changes in the Account Value and the amount of premiums paid may affect the Death Benefits under Options 1, 2, and 3. EXAMPLE I Under Option 1, the Death Benefit will remain at the Face Amount, in this example $1,000,000, unless the Minimum Death Benefit exceeds the Face Amount. Assume the Owner has selected Option 1 with a Face Amount of $1,000,000. The Account Value is $50,000. The Death Benefit in this case is $1,000,000. The Minimum Death Benefit is $219,000. If the Account Value increases to $80,000, the Minimum Death Benefit increases to $350,400, but the Death Benefit remains at $1,000,000. If the Account Value decreases to $30,000, the Minimum 4 Death Benefit decreases to $131,400 and the Death Benefit still remains at $1,000,000. EXAMPLE II Under Option 2, the Death Benefit will be the Face Amount plus the Account Value unless the Minimum Death Benefit exceeds the sum of the Face Amount plus the Account Value. Assume the Owner has selected Option 2 with a Face Amount of $1,000,000. The Account Value is $50,000, and the Minimum Death Benefit is $219,000. The Death Benefit in this case is $1,050,000 (Face Amount plus Account Value). If the Account Value increases to $80,000, the Minimum Death Benefit will increase to $350,400, and the Death Benefit will increase to $1,080,000. If the Account Value decreases to $30,000, the Minimum Death Benefit will decrease to $131,400, and the Death Benefit will decrease to $1,030,000. EXAMPLE III Under Option 3, the Death Benefit will be the Face Amount plus the premiums paid under the Policy, less any premium refunds, unless the Minimum Death Benefit exceeds the sum of the Face Amount plus the premiums paid. Assume the Owner has selected Option 3 with a Face Amount of $1,000,000. The Account Value is $50,000, the Minimum Death Benefit is $219,000 and premiums paid under the Policy to-date total $40,000. The Death Benefit in this case is $1,040,000. If an additional $30,000 of premium is paid into the Policy and the Account Value increases to $80,000, the Minimum Death Benefit will increase to $350,400, and the Death Benefit will increase to $1,070,000. CHANGES IN DEATH BENEFIT OPTION. After the first Policy Year, the Owner may change the Death Benefit Option. Any changes of Death Benefit Option may require a written application and satisfactory evidence of insurability. The effective date of any change will be the Monthly Charge Date that is on or precedes the date MassMutual approves the change. A change in the Death Benefit Option will not in and of itself result in an immediate change in the amount of a Policy's Death Benefit. The Policy Face Amount will be increased or decreased to give the same Death Benefit under the new Death Benefit Option. A change in Death Benefit Option will not be allowed if it would result in a Face Amount of less than $500,000 after the change, if the older insured is older than Attained Age 85, or if only one of the Insureds is alive. An increase or decrease in Face Amount resulting from a change in the Death Benefit Option will affect the Monthly Charges, as they depend in part on the Face Amount. The charge for certain additional benefits also may be affected. The Surrender Charge, however, will not be affected by an increase or decrease in Face Amount resulting from a change in the Death Benefit Option. For examples of Death Benefit Option changes and their impacts on the contract, see APPENDIX B. CHANGES IN FACE AMOUNT. The Owner may request an increase or decrease in the Face Amount subject to certain requirements. Any request for an increase or decrease must be submitted in writing to MassMutual's Administrative Office. It will become effective on the Monthly Charge Date that is on or precedes MassMutual's acceptance of the request. INCREASES IN FACE AMOUNT. For an increase in the Face Amount, MassMutual requires a written application and satisfactory evidence of insurability. An increase may not be less than $50,000, and no increase will be permitted after the younger Insured reaches Attained Age 85, or the older Insured reaches Attained Age 90. An increase in Face Amount will affect the Monthly Charges. The Face Amount Charge and the Insurance Charges will increase. DECREASES IN FACE AMOUNT. Decreases in coverage are allowed after the first Policy Year or one year after a Face Amount increase by written request. A decrease will not be permitted if the Face Amount would fall below $500,000. A decrease may result in the deduction of Surrender Charges from the Account Value. (For a discussion of the Surrender Charges associated with a decrease, see SURRENDER CHARGES.) Any Surrender Charges applicable to a decrease will be deducted from the Division(s) of the Separate Account and from the GPA in proportion to the non-loaned values in each. A decrease will reduce the Face Amount in the following order: (a) the Face Amount provided by the most recent increase; (b) the Face Amounts provided by the next most recent increases successively; and finally (c) the Initial Face Amount. As a result, a decrease in Face Amount will affect the Monthly Charges deducted from the Account Value. A decrease may result in the Policy becoming a "modified endowment contract". (See POLICY PROCEEDS, PREMIUMS AND LOANS.) PREMIUMS Subject to certain limitations, the Owner has flexibility in determining the frequency and amount of premium payments. PREMIUM FLEXIBILITY. Unlike traditional insurance policies, this Policy frees the Owner from required premium payments and a rigid premium schedule. Instead, 5 MassMutual requires an Owner to pay only a minimum initial premium at the time of application or at any time before delivery of the Policy. After the first premium has been paid, subject to certain limitations, premiums may be paid in any amount and at any interval. The minimum initial premium depends on the planned frequency of premium payments, and the Issue Ages, sexes, and rating classes of the Insureds, as well as the initial Death Benefit Option and Initial Face Amount of the Policy. PLANNED ANNUAL PREMIUM. When applying for a Policy, the Owner will select a planned annual premium and payment frequency (annual, semiannual, quarterly, or monthly check service). The planned premium at the payment frequency chosen is shown on the schedule page of the Policy. MassMutual will send premium notices for the planned premium according to the amount and frequency selected. The Owner may change the amount and frequency of planned premiums at any time by sending written notice to MassMutual's Administrative Office. An Owner may elect to pay premiums by means of a pre-authorized check procedure. Under this procedure, premium payments are deducted automatically on a monthly basis from a designated bank account. An Owner does not receive a "bill" for these payments. There is no penalty if the planned premium is not paid, nor does payment of this amount guarantee coverage for any period of time. Instead, the duration of the Policy depends on maintaining a sufficient Policy Value, or meeting the Safety Test (See POLICY TERMINATION section.). The Policy Value is equal to the Account Value less any outstanding Policy Debt during the first three Policy Years. It is equal to the Net Surrender Value in years four and later. Even if planned premiums are paid, if the Safety Test is not met, the Policy terminates when the Policy Value becomes insufficient to pay the Monthly Charges and the grace period expires without sufficient payment. PREMIUM LIMITATIONS. After the first premium is paid, the minimum premium payment is $20. If the Cash Value Test has been chosen as the Death Benefit Compliance Test, the maximum premium that may be paid in any Policy Year without evidence of insurability is the greatest of (a) the premium that will not increase the net amount at risk under the Policy; (b) twice the Policy's Target Premium plus $100; and (c) the annual premium paid in the preceding Policy year. If the Guideline Premium Test has been chosen, the maximum premium is equal to the lesser of the maximum premium as determined above and the Guideline Premium Test premium limitation. We have the right to refund any premium amount that exceeds these limitations. Premium payments should be sent either to MassMutual's Administrative Office or to the address indicated on the billing notice. ALLOCATION OF NET PREMIUM PAYMENTS. The Net Premium equals the premium paid less the Premium Expense Charge. (See DEDUCTIONS FROM PREMIUMS.) At the time of Application, the Owner indicates how Net Premiums are to be allocated among the Divisions of the Separate Account and the GPA. The allocation percentages must be in whole numbers and the sum of the allocation percentages must equal 100%. The allocation percentages may be changed without charge at any time by providing written notice to MassMutual's Administrative Office. The maximum number of different Divisions that may be used during the life of the Policy is 16. Any Initial Net Premium remitted with an application will be deposited and earn interest at the rate set by MassMutual from the date We receive the premium in good order, or from the Policy Date if later, to the date the Policy is issued. Once the Policy has been issued, the Net Premium plus interest earnings, less any Monthly Charges will be allocated either in accordance with the allocation percentages in the Application, or to the Money Market Division of the Separate Account on the next business day after the Issue Date. If under the Free Look Provision, the Owner receives (i) any premium paid for this Policy plus (ii) interest credited to this Policy under the Guaranteed Principal Account, plus or minus (iii) an amount reflecting the investment experience of the investment divisions of the Separate Account under this Policy to the date the Policy is received by us, minus (iv) any amounts withdrawn and any Policy Debt, this amount will be allocated to the GPA and the Divisions of the Separate Account based on the allocation percentages in the Application. If under the Free Look Provision, the Owner receives the total of all premiums paid for the Policy, reduced by any amounts borrowed or withdrawn, this amount will be allocated to the Money Market Division of the Separate Account. If the Initial Net Premium plus interest earnings, less any Monthly Charges is allocated to the Money Market Division of the Separate Account, Subsequent Net Premiums received during the Free Look Period also will be allocated to the Money Market Division of the Separate Account at the price next determined after receipt in good order at our Administrative Office, or at the address indicated on the billing notice. At the end of the Free Look Period, the Money Market account balance will be transferred to the GPA and the Separate Accounts in accordance with the allocation percentages in the Application. If the Initial Net Premium plus interest earnings, less any Monthly Charges is allocated in accordance with the allocation percentages in the Application, Subsequent Net Premiums will be deposited on the Valuation Date We receive the Subsequent Net Premiums in good order at our Administrative Office, or at the address indicated on the billing notice. Transfers from one Division to another will be credited on the Valuation Date the Transfer Request is received in good order. 6 TRANSFERS By written request, the Owner may transfer all or part of the Account Value of a Division of the Separate Account to any other Division or to the GPA. Although MassMutual currently imposes no limitation on the right of the Owner to make transfers, we reserve the right to limit transfers to no more than one every 90 days in connection with compliance with Section 404(c) of ERISA. Any limitation would not apply to a transfer of all funds in the Separate Account to the GPA or to automated transfers made in connection with any program MassMutual has in place. Transfers of values from the GPA to the Separate Account are limited to one each Policy Year. Any transfer from the GPA cannot exceed 25% of the Fixed Account Value (less any Policy Debt) at the time of the transfer. If 25% of the Fixed Account Value has been transferred from the GPA each year for three consecutive Policy Years, and no value has been transferred into the GPA, nor premiums allocated to the GPA, during this time, the remainder of the Fixed Account Value (less any Policy Debt) may be transferred, in one transaction, out of the GPA in the succeeding Policy Year. Any transfer is effective on the Valuation Date at the price next determined after receipt of the request in good order at our Administrative Office. There are no charges for transfers. POLICY TERMINATION AND REINSTATEMENT POLICY TERMINATION. This Policy will not terminate for failure to pay premiums since premium payments, other than the Initial Premium Payment, are not specifically required. Rather, if in the first three Policy Years the Account Value less any Policy Debt is not enough to cover the Monthly Charges on a Monthly Charge Date, or if in subsequent Policy Years the Net Surrender Value is not enough to cover the Monthly Charges on a Monthly Charge Date, the Policy will enter a 61-day grace period unless the Safety Test has been met. At the beginning of the grace period, MassMutual will mail a notice to the Owner's last known address stating the amount of premium needed to cover the shortfall. During the grace period, the Policy remains in force. If the required premium is not paid within 61 days after the Monthly Charge Date (or, if later, within 30 days after we mail the written notice), the Policy terminates without value. If the Account Value less Policy Debt in the first three Policy Years or the Net Surrender Value in subsequent years is insufficient to pay the Monthly Charges on a particular Monthly Charge Date and the Safety Test (as described below) has been met on that date, the Monthly Charges for that Date will be reduced to an amount equal to the Account Value less any Policy Debt. The Safety Test can be met only during a Guarantee Period. There are two Guarantee Periods. One Period is the lesser of 20 years or to the younger Insured's age 90. The other is to the younger Insured's age 100. Each Guarantee Period has a Guarantee premium associated with it. These premiums vary depending on the issue ages, sexes, and issue classifications of the Insureds and the Death Benefit Option in effect. The Guarantee premiums for Your Policy are shown in the Policy. On any day during a Guarantee Period, the Safety Test is met if the premiums paid less amounts withdrawn accumulated with interest to that day, equal or exceed the Guarantee premium accumulated with interest to that date. The effective annual rate of interest used to accumulate these amounts is 3%. The Guarantee Period in effect is determined by the Guarantee premium paid. The Guarantee Periods available and the Safety Test may vary depending on the contract state of Your Policy. Consult Your Policy for the Guarantee Periods available to You. REINSTATEMENT. For a period of five years after a Policy terminates, the Owner can request that We reinstate the Policy provided neither Insured has died since the Policy termination. However, the Policy cannot be reinstated if it has been surrendered for its Net Surrender Value. Please note a termination or reinstatement may cause the Policy to become a modified endowment contract. (See MODIFIED ENDOWMENT CONTRACTS.) Before We will reinstate the Policy, We must receive the following: (a) Evidence of insurability satisfactory to MassMutual; (b) A premium payment sufficient to keep the policy in force for three months following reinstatement; (c) Where applicable, a signed acknowledgement the Policy has become a modified endowment contract. If We reinstate the Policy, the Face Amount for the reinstated Policy will be the same as it would have been if the Policy had not terminated. The premium payment will be allocated based on the allocation requested at the time of reinstatement effective on the Monthly Charge Date on which the Policy is reinstated. The Account Value at the time of reinstatement will be the net amount of the premium paid at the time of reinstatement, less any Monthly Charges taken at that time. 7 CHARGES AND DEDUCTIONS Charges will be deducted in connection with the Policy to compensate MassMutual for: (a) providing the insurance benefits under the Policy (including any riders); (b) administering the Policy; (c) assuming certain risks in connection with the Policy (including any riders); and (d) expenses incurred in selling and distributing the Policy. Additionally, certain expenses are deducted from the underlying funds. For more information about these expenses, see the individual fund prospectuses. A summary of the product and separate account charges is as follows.
- ------------------------------------------------------------------------------------------------------------------------------------ CURRENT RATE GUARANTEED RATE - ------------------------------------------------------------------------------------------------------------------------------------ Premium Expense Charge Coverage Years 1-10:13% of premium up to All Coverage Years: 13% of premium up to Expense Premium; 3% of premium over Expense Expense Premium; 3% of premium over Expense Premium Premium Coverage Years 11+: 3% of all premium Administrative Charge Policy Years 1-10: $12 per month per policy All Coverage Years: $12 per month per policy Policy Years 11+: $6 per month per policy Face Amount Charge Coverage Years 1-10: $0.13 per month per Coverage Years 1-10: $0.13 per month per $1,000 of Face Amount $1,000 of Face Amount Coverage Years 11+: $0.0 Coverage Years 11+: $0.0 Insurance Charges A per thousand rate multiplied by the For standard risks, the guaranteed cost of amount at risk each month. The rate varies insurance rates are based on 1980 by the sexes, issue ages, and risk Commissioners Standard Ordinary (CSO) classifications of the Insureds, and the Mortality Tables. Year of Coverage. Mortality and Expense Risk Charge All Policy Years: 0.25% on an annual basis All Policy Years: 0.90% on an annual basis of daily net asset value of the Separate of daily net asset value of the Separate Account Account Loan Rate Expense Charge Policy Years 1-10: 0.50% of loaned amount All Policy Years: 2.0% of loaned amount Policy Years 11+: 0.25% of loaned amount Withdrawal Fee $25 $25 Surrender Charges First coverage year: the lesser of 100% of First coverage year: the lesser of 100% of the Target Premium or $50 per thousand of the Target Premium or $60 per thousand of Face Amount. Face Amount. Coverage years 2-10: the prior year Coverage years 2-10: the prior year Surrender Charge reduced by 10% of the Surrender Charge reduced by 10% of the first year Surrender Charge first year Surrender Charge - --------------------------------------------------------------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS A Premium Expense Charge is deducted from each premium payment made prior to the allocation of the payment to the Divisions of the Separate Account and the GPA. The Premium Expense Charge distinguishes between premium payments up to the Expense Premium, and premium payments over the Expense Premium. The Expense Premium is based on the issue ages, sexes, and risk classifications of the Insureds. 8 Premiums are allocated to the Initial Face Amount and any subsequent increases based on the ratio of the Expense Premium for each segment to the total of the Expense Premiums for all segments. MONTHLY CHARGES AGAINST THE ACCOUNT VALUE Charges will be deducted from the Account Value on each Monthly Charge Date. The Monthly Charges consist of: (a) an Administrative Charge; (b) a Face Amount Charge; (c) an Insurance Charge; and (d) a rider charge for any additional benefits provided by rider. The Monthly Charges will be deducted from the Division(s) of the Separate Account and the GPA in proportion to the non-loaned values of the Policy in the Division(s) and the GPA. ADMINISTRATIVE CHARGE AND FACE AMOUNT CHARGE. The monthly Administrative Charge and Face Amount Charge reimburse MassMutual for expenses incurred in issuing and administering the Policy, and for such activities as processing claims, maintaining records and communicating with Owners. INSURANCE CHARGES. The monthly Insurance Charge for a Policy is equal to the "amount at risk" under the Policy, multiplied by the monthly Insurance Charge rate for that Policy month. The amount at risk is determined on the first day of each Policy month and is the amount by which the Death Benefit (discounted at the monthly equivalent of 3% per year) exceeds the Account Value. Insurance rates will be based on the sexes, Issue Ages, and risk classes of the Insureds, and the Year of Coverage. MassMutual currently places Insureds into the following three standard rate classes: Select-Preferred Nontobacco, Preferred Nontobacco, and Preferred Tobacco; as well as substandard rate classes involving higher mortality risks. In an otherwise identical Policy, the monthly insurance rate is higher for tobacco users than for those who do not use tobacco and higher for Preferred Nontobacco Insureds than for Select-Preferred Nontobacco Insureds. RIDER CHARGE. The monthly rider charge will include charges for any additional benefits provided by rider. DAILY CHARGES AGAINST THE SEPARATE ACCOUNT MORTALITY AND EXPENSE RISK CHARGE. MassMutual assesses a daily charge against the net asset value of the Separate Account for mortality and expense risks. This charge is not deducted from the assets in the GPA. The mortality risk We assume is that the group of lives insured under our Policies may, on average, live for shorter periods of time than We estimated. The expense risk We assume is that our costs of issuing and administering Policies may be more than We estimated. If not all the money MassMutual collects from this charge is needed to cover death benefits and expenses, it will be our gain and will be used for any proper purpose, including payment of sales commissions. Conversely, even if the money We collect is insufficient, We will provide for all Death Benefits and expenses. INVESTMENT MANAGEMENT FEE AND OTHER EXPENSES. Because the Divisions of the Separate Account purchase shares of MML Trust, Oppenheimer Trust, (Fidelity) Variable Insurance Products Fund II, T. Rowe Price Equity Series, Inc., or American Century Variable Portfolios, Inc., the value of Accumulation Units of the Divisions will reflect the investment management fee and other expenses incurred by these entities. The following were the total fund operating expenses expressed as a percentage of average net assets for the year ended December 31, 1997 for the Funds.
Management Total Fund Fund Name Fees Other Expenses Operating Expenses -------------- ------------------ --------------------- MML Equity 0.35% 0.00% 0.35% MML Money Market 0.48% 0.04% 0.52% MML Managed Bond 0.44% 0.03% 0.46% MML Blend 0.37% 0.00% 0.37% MML Equity Index 0.40% 0.03% 0.43% Oppenheimer Growth 0.73% 0.02% 0.75% Oppenheimer Aggressive Growth 0.71% 0.02% 0.73% Oppenheimer Global Securities 0.70% 0.06% 0.76% Oppenheimer Strategic Bond 0.75% 0.08% 0.83% VIP II Contrafund Portfolio 0.60% 0.11% 0.71% T. Rowe Price Mid-Cap Growth Portfolio 0.85% 0.00% 0.85% American Century VP Income & Growth 0.70% 0.00% 0.70%
MML Small Cap Value Equity had not been established as of December 31, 1997. The management fees, other expenses and total fund operating expenses for the 1998 calendar year are estimated to be 0.65%, 0.39% and 1.04% respectively. SURRENDER CHARGES During the first 10 Years of Coverage for the Initial Face Amount and during the first 10 Years of Coverage for any increase in Face Amount, MassMutual will impose a Surrender Charge against the Account Value if the Owner surrenders the Policy or decreases the Face Amount under the Policy. The Surrender Charge in the first Year of Coverage is the lesser of 100% of the Target Premium or $50 per thousand of Face Amount. The Target Premium is used to determine the maximum premium limitation, Surrender Charges and agent commissions. The Target Premium is based on the issue ages, sexes, and risk classifications of the Insureds. The Surrender Charge is decreased by 10% of the first year Surrender Charge in each of the next nine years of coverage, and is zero in the eleventh year. Surrender Charges are calculated separately for the Initial Face Amount and for each increase in the Face Amount. SURRENDER CHARGE UPON DECREASE IN SELECTED FACE AMOUNT. Elected decreases in Face Amount--that is, decreases resulting from other than a Withdrawal or a change in the Death Benefit Option--result in canceling all or a part of previously issued Face Amount segments. A partial Surrender Charge is assessed and deducted from the Account Value. The partial Surrender Charge is equal to the Surrender Charge associated with each canceled Face Amount segment. If the partial Surrender Charge for a decreased or canceled Face Amount segment would be greater than the Account Value of the Policy, the partial Surrender Charge for that decrease is set equal to the Account Value on the date of the surrender. 9 The Surrender Charge after the decrease equals the Surrender Charge prior to the decrease less the partial Surrender Charge taken. OTHER CHARGES WITHDRAWAL FEE. For each Withdrawal, a charge of $25 will be deducted from the amount withdrawn. LOAN INTEREST RATE EXPENSE CHARGE. This charge reimburses MassMutual for expenses incurred in administering loans. SPECIAL CIRCUMSTANCES MassMutual may vary the charges and other terms of Flexible Premium Adjustable Variable Life Policies where special circumstances result in sales or administrative expenses or mortality risks that are different than those normally associated with these Policies. These variations will be made only in accordance with uniform rules we establish. ACCOUNT VALUE AND NET SURRENDER VALUE ACCOUNT VALUE. The Account Value of the Policy is the sum of all Net Premium payments adjusted by periodic charges and credits and by Withdrawals. Following the Free Look Period, this amount is allocated among the Separate Account Divisions and the GPA according to the net premium allocation requested at the time of Application. (See ALLOCATION OF NET PREMIUM PAYMENTS section for more details.) INVESTMENT RETURN. The investment return of a Policy is based on: (a) The Account Value held for the Policy in each Division of the Separate Account; (b) The investment experience of each Division as measured by its actual net rate of return; and (c) The interest credited on Account Values held in the GPA. The investment experience of a Division reflects increases and decreases in the net asset value of the shares of the underlying Fund, any dividend or capital gains distributions declared by the Fund, and any charges assessed against assets of the Division. The investment experience is determined each day the net asset value of the underlying Fund is determined -- that is, on each Valuation Date. The actual net rate of return for a Division measures the net investment experience from the end of one Valuation Date to the end of the next Valuation Date. NET SURRENDER VALUE. The Policy may be fully surrendered for its Net Surrender Value at any time while at least one Insured is living. The Net Surrender Value is equal to the Account Value less any applicable Surrender Charges and less any Policy Debt as of the date the Company receives the request to surrender in good order. The surrender will be processed within seven days. An Owner may surrender the Policy by sending a written request together with the Policy to MassMutual's Administrative Office. The proceeds will be determined as of the end of the Valuation Date on which the request for surrender is received in good order. WITHDRAWALS. After the first Policy Year, the Owner may, subject to certain restrictions, withdraw up to 75% of the Net Surrender Value. For each Withdrawal, a fee of $25 is deducted from the amount withdrawn. The minimum amount of a Withdrawal is $100 (before deducting the Withdrawal fee). We reserve the right to prohibit Withdrawals that would result in a reduction of the Face Amount to less than $500,000. The Owner must state in the Withdrawal Request the account and/or Divisions from which the withdrawal will be made. The amount can be stated as a dollar amount or a percentage. The withdrawal will be effective on the date We receive the written request in good order and will be processed within seven days. The Withdrawal amount attributable to a Division of the Separate Account or to the GPA may not exceed the non-loaned Account Value of the Division or GPA. If Death Benefit Option 1 or 3 is in effect, MassMutual will reduce the Face Amount by the amount of the Withdrawal unless satisfactory evidence of insurability is provided. A Surrender Charge is not assessed for a Withdrawal. POLICY LOAN PRIVILEGE GENERAL. After the first Policy Year, the Owner may obtain a loan from the Policy as long as the Account Value exceeds the total of any Surrender Charges. The Policy must be assigned to MassMutual as collateral for the loan. The maximum amount that can be borrowed at any time is 90% of the Policy's Account Value less any Surrender Charge. This is reduced by any outstanding Policy Debt, which includes accrued interest. SOURCE OF LOAN. The Policy loan amount requested is taken from the Divisions of the Separate Account and the GPA in proportion to the Account Value of each Division and the GPA (excluding any outstanding loans) on the date of the loan. Loaned amounts are taken from the Divisions by liquidating units and the resulting dollar amounts are transferred to the loaned portion of the GPA. We may delay 10 the granting of any loan taken from the GPA for up to six months. We also may delay the granting of any loan from the Divisions of the Separate Account during any period that: (i) the New York Stock Exchange is closed (other than customary weekend and holiday closings); (ii) trading is restricted; (iii) the SEC determines a state of emergency exists; or (iv) the Securities and Exchange Commission permits MassMutual to delay payment for the protection of our Owners. Whenever total Policy Debt (which includes accrued interest) equals or exceeds the Account Value less Surrender Charges, MassMutual will send a notice to the Owner. This notice will state the amount necessary to bring the Policy Debt back within the limit. If we do not receive payment of that amount plus a premium payment sufficient to keep the policy in force for three months, within 31 days after the date we mailed the notice, and if Policy Debt exceeds the Account Value less any Surrender Charges at the end of those 31 days, the Policy terminates without value. LOAN INTEREST CHARGED. At the time of Application, the Owner may select a loan interest rate of 5% or (in all jurisdictions except Arkansas) an adjustable loan rate. Each year MassMutual will set the adjustable rate that will apply for the next Policy Year. The maximum loan rate is based on the Monthly Average Corporate yield on seasoned corporate bonds as published by Moody's Investors Service, Inc., or, if it is no longer published, a substantially similar average. The maximum rate is the published monthly average for the calendar month ending two months before the Policy Year begins, or 4%, whichever is higher. If the maximum limit is not at least 1/2% higher than the rate in effect for the previous year, we will not increase the rate. If the maximum limit is at least 1/2% lower than the rate in effect for the previous year, we will decrease the rate. Interest on Policy loans accrues daily and becomes part of the Policy Debt as it accrues. It is due on each Policy Anniversary. If not paid when due, the interest will be added to the loan and, as part of the loan, will bear interest at the same rate. Any interest capitalized on a Policy Anniversary will be treated the same as a new loan and will be taken from the Divisions and the GPA in proportion to the non-loaned Account Value in each. REPAYMENT. All or part of any Policy Debt may be repaid at any time while at least one of the Insureds is living and while the Policy is in force. Any loan repayment made within 30 days of the policy Anniversary date pays policy loan interest due. Any other loan repayment first will be allocated to the GPA until the Owner has repaid all loan amounts that originated from the GPA. Additional loan repayments will be allocated according to the premium allocation factors in effect. Loan repayments must be clearly identified as such; otherwise they will be considered premium payments. Any outstanding Policy Debt will be deducted from the proceeds payable at the second death or the surrender of the Policy. INTEREST ON LOANED VALUE. Any loaned amount is held in the GPA and earns interest at a rate determined by MassMutual, equal to the greater of 3% and the Policy loan rate less the Loan Interest Rate Expense Charge. This Charge is 2% on a guaranteed basis and 0.50% in Policy Years one through 10 and 0.25% in Policy Years 11 and later on a current basis. EFFECT OF LOAN. A Policy loan affects the Policy since the Death Benefit and Net Surrender Value under a Policy are reduced by the amount of the loan. Repayment of the loan increases the Death Benefit and Net Surrender Value under the Policy by the amount of the repayment. Taking a Policy loan could have tax consequences. (See POLICY PROCEEDS, PREMIUMS AND LOANS.) As long as a loan is outstanding, a portion of the Policy Account Value equal to the loan is held in the GPA. This amount is not affected by the Separate Account investment performance. The Account Value may be impacted since the portion of the Account Value equal to the Policy loan is credited with an interest rate declared by MassMutual rather than a rate of return reflecting the investment performance of the Division(s) of the Separate Account from which the loan was taken. FREE LOOK PROVISION The Owner may cancel the Policy within 10 days.(This period may be longer in some states.). The Owner should mail or deliver the Policy and Policy delivery receipt either to MassMutual's Administrative Office or to the agent who sold the Policy or to one of our agency offices. If the Policy is canceled in this fashion, a refund will be made to the Owner. The refund may be equal to the sum of: (i) any premium paid for this Policy; plus (ii) interest credited to this Policy under the Guaranteed Principal Account; plus or minus (iii) an amount reflecting the investment experience of the investment divisions of the Separate Account under this Policy to the date the Policy is received by us; minus (iv) any amounts withdrawn and any Policy Debt. Or, the refund may be equal to the total of all premiums paid for the Policy, reduced by any amounts borrowed or withdrawn. Check Your contract to determine which refund is applicable under Your Policy. THE GUARANTEED PRINCIPAL ACCOUNT An Owner may allocate some or all of the Net Premiums and transfer some or all of the Account Value in the Divisions of the Separate Account, to the Guaranteed Principal Account ("GPA"). Because of exemptive and exclusionary provisions, interests in MassMutual's General 11 Account (which include interests in the Guaranteed Principal Account) are not registered under the Securities Act of 1933 and the General Account is not registered as an investment company under the Investment Company Act of 1940. Accordingly, neither the General Account nor any interests therein are subject to the provisions of these Acts, and MassMutual has been advised that the staff of the Securities and Exchange Commission has not reviewed the disclosures in the Prospectus relating to the General Account. Disclosures regarding the General Account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. Amounts allocated to the Guaranteed Principal Account become part of the General Account of MassMutual, which consists of all assets owned by MassMutual other than those in the Separate Account and other separate accounts of MassMutual. Subject to applicable law, MassMutual has sole discretion over the investment of the assets of its General Account. MassMutual guarantees those amounts allocated to the GPA in excess of any Policy Debt (which includes accrued interest) will accrue interest daily at an effective annual rate at least equal to 3%. For amounts in the GPA equal to any Policy Debt, the guaranteed minimum interest rate is an effective annual rate of 3% or, if greater, the Policy loan rate less the Loan Interest Rate Expense Charge. This charge will not be greater than 2% per year. Such interest will be paid regardless of the actual investment experience of the GPA. Although MassMutual is not obligated to credit interest at a rate higher than the guaranteed minimum, it may declare a higher rate applicable for such periods as it deems appropriate. WHEN WE PAY PROCEEDS If the Policy has not terminated, payment of the Net Surrender Value is made within 14 days, and payment of loan proceeds, partial Withdrawals or the Death Benefit are made within seven days after We receive all required documents in a form satisfactory to us at our Administrative Office. But We can delay payment of the Net Surrender Value or any Withdrawal from the Separate Account or any loan proceeds attributable to the Separate Account during any period when: (i) it is not reasonably practical to determine the amount because the New York Stock Exchange is closed (other than customary week-end and holiday closings); or (ii) trading is restricted by the SEC; or (iii) the SEC declares an emergency exists; or (iv) the SEC, by order, permits us to delay payment in order to protect our Owners. We may delay paying any Net Surrender Value, any Withdrawal, or any loan proceeds based on the GPA for up to six months from the date the request is received at our Administrative Office. We can delay payment of the entire Death Benefit if payment is contested. We investigate all death claims arising within the two-year contestable period. We may investigate death claims arising beyond the two-year contestable period. Upon receiving the information from a completed investigation, We generally make a determination within five days as to whether the claim should be authorized for payment. Payments are made promptly after authorization. If payment of a Net Surrender or Withdrawal is delayed for 30 days or more, We add interest to the date of payment at the same rate it is paid under the interest payment option. Interest is paid on the Death Benefit from the date of death to the date of payment. FEDERAL INCOME TAX CONSIDERATIONS Policy Proceeds, Premiums and Loans MassMutual believes the Policy meets the statutory definition of life insurance under Code Section 7702 and hence receives the same tax treatment as that accorded to fixed benefit life insurance. Thus, the Death Benefit under the Policy is generally excludible from the gross income of the Beneficiary under Section 101(a)(1) of the Code. As an exception to this general rule, where a Policy has been transferred for value, only the portion of the Death Benefit that is equal to the total consideration paid for the Policy may be excluded from gross income. The Owner is not deemed to be in constructive receipt of the cash values, including increments thereon, under the Policy until a full surrender or partial Withdrawal is made (unless the Policy is a "modified endowment contract," as discussed below). Decreases in Face Amount and Withdrawals may be taxable depending on the circumstances. Code Section 7702(f)(7) provides that where a reduction of future benefits occurs during the first 15 years after a Policy is issued and where there is a cash distribution associated with that reduction, the Owner may be taxed on all or a part of the amount distributed. Where the provisions of Code Section 7702(f) do not cause a taxable event, a Withdrawal is taxable only to the extent it exceeds the Owner's unrecovered premiums. After 15 years, such cash distributions are not subject to federal income tax, except to the extent they exceed the total amount of premiums paid but not previously recovered. MassMutual suggests You consult with your tax adviser in advance of a proposed decrease in Face Amount or Withdrawal as to the portion, if any, which would be subject to federal income tax. A change of the Owner or the Insured(s) or an exchange or assignment of the Policy may have tax consequences depending on the circumstances. 12 MassMutual also believes that under current law any loan received under the Policy will be treated as Policy Debt of an Owner, and that no part of any loan under a Policy will constitute income to the Owner unless the Policy has become a "modified endowment contract." If the Policy is a modified endowment contract under Code Section 7702A, loans will be fully taxable to the extent of any income in the Policy and could be subject to an additional 10 percent tax. In general, income in the policy is defined as the excess of the Account Value (both loaned and unloaned) over previously unrecovered premiums paid. See the discussion on modified endowment contracts below. Under the "personal" interest limitation provisions of the Tax Reform Act of 1986, interest on Policy loans used for personal purposes, which otherwise meet the requirements of Code Section 264, will no longer be tax-deductible. However, other rules may apply to allow all or part of the interest expense as a deduction if the loan proceeds are used for "trade or business" or "investment" purposes. See your tax adviser for further guidance. If the Policy is owned by a business or corporation, the 1986 Act may impose additional restrictions. The Act limits the interest deduction available for loans against a business-owned Policy. It imposes an indirect tax on the gain in corporate-owned life insurance policies by way of the corporate alternative minimum tax for those corporations subject to the alternative minimum tax. The corporate alternative minimum tax also could apply to a portion of the amount by which Death Benefits received exceed the Policy's date-of-death Net Surrender Value. Federal estate and gift and state and local estate and other tax consequences of ownership or receipt of Policy proceeds depend on the circumstances of each Owner or Beneficiary. MassMutual cannot make any guarantee regarding the future tax treatment of any Policy. For complete information on the impact of changes with respect to the Policy and federal and state tax considerations, a qualified tax adviser should be consulted. The ultimate effect of federal income taxes on values under this Policy and on the economic benefit to the Owner or Beneficiary depends on MassMutual's tax status and on the tax status of the individual concerned. The discussion contained herein is general in nature and is not an exhaustive discussion of all tax questions that might arise under the Policy, and is not intended as tax advice. Moreover, no representation is made as to the likelihood of continuation of current federal income tax laws and Treasury Regulations or of the current interpretations of the Internal Revenue Service. MassMutual reserves the right to make changes in the Policy to assure that it continues to qualify as life insurance for tax purposes. For complete information on federal and state tax law considerations, You should consult a qualified tax adviser. No attempt is made herein to consider any applicable state or other tax laws. CHARGES FOR FEDERAL TAXES. MassMutual currently does not make any charge against the Separate Account for federal income taxes. We may make such a charge eventually in order to provide for the future federal income tax liability of the Separate Account. Upon a full surrender of a Policy for its Net Surrender Value, the Owner may recognize ordinary income for federal income tax purposes. Ordinary income is computed to be the amount by which the Account Value, unreduced by any outstanding Policy Debt but less any Surrender Charges assessed, exceeds the premiums paid but not previously recovered and any other consideration paid for the Policy. MODIFIED ENDOWMENT CONTRACTS. Contrary to the rules described above, loans, collateral assignments, and other amounts distributed under a "modified endowment contract" are taxable to the extent of any accumulated income in the Policy. In general, the amount that may be subject to taxation is the excess of the Account Value (both loaned and unloaned) over the previously unrecovered premiums paid. Death benefits paid under a modified endowment contract, however, are not taxed any differently than death benefits payable under other life insurance contracts. A Policy is a modified endowment contract if it satisfies the definition of life insurance in the Internal Revenue Code but fails the additional "7-pay test." A Policy fails this test if the accumulated amount paid under the contract at any time during the first seven contract years exceeds the total premiums that would have been payable under a policy providing guaranteed benefits upon the payment of seven level annual premiums. Also, a Policy that would otherwise satisfy the 7-pay test will be taxed as a modified endowment contract if it is received in exchange for a modified endowment contract. Certain changes will require a Policy to be retested to determine whether it has become a modified endowment contract. For example, a reduction in death benefits during the first seven contract years will cause the Policy to be retested as if it originally had been issued with the reduced death benefit. If the premiums actually paid into the Policy exceed the limits under the 7-pay test for a policy with the reduced death benefit, the Policy will become a modified endowment contract. This classification change is effective retroactively to the Policy Year in which the actual premiums paid exceed the new 7-pay limits. In addition, a "material change" occurring at any time while the Policy is in force will require the Policy to be re-tested to determine whether it continues to meet the 7-pay test. A material change starts a new 7-pay test period. The term "material change" includes many increases in death benefits. A material change does not include an increase in death benefit attributable to the payment of premiums necessary to fund the lowest level of death benefit payable 13 during the first seven contract years, or which is attributable to the crediting of interest with respect to such premiums. Since the Policy provides for flexible premium payments, the Company has instituted procedures to monitor 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. If any amount is taxable as a distribution of income under a modified endowment contract, it also will be subject to a 10% penalty tax. Limited exceptions from the additional penalty tax are available for individual Owners. The penalty tax will not apply to distributions: (i) made on or after the date the taxpayer attains age 59 1/2; or (ii) attributable to the taxpayer becoming disabled; or (iii) part of a series of substantially equal periodic payments (made at least annually) made for the life or life expectancy of the taxpayer. For complete information about modified endowment contract status, a qualified tax adviser should be consulted. Once a Policy fails the 7-pay test, loans and distributions occurring in the year of failure and thereafter become subject to the rules for modified endowment contracts. In addition, a recapture provision applies to loans and distributions received in anticipation of failing the 7-pay test. Any distribution or loan made within two years prior to failing the 7-pay test is considered to have been made in anticipation of the failure. Under certain circumstances, a loan, collateral assignment, or other distribution under a modified endowment contract may be taxable even though it exceeds the amount of income accumulated in the Policy. For purposes of determining the amount of income received from a modified endowment contract, the law requires the aggregation of all modified endowment contracts issued to the same Owner by an insurer and its affiliates within the same calendar year. Therefore, loans, collateral assignments, and distributions from any one such Policy are taxable to the extent of the income accumulated in all the Policies required to be aggregated. QUALIFIED PLANS. The Policy may be used in conjunction with certain tax- qualified employee benefit plans. Since the rules governing such use are complex, a purchaser should not use the Policy in conjunction with any such qualified plan until a competent tax adviser has been consulted. The Policy may not be used in conjunction with an Individual Retirement Account (IRA). DIVERSIFICATION STANDARDS. To comply with final regulations under Code Section 817(h) ("Final Regulations"), each Fund of the Trusts is required to diversify its investments. The Final Regulations generally require that on the last day of each quarter of a calendar year no more than 55% of the value of a Fund's assets is represented by any one investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. A "look-through" rule applies to treat a pro rata portion of each asset of a Fund as an asset of the Separate Account. All securities of the same issuer are treated as a single investment. However, each government agency or instrumentality is treated as a separate issuer. With respect to variable life insurance contracts, the general diversification requirements are modified if any of the assets of the Separate Account are direct obligations of the United States Treasury. In this case, there is no limit on the investment that may be made in United States Treasury securities, and for purposes of determining whether assets other than United States Treasury securities are adequately diversified, the generally applicable percentage limitations are increased based on the value of the Separate Account's investment in United States Treasury securities. Notwithstanding this modification of the general diversification requirements, the Funds of the Trusts will be structured to comply with the general diversification standards because they serve as an investment vehicle for certain variable annuity contracts that must comply with the general standards. In connection with the issuance of the temporary regulations prior to the Final Regulations, the Treasury announced that such temporary regulations did not provide guidance concerning the extent to which Owners may direct their investments to particular Divisions of a separate account. Regulations in this regard were not issued in connection with the Final Regulations, however. It is not clear, at this time, what future regulations might provide. It is possible, if future regulations are issued, the Policy may need to be modified to comply with such regulations. For these reasons, MassMutual reserves the right to modify the Policy, as necessary, to prevent the Owner from being considered the owner of the assets of the Separate Account. MassMutual intends to comply with the Final Regulations to assure the Policy continues to qualify as life insurance for federal income tax purposes. YOUR VOTING RIGHTS As long as the Separate Account continues to operate as a unit investment trust under the Investment Company Act of 1940, the Owner is entitled to give MassMutual instructions as to how shares of the Funds held in the Separate Account (or other securities held in lieu of such shares) deemed attributable to the Policy shall be voted at meetings of shareholders of the Funds of the Trusts. Those persons entitled to give voting instructions are determined as of the record date for the meeting. The number of shares of the Funds held in the Separate Account deemed attributable to the Policy during the lifetimes of the Insureds is determined by dividing the Policy's Account Value held in each Division of the 14 Separate Account, if any, by $100. Fractional votes are counted. Owners receive proxy material and a form on which Owner instructions may be given. Shares of the Funds held by the Separate Account for which no effective Owner instructions have been received are voted for or against any proposition in the same proportion as the shares for which instructions have been received. RESERVATION OF RIGHTS We reserve the right to take certain actions in connection with our operations and the operations of the Separate Account. These actions will be taken in accordance with applicable laws (including obtaining any required approval of the Securities and Exchange Commission). If necessary, we will seek approval by Owners. Specifically, we reserve the right to: . Create new Divisions of the Separate Account; . Create new Separate Accounts; . Combine any two or more Separate Accounts; . Make available additional Divisions of the Separate Account investing in additional investment companies; . Invest the assets of the Separate Account in securities other than shares of the Funds as a substitute for such shares already purchased or as the securities to be purchased in the future; . Operate the Separate Account as a management investment company under the Investment Company Act of 1940 or in any other form permitted by law; . De-register the Separate Account under the Investment Company Act of 1940 in the event such registration is no longer required; . Substitute one or more Funds for other funds with similar investment objectives; and . Delete Funds. MassMutual also reserves the right to change the name of the Separate Account. We have reserved all rights to the name MassMutual Life Insurance Company or any part of it. We may allow the Separate Account and other entities to use our name or part of it, but we also may withdraw this right. ADDITIONAL BENEFITS YOU CAN GET BY RIDER At the Owner's request, the Policy can include additional benefits We approve based on our standards and limits for issuing insurance and classifying risks. An additional benefit is provided by rider and is subject to the terms of both the rider and the Policy. The cost of any rider is deducted as part of the Monthly Charges. Subject to state availability, the following riders are available. POLICY SPLIT OPTION RIDER. This rider allows the Owner, while both Insureds are living, to exchange the Policy for two new policies, one on the life of each Insured, without evidence of insurability. Each new policy may be a fixed premium permanent life policy or a flexible premium adjustable life policy. This right will be available for the six-month period beginning on: . The date six months after the effective date of a final decree of divorce, issued by a court of competent jurisdiction, ending the Insureds' marriage to each other, if the decree first becomes effective at least one year after the Policy Issue Date, and remains in effect during the entire six-month period after it first becomes effective. . The date either Section 2056 of the Internal Revenue Code (I.R.C.) is nullified or amended to eliminate or reduce by at least 50% the Insureds' federal estate tax marital deduction; or the maximum federal estate tax rate given in I.R.C. Section 2001 is reduced to half the rate in effect on the Policy Issue Date of this Policy. . If this Policy Owner is a corporation or partnership, the effective date the corporation or partnership dissolves. The new policies must meet the policy requirements in effect at the time of the exchange. The face amount of each new policy will be one-half the face Amount of this Policy at the time of the split. The policy date of each new policy will be the date of exchange. The issue age of each Insured will be the age of each Insured on the birthday nearest the policy date. This rider may be attached to the Policy at the time of issue as long as the younger Insured is younger than age 80, the older insured is younger than age 85, and the insurance risk class of neither Insured is uninsurable There is a one-time charge for this Rider at the time of attachment. It is equal to eight percent of the first year premium. ESTATE PROTECTION RIDER. This rider may be attached to the Policy at the time of issue. It provides an additional Death Benefit during the first four Policy Years if both Insureds die during this period. The Owner selects the Face Amount of the rider subject to a minimum of $25,000 and a maximum of 125% of the Policy's Initial Face Amount. A charge equal to the policy Insurance Charge multiplied by the Face Amount of the rider divided by $1,000. PAYMENT OPTIONS The Policy proceeds (the Death Benefit or the Net Surrender Value) can be paid in cash, or if elected, all or part of these proceeds can be placed under one or more of the following payment options. The minimum amount that can be applied 15 under a payment option is $2,000. If the periodic payment under any option is less than $20, we reserve the right to make payments at less-frequent intervals. None of these benefits depends on the performance of the Separate Account or the GPA. For additional information concerning these options, see the Policy. The following payment options are currently available. - ----------------------------------------------------------------------------------------------------------------------------- Installments for a Specified Period Equal monthly payments will be made for any period selected, up to 30 years. The amount of each payment depends on the total amount applied, the period selected, and the monthly income rates We are using when the first payment is due. - ----------------------------------------------------------------------------------------------------------------------------- Life Income Equal monthly payments will be based on the life of a named person. Payments will continue for the lifetime of that person. Income with or without a minimum payment period may be elected. - ----------------------------------------------------------------------------------------------------------------------------- Interest We will hold any amount applied under this option. Interest on the amount will be paid at an effective annual rate determined by us. This rate will not be less than 3%. - ----------------------------------------------------------------------------------------------------------------------------- Installments of Specified Amount Each payment will be made for an agreed fixed amount. The total amount paid during the first year must be at least 6% of the total amount applied. Interest will be credited each month on the unpaid balance and added to it. This interest will be an effective annual rate determined by us, but not less than 3%. Payments continue until the balance we hold is reduced to an amount less than the agreed fixed amount. The last payment will be for the balance only. - ----------------------------------------------------------------------------------------------------------------------------- Life Income with Payments Guaranteed Equal monthly payments will be based on the life of a named person. Payments will for Amount Applied be made until the total amount paid equals the amount applied, and as long thereafter as the named person lives. - ----------------------------------------------------------------------------------------------------------------------------- Joint Lifetime Income with Reduced Monthly payments will be based on the lives of two named persons. Payments at the Payments to Survivor initial level will continue while both are living, or for 10 years if longer. When one dies (but not before the 10 years has elapsed), payments are reduced by one-third and will continue at that level for the lifetime of the other. After the 10 years has elapsed, payments stop when both named persons have died. - -----------------------------------------------------------------------------------------------------------------------------
WITHDRAWAL RIGHTS UNDER PAYMENT OPTIONS. If provided in the payment option election, all or part of the unpaid balance under the Fixed Amount or Interest Payment Option may be withdrawn or applied under any other option. No part of the payments under the Fixed Time Payment Option or payments that are based on a named person's life may be withdrawn. BENEFICIARY A Beneficiary is any person named on our records to receive insurance proceeds at the second death. The Beneficiary is named in the application for the Policy. There may be different classes of beneficiaries, such as primary and secondary. These classes set the order of payment. There may be more than one Beneficiary in a class. Any Beneficiary may be named an Irrevocable Beneficiary. An Irrevocable Beneficiary is one whose consent is needed to change that Beneficiary. The consent of any Irrevocable Beneficiary is needed to exercise any Policy right except the right to change the frequency of Planned Premiums and Reinstate the Policy after termination. The Owner may change the Beneficiary during either Insured's lifetime by writing to our Administrative Office. Generally, the change will take effect as of the date of the request. If no Beneficiary is living at the second death, unless provided otherwise, the Death Benefit is paid to the Owner or, if deceased, to the Owner`s estate. ASSIGNMENT The Policy may be assigned as collateral for a loan or other obligation. For any assignment to be binding on MassMutual, however, We must receive a signed copy of it at our Administrative Office. We are not responsible for the validity of any assignment. 16 LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY Except for any policy change or reinstatement requiring evidence of insurability, we cannot contest the validity of the policy: . with respect to any material misrepresentation in the application regarding the insurability of Insured No. 1, once the policy has been in force during the lifetime of Insured No. 1 for two years after the Issue Date; or . with respect to any material misrepresentation in the application regarding the insurability of Insured No. 2, once the policy has been in force during the lifetime of Insured No. 2 for two years after the its Issue Date. For any policy change or reinstatement requiring evidence of insurability, We cannot contest the validity of the change or reinstatement with respect to each Insured after the change has been in effect for two years during the lifetime of that Insured. ERROR OF AGE OR SEX If either Insured`s age or sex is misstated in the Policy application, the Death Benefit payable under the Policy will be adjusted based on what the Policy would provide according to the most recent Monthly Charge for the correct date of birth and correct sex. SUICIDE Suicide within two years of the Policy Date is not covered by the Policy. If either Insured dies by suicide, while sane or insane, within two years from the Issue Date or Reinstatement Date, the Policy will terminate. We will refund the amount of all premiums paid, less any Withdrawals and Policy Debt. If either Insured, while sane or insane, dies by suicide within two years after the effective date of any increase in the Face Amount, the increase will terminate and We will refund the Monthly Charges for that increase. However, if a refund was payable as the result of suicide during the first two years following the Issue Date or the Reinstatement Date of the Policy, there is no additional refund for any Face Amount increase. SALES AND OTHER AGREEMENTS MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA 01144-1013, is the principal underwriter of the Policy pursuant to an Underwriting and Servicing Agreement to which MML Distributors, MassMutual and the Separate Account are parties. MML Investors Services, Inc. ("MMLISI"), also located at 1414 Main Street, Springfield, MA 01144-1013, serves as the co- underwriter of the Policy. Both MML Distributors and MMLISI are registered with the Securities and Exchange Commission (the "SEC") as broker-dealers under the Securities Exchange Act of 1934 and are members of the National Association of Securities Dealers, Inc. (the "NASD"). MML Distributors may enter into selling agreements with other broker-dealers that are registered with the SEC and are members of the NASD ("selling brokers"). MassMutual sells the Policy through agents who are licensed by state insurance officials to sell the Policy. These agents also are registered representatives of selling brokers or of MMLISI. The Policy is offered in all states where MassMutual is authorized to sell variable life insurance. The Company also may contract with independent third party broker-dealers who may act as wholesalers by assisting the Company in finding Broker-dealers to offer and sell the Policies. These parties also may provide training, marketing and other sales related functions for the Company and other broker-dealers and may provide certain administrative services to the Company in connection with the Policies. The Company may pay such parties compensation based on premium payments for the Policies purchased through broker-dealers selected by the wholesaler. In addition, some sales personnel may receive various types of non- cash compensation as special sales incentives, including trips and educational and/or business seminars. When an application for the Policy is completed, it is submitted to MassMutual. MassMutual performs suitability and insurance underwriting and determines whether to accept or reject the application for the Policy and the Insureds' risk classifications. If the application is not accepted, MassMutual will refund any premium paid. Pursuant to the Underwriting and Servicing Agreement, both MML Distributors and MMLISI will receive compensation for their activities as underwriters of the Policy. 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. COMPENSATION Writing agents will receive commissions based on a commission schedule and rules. Some commissions are paid as a percentage of the premium paid in each Policy Year. These commissions distinguish between premiums up to the Target Premium and premiums paid in excess of the Target Premium. The Target Premium is based on the issue ages, sexes, and risk classifications of the Insureds. Commissions also are paid as a percentage of the average monthly 17 Account Value in each Policy Year. The maximum commission percentages are as follow. PREMIUM-BASED COMMISSIONS - -------------------------------------------------------------------------------- COVERAGE YEAR 1 50% of premium paid up to the Target Premium 3% of premium paid over the Target Premium COVERAGE YEARS 2-5 5% of premium paid up to the Target Premium 3% of premium paid over the Target Premium COVERAGE YEARS 6-10 3% of all premium paid COVERAGE YEARS 11 AND BEYOND 1% of all premium paid - -------------------------------------------------------------------------------- ASSET-BASED COMMISSIONS - -------------------------------------------------------------------------------- POLICY YEARS 2 AND BEYOND 0.15% of the average monthly Account Value in each Policy Year - -------------------------------------------------------------------------------- Agents under financing agreements with a general agent of MassMutual may be compensated differently. Agents who meet certain productivity and persistency standards in selling MassMutual policies are eligible for additional compensation. General agents and district managers who are registered representatives of MMLISI also may receive commission overrides, allowances and other compensation. While the compensation payable to broker-dealers for sales of Policies may vary with the sales agreement and level of production, they generally are expected to be comparable to the aggregate compensation paid to Company agents and general agents. BONDING ARRANGEMENT An insurance company blanket bond is maintained providing $50,000,000 coverage for officers and employees of MassMutual and C.M. Life (subject to a $350,000 deductible) and $50,000,000 for MassMutual`s general agents and agents (also subject to a $350,000 deductible). LEGAL PROCEEDINGS We are not currently involved in any legal proceedings that would have a material impact on the Policy. EXPERTS The audited financial statements of MassMutual included in this Prospectus have been included herein in reliance on the reports of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. Coopers & Lybrand's report on the statutory financial statements of MassMutual includes explanatory paragraphs relating to the use of statutory accounting practices rather than generally accepted accounting principles. Actuarial matters in the Prospectus have been examined by Craig Waddington, FSA, MAAA. An opinion on actuarial matters is filed as an exhibit to the registration statements We filed with the SEC. III. ADDITIONAL INFORMATION 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 assets under management of $152.5 billion and unconsolidated MassMutual assets in excess of $57.5 billion. MASSMUTUAL'S TAX STATUS. MassMutual is taxed as a life insurance company under Subchapter L of the Internal Revenue Code of 1986 (the "Code"). The Segment and the Separate Account are not separate entities from MassMutual and its operations form a part of MassMutual. Investment income and realized capital gains on the assets of the Segment are reinvested and taken into account in determining Account Value. The investment income and realized capital gains are applied automatically to increase book reserves associated with the Policy. Under existing federal income tax law, the Segment's investment income, including net capital gains, is not taxed to MassMutual to the extent it is applied to increase reserves associated with the Policy. The reserve items taken into account at the close of the taxable year for purposes of determining net increases and net decreases must be adjusted for tax purposes by subtracting any amount attributable to appreciation in the value of assets and by adding any amount attributable to depreciation. MassMutual's basis in the Policy's share of the assets underlying the Segment will be adjusted for appreciation or depreciation, to the extent the reserves are adjusted. Thus, corporate-level capital gains and losses, and the tax effect thereof, are eliminated. 18 Due to MassMutual's current tax status, no charge is made to the Segment for MassMutual's federal income taxes that may be attributable to the Segment. Periodically, MassMutual reviews the question of a charge to the Segment for MassMutual's federal income taxes. A charge may be made for any federal income taxes incurred by MassMutual and attributable to the Segment. Depending on the method of calculating interest on Policy values allocated to the Guaranteed Principal Account (see preceding section), a charge may be imposed for the Policy's share of MassMutual's federal income taxes attributable to that account. Under current laws, MassMutual may incur state or local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant. If there is a material change in applicable state or local tax laws, MassMutual reserves the right to charge the Separate Account for taxes, if any, attributable to the Separate Account. RECORDS AND REPORTS All records and accounts relating to the Separate Account and the GPA are maintained by MassMutual. Each year within the 30 days following the Policy Anniversary, MassMutual will mail You a report showing the Account Value at the beginning of the previous Policy Year, all premiums paid since that time, all additions to and deductions from the Account Value during the year, and the Account Value, Death Benefit, Net Surrender Value and Policy Debt as of the last Policy Anniversary. This report contains any additional information required by any applicable law or regulation. THE SEPARATE ACCOUNT The Separate Account was established on February 2, 1995, as a separate investment account of MassMutual by MassMutual's Board of Directors in accordance with the laws of the State of Massachusetts. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust pursuant to the provisions of the Investment Company Act of 1940, and meets the definition of a "separate account" in that statute. Registration does not involve supervision of the management or investment practices of either the Separate Account or of MassMutual. A separate segment for the Policies (the "Segment") was established on November 12, 1997 and has since been divided into 13 Divisions. Each Division invests in a corresponding series of shares of a designated Fund of either MML Trust, Oppenheimer Trust, Variable Insurance Products Fund II (managed by Fidelity Management & Research Company), T. Rowe Price Equity Series, Inc., or American Century Variable Portfolios, Inc. MassMutual may establish additional divisions within the Separate Account in the future, which may invest in other investment funds, including those of MML Trust, Oppenheimer Trust, (Fidelity) Variable Insurance Products Fund II, T. Rowe Price Equity Series, Inc., or American Century Variable Portfolios, Inc., or in any other investment fund MassMutual deems to be appropriate. MassMutual owns the assets in the Separate Account and is required to maintain sufficient assets in the Separate Account to meet anticipated obligations of the Policies funded by the Separate Account. The income, gains, or losses, realized or unrealized, of the Separate Account are credited to or charged against the assets held in the Separate Account without regard to the other income, gains, or losses of MassMutual. Assets in the Separate Account attributable to the reserves and other liabilities under the Policies are not chargeable with liabilities arising from any other business conducted by MassMutual. MassMutual may transfer to its General Account; however, any assets that exceed anticipated obligations of the Separate Account. All obligations arising under the Policy are general corporate obligations of MassMutual. MassMutual may accumulate in the Separate Account proceeds from various Policy charges and investment results applicable to those assets. Some of the Funds offered are substantially identical to or are "clones" of mutual funds offered in the retail marketplace. These "clone" funds have the same investment objectives, policies, and portfolio managers as the retail funds and usually were formed after the retail funds. For example, the Variable Product Insurance Funds' Contrafund is a clone of Fidelity's Contrafund; American Century Variable Portfolios' Income & Growth Portfolio is a clone of the American Century Income & Growth Fund and the T. Rowe Price Equity Series' Mid-Cap Growth Portfolio is a clone of the T. Rowe Price Mid-Cap Growth Fund. Whole the clone funds generally have identical investment objectives, policies and portfolio managers, they are separate and distinct from the retail funds. In fact, the performance of the clone funds may be dramatically different from the performance of the retail funds due to differences in the funds' sizes, dates shares of stock are purchased and sold, cash flows and expenses. Thus, while the performance of the retail funds may be informative, you should remember that such performance is not the performance of the funds that support the Policy and is not an indication of future performance of such funds. MML TRUST AND OPPENHEIMER TRUST The MML Trust is a no-load, open-end, management investment company registered under the Investment Company Act of 1940. The Oppenheimer Trust is an open-end, diversified, management investment company registered under the Investment Company Act of 1940. Both the MML Trust and the Oppenheimer Trust provide an investment vehicle for the separate investment accounts of variable life and variable annuity contracts offered by companies such as MassMutual. Shares of the MML Trust and the Oppenheimer Trust are not offered to the general public. The assets of certain variable annuity separate accounts for which MassMutual or an affiliate is the depositor are invested in shares of the MML Trust's and Oppenheimer Trust's Funds. Because these separate accounts are invested in the same underlying Funds, it is possible material irreconcilable conflicts could arise between Policy Owners and owners of the variable annuity contracts. Possible conflicts could arise if: (i) state insurance regulators should disapprove or require changes in investment policies, investment advisers or principal underwriters or if MassMutual should be permitted to act contrary to actions approved by holders of the Policies under rules of the Securities and Exchange Commission; (ii) adverse tax treatment of the Policies or the variable annuity contracts would result from utilizing the same underlying funds; (iii) different investment strategies would be more suitable for the variable annuity contracts than for the Policies; or (iv) state insurance laws or regulations or other applicable laws would prohibit the funding of both the Separate Account and other investment accounts by the same Funds. The 19 Board of Trustees of each Trust will follow monitoring procedures that have been developed to determine whether material conflicts have arisen. If it is determined a conflict exists, the Trustees will notify MassMutual and OppenheimerFunds and appropriate action will be taken to eliminate such irreconcilable conflicts. MassMutual purchases the shares of each Fund for the corresponding Division at net asset value. All dividends and capital gain distributions received from a Fund are automatically reinvested in that Fund at net asset value, unless MassMutual, on behalf of the Separate Account, elects otherwise. Shares of the MML Trust and the Oppenheimer Trust will be redeemed by MassMutual at their net asset values to the extent necessary to make payments under the Policies. VARIABLE INSURANCE PRODUCTS FUND II Variable Insurance Product Fund II ("Fidelity VIP II"), managed by Fidelity Management & Research Company (FMR), is an open-end, diversified management investment company organized as a Massachusetts business trust on March 21, 1988 and is registered with the SEC under the 1940 Act. One of its investment portfolios, the VIP II Contrafund Portfolio, is available under this Policy. T. ROWE PRICE EQUITY SERIES, INC. The T. Rowe Price Equity Series, Inc. (the "Corporation") was incorporated in Maryland in 1994, and is a diversified, open-end investment company, or mutual fund. Currently, the corporation consists of four series, each representing a separate class of shares having different objectives and investment policies. One of the series, the Mid-Cap Growth Portfolio, is available under this Policy. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. American Century Variable Portfolios, Inc. is part of American Century Investments, a family of funds that includes nearly 70 no-load mutual funds covering a variety of investment opportunities. American Century Variable Portfolios offers its shares only to insurance companies to fund the benefits of variable annuity or variable life insurance contracts. One of the funds, VP Income and Growth, is offered under this Policy. Following is a chart illustrating the risk profiles of the investment options available, and a summary of the investment objectives of each fund. Please note there can be no assurance any fund will achieve its objectives. More detailed information concerning these investment objectives is contained in the accompanying prospectuses, including information on the risks associated with the investments, the investment techniques of each of the funds, and the deduction of expenses applicable to each of the funds. INVESTMENT PREFERENCE CHART - -------------------------------------------------------------------------------- Oppenheimer Global Securities Fund VIP II Contrafund Portfolio Oppenheimer Aggressive Growth Fund MML Small Cap Value Equity Fund T. Rowe Price Mid-Cap Growth Portfolio Oppenheimer Growth Fund MML Equity Index Fund American Century VP Income & Growth MML Equity Fund MML Blend Fund Oppenheimer Strategic Bond Fund MML Managed Bond Fund MML Money Market Fund Guaranteed Principal Account - -------------------------------------------------------------------------------- CONSERVATIVE LESS CONSERVATIVE MODERATE AGGRESSIVE MORE AGGRESSIVE CONSERVATIVE: Investment goal is preservation of principal, while incurring little or no risk. LESS CONSERVATIVE: Investment goal is primarily preservation of principal, with some desire for growth. MODERATE: Investment goal is growth, while seeking some preservation of principal. AGGRESSIVE: Investment goal is growth, with more tolerance for risk. MORE AGGRESSIVE: Investment goal is significant growth over the long-term, with short-term fluctuations in value expected. 20 MML MONEY MARKET FUND MML Money Market Fund seeks to achieve high current income, while preserving capital, and liquidity. This Fund invests in short-term debt instruments, including but not limited to commercial paper, certificates of deposit, bankers' acceptances, and obligations of the United States government, its agencies and instrumentalities. An investment in the Fund is neither insured nor guaranteed by the U.S. Government, and there can be no assurance that the Fund will be able to maintain a stable net asset value of $1.00 per share. MML MANAGED BOND FUND MML Managed Bond Fund seeks to achieve as high a total rate of return on an annual basis as is considered consistent with the preservation of capital. This Fund invests primarily in investment grade, publicly-traded fixed income securities of such maturities as MassMutual deems appropriate from time to time in light of market conditions and prospects. OPPENHEIMER STRATEGIC BOND FUND Oppenheimer Strategic Bond Fund seeks a high level of current income principally derived from interest on debt securities; and seeks to enhance such income by writing covered call options on debt securities. The Fund intends to invest principally in: (i) foreign government and corporate debt securities; (ii) U.S. Government securities; and (iii) lower-rated, high-yield domestic debt securities, commonly known as "junk bonds", which are subject to a greater risk of loss of principal and nonpayment of interest than higher-rated securities. Current income is not an objective. MML BLEND FUND MML Blend Fund seeks to achieve as high a level of total rate of return over an extended period of time as is considered consistent with prudent investment risk and the preservation of capital. This Fund invests in a portfolio of common stocks and other equity-type securities, bonds and other debt securities with maturities generally exceeding one year, and money market instruments and other debt securities with maturities generally not exceeding one year. Sub-advisor to the Equity sector of the Fund is David L. Babson & Company, Inc. MML Equity Fund MML Equity Fund seeks to achieve a superior total rate of return over an extended period of time from both capital appreciation and current income. A secondary objective is the preservation of capital when business and economic conditions indicate investing for defensive purposes is appropriate. The assets of this Fund are expected to be invested primarily in equity-type securities. Sub-advisor to the Fund is David L. Babson & Company, Inc. AMERICAN CENTURY VP INCOME & GROWTH American Century VP Income & Growth seeks long-term growth of capital as well as current income. The Fund pursues a total return and dividend yield that exceed those of the S&P 500 by investing in stocks of companies with strong dividend growth potential. MML EQUITY INDEX FUND MML Equity Index Fund seeks to provide investment results that correspond to the price and yield performance of the publicly traded common stocks in the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price Index. ("Standard & Poor's 500" and "S&P 500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's or the McGraw-Hill Companies, Inc.) OPPENHEIMER GROWTH FUND Oppenheimer Growth Fund seeks to achieve capital appreciation by investing in securities of well-known established companies. T. ROWE PRICE MID-CAP GROWTH PORTFOLIO The Mid-Cap Growth Portfolio seeks to provide long-term capital appreciation by investing primarily in common stocks of medium-sized (mid-cap) growth companies. The Fund focuses on companies with higher earnings growth potential that are no longer considered new or emerging, but may still be in the dynamic phase of their life cycles. MML SMALL CAP VALUE EQUITY FUND This Fund seeks to earn a high rate of return over an extended period. The Fund invests primarily in stocks of smaller capitalization companies with some unique product, market position, or operating characteristic which, in the portfolio manager's opinion distinguishes them and will result in above-average returns. OPPENHEIMER AGGRESSIVE GROWTH FUND Oppenheimer Aggressive Growth Fund seeks to achieve capital appreciation by investing in "growth-type" companies. Prior to May 1, 1998, this Fund was named Oppenheimer Capital Appreciation Fund. VIP II CONTRAFUND PORTFOLIO This Fund seeks capital appreciation by investing in the securities of companies whose value FMR believes is not fully recognized by the public. This Fund may be appropriate for policyowners who are willing to ride out stock market fluctuations in pursuit of potentially high long-term returns. The Fund is designed for those who are looking for an investment approach that follows a contrarian philosophy. OPPENHEIMER GLOBAL SECURITIES FUND Oppenheimer Global Securities Fund seeks long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations which are considered to have appreciation possibilities, but which may be considered to be speculative. 21 THE INVESTMENT ADVISERS MassMutual serves as investment manager of each of the MML Funds pursuant to investment management agreements. Concert Capital Management, Inc. ("Concert") served as the investment sub-adviser to MML Equity Fund and the Equity Sector of the MML Blend Fund from 1993-1996. Concert merged with and into David L. Babson & Company, Inc. ("Babson") effective December 31, 1996. Both Concert and Babson are wholly-owned subsidiaries of Babson Acquisition Corporation, which is a controlled subsidiary of MassMutual. Effective January 1, 1997, Babson became the investment sub-adviser to MML Equity Fund and the Equity Sector of the MML Blend Fund. Both MassMutual and Babson are registered investment advisers under the Investment Advisers Act of 1940. MassMutual entered into a sub-advisory agreement with Mellon Equity whereby Mellon Equity manages the investment and reinvestment of the assets of the MML Equity Index Fund. OppenheimerFunds, Inc. ("OFI") is an investment adviser organized under the laws of Colorado as a corporation; it was originally organized in 1959. It (including a subsidiary) currently has assets aggregating over $62 billion as of December 31, 1997, with over three million shareholder accounts. OFI is owned by Oppenheimer Acquisition Corporation, a holding company owned in part by senior management of OFI and ultimately controlled by MassMutual. OFI serves as investment adviser to the Oppenheimer Trust. OFI is registered as an investment adviser under the Investment Advisers Act of 1940. OFI serves as Investment Adviser to the Oppenheimer Funds. Citibank N.A., with its home office located at 111 Wall Street, New York, NY, 10005, acts as custodian for the MML Trust. Bank of New York, with its home office at One Wall Street, New York, NY 10015, acts as custodian for the Oppenheimer Trust. MassMutual is also the investment adviser to MassMutual Corporate Investors and MassMutual Participation Investors, closed-end investment companies, certain wholly-owned subsidiaries of MassMutual, and various employee benefit plans. MassMutual is the investment sub-adviser to Oppenheimer Investment Grade Bond Fund and Oppenheimer Value Stock Fund, open-end management investment companies. Fidelity Management & Research Company ("FMR") is the investment adviser to the VIP II Contrafund Portfolio. FMR is the management arm of Fidelity Investments(R) which was established in 1946. Fidelity Investments(R) has its principal business address at 82 Devonshire Street, Boston, Massachusetts. FMR handles the VIP II Contrafund business affairs and, with the assistance of affiliates, chooses the Fund's investments. Fidelity Management & Research (U.K.) Inc, in London, England, and Fidelity Management & Research (Far East) Inc, serve as sub-advisers for the VIP II Contrafund Portfolio. T. Rowe Price Associates, Inc ("T. Rowe Price") is the investment adviser to the T. Rowe Price Mid-Cap Growth Portfolio. T. Rowe Price was founded in 1937. The T. Rowe Price Equity Series, Inc. (the "Corporation") was incorporated in Maryland in 1994, and is a diversified, open-end investment company. The Corporation is governed by a Board of Directors that meets regularly to review the Fund's investments, performance, expenses, and other business affairs. The policy of the Corporation is that a majority of Board members will be independent of T. Rowe Price. American Century Investment Management, Inc. is the investment adviser to the American Century VP Income & Growth Fund. Under the laws of the state of Maryland, the Board of Directors is responsible for managing the business and affairs of the Fund. Acting pursuant to an investment management agreement entered into with the fund, American Century Investment Management, Inc. serves as the manager of the Fund. Its principal place of business is American Century Tower, 4500 Main Street, Kansas City, Missouri. The manager has been providing investment advisory services to investment companies and institutional investors since it was founded in 1958. 22 APPENDIX A DEFINITION OF TERMS ACCOUNT VALUE: The sum of the Variable Account Value and the Fixed Account Value of the Policy. ADMINISTRATIVE OFFICE: MassMutual's Administrative Office is located at 1295 State Street, Springfield, Massachusetts 01111-0001. ATTAINED AGE: The Issue Age of an Insured plus the number of completed Policy Years. BENEFICIARY(IES): The person or persons specified by the Owner to receive some or all of the Death Benefit at the second death. DEATH BENEFIT: The amount paid following receipt of due proof of the death of both Insureds. The amount is equal to the benefit provided by the Death Benefit Option in effect on the date of the second death less any Policy Debt outstanding and any unpaid premium. DEATH BENEFIT OPTION: The Policy offers three Death Benefit Options for determination of the amount of the Death Benefit. The Death Benefit Option is elected at the time of application and, subject to certain requirements, may be changed at a later date. EXPENSE PREMIUM: The level of premium payment used to determine the Premium Expense Charges. The Expense Premium is based on the Issue Ages, sexes, and risk classifications of the Insureds in effect at the time of any premium payment. FIXED ACCOUNT VALUE: The current Account Value that is allocated to the Guaranteed Principal Account. FREE LOOK PERIOD: The Period during which an Owner may return the Policy for cancellation and refund. GUARANTEED PRINCIPAL ACCOUNT ("GPA"): Part of our General Account, the GPA is a fixed account to and from which the Owner may make allocations and transfers. INITIAL FACE AMOUNT: The amount of insurance coverage issued under the Policy. Subject to certain limitations, the Owner may change the Face Amount after issue. INITIAL NET PREMIUM: The premium received before or at delivery of the Policy, reduced by the Premium Expense Charge. INSUREDS: The two persons whose lives this Policy insures. ISSUE AGE: The age of an Insured at his or her birthday nearest the Policy Date. ISSUE DATE: The date on which the suicide and contestability periods begin. MINIMUM DEATH BENEFIT: The Death Benefit determined in accordance with the applicable Death Benefit Compliance Test. The applicable Test is either the Cash Value Test or the Guideline Premium Test, as chosen at the time of application. MONTHLY CHARGE DATE: The monthly date on which the Monthly Charges for the Policy are deducted from the Account Value. The first Monthly Charge Date is the Policy Date, and subsequent Monthly Charge Dates are on the same day of each succeeding calendar month. MONTHLY CHARGES: The charges assessed against the Policy Account Value on each Monthly Charge Date. NET PREMIUM: The premium payment less the Premium Expense Charge we deduct. NET SURRENDER VALUE: The amount payable to an Owner upon surrender of the Policy. It is equal to the Account Value less any surrender charges that apply and less any Policy Debt. OWNER: The person or entity that owns the Policy. POLICY: The survivorship flexible premium adjustable variable life insurance policy offered by MassMutual and described in this Prospectus. POLICY ANNIVERSARY DATE: An anniversary of the Policy Date. POLICY DATE: The date shown on the Policy that is the starting point for determining Policy Anniversary Dates, Policy Years, and Monthly Charge Dates. POLICY DEBT: All outstanding Policy loans plus accrued loan interest. POLICY VALUE: The Account Value less any outstanding Policy Debt during the first three Policy Years. It is equal to the Net Surrender Value in years four and later. POLICY YEAR: A twelve-month period commencing with the Policy Date or a Policy Anniversary Date. SAFETY TEST: On any day during the Guarantee Periods as shown on the Policy Specifications page of Your Policy, the Safety Test is met if the result of premiums paid less amounts withdrawn, accumulated with interest to that day, equals or exceeds the Guarantee Period premium requirement as shown on the Policy Specification page of Your Policy accumulated with interest to that date. 23 SECOND DEATH: The death of the surviving Insured. SEPARATE ACCOUNT: The Policies' designated segment of the "MassMutual Variable Life Separate Account I" established by MassMutual under the laws of Massachusetts and registered as a unit investment trust with the Securities and Exchange Commission pursuant to the Investment Company Act of 1940, as amended ("1940 Act"). The Separate Account is used to receive and invest Net Premiums for this Policy. SUBSEQUENT NET PREMIUM: Any premium received after the Policy is delivered, reduced by the Premium Expense Charge. TARGET PREMIUM: The level of premium payments used to determine commission payments and surrender charges. The Target Premium is based on the Issue Ages, sexes, and risk classifications of the Insureds. VALUATION DATE: A date on which the net asset value of the shares of each Division of the Separate Account is determined. Generally, this will be any date on which the New York Stock Exchange (or its successor) is open for trading. VALUATION PERIOD: The period, consisting of one or more days, from one Valuation Date to the next succeeding Valuation Date. VALUATION TIME: The time of the close of the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on a Valuation Date. All actions that are to be performed on a Valuation Date will be performed as of the Valuation Time. VARIABLE ACCOUNT VALUE: The total of the values of the Accumulation Units credited to the Policy in each Division of the Separate Account multiplied by the Owner's number of units in that Division. WE: Refers to MassMutual. YEAR OF COVERAGE: For the Initial Face Amount, each Policy Year is a Year of Coverage. For any increase in the Face Amount, each Year of Coverage is measured from the effective date of the increase. YOU: Refers to the Owner. 24 APPENDIX B Examples of Death Benefit Option Changes Example I - Change from Option 2 to Option 1 For a change from Option 2 to Option 1, the Face Amount is increased by the amount of the Account Value on the effective date of the change. For example, if the Policy has a Face Amount of $500,000 and an Account Value of $25,000, the Death Benefit under Option 2 is equal to the Face Amount plus the Account Value, or $525,000. If the Owner changes from Option 2 to Option 1, the Death Benefit under Option 1 is equal to the Policy Face Amount. Since the Death Benefit under a Policy does not change as the result of a Death Benefit Option change, the Face Amount will be increased from $500,000 under Option 2 to $525,000 under Option 1. EXAMPLE II - CHANGE FROM OPTION 3 TO OPTION 1 For a change from Option 3 to Option 1, the Face Amount is increased by the amount of the premiums paid to the effective date of the change. For example, if a Policy has a Face Amount of $500,000, and premium payments of $12,000 have been made to-date, the Policy Death Benefit under Option 3 is equal to the Face Amount plus the premiums paid, or $512,000. If the Owner changes from Option 3 to Option 1, the Death Benefit under Option 1 is equal to the Policy Face Amount. Since the Death Benefit under a Policy does not change as the result of a Death Benefit Option change, the Face Amount will be increased from $500,000 under Option 3 to $512,000 under Option 1. EXAMPLE III - CHANGE FROM OPTION 1 TO OPTION 2 For a change from Option 1 to Option 2, the Face Amount will be decreased by the amount of the Account Value on the effective date of the change. For example, if the Policy has a Face Amount of $700,000 and an Account Value of $25,000, under Option 1 the Death Benefit is equal to the Face Amount, or $700,000. If the Owner changes from Option 1 to Option 2, the Death Benefit under Option 2 is equal to the Face Amount plus the Account Value. Since the Death Benefit does not change as the result of a Death Benefit Option change, the Face Amount will be decreased by $25,000 to $675,000, and the Death Benefit under Option 2 after the change will remain $700,000. EXAMPLE IV - CHANGE FROM OPTION 1 TO OPTION 3 For a change from Option 1 to Option 3, the Face Amount will be decreased by the amount of the premiums paid to the effective date of the change. For example, if the Policy has a Face Amount of $700,000 and premiums paid to-date are $30,000, the Death Benefit under Option 1 is equal to the Face Amount, or $700,000. If the Owner changes from Option 1 to Option 3, the Death Benefit under Option 3 is equal to the Face Amount plus the premiums paid to-date. Since the Death Benefit under a Policy does not change as the result of a Death Benefit Option change, the Face Amount will be decreased from $700,000 under Option 1 to $670,000 under Option 3. EXAMPLE V - CHANGE FROM OPTION 2 TO OPTION 3, OR FROM OPTION 3 TO OPTION 2 For a change from Option 2 to Option 3 or from Option 3 to Option 2, the Face Amount is changed (increased or decreased) by the difference between the Account Value and the premiums paid less any premium refunds. For example, if the Policy has a Face Amount of $1,000,000, and an Account Value of $70,000, and Premiums paid of $25,000, the Death Benefit under Option 2 is equal to the Account Value plus the Face Amount, or $1,070,000. If the Owner changes from Option 2 to Option 3, the Death Benefit under Option 3 is equal to the Face Amount plus the premiums paid less any premium refunds. Since the Death Benefit under a Policy does not immediately change as the result of a Death Benefit Option change, the Face Amount will be increased by the difference between the Account Value and the premiums paid, or $45,000, to $1,045,000 under Option 3, maintaining a Death Benefit of $1,070,000. A similar type of change would be made for a change from Option 3 to Option 2. 25 APPENDIX C Rates of Return From time to time, the Company may report different types of historical performance for the Divisions of the Separate Account available under the Policy. The Company may report the average annual total returns of the funds over various time periods. Such returns will reflect an annual reduction for investment management fees and fund expenses, but not deductions at the Separate Account or Policy level for Mortality and Expense Risk Charges and Policy expenses, which, if included, would reduce performance. The Company will accompany the returns of the funds with at least one of the following: (i) returns, for the same periods as shown for the Funds, which include deductions under the Separate Account for the Mortality and Expense Risk Charge in addition to the deduction of investment management fees and Fund expenses,, but not other charges under the Policy; or (ii) an illustration of Account Values and Net Surrender Values as of the performance reporting date for hypothetical Insureds of given ages, sexes, risk classifications, premium levels and Initial Face Amounts. Each illustration will assume 100% of each Net Premium was allocated to the Division of the Separate Account illustrated. The Net Surrender Value figures will assume all fund charges, the Mortality and Expense Risk Charge, and all other Policy charges are deducted. The Account Value figures will assume all charges except the Surrender Charge are deducted. We also may distribute sales literature comparing the percentage change in the net asset values of the funds or in the Accumulation Unit Values for any of the Divisions of the Separate Account to established market indices, such as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average. We also may make comparisons to the percentage change in values of other mutual funds with investment objectives similar to those of the Divisions of the Separate Account being compared. Tables 1 and 2 show the Effective Annual Rates of Return and One Year Total Returns, respectively, of the funds based on the actual investment performance (after deduction of investment management fees and direct operating expenses) underlying each Division of the Separate Account. Table 1 shows figures for periods ended December 31, 1997, while Table 2 shows December 31 one year total returns for each year shown. These rates do not reflect the Mortality and Expense Risk Charges assessed against the Separate Account. Tables 1 and 2 do not reflect deductions from premiums or Monthly Charges assessed against the Account Value of the Policies, nor do they reflect the Policy's Surrender Charges. (For a discussion of these charges, please see CHARGES AND DEDUCTIONS.) Therefore, these rates are not illustrative of how actual investment performance will affect the benefits under the Policy (see, however, PERFORMANCE ILLUSTRATION, Appendix D). The rates of return shown are not necessarily indicative of future performance. These rates of return may be considered, however, in assessing the competence and performance of the investment advisers. 26 TABLE 1 EFFECTIVE ANNUAL RATES OF RETURN AS OF DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------- Fund Since 15 Years 10 Years 5 Years 1 Year Inception - ------------------------------------------------------------------------------------------------------------- MML Equity 14.78% 16.19% 16.44% 18.25% 28.59% MML Blend 13.67% --- 13.68% 13.81% 20.89% MML Managed Bond 10.37% 9.73% 9.08% 7.79% 9.91% MML Money Market 6.73% 6.44% 5.63% 4.47% 5.18% MML Equity Index 21.93% --- --- --- --- Oppenheimer Global Securities 12.26% --- --- 18.81% 22.42% Oppenheimer Aggressive Growth 15.31% --- 16.23% 15.92% 11.67% Oppenheimer Growth 15.43% --- 16.67% 18.61% 26.68% Oppenheimer Strategic Bond 7.64% --- --- --- 8.71% VIP II Contrafund Portfolio 28.11% --- --- --- 24.41% Mid-Cap Growth Portfolio 18.80% --- --- --- 18.80% VP Income & Growth 7.8% --- --- --- 7.8%*
The figures show in this Table do not reflect any charges at the Separate Account or the Policy level. *since inception. Dates of inception: MML Equity Fund - 9/15/71 MML Blend Fund - 2/3/84 Managed Bond Fund - 12/16/81 MML Small Cap Value Equity Fund - 6/1/98 MML Money Market Fund - 11/12/90 MML Equity Index Fund - 4/30/97 Oppenheimer Global Securities Fund - 11/12/90 Oppenheimer Aggressive Growth Fund - 8/15/86 Oppenheimer Growth Fund - 4/3/85 Oppenheimer Strategic Bond Fund - 5/3/93 VIP II Contrafund Portfolio - 1/3/95 Mid-Cap Growth Portfolio - 12/31/96 VP Income & Growth - 10/30/97
Performance of MML Small Cap Value Equity Fund is unavailable since inception date of the Fund is June 1, 1998. American Century VP Income & Growth Portfolio commenced operations on September 15, 1997. Because it has such a short period of performance history, it is not included in this Table. For the performance history of a substantially similar fund, the American Century Income & Growth Fund, turn to the Section in the attached American Century Variable Portfolios prospectus entitled "INVESTMENT PERFORMANCE OF SIMILAR FUND." 27 TABLE 2 ONE YEAR TOTAL RETURNS
Year MML Money MML EQUITY Oppenheimer Ended MML EQUITY Market MML BOND MML Blend INDEX FUND Growth - ----------------------------------------------------------------------------------------------------------------------- 1997 28.59% 5.18% 9.91% 20.89% 21.93%* 26.68% 1996 20.25% 5.01% 3.25% 13.95% --- 25.20% 1995 31.13% 5.58% 19.14% 23.28% --- 36.65% 1994 4.10% 3.84% (3.76%) 2.48% --- 0.98% 1993 9.52% 2.75% 11.81% 9.70% --- 7.25% 1992 10.48% 3.48% 7.31% 9.36% --- 14.53% 1991 25.56% 6.01% 16.66% 24.00% --- 25.54% 1990 (0.51%) 8.12% 8.38% 2.37% --- (8.21%) 1989 23.04% 9.16% 12.83% 19.96% --- 23.59% 1988 16.68% 7.39% 7.13% 13.40% --- 22.09% 1987 2.10% 6.49% 2.60% 3.12% --- 3.32% 1986 20.15% 6.60% 14.46% 18.30% --- 17.76% 1985 30.54% 8.03% 19.94% 24.88% --- 9.50%* 1984 5.40% 10.39% 11.69% 8.24%* --- --- 1983 22.85% 8.97% 7.26% --- --- --- 1982 25.67% 11.12%* 22.79%* --- --- --- 1981 6.67% --- --- --- --- --- 1980 27.62% --- --- --- --- --- 1979 19.54% --- --- --- --- --- 1978 3.71% --- --- --- --- --- 1977 (0.52%) --- --- --- --- --- 1976 24.77% --- --- --- --- --- 1975 32.85% --- --- --- --- --- 1974 (17.61%)* --- --- --- --- ---
The figures show in this Table do not reflect any charges at the Separate Account or the Policy level. *since inception. Dates of inception: MML Equity Fund - 9/15/71 MML Blend Fund - 2/3/84 Managed Bond Fund - 12/16/81 MML Small Cap Value Equity Fund - 6/1/98 MML Money Market Fund - 11/12/90 MML Equity Index Fund - 4/30/97 Oppenheimer Global Securities Fund - 11/12/90 Oppenheimer Aggressive Growth Fund - 8/15/86 Oppenheimer Growth Fund - 4/3/85 Oppenheimer Strategic Bond Fund - 5/3/93 VIP II Contrafund Portfolio - 1/3/95 Mid-Cap Growth Portfolio - 12/31/96 VP Income & Growth - 10/30/97
Performance of MML Small Cap Value Equity Fund is unavailable since inception date of the Fund is June 1, 1998. American Century VP Income & Growth Portfolio commenced operations on September 15, 1997. Because it has such a short period of performance history, it is not included in this Table. For the performance history of a substantially similar fund, the American Century Income & Growth Fund, turn to the Section in the attached American Century Variable Portfolios prospectus entitled "INVESTMENT PERFORMANCE OF SIMILAR FUND." 28 TABLE 2 (continued) ONE YEAR TOTAL RETURNS
VIP II Year Oppenheimer OPPENHEIMER Oppenheimer GLOBAL CONTRAFUND MID CAP GROWTH Ended Strategic Bond AGGRESSIVE GROWTH SECURITIES PORTFOLIO PORTFOLIO VP Income & Growth - ----------------------------------------------------------------------------------------------------------------------------------- 1997 8.71% 11.67% 22.42% 24.14% 18.80%* 7.8%* 1996 12.07% 20.16% 17.80% 21.22% -- --- 1995 15.33% 32.52% 2.24% 39.72%* -- --- 1994 (5.85%) (7.50%) (5.72%) --- -- --- 1993 4.25%* 27.32% 70.32% --- -- --- 1992 --- 15.42% (7.11%) --- -- --- 1991 --- 54.72% 3.39% --- -- --- 1990 --- (16.32%) 0.40%* --- -- --- 1989 --- 27.39% --- --- -- --- 1988 --- 13.41% --- --- -- --- 1987 --- 14.34% --- --- -- --- 1986 --- (1.65%)* --- --- -- --- 1985 --- --- --- --- -- --- 1984 --- --- --- --- -- --- 1983 --- --- --- --- -- --- 1982 --- --- --- --- -- --- 1981 --- --- --- --- -- --- 1980 --- --- --- --- -- --- 1979 --- --- --- --- -- --- 1978 --- --- --- --- -- --- 1977 --- --- --- --- -- --- 1976 --- --- --- --- -- --- 1975 --- --- --- --- -- --- 1974 --- --- --- --- -- ---
The figures show in this Table do not reflect any charges at the Separate Account or the Policy level. *since inception. Dates of inception: MML Equity Fund - 9/15/71 MML Blend Fund - 2/3/84 Managed Bond Fund - 12/16/81 MML Small Cap Value Equity Fund - 6/1/98 MML Money Market Fund - 11/12/90 MML Equity Index Fund - 4/30/97 Oppenheimer Global Securities Fund - 11/12/90 Oppenheimer Aggressive Growth Fund - 8/15/86 Oppenheimer Growth Fund - 4/3/85 Oppenheimer Strategic Bond Fund - 5/3/93 VIP II Contrafund Portfolio - 1/3/95 Mid-Cap Growth Portfolio - 12/31/96 VP Income & Growth - 10/30/97
Performance of MML Small Cap Value Equity Fund is unavailable since inception date of the Fund is June 1, 1998. American Century VP Income & Growth Portfolio commenced operations on September 15, 1997. Because it has such a short period of performance history, it is not included in this Table. For the performance history of a substantially similar fund, the American Century Income & Growth Fund, turn to the Section in the attached American Century Variable Portfolios prospectus entitled "INVESTMENT PERFORMANCE OF SIMILAR FUND." 29 Appendix D ILLUSTRATION OF DEATH BENEFITS, NET SURRENDER VALUES, AND ACCUMULATED PREMIUMS The following tables illustrate the way in which a Policy operates. They show how the Death Benefit and Net Surrender Value could vary over an extended period of time assuming the funds experience hypothetical gross rates of investment return (i.e., investment income and capital gains and losses, realized or unrealized), equivalent to constant gross annual rates of 0%, 6%, and 12%. The tables are based on annual premium payments of $5,000 for a combination of a Select-Preferred Male age 35 and a Select-Preferred Female age 35. Select- Preferred is C.M. Life's best risk classification. Separate tables are shown for the current and guaranteed schedules of charges. These tables will assist in the comparison of Death Benefits and Net Surrender Values for the Policy with those of other variable life policies. The Death Benefits and Net Surrender Values for a Policy would be different from the amounts shown if the rates of return averaged 0%, 6%, and 12% over a period of years, but varied above and below that average in individual Policy Years. They also would differ if any Policy loan were made during the period of time illustrated. They also would be different depending on the allocation of investment value to each Division. They would be different depending on the allocation of investment value to each Division if the rates of return for all funds averaged 0%, 6%, and 12% but varied above or below that average for particular funds. The Death Benefits and Net Surrender Values shown in Tables 1, 2, 3, 7, 8, and 9 reflect the following current charges: . Administrative Charges of $12 per month per Policy in Policy Years 1-10, and $6 per month in Policy Years 11 and beyond. . Face Amount Charges of $0.13 per month per $1,000 of Face Amount in Coverage Years 1-10. . Insurance Charges based on the current rates being charged by the Company for Select-Preferred, fully underwritten risks. . Mortality and Expense Risk Charges of 0.25% on an annual basis of the daily net asset value of the Separate Account in all Policy Years. . Fund level expenses of 0.66% on an annual basis of the net asset value of the Separate Account. These expenses represent the unweighted average of all fund expenses. The Death Benefits and Net Surrender Values shown in Tables 4, 5, 6, 10, 11, and 12 reflect the following guaranteed maximum charges as well as the current fund level expenses. . Administrative Charges equal to $12 per month per policy in all years. . Face Amount Charge of $0.13 per month per $1,000 of Face Amount in Coverage Years 1-10. . Insurance Charges based on the 1980 CSO Mortality Table. . Mortality and Expense Risk Charges equal to 0.90% on an annual basis of the daily net asset value of the Separate Account in all years. Net Surrender Values shown in the Tables reflect the deduction of Surrender Charges in the first 10 Policy Years. The Surrender Charge in the first year is the Target Premium or $60 per $1,000 of Face Amount if less. In each of Years two through 10, the Surrender Charge is equal to the Surrender Charge in the prior year reduced by 10% of the Surrender Charge in the first year. Taking the current Mortality and Expense Risk Charge and the fund level expenses into account, the gross rates of 0%, 6%, and 12% are -0.90%, 5.05%, and 11.00% respectively on a net basis. 30
TABLE 1 Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 1 Guideline Premium Test Current Schedule of Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - -------------------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - --------------------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,000,000 1,000,000 1,000,000 0 0 0 2 $10,763 1,000,000 1,000,000 1,000,000 1,098 1,672 2,272 3 $16,551 1,000,000 1,000,000 1,000,000 4,117 5,233 6,448 4 $22,628 1,000,000 1,000,000 1,000,000 7,111 8,949 11,030 5 $29,010 1,000,000 1,000,000 1,000,000 10,079 12,827 16,063 6 $35,710 1,000,000 1,000,000 1,000,000 13,023 16,875 21,597 7 $42,746 1,000,000 1,000,000 1,000,000 15,943 21,103 27,689 8 $50,133 1,000,000 1,000,000 1,000,000 18,839 25,520 34,398 9 $57,889 1,000,000 1,000,000 1,000,000 21,713 30,137 41,795 10 $66,034 1,000,000 1,000,000 1,000,000 24,565 34,964 49,955 15 $113,287 1,000,000 1,000,000 1,000,000 47,041 72,936 117,818 20 $173,596 1,000,000 1,000,000 1,000,000 67,921 120,751 231,208 25 $250,567 1,000,000 1,000,000 1,000,000 87,446 181,480 421,897 30 $348,804 1,000,000 1,000,000 1,000,000 104,923 258,061 742,722 35 $474,182 1,000,000 1,000,000 1,488,162 117,923 352,929 1,282,898 40 $634,199 1,000,000 1,000,000 2,344,415 122,301 468,925 2,191,042 45 $838,426 1,000,000 1,000,000 3,903,636 106,516 607,964 3,717,748 50 $1,099,077 1,000,000 1,000,000 6,583,023 42,319 774,682 6,269,546 - ---------------------------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: -------------------------------------------------------------------------- End of Policy Year 0% 6% 12% -------------------------------------------------------------------------- 1 2,614 2,818 3,023 2 5,202 5,776 6,376 3 7,765 8,881 10,096 4 10,303 12,141 14,222 5 12,815 15,563 18,799 6 15,303 19,155 23,877 7 17,767 22,927 29,513 8 20,207 26,888 35,766 9 22,625 31,049 42,707 10 25,021 35,420 50,411 15 47,041 72,936 117,818 --------------------------------------------------------------------------
- ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 31 Table 2
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 2 Guideline Premium Test Current Schedule of Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - ------------------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - ------------------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,002,614 1,002,818 1,003,023 0 0 0 2 $10,763 1,005,202 1,005,776 1,006,376 1,098 1,672 2,272 3 $16,551 1,007,765 1,008,881 1,010,096 4,117 5,233 6,448 4 $22,628 1,010,303 1,012,141 1,014,222 7,111 8,949 11,030 5 $29,010 1,012,815 1,015,562 1,018,799 10,079 12,826 16,063 6 $35,710 1,015,302 1,019,154 1,023,877 13,022 16,874 21,597 7 $42,746 1,017,766 1,022,926 1,029,512 15,942 21,102 27,688 8 $50,133 1,020,206 1,026,886 1,035,764 18,838 25,518 34,396 9 $57,889 1,022,623 1,031,046 1,042,704 21,711 30,134 41,792 10 $66,034 1,025,020 1,035,417 1,050,407 24,564 34,961 49,951 15 $113,287 1,047,033 1,072,923 1,117,796 47,033 72,923 117,796 20 $173,596 1,067,894 1,120,697 1,231,096 67,894 120,697 231,096 25 $250,567 1,087,354 1,181,269 1,421,369 87,354 181,269 421,369 30 $348,804 1,104,619 1,257,242 1,740,226 104,619 257,242 740,226 35 $474,182 1,116,898 1,349,627 2,271,987 116,898 349,627 1,271,987 40 $634,199 1,119,382 1,457,284 3,155,976 119,382 457,284 2,155,976 45 $838,426 1,099,202 1,569,369 4,616,406 99,202 569,369 3,616,406 50 $1,099,077 1,028,232 1,653,814 7,010,620 28,232 653,814 6,010,620 - ------------------------------------------------------------------------------------------------------------------------------- Account Value Assuming Hypothetical Gross Annual Investment Return of: -------------------------------------------------------------------- End of Policy 0% 6% 12% Year -------------------------------------------------------------------- 1 2,614 2,818 3,023 2 5,202 5,776 6,376 3 7,765 8,881 10,096 4 10,303 12,141 14,222 5 12,815 15,562 18,799 6 15,302 19,154 23,877 7 17,766 22,926 29,512 8 20,206 26,886 35,764 9 22,623 31,046 42,704 10 25,020 35,417 50,407 15 47,033 72,923 117,796 --------------------------------------------------------------------
- ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 32 TABLE 3
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 3 Guideline Premium Test Current Schedule of Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - ----------------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - ------------------------------------------------------------------------------------------------------------------------------ 1 $5,250 1,005,000 1,005,000 1,005,000 0 0 0 2 $10,763 1,010,000 1,010,000 1,010,000 1,098 1,672 2,272 3 $16,551 1,015,000 1,015,000 1,015,000 4,117 5,233 6,448 4 $22,628 1,020,000 1,020,000 1,020,000 7,111 8,949 11,030 5 $29,010 1,025,000 1,025,000 1,025,000 10,079 12,826 16,063 6 $35,710 1,030,000 1,030,000 1,030,000 13,022 16,874 21,596 7 $42,746 1,035,000 1,035,000 1,035,000 15,942 21,102 27,687 8 $50,133 1,040,000 1,040,000 1,040,000 18,837 25,517 34,395 9 $57,889 1,045,000 1,045,000 1,045,000 21,710 30,133 41,791 10 $66,034 1,050,000 1,050,000 1,050,000 24,562 34,959 49,950 15 $113,287 1,075,000 1,075,000 1,075,000 47,028 72,920 117,798 20 $173,596 1,100,000 1,100,000 1,100,000 67,879 120,696 231,135 25 $250,567 1,125,000 1,125,000 1,125,000 87,311 181,304 421,653 30 $348,804 1,150,000 1,150,000 1,150,000 104,488 257,489 741,919 35 $474,182 1,175,000 1,175,000 1,661,088 116,438 350,982 1,281,110 40 $634,199 1,200,000 1,200,000 2,541,196 117,836 462,961 2,188,034 45 $838,426 1,225,000 1,225,000 4,123,323 93,639 590,437 3,712,689 50 $1,099,077 1,250,000 1,250,000 6,824,112 6,117 724,199 6,261,059 - ------------------------------------------------------------------------------------------------------------------------------ Account Value Assuming Hypothetical Gross Annual Investment Return of: ------------------------------------------------------------------------ End of Policy Year 0% 6% 12% ------------------------------------------------------------------------ 1 2,614 2,818 3,023 2 5,202 5,776 6,376 3 7,765 8,881 10,096 4 10,303 12,141 14,222 5 12,815 15,562 18,799 6 15,302 19,154 23,876 7 17,766 22,926 29,511 8 20,205 26,885 35,763 9 22,622 31,045 42,703 10 25,018 35,415 50,406 15 47,028 72,920 117,798 ------------------------------------------------------------------------
- ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 33 Table 4
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 1 Guideline Premium Test Guaranteed Schedules of Mortality and Expense Charges and Current Fund Level Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - ---------------------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - ---------------------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,000,000 1,000,000 1,000,000 0 0 0 2 $10,763 1,000,000 1,000,000 1,000,000 1,094 1,667 2,267 3 $16,551 1,000,000 1,000,000 1,000,000 4,104 5,220 6,433 4 $22,628 1,000,000 1,000,000 1,000,000 7,085 8,921 11,000 5 $29,010 1,000,000 1,000,000 1,000,000 10,034 12,777 16,009 6 $35,710 1,000,000 1,000,000 1,000,000 12,950 16,794 21,507 7 $42,746 1,000,000 1,000,000 1,000,000 15,830 20,976 27,546 8 $50,133 1,000,000 1,000,000 1,000,000 18,672 25,330 34,182 9 $57,889 1,000,000 1,000,000 1,000,000 21,474 29,862 41,478 10 $66,034 1,000,000 1,000,000 1,000,000 24,233 34,578 49,505 15 $113,287 1,000,000 1,000,000 1,000,000 43,057 68,145 112,045 20 $173,596 1,000,000 1,000,000 1,000,000 59,163 108,940 215,068 25 $250,567 1,000,000 1,000,000 1,000,000 71,223 157,695 385,795 30 $348,804 1,000,000 1,000,000 1,000,000 75,337 212,986 670,288 35 $474,182 1,000,000 1,000,000 1,333,819 61,036 267,787 1,149,844 40 $634,199 1,000,000 1,000,000 2,087,564 4,646 305,034 1,950,995 45 $838,426 0 1,000,000 3,452,613 0 274,501 3,288,203 50 $1,099,077 0 1,000,000 5,746,045 0 36,578 5,472,424 - ---------------------------------------------------------------------------------------------------------------------------------- Account Value Assuming Hypothetical Gross Annual Investment Return of: ---------------------------------------------------------------------- End of Policy Year 0% 6% 12% ---------------------------------------------------------------------- 1 2,613 2,817 3,022 2 5,198 5,771 6,371 3 7,752 8,868 10,081 4 10,277 12,113 14,192 5 12,770 15,513 18,745 6 15,230 19,074 23,787 7 17,654 22,800 29,370 8 20,040 26,698 35,550 9 22,386 30,774 42,390 10 24,689 35,034 49,961 15 43,057 68,145 112,045 ----------------------------------------------------------------------
- ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 34 TABLE 5
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 2 Guideline Premium Test Guaranteed Schedules of Mortality and Expense Charges and Current Fund Level Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - -------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - ----------------------------------------------------------------------------------------------------------------- 1 $5,250 1,002,613 1,002,817 1,003,022 0 0 0 2 $10,763 1,005,198 1,005,771 1,006,371 1,094 1,667 2,267 3 $16,551 1,007,752 1,008,867 1,010,081 4,104 5,219 6,433 4 $22,628 1,010,277 1,012,113 1,014,191 7,085 8,921 10,999 5 $29,010 1,012,769 1,015,512 1,018,744 10,033 12,776 16,008 6 $35,710 1,015,228 1,019,072 1,023,785 12,948 16,792 21,505 7 $42,746 1,017,651 1,022,797 1,029,366 15,827 20,973 27,542 8 $50,133 1,020,036 1,026,692 1,035,542 18,668 25,324 34,174 9 $57,889 1,022,380 1,030,765 1,042,378 21,468 29,853 41,466 10 $66,034 1,024,680 1,035,020 1,049,941 24,224 34,564 49,485 15 $113,287 1,043,009 1,068,063 1,111,900 43,009 68,063 111,900 20 $173,596 1,058,973 1,108,560 1,214,270 58,973 108,560 214,270 25 $250,567 1,070,614 1,156,237 1,382,035 70,614 156,237 382,035 30 $348,804 1,073,654 1,208,026 1,654,229 73,654 208,026 654,229 35 $474,182 1,056,996 1,251,961 2,087,433 56,996 251,961 1,087,433 40 $634,199 0 1,259,056 2,761,611 0 259,056 1,761,611 45 $838,426 0 1,155,504 3,769,693 0 155,504 2,769,693 50 $1,099,077 0 0 5,226,634 0 0 4,226,634 - -----------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,613 2,817 3,022 2 5,198 5,771 6,371 3 7,752 8,867 10,081 4 10,277 12,113 14,191 5 12,769 15,512 18,744 6 15,228 19,072 23,785 7 17,651 22,797 29,366 8 20,036 26,692 35,542 9 22,380 30,765 42,378 10 24,680 35,020 49,941 15 43,009 68,063 111,900 -----------------------------------------------------------
- ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 35 TABLE 6
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 3 Guideline Premium Test Guaranteed Schedules of Mortality and Expense Charges and Current Fund Level Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - -------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - ------------------------------------------------------------------------------------------------------------------ 1 $5,250 1,005,000 1,005,000 1,005,000 0 0 0 2 $10,763 1,010,000 1,010,000 1,010,000 1,094 1,667 2,267 3 $16,551 1,015,000 1,015,000 1,015,000 4,104 5,219 6,433 4 $22,628 1,020,000 1,020,000 1,020,000 7,084 8,920 10,999 5 $29,010 1,025,000 1,025,000 1,025,000 10,032 12,775 16,007 6 $35,710 1,030,000 1,030,000 1,030,000 12,947 16,791 21,504 7 $42,746 1,035,000 1,035,000 1,035,000 15,825 20,971 27,540 8 $50,133 1,040,000 1,040,000 1,040,000 18,664 25,321 34,172 9 $57,889 1,045,000 1,045,000 1,045,000 21,462 29,849 41,463 10 $66,034 1,050,000 1,050,000 1,050,000 24,216 34,558 49,482 15 $113,287 1,075,000 1,075,000 1,075,000 42,970 68,041 111,917 20 $173,596 1,100,000 1,100,000 1,100,000 58,839 108,533 214,545 25 $250,567 1,125,000 1,125,000 1,125,000 70,182 156,343 383,968 30 $348,804 1,150,000 1,150,000 1,150,000 72,281 208,909 664,529 35 $474,182 1,175,000 1,175,000 1,492,666 52,268 255,851 1,135,919 40 $634,199 0 1,200,000 2,262,659 0 271,046 1,927,718 45 $838,426 0 1,225,000 3,636,784 0 175,021 3,249,318 50 $1,099,077 0 0 5,928,452 0 0 5,408,050 - ------------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,613 2,817 3,022 2 5,198 5,771 6,371 3 7,752 8,867 10,081 4 10,276 12,112 14,191 5 12,768 15,511 18,743 6 15,227 19,071 23,784 7 17,649 22,795 29,364 8 20,032 26,689 35,540 9 22,374 30,761 42,375 10 24,672 35,014 49,938 15 42,970 68,041 111,917 ----------------------------------------------------------- - ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 36 Table 7
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 1 Cash Value Test Current Schedule of Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - ---------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - ---------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,000,000 1,000,000 1,000,000 0 0 0 2 $10,763 1,000,000 1,000,000 1,000,000 1,098 1,672 2,272 3 $16,551 1,000,000 1,000,000 1,000,000 4,117 5,233 6,448 4 $22,628 1,000,000 1,000,000 1,000,000 7,111 8,949 11,030 5 $29,010 1,000,000 1,000,000 1,000,000 10,079 12,827 16,063 6 $35,710 1,000,000 1,000,000 1,000,000 13,023 16,875 21,597 7 $42,746 1,000,000 1,000,000 1,000,000 15,943 21,103 27,689 8 $50,133 1,000,000 1,000,000 1,000,000 18,839 25,520 34,398 9 $57,889 1,000,000 1,000,000 1,000,000 21,713 30,137 41,795 10 $66,034 1,000,000 1,000,000 1,000,000 24,565 34,964 49,955 15 $113,287 1,000,000 1,000,000 1,000,000 47,041 72,936 117,818 20 $173,596 1,000,000 1,000,000 1,000,000 67,921 120,751 231,208 25 $250,567 1,000,000 1,000,000 1,101,124 87,446 181,480 421,886 30 $348,804 1,000,000 1,000,000 1,617,043 104,923 258,061 741,763 35 $474,182 1,000,000 1,000,000 2,346,049 117,923 352,929 1,275,026 40 $634,199 1,000,000 1,000,000 3,410,508 122,301 468,925 2,158,549 45 $838,426 1,000,000 1,000,000 5,013,034 106,516 607,964 3,606,499 50 $1,099,077 1,000,000 1,000,000 7,491,052 42,319 774,682 5,945,279 - --------------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,614 2,818 3,023 2 5,202 5,776 6,376 3 7,765 8,881 10,096 4 10,303 12,141 14,222 5 12,815 15,563 18,799 6 15,303 19,155 23,877 7 17,767 22,927 29,513 8 20,207 26,888 35,766 9 22,625 31,049 42,707 10 25,021 35,420 50,411 15 47,041 72,936 117,818 ----------------------------------------------------------- - ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 37 TABLE 8
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 2 Cash Value Test Current Schedule of Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - -------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - ------------------------------------------------------------------------------------------------------------------ 1 $5,250 1,002,614 1,002,818 1,003,023 0 0 0 2 $10,763 1,005,202 1,005,776 1,006,376 1,098 1,672 2,272 3 $16,551 1,007,765 1,008,881 1,010,096 4,117 5,233 6,448 4 $22,628 1,010,303 1,012,141 1,014,222 7,111 8,949 11,030 5 $29,010 1,012,815 1,015,562 1,018,799 10,079 12,826 16,063 6 $35,710 1,015,302 1,019,154 1,023,877 13,022 16,874 21,597 7 $42,746 1,017,766 1,022,926 1,029,512 15,942 21,102 27,688 8 $50,133 1,020,206 1,026,886 1,035,764 18,838 25,518 34,396 9 $57,889 1,022,623 1,031,046 1,042,704 21,711 30,134 41,792 10 $66,034 1,025,020 1,035,417 1,050,407 24,564 34,961 49,951 15 $113,287 1,047,033 1,072,923 1,117,796 47,033 72,923 117,796 20 $173,596 1,067,894 1,120,697 1,231,096 67,894 120,697 231,096 25 $250,567 1,087,354 1,181,269 1,421,369 87,354 181,269 421,369 30 $348,804 1,104,619 1,257,242 1,740,226 104,619 257,242 740,226 35 $474,182 1,116,898 1,349,627 2,340,382 116,898 349,627 1,271,947 40 $634,199 1,119,382 1,457,284 3,402,394 119,382 457,284 2,153,414 45 $838,426 1,099,202 1,569,369 5,001,214 99,202 569,369 3,597,996 50 $1,099,077 1,028,232 1,653,814 7,473,486 28,232 653,814 5,931,338 - ------------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,614 2,818 3,023 2 5,202 5,776 6,376 3 7,765 8,881 10,096 4 10,303 12,141 14,222 5 12,815 15,562 18,799 6 15,302 19,154 23,877 7 17,766 22,926 29,512 8 20,206 26,886 35,764 9 22,623 31,046 42,704 10 25,020 35,417 50,407 15 47,033 72,923 117,796 ----------------------------------------------------------- - ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 38 TABLE 9
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 3 Cash Value Test Current Schedule of Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - ---------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - -------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,005,000 1,005,000 1,005,000 0 0 0 2 $10,763 1,010,000 1,010,000 1,010,000 1,098 1,672 2,272 3 $16,551 1,015,000 1,015,000 1,015,000 4,117 5,233 6,448 4 $22,628 1,020,000 1,020,000 1,020,000 7,111 8,949 11,030 5 $29,010 1,025,000 1,025,000 1,025,000 10,079 12,826 16,063 6 $35,710 1,030,000 1,030,000 1,030,000 13,022 16,874 21,596 7 $42,746 1,035,000 1,035,000 1,035,000 15,942 21,102 27,687 8 $50,133 1,040,000 1,040,000 1,040,000 18,837 25,517 34,395 9 $57,889 1,045,000 1,045,000 1,045,000 21,710 30,133 41,791 10 $66,034 1,050,000 1,050,000 1,050,000 24,562 34,959 49,950 15 $113,287 1,075,000 1,075,000 1,075,000 47,028 72,920 117,798 20 $173,596 1,100,000 1,100,000 1,100,000 67,879 120,696 231,135 25 $250,567 1,125,000 1,125,000 1,225,514 87,311 181,304 421,653 30 $348,804 1,150,000 1,150,000 1,766,171 104,488 257,489 741,363 35 $474,182 1,175,000 1,175,000 2,519,817 116,438 350,982 1,274,357 40 $634,199 1,200,000 1,200,000 3,608,745 117,836 462,961 2,157,433 45 $838,426 1,225,000 1,225,000 5,235,465 93,639 590,437 3,604,651 50 $1,099,077 1,250,000 1,250,000 7,737,235 6,117 724,199 5,942,250 - -------------------------------------------------------------------------------------------------------------------- Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,614 2,818 3,023 2 5,202 5,776 6,376 3 7,765 8,881 10,096 4 10,303 12,141 14,222 5 12,815 15,562 18,799 6 15,302 19,154 23,876 7 17,766 22,926 29,511 8 20,205 26,885 35,763 9 22,622 31,045 42,703 10 25,018 35,415 50,406 15 47,028 72,920 117,798 -----------------------------------------------------------
- ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 39 TABLE 10
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 1 Cash Value Test Guaranteed Schedules of Mortality and Expense Charges and Current Fund Level Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - -------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - -------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,000,000 1,000,000 1,000,000 0 0 0 2 $10,763 1,000,000 1,000,000 1,000,000 1,094 1,667 2,267 3 $16,551 1,000,000 1,000,000 1,000,000 4,104 5,220 6,433 4 $22,628 1,000,000 1,000,000 1,000,000 7,085 8,921 11,000 5 $29,010 1,000,000 1,000,000 1,000,000 10,034 12,777 16,009 6 $35,710 1,000,000 1,000,000 1,000,000 12,950 16,794 21,507 7 $42,746 1,000,000 1,000,000 1,000,000 15,830 20,976 27,546 8 $50,133 1,000,000 1,000,000 1,000,000 18,672 25,330 34,182 9 $57,889 1,000,000 1,000,000 1,000,000 21,474 29,862 41,478 10 $66,034 1,000,000 1,000,000 1,000,000 24,233 34,578 49,505 15 $113,287 1,000,000 1,000,000 1,000,000 43,057 68,145 112,045 20 $173,596 1,000,000 1,000,000 1,000,000 59,163 108,940 215,068 25 $250,567 1,000,000 1,000,000 1,006,926 71,223 157,695 385,795 30 $348,804 1,000,000 1,000,000 1,452,688 75,337 212,986 666,371 35 $474,182 1,000,000 1,000,000 2,051,751 61,036 267,787 1,115,082 40 $634,199 1,000,000 1,000,000 2,862,586 4,646 305,034 1,811,763 45 $838,426 0 1,000,000 3,952,379 0 274,501 2,843,438 50 $1,099,077 0 1,000,000 5,439,487 0 36,578 4,317,053 - --------------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,613 2,817 3,022 2 5,198 5,771 6,371 3 7,752 8,868 10,081 4 10,277 12,113 14,192 5 12,770 15,513 18,745 6 15,230 19,074 23,787 7 17,654 22,800 29,370 8 20,040 26,698 35,550 9 22,386 30,774 42,390 10 24,689 35,034 49,961 15 43,057 68,145 112,045 ----------------------------------------------------------- - ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 40 TABLE 11
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 2 Cash Value Test Guaranteed Schedules of Mortality and Expense Charges and Current Fund Level Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - -------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - -------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,002,613 1,002,817 1,003,022 0 0 0 2 $10,763 1,005,198 1,005,771 1,006,371 1,094 1,667 2,267 3 $16,551 1,007,752 1,008,867 1,010,081 4,104 5,219 6,433 4 $22,628 1,010,277 1,012,113 1,014,191 7,085 8,921 10,999 5 $29,010 1,012,769 1,015,512 1,018,744 10,033 12,776 16,008 6 $35,710 1,015,228 1,019,072 1,023,785 12,948 16,792 21,505 7 $42,746 1,017,651 1,022,797 1,029,366 15,827 20,973 27,542 8 $50,133 1,020,036 1,026,692 1,035,542 18,668 25,324 34,174 9 $57,889 1,022,380 1,030,765 1,042,378 21,468 29,853 41,466 10 $66,034 1,024,680 1,035,020 1,049,941 24,224 34,564 49,485 15 $113,287 1,043,009 1,068,063 1,111,900 43,009 68,063 111,900 20 $173,596 1,058,973 1,108,560 1,214,270 58,973 108,560 214,270 25 $250,567 1,070,614 1,156,237 1,382,035 70,614 156,237 382,035 30 $348,804 1,073,654 1,208,026 1,654,229 73,654 208,026 654,229 35 $474,182 1,056,996 1,251,961 2,087,433 56,996 251,961 1,087,433 40 $634,199 0 1,259,056 2,783,281 0 259,056 1,761,570 45 $838,426 0 1,155,504 3,842,382 0 155,504 2,764,304 50 $1,099,077 0 0 5,288,984 0 0 4,197,606 - --------------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,613 2,817 3,022 2 5,198 5,771 6,371 3 7,752 8,867 10,081 4 10,277 12,113 14,191 5 12,769 15,512 18,744 6 15,228 19,072 23,785 7 17,651 22,797 29,366 8 20,036 26,692 35,542 9 22,380 30,765 42,378 10 24,680 35,020 49,941 15 43,009 68,063 111,900 ----------------------------------------------------------- - ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 41 Table 12
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy $5,000 Annual Premium Male and Female Each Issue Age 35, Select-Preferred $1 million Initial Face Amount Death Benefit Option 3 Cash Value Test Guaranteed Schedules of Mortality and Expense Charges and Current Fund Level Charges Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical Gross Annual Investment Return of: Gross Annual Investment Return of: - -------------------------------------------------------------------------------------------------------------------- End of Premiums Policy Accumulated Year at 5% Interest Per Year 0% 6% 12% 0% 6% 12% - -------------------------------------------------------------------------------------------------------------------- 1 $5,250 1,005,000 1,005,000 1,005,000 0 0 0 2 $10,763 1,010,000 1,010,000 1,010,000 1,094 1,667 2,267 3 $16,551 1,015,000 1,015,000 1,015,000 4,104 5,219 6,433 4 $22,628 1,020,000 1,020,000 1,020,000 7,084 8,920 10,999 5 $29,010 1,025,000 1,025,000 1,025,000 10,032 12,775 16,007 6 $35,710 1,030,000 1,030,000 1,030,000 12,947 16,791 21,504 7 $42,746 1,035,000 1,035,000 1,035,000 15,825 20,971 27,540 8 $50,133 1,040,000 1,040,000 1,040,000 18,664 25,321 34,172 9 $57,889 1,045,000 1,045,000 1,045,000 21,462 29,849 41,463 10 $66,034 1,050,000 1,050,000 1,050,000 24,216 34,558 49,482 15 $113,287 1,075,000 1,075,000 1,075,000 42,970 68,041 111,917 20 $173,596 1,100,000 1,100,000 1,100,000 58,839 108,533 214,545 25 $250,567 1,125,000 1,125,000 1,127,155 70,182 156,343 383,968 30 $348,804 1,150,000 1,150,000 1,595,121 72,281 208,909 662,900 35 $474,182 1,175,000 1,175,000 2,216,335 52,268 255,851 1,109,421 40 $634,199 0 1,200,000 3,048,280 0 271,046 1,802,709 45 $838,426 0 1,225,000 4,157,819 0 175,021 2,829,366 50 $1,099,077 0 0 5,662,736 0 0 4,295,822 - --------------------------------------------------------------------------------------------------------------------
Account Value Assuming Hypothetical Gross Annual Investment Return of: ----------------------------------------------------------- End of Policy Year 0% 6% 12% ----------------------------------------------------------- 1 2,613 2,817 3,022 2 5,198 5,771 6,371 3 7,752 8,867 10,081 4 10,276 12,112 14,191 5 12,768 15,511 18,743 6 15,227 19,071 23,784 7 17,649 22,795 29,364 8 20,032 26,689 35,540 9 22,374 30,761 42,375 10 24,672 35,014 49,938 15 42,970 68,041 111,917 ----------------------------------------------------------- - ------------ It is emphasized that the hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown. The death benefits and cash surrender values for a policy would be different from the amounts shown if the rates of return averaged 0%, 6% and 12% over a period of years, but varied above or below that average in individual policy years. They would also be different, depending on the allocation of investment value to each division of the separate account, if the rates of return over all divisions averaged 0%, 6% or 12% but varied above or below that average for individual divisions. They would also differ if any policy loan were made during the period. No representations can be made by the Company or the trust that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. 42 APPENDIX E Directors of Massachusetts Mutual Life Insurance Company Principal Occupation(s) During Past Five Years Roger G. Ackerman, Director Chairman and Chief Executive Officer, since 1996, President and Chief Operating Officer 1990-1996, Corning, Inc., One Riverfront Plaza, HQE 2, Corning, NY 14831. James R. Birle, Director Chairman, since 1997, and Founder since 1994, President, 1994-1997, Resolute Partners, LLC; General Partner, Blackstone Group, 1988-1994, 2 Soundview Drive, Greenwich CT 06836. Gene Chao, Director Chairman, President and CEO, Computer Projections, Inc., since 1991, 733 SW Vista Avenue, Portland, OR 97205-1203. Patricia Diaz Dennis, Director Senior Vice President and Assistant General Counsel, SBC Communications Inc., since 1995; Special Counsel, Sullivan & Cromwell, 1993-1995; Assistant Secretary of State for Human Rights and Humanitarian Affairs, U.S. Department of State, 1992-1993, 175 East Houston, Room 4-A-70, San Antonio, TX 78205 Anthony Downs, Director Senior Fellow, The Brookings Institution, since 1977, 1775 Massachusetts Ave., N.W., Washington DC 20036-2188. James L. Dunlap, Director President and Chief Operating Officer, United Meridian Corporation, since 1996, Senior Vice President, Texaco, Inc. 1987-1996, 1201 Louisiana, Suite 1400, Houston, TX 77002-5603. William B. Ellis, Director Senior Fellow, Yale University School of Forestry and Environmental Studies, since 1995; Chairman and Chief Executive Officer, Northeast Utilities, 1983- 1995, 31 Pound Foolish Lane, Glastonbury, CT 06033. Robert M. Furek, Director Chairman, State Board of Trustees for the Hartford School System, since 1997, President and Chief Executive Officer, Heublein, Inc., 1987-1996, 1 State Street, Suite 2310, Hartford, CT 06103. Charles K. Gifford, Director Chairman and Chief Executive Officer since 1995, and President 1989-1995, BankBoston, N.A. and Chairman, since 1998, and Chief Executive Officer, since 1985, BankBoston Corporation, 100 Federal Street, Boston, MA 02110. William N. Griggs, Director Managing Director, Griggs & Santow, Inc., since 1983, 75 Wall Street, 20th Floor, New York, NY 10005. George B. Harvey, Director Retired Chairman, President and CEO, Pitney Bowes, since 1996, One Landmark Square, Suite 1905, 19th Floor, Stamford, CT 06901. Barbara B. Hauptfuhrer, Director Director of various corporations, since 1972, 1700 Old Welsh Road, Huntington Valley, PA 19006. Sheldon B. Lubar, Director Chairman, Lubar & Co. Incorporated, since 1977, 700 North Water Street, Suite 1200, Milwaukee, WI 53202. 43 William B. Marx, Jr., Director Retired Senior Executive Vice President, Lucent Technologies, since 1996; Executive Vice President and CEO Multimedia Products Group, AT&T, 1994-1996; Executive Vice President and CEO, Network Systems Group, 1993-1994; Group Executive and President, AT&T Network Systems, 1989-1993. 5 Peacock Lane, Village of Golf, FL 33436-5299. John F. Maypole, Director Managing Partner, Peach State Real Estate Holding Company, since 1984, 55 Sandy Hook Road - North, Sarasota, FL 34242. John J. Pajak, Director, President and Chief Operating Officer President and Chief Operating Officer, since 1996; Vice Chairman and Chief Administrative Officer, 1996; Executive Vice President, 1987-1996, MassMutual, 1295 State Street, Springfield, MA 01111. Thomas B. Wheeler, Director, Chairman and Chief Executive Officer Chairman and Chief Executive Officer, since 1996; President and Chief Executive Officer, 1988-1996, MassMutual, 1295 State Street, Springfield, MA 01111. Alfred M. Zeien, Director Chairman and Chief Executive Officer, The Gillette Company, since 1991, Prudential Tower, Boston, MA 02199. Executive Vice Presidents Lawrence V. Burkett, Jr Executive Vice President and General Counsel, since 1993, Senior Vice President and Deputy General Counsel, 1992-1993, MassMutual, 1295 State Street, Springfield, MA 01111. Peter J. Daboul Executive Vice President and Chief Information Officer since 1997, Senior Vice President 1990-1997, MassMutual, 1295 State Street, Springfield, MA 01111. John B. Davies Executive Vice President, since 1994; Associate Executive Vice President, 1994; General Agent, 1982-1993, MassMutual, 1295 State Street, Springfield, MA 01111. Daniel J. Fitzgerald Executive Vice President, since 1994, Corporate Financial Operations, 1994-1997; Senior Vice President, 1991-1994, MassMutual, 1295 State Street, Springfield, MA 01111. James E. Miller Executive Vice President since 1997 and 1987-1996, MassMutual, Senior Vice President, UniCare Life and Health Insurance Company, 1996-1997, 1295 State Street, Springfield, MA 01111 John V. Murphy Executive Vice President, MassMutual, since 1997; Executive Vice President and Chief Operating Officer, David L. Babson & Co., Inc., 1995-1997; Chief Operating Officer, Concert Capital Management, Inc., 1993-1995, Senior Vice President and Chief Financial Officer, Liberty Financial Companies, 1977-1993, 1295 State Street, Springfield, MA 01111 Gary E. Wendlandt Executive Vice President and Chief Investment Officer, since 1993; Executive Vice President, 1992-1993; MassMutual, 1295 State Street, Springfield, MA 01111. Joseph M. Zubretsky Executive Vice President and Chief Financial Officer, since 1997, MassMutual, Chief Financial Officer, 1996, HealthSource, Coopers & Lybrand, 1990-1996, 1295 State Street, Springfield, MA 01111. 44 Report Of Independent Accountants To the Board of Directors and Policyholders of Massachusetts Mutual Life Insurance Company We have audited the accompanying statutory statements of financial position of Massachusetts Mutual Life Insurance Company as of December 31, 1997 and 1996, and the related statutory statements of income, changes in policyholders' contingency reserves, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the statutory financial statements of Connecticut Mutual Life Insurance Company ("Connecticut Mutual") for the year ended December 31, 1995, which statements reflect total revenue and net gain from operations constituting 26% and 22% of the related Company totals after restatement for the merger of the two companies. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Connecticut Mutual, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion. As described more fully in Note 1, these financial statements were prepared in conformity with statutory accounting practices of the National Association of Insurance Commissioners and the accounting practices prescribed or permitted by the Division of Insurance of the Commonwealth of Massachusetts and, for the pre-merger balances of Connecticut Mutual, the Department of Insurance of the State of Connecticut (collectively "statutory accounting practices"), which practices differ from generally accepted accounting principles. The effects on the financial statements of the variances between the statutory basis of accounting and generally accepted accounting principles, although not reasonably determinable at this time, are presumed to be material. In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with generally accepted accounting principles, the financial position of Massachusetts Mutual Life Insurance Company at December 31, 1997 and 1996, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 1997. In our opinion, based upon our audits and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Massachusetts Mutual Life Insurance Company at December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, on the statutory basis of accounting described in Note 1. Coopers & Lybrand L.L.P. Springfield, Massachusetts February 6, 1998 Massachusetts Mutual Life Insurance Company STATUTORY STATEMENTS OF FINANCIAL POSITION December 31, 1997 1996 ---- ---- (In Millions) Assets: Bonds............................................. $23,890.3 $24,299.3 Common stocks..................................... 354.7 336.6 Mortgage loans.................................... 4,863.7 4,852.8 Real estate....................................... 1,697.7 1,840.9 Other investments................................. 1,963.8 1,425.6 Policy loans...................................... 4,950.4 4,752.3 Cash and short-term investments................... 1,941.2 1,075.4 --------- --------- 39,661.8 38,582.9 Investment and insurance amounts receivable....... 1,064.9 1,102.4 Other assets...................................... 104.8 97.9 --------- --------- 40,831.5 39,783.2 Separate account assets........................... 16,803.1 13,563.5 --------- --------- $57,634.6 $53,346.7 ========= ========= See notes to statutory financial statements. Massachusetts Mutual Life Insurance Company STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued December 31, 1997 1996 ---- ---- (In Millions) Liabilities: Policyholders' reserves and funds................. $33,783.2 $33,341.5 Policyholders' dividends.......................... 954.1 885.3 Policyholders' claims and other benefits.......... 353.4 373.8 Federal income taxes.............................. 436.5 440.7 Asset valuation reserve........................... 840.6 689.2 Investment reserves............................... 132.8 208.4 Amounts due on investments puchased and other liabilities................................ 1,457.9 1,206.1 --------- --------- 37,958.5 37,145.0 Separate account reserves and liabilities......... 16,802.8 13,563.1 --------- --------- 54,761.3 50,708.1 Policyholders' contingency reserves............... 2,873.3 2,638.6 --------- --------- $57,634.6 $53,346.7 ========= ========= See notes to statutory financial statements. Massachusetts Mutual Life Insurance Company STATUTORY STATEMENTS OF INCOME
Years ended December 31, 1997 1996 1995 ---- ---- ---- (In Millions) Revenue: Premium income............................................ $6,764.8 $6,328.6 $5,727.7 Net investment and other income........................... 2,904.4 2,861.1 2,898.4 -------- -------- -------- 9,669.2 9,189.7 8,626.1 -------- -------- -------- Benefits and expenses: Policy benefits and payments.............................. 6,597.3 6,048.2 5,152.2 Addition to policyholder's reserves and funds............. 720.8 854.7 1,205.4 Commissions and operating expenses........................ 766.1 763.5 833.7 State taxes, licenses and fees............................ 81.5 96.4 89.4 Merger restructuring costs................................ - 66.1 44.0 -------- -------- -------- 8,165.7 7,828.9 7,324.7 -------- -------- -------- Net gain before federal income taxes and dividends........ 1,503.5 1,360.8 1,301.4 Federal income taxes...................................... 284.4 276.7 206.2 -------- -------- -------- Net gain from operations before dividends................. 1,219.1 1,084.1 1,095.2 Dividends to policyholders................................ 919.5 859.9 819.0 -------- -------- -------- Net gain from operations.................................. 299.6 224.2 276.2 Net realized capital gain (loss).......................... (42.5) 40.3 (85.8) -------- -------- -------- Net income................................................ $ 257.1 $ 264.5 $ 190.4 ======== ======== ========
See notes to statutory financial statements. Massachusetts Mutual Life Insurance Company STATUTORY STATEMENTS OF CHANGES IN POLICYHOLDERS' CONTINGENCY RESERVES
Years ended December 31, 1997 1996 1995 ---- ---- ---- (In Millions) Policyholder's contingency reserves, beginning of year.... $2,638.6 $2,600.9 $2,569.1 -------- -------- -------- Increases (decreases) due to: Net income............................................... 257.1 264.5 190.4 Net unrealized capital gain (loss)....................... 119.1 (1.7) 88.7 Merger restructuring costs, net of fax................... - - (45.4) Change in asset valuation and investment reserves........ (76.0) (142.4) (75.6) Change in prior year policyholders' reserves............. (55.4) (72.2) (108.2) Change in non-admitted assets and other.................. (10.1) (10.5) (18.1) -------- -------- -------- 234.7 37.7 31.8 -------- -------- -------- Policyholders' contingency reserves, end of year.......... $2,873.3 $2,638.6 $2,600.9 ======== ======== ========
See notes to statutory financial statements. Massachusetts Mutual Life Insurance Company STATUTORY STATEMENTS OF CASH FLOWS
Years ended December 31, 1997 1996 1995 ---- ---- ---- (In Millions) Operating acitivites: Net income............................................... $ 257.1 $ 264.5 $ 190.4 Addition to policyholders' reserves and funds, net of transfers to separate accounts................... 421.3 426.7 575.8 Net realized capital (gain) loss......................... 42.5 (40.3) 85.8 Other changes............................................ (58.1) (232.8) (25.2) --------- --------- --------- Net cash provided by operating activities................ 662.8 418.1 826.8 --------- --------- --------- Investing activities: Purchases of investments and loans....................... (12,292.7) (10,171.5) (10,364.2) Sales or maturities of investments and receipts from repayment of loans................................. 12,545.7 8,539.3 9,671.1 --------- --------- --------- Net cash provided by (used in) investing activities...... 253.0 (1,632.2) (693.1) --------- --------- --------- Financing activities: Repayments of long-term debt............................. (50.0) (53.3) (46.4) --------- --------- --------- Net cash used by financing activities.................... (50.0) (53.3) (46.4) --------- --------- --------- Increase (decrease) in cash and short-term investments... 865.8 (1,267.4) 87.3 Cash and short-term investments, beginning of year....... 1,075.4 2,342.8 2,255.5 --------- --------- --------- Cash and short-term investments, end of year............. $ 1,941.2 $ 1,075.4 $ 2,342.8 ========= ========= =========
See Notes to Statutory Financial Statements. Notes To Statutory Financial Statements Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life insurance company and as such has no shareholders. The Company's primary business is individual life insurance, annuity and disability income products distributed primarily through career agents. The Company also provides a wide range of pension products and services, as well as investment services to individuals, corporations and institutions in all 50 states and the District of Columbia. On March 1, 1996, the operations of the former Connecticut Mutual Life Insurance Company ("Connecticut Mutual") were merged into the Company. This merger was accounted for under the pooling of interests method of accounting. For the purposes of this presentation, these financial statements reflect historical amounts giving retroactive effect as if the merger had occurred on January 1, 1995 in conformity with the practices of the National Association of Insurance Commissioners and the accounting practices prescribed or permitted by the Division of Insurance of the Commonwealth of Massachusetts. In 1996, merger-related expenses totaling $66.1 million were recorded in the Statutory Statement of Income. In 1995, merger-related expenses incurred by Massachusetts Mutual (the Company prior to the merger) of $44.0 million, were recorded in the Statutory Statement of Income and the expenses incurred by Connecticut Mutual of $45.4 million, net of tax, were recorded as a component of changes in policyholders' contingency reserves, as permitted by each company's regulatory authority. On the merger date, policyholders' reserves attributable to disability income contracts were strengthened by $75.0 million, investment reserves for real estate were increased by $49.8 million and net prepaid pension assets were increased by $10.4 million with all adjustments reflected as a change to policyholders' contingency reserves. The separate results of each company prior to the merger for the year ended December 31, 1995, were as follows: (a) revenue was $6,443.8 million for Massachusetts Mutual and $2,182.3 million for Connecticut Mutual; (b) net income was $160.7 million for Massachusetts Mutual and $29.6 million for Connecticut Mutual and (c) policyholders' contingency reserves increased by $143.7 million for Massachusetts Mutual and decreased by $112.0 million for Connecticut Mutual. On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a wholly-owned subsidiary, and its subsidiaries, including Mirus Life Insurance Company (formerly the MML Pension Insurance Company; currently doing business as "UniCARE"), which comprised the Company's group life and health business, to WellPoint Health Networks, Inc. The Company received total consideration of $402.2 million ($340.0 million in cash and $62.2 million in notes receivable) and recognized a before tax gain of $187.9 million. The Company, pursuant to a 1994 reinsurance agreement, cedes its group life, accident and health business to UniCARE. The Company's investment in MassMutual Holding Company Two, Inc. amounted to $187.8 million at December 31, 1995; its gain from operations included a $41.0 million dividend received from MIRUS in 1995. Additionally, this investment produced an unrealized gain of $13.9 million in 1995. 1. SUMMARY OF ACCOUNTING PRACTICES The accompanying statutory financial statements, except as to form, have been prepared in conformity with the statutory accounting practices of the National Association of Insurance Commissioners ("NAIC") and the accounting practices prescribed or permitted by the Division of Insurance of the Commonwealth of Massachusetts and, for the pre-merger balances of Connecticut Mutual, the Department of Insurance of the State of Connecticut (collectively "statutory accounting practices"), which practices were at one time also considered to be in conformity with generally accepted accounting principles ("GAAP"). The accompanying statutory financial statements are different in some respects from GAAP financial statements. The more significant differences are as follows: (a) acquisition costs, such as commissions and other costs directly related to acquiring new business, are charged to current operations as incurred, whereas GAAP would require these expenses to be capitalized and recognized over the life of the policies; (b) policy reserves are based upon statutory mortality and interest requirements without consideration of withdrawals, whereas GAAP reserves would be based upon reasonably conservative estimates of mortality, morbidity, interest and withdrawals; (c) bonds are generally carried at amortized cost whereas GAAP generally requests they be valued at fair value; (d) deferred income taxes are not provided for book-tax timing differences as would be required by GAAP, and (e) payments received for universal and variable life products, variable annuities and investment related products are reported as premium revenue, whereas under GAAP, these payments would be recorded as deposits to policyholders' account balances. The NAIC is currently engaged in an extensive project ("Codification") to codify statutory accounting principles with a goal of providing a comprehensive guide of statutory accounting principles for use by insurers in all states. This comprehensive guide, which has not been approved by the NAIC or any state insurance department, includes seventy-two Statements of Statutory Accounting Principles ("SSAPs") and is expected to be effective no earlier than January 1, 1999. The effect of adopting these SSAPs shall be reported as an adjustment to surplus on the effective date. Management is currently reviewing the impact of Codification. However, since the SSAPs have not been finalized, the ultimate impact cannot be determined at this time. Notes To Statutory Financial Statements (Continued) The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities at the date of the financial statements. Management must also make estimates and assumptions that affect the amounts of revenues and expenses during the reporting period. Future events, including changes in the levels of mortality, morbidity, interest rates and asset valuations, could cause actual results to differ from the estimates used in these financial statements. The following is a description of the Company's principal accounting policies and practices. A. Investments Bonds and stocks are valued in accordance with rules established by the National Association of Insurance Commissioners. Generally, bonds are valued at amortized cost, preferred stocks in good standing at cost, and common stocks, except for unconsolidated subsidiaries, at fair value. Mortgage loans are valued at unpaid principal less unamortized discount. Real estate is valued at cost less accumulated depreciation, impairment allowances and mortgage encumbrances. Encumbrances totaled $14.2 million in 1997 and $27.3 million in 1996. Depreciation on investment real estate is calculated using the straight-line and constant yield methods. Policy loans are carried at the outstanding loan balance less amounts unsecured by the cash surrender value of the policy. Short-term investments are stated at amortized cost, which approximates fair value. Investments in unconsolidated subsidiaries and affiliates, joint ventures and other forms of partnerships are included in other investments on the Statutory Statement of Financial Position and are accounted for using the equity method. In compliance with regulatory requirements, the Company maintains an Asset Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation Reserve and other investment reserves stabilize the policyholders' contingency reserves against fluctuations in the value of stocks, as well as declines in the value of bonds, mortgage loans and real estate investments. The Interest Maintenance Reserve captures after-tax realized capital gains and losses which result from changes in the overall level of interest rates for all types of fixed income investments, as well as other financial instruments, including financial futures, U.S. Treasury purchase commitments, options, interest rate swaps, interest rate caps and interest rate floors. These interest rate related gains and losses are amortized into income using the grouped method over the remaining life of the investment sold or over the remaining life of the underlying asset. Net realized after tax capital gains of $95.4 million in 1997, $73.1 million in 1996, and net realized after tax capital losses of $130.7 million in 1995 were charged to the Interest Maintenance Reserve. Amortization of the Interest Maintenance Reserve into net investment income amounted to $31.0 million in 1997, $26.9 million in 1996, and $5.0 million in 1995. Realized capital gains and losses, less taxes, not includable in the Interest Maintenance Reserve, are recognized in net income. Realized capital gains and losses are determined using the specific identification method. Unrealized capital gains and losses are included in policyholders' contingency reserves. B. Separate Accounts Separate account assets and liabilities represent segregated funds administered and invested by the Company for the benefit of pension, variable annuity and variable life insurance contract holders. Assets consist principally of marketable securities reported at fair value. Premiums, benefits and expenses of the separate accounts are reported in the Statutory Statement of Income. The Company receives administrative and investment advisory fees from these accounts. C. Non-admitted Assets Assets designated as "non-admitted" (principally certain fixed assets, receivables and Interest Maintenance Reserve, when in a net loss deferral position) are excluded from the Statutory Statement of Financial Position by an adjustment to policyholders' contingency reserves. Notes To Statutory Financial Statements (Continued) D. Policyholders' Reserves and Funds Policyholders' reserves for life contracts are developed using accepted actuarial methods computed principally on the net level premium and the Commissioners' Reserve Valuation Method bases using the American Experience and the 1941, 1958 and 1980 Commissioners' Standard Ordinary mortality tables with assumed interest rates ranging from 2.5 to 6.0 percent. Reserves for individual annuities, guaranteed investment contracts and deposit administration and immediate participation guarantee funds are based on accepted actuarial methods principally at interest rates ranging from 2.25 to 11.25 percent. Reserves for policies and contracts considered investment contracts have a carrying value of $8,077.9 million and $9,073.8 million at December 31, 1997 and 1996, respectively (fair value of $8,250.0 million and $9,324.6 million at December 31, 1997 and 1996, respectively as determined by discounted cash flow projections). Accident and health policy reserves are generally calculated using the two-year preliminary term, net level premium and fixed net premium methods and various morbidity tables. The Company made certain changes in the valuation of policyholders' reserves of $55.4 million in 1997 and $72.2 million in 1996. The effects of these changes were recorded as a decrease to policyholders' contingency reserves. E. Premium and Related Expense Recognition Life insurance premium revenue is recognized annually on the anniversary date of the policy. Annuity premium is recognized when received. Accident and health premiums are recognized as revenue when due. Commissions and other costs related to issuance of new policies, maintenance and settlement costs are charged to current operations when incurred. F. Policyholders' Dividends The Board of Directors annually approves dividends to be paid in the following year. These dividends are allocated to reflect the relative contribution of each group of policies to policyholders' contingency reserves and consider investment and mortality experience, expenses and federal income tax charges. The liability for policyholders' dividends is equal to the estimated amount of dividends to be paid in the following calendar year. G. Cash and Short-term Investments For purposes of the Statutory Statement of Cash Flows, the Company considers all highly liquid investments purchased with a maturity of twelve months or less to be cash and short-term investments. 2. POLICYHOLDERS' CONTINGENCY RESERVES Policyholders' contingency reserves represent surplus of the Company as reported to regulatory authorities and are intended to protect policyholders against possible adverse experience. The Company issued surplus notes of $100.0 million at 7 1/2 percent and $250.0 million at 7 5/8 percent in 1994 and 1993, respectively. These notes are unsecured and subordinate to all present and future indebtedness of the Company, policy claims and prior claims against the Company as provided by the Massachusetts General Laws. Issuance was approved by the Commissioner of Insurance of the Commonwealth of Massachusetts ("the Commissioner"). All payments of interest and principal are subject to the prior approval of the Commissioner. Sinking fund payments are due as follows: $62.5 million in 2021, $87.5 million in 2022, $150.0 million in 2023 and $50.0 million in 2024. Interest on the notes issued in 1994 is scheduled to be paid on March 1 and September 1 of each year, to holders of record on the preceding February 15 or August 15, respectively. Interest on the notes issued in 1993 is scheduled to be paid on May 15 and November 15 of each year, to holders of record on the preceding May 1 or November 1, respectively. Interest expense is not recorded until approval for payment is received from the Commissioner. Interest of $26.6 million was approved and paid in 1997, 1996 and 1995. Notes To Statutory Financial Statements (Continued) The proceeds of the notes, less a $28.3 million reserve in 1997, and a $32.2 million reserve in 1996 for contingencies associated with the issuance of the notes, are recorded as a component of the Company's policyholders' contingency reserves as approved by the Commissioner. These reserves, as permitted by the Division of Insurance, are included in investment reserves on the Statutory Statement of Financial Position. 3. EMPLOYEE BENEFIT PLANS The Company's employee benefit plans include plans in place for the employees of Massachusetts Mutual and Connecticut Mutual prior to the merger. Employees previously covered by the Connecticut Mutual pension plans will continue coverage under these plans. All other employees, including employees hired after the merger date, will be covered by the Massachusetts Mutual benefit plans. A. Pension The Company has two non-contributory defined benefit plans covering substantially all of its employees. One plan includes employees previously employed by Connecticut Mutual; the other includes all other eligible employees. Benefits are based on the employees' years of service, compensation during the last five years of employment and estimated social security retirement benefits. The Company accounts for these plans following Financial Accounting Standards Board Statement No. 87, "Employers' Accounting for Pensions." Accordingly, as permitted by the Massachusetts Division of Insurance, the Company has recognized a pension asset of $157.4 million and $97.2 million at December 31, 1997 and 1996, respectively. On the merger date, the accounting for Connecticut Mutual pension plans was conformed to the Company's policy of recording pension plan assets and liabilities, resulting in a $10.4 million increase in policyholders' contingency reserves. Company policy is to fund pension costs in accordance with the requirements of the Employee Retirement Income Security Act of 1974 and, based on such requirements, no funding was required for the years ended December 31, 1997, 1996 and 1995. The assets of the plans are invested in the Company's general account and separate accounts. The benefit status of the defined benefit plans as of December 31 is as follows: 1997 1996 ---- ---- (In Millions) Accumulated benefit obligation $ 663.1 $ 611.5 Vested benefit obligation 653.8 606.5 Projected benefit obligation 713.9 665.5 Plan assets at fair value 1,154.2 1,201.7 The following assumptions were used in determining the actuarial present value of both the accumulated and projected benefit obligations. MassMutual Connecticut Mutual Plan Plan ---- ---- Discount rate - 1997 7.25% 7.25% Discount rate - 1996 7.75 7.75 Increase in future compensation levels 4.00 5.00 Long-term rate of return on assets 10.00 9.00 In 1997, there was a significant reduction in plan participants in the Connecticut Mutual Plan which resulted in recognition of a pension plan curtailment gain of $10.7 million. As a result of the sale of Mirus Life Insurance Company, there was a significant reduction in plan participants which resulted in recognition of a pension plan curtailment gain of $15.3 million in 1996. The Company also has defined contribution plans for employees and agents. The expense credited to operations for all pension plans is $38.9 million in 1997, $32.7 million in 1996 and $10.9 million in 1995. Notes To Statutory Financial Statements (Continued) B. Life and Health Certain life and health insurance benefits are provided to retired employees and agents through group insurance contracts. Substantially all of the Company's employees may become eligible for these benefits if they reach retirement age while working for the Company. The Company adopted the National Association of Insurance Commissioners' accounting standard for post-retirement life and health benefit costs, requiring these benefits to be accounted for using the accrual method for employees and agents eligible to retire and current retirees. The following assumptions were used in determining the accumulated postretirement benefit liability. MassMutual Connecticut Mutual Plan Plan ---- ---- Discount - 1997 7.25% 7.25% Discount - 1996 7.75 7.75 Assumed increases in medical cost rates in the first year 6.25 - 6.75 9.50 declining to 4.75 5.00 within 5 years 5 years The initial transition obligation of $137.9 million is being amortized over twenty years through 2012. At December 31, 1997 and 1996, the net unfunded accumulated benefit obligation was $124.2 million and $124.1 million, respectively, for employees and agents eligible to retire or currently retired and $34.7 million and $33.8 million, respectively, for participants not eligible to retire. A Retired Lives Reserve Trust was funded to pay life insurance premiums for certain retired employees. Trust assets available for benefits were $21.7 million and $23.0 million at December 31, 1997 and 1996, respectively. As a result of the sale of Mirus Life Insurance Company, there was a significant reduction in plan participants which resulted in recognition of a life and health plan curtailment loss of $13.9 million in 1996. The expense for 1997, 1996 and 1995 was $16.5 million, $17.6 million, and $22.9 million, respectively. A one percent increase in the annual assumed increase in medical cost rates would increase the 1997 accumulated postretirement benefit liability and benefit expense by $10.9 million and $1.4 million, respectively. 4. RELATED PARTY TRANSACTIONS Pursuant to two 1994 reinsurance agreements with Mirus Life Insurance Company (Mirus) whereby the Company assumed all of the single premium immediate annuity business written by Mirus and ceded all of its group life, accident and health business to Mirus. A gain from operations of this business was reflected in 1995 as a $41.0 million dividend received from Mirus, which was recorded as net investment income on the Statutory Statement of Income. As previously discussed, on March 31, 1996, the Company sold MassMutual Holding Company Two, Inc. a wholly-owned subsidiary, and its subsidiaries, including Mirus Life Insurance Company to WellPoint Health Networks, Inc. The Company has a modified coinsurance quota-share reinsurance agreement with a wholly-owned subsidiary, C.M. Life Insurance Company, whereby the Company assumes 75% of the premiums on certain universal life policies issued by C.M. Life. The Company pays a stipulated expense allowance, death and surrender benefits, and a modified coinsurance adjustment. Reserves for payment of future benefits are retained by C.M. Life. 5. FEDERAL INCOME TAXES Provision for federal income taxes is based upon the Company's best estimate of its current tax liability. No deferred tax effect is recognized for temporary differences that may exist between financial reporting and taxable income. Accordingly, the reporting of equity tax (essentially a reduction in the deduction for policyholder dividends) and miscellaneous temporary differences, such as reserves, acquisition costs and restructuring costs, resulted in effective tax rates which differ from the statutory tax rate. The Internal Revenue Service has completed examining the Company's income tax returns through the year 1992 for Massachusetts Mutual and 1991 for Connecticut Mutual, and is currently examining Massachusetts Mutual for the years 1993 and 1994, and Connecticut Mutual for the years 1992 through 1995. The Company believes any adjustments resulting from such examinations will not materially affect its financial statements. Notes to Statutory Financial Statements (Continued) Components of the formula authorized by the Internal Revenue Service for determining deductible policyholder dividends have not been finalized for 1997 or 1996. The Company records the estimated effects of anticipated revisions in the Statutory Statement of Income. The Company plans to file its 1997 federal income tax return on a consolidated basis with its life and non-life affiliates with the exception of C.M. Life Insurance Company. The Company and its eligible life and non-life affiliates are subject to a written tax allocation agreement, which allocates the group's consolidated tax liability for payment purposes. Generally, the agreement provides that members with losses shall be compensated for the use of their losses and credits by other members. The Company made federal tax payments of $353.4 million in 1997, $330.7 million in 1996 and $147.3 million in 1995. 6. INVESTMENTS The Company maintains a diversified investment portfolio. Investment policies limit concentration in any asset class, geographic region, industry group, economic characteristic, investment quality or individual investment. In the normal course of business, the Company enters into commitments to purchase privately placed bonds and to issue mortgage loans. A. Bonds The carrying value and estimated fair value of bonds are as follows: December 31, 1997 ----------------- Gross Gross Estimated Carrying Unrealized Unrealized Fair Value Gains Losses Value ----- ----- ------ ----- (In Millions) U.S. Treasury securities $ 6,241.0 $ 470.5 $10.3 $ 6,701.2 and obligations of U.S. government corporations and agencies Debt securities issued by foreign governments 83.5 4.4 3.0 84.9 Mortgage-backed securities 3,390.8 187.9 9.0 3,569.7 State and local governments 361.9 23.9 .6 385.2 Corporate debt securities 12,148.9 765.2 46.9 12,867.2 Utilities 871.8 100.1 2.2 969.7 Affiliates 792.4 2.8 1.0 794.2 --------- -------- ----- --------- TOTAL $23,890.3 $1,554.8 $73.0 $25,372.1 ========= ======== ===== ========= December 31, 1996 ----------------- Gross Gross Estimated Carrying Unrealized Unrealized Fair Value Gains Losses Value ----- ----- ------ ----- (In Millions) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 8,042.6 $ 344.0 $ 56.3 $ 8,330.3 Debt securities issued by 95.2 10.2 .5 104.9 foreign governments Mortgage-backed securities 3,014.0 119.0 43.3 3,089.6 State and local governments 173.2 13.1 2.1 184.2 Corporate debt securities 11,675.2 528.0 133.3 12,069.9 Utilities 975.0 87.0 18.5 1,043.5 Affiliates 324.1 4.3 3.5 324.9 --------- -------- ------ --------- TOTAL $24,299.3 $1,105.6 $257.5 $25,147.3 ========= ======== ====== ========= Notes To Statutory Financial Statements (Continued) The carrying value and estimated fair value of bonds at December 31, 1997 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties. Estimated Carrying Fair Value Value ----- ----- (In Millions) Due in one year or less $ 519.7 $ 523.0 Due after one year through five years 3,972.1 4,104.6 Due after five years through ten years 7,423.3 7,838.1 Due after ten years 5,254.9 5,888.1 --------- --------- 17,170.0 18,353.8 Mortgage-backed securities, including securities guaranteed by the U.S. Government 6,720.3 7,018.3 --------- --------- TOTAL $23,890.3 $25,372.1 ========= ========= Proceeds from sales of investments in bonds were $11,427.8 million during 1997, $6,390.7 million during 1996 and $8,068.8 million during 1995. Gross capital gains of $200.7 million in 1997, $188.8 million in 1996 and $255.5 million in 1995 and gross capital losses of $68.8 million in 1997, $255.5 million in 1996 and $67.1 million in 1995 were realized on those sales, portions of which were included in the Interest Maintenance Reserve. The estimated fair value of non-publicly traded bonds is determined by the Company using a pricing matrix. B. Stocks Preferred stocks in good standing had fair values of $145.5 million in 1997 and $150.8 million in 1996, using a pricing matrix for non-publicly traded stocks and quoted market prices for publicly traded stocks. Common stocks, except for unconsolidated subsidiaries, had a cost of $250.3 million in 1997 and $249.2 million in 1996. C. Mortgages The fair value of mortgage loans, as determined from a pricing matrix for performing loans and the estimated underlying real estate value for non-performing loans, approximated carrying value. The Company had restructured loans with book values of $202.3 million, and $383.5 million at December 31, 1997 and 1996, respectively. These loans typically have been modified to defer a portion of the contracted interest payments to future periods. Interest deferred to future periods totaled $5.1 million in 1997, $2.2 million in 1996 and $2.5 million in 1995. D. Other The carrying value of investments which were non-income producing for the preceding twelve months was $5.7 million and $23.1 million at December 31, 1997 and 1996, respectively. The Company made voluntary contributions to the Asset Valuation Reserve of $6.8 million 1996. No additional voluntary contribution to the Asset Valuation Reserve was made in 1997. It is not practicable to determine the fair value of policy loans as they do not have a stated maturity. 7. PORTFOLIO RISK MANAGEMENT The Company manages its investment risks, primarily to reduce interest rate and duration imbalances determined in asset/liability analyses. The fair values of these instruments, described below, which are not recorded in the financial statements, are based upon market prices or prices obtained from brokers. The Company does not hold or issue these financial instruments for trading purposes. Notes To Statutory Financial Statements (Continued) The notional amounts described do not represent amounts exchanged by the parties and, thus, are not a measure of the exposure of the Company. The amounts exchanged are calculated on the basis of the notional amounts and the other terms of the instruments, which relate to interest rates, exchange rates, security prices or financial or other indexes. The Company enters into financial futures contracts for the purpose of managing interest rate exposure. Margin requirements are met with the deposit of securities. Futures contracts are generally settled with offsetting transactions. Gains and losses on financial futures contracts are recorded when the contract is closed and amortized through the Interest Maintenance Reserve over the remaining life of the underlying asset. As of December 31, 1997 and 1996, the Company did not have any open financial futures contracts. The Company utilizes interest rate swap agreements, options, and purchased caps and floors to reduce interest rate exposures arising from mismatches between assets and liabilities and to modify portfolio profiles to manage other risks identified. Under interest rate swaps, the Company agrees to an exchange, at specified intervals, between streams of variable rate and fixed rate interest payments calculated by reference to an agreed-upon notional principal amount. Net amounts receivable and payable are accrued as adjustments to interest income and included in investment and insurance amounts receivable on the Statutory Statement of Financial Position. Gains and losses realized on the termination of contracts are amortized through the Interest Maintenance Reserve over the remaining life of the associated contract. At December 31, 1997 and 1996, the Company had swaps with notional amounts of $3,220.2 million and $2,090.3 million, respectively. The fair values of these instruments were $20.9 million at December 31, 1997 and $14.8 million at December 31, 1996. Options grant the purchaser the right to buy or sell a security or enter into a derivative transaction at a stated price within a stated period. The Company's option contracts have terms of up to fifteen years. The amounts paid for options purchased are included in other investments on the Statutory Statement of Financial Position. Gains and losses on these contracts are recorded at the expiration or termination date and are amortized through the Interest Maintenance Reserve over the remaining life of the option contract. At December 31, 1997 and 1996, the Company had option contracts with notional amounts of $5,388.2 million and $1,928.4 million, respectively. The Company's credit risk exposure was limited to the unamortized costs of $59.0 million and $18.1 million, which had fair values of $99.6 million and $19.2 million at December 31, 1997 and 1996, respectively. Interest rate cap agreements grant the purchaser the right to receive the excess of a referenced interest rate over a given rate calculated by reference to an agreed upon notional amount. Interest rate floor agreements grant the purchaser the right to receive the excess of a given rate over a referenced interest rate calculated by reference to an agreed upon notional amount. Amounts paid for interest rate caps and floors are amortized into interest income over the life of the asset on a straight-line basis. Unamortized costs are included in other investments on the Statutory Statement of Financial Position. Amounts receivable and payable are accrued as adjustments to interest income and included in the Statutory Statement of Financial Position as investment and insurance amounts receivable. Gains and losses on these contracts, including any unamortized cost, are recognized upon termination and are amortized through the Interest Maintenance Reserve over the remaining life of the associated cap or floor agreement. At December 31, 1997 and 1996, the company had agreements with notional amounts of $3,348.6 million and $3,859.6 million, respectively. The Company's credit risk exposure on these agreements is limited to the unamortized costs of $18.2 million and $22.0 million at December 31, 1997 and 1996, respectively. The fair values of these instruments were $23.4 million and $15.2 million at December 31, 1997 and 1996, respectively. The Company utilizes asset swap agreements to reduce exposures, such as currency risk and prepayment risk, built into certain assets acquired. Cross-currency interest rate swaps allow investment in foreign currencies, increasing access to additional investment opportunities, while limiting foreign exchange risk. The net cash flows from asset and currency swaps are recognized as adjustments to the underlying assets' interest income. Gains and losses realized on the termination of these contracts adjusts the bases of the underlying asset. Notional amounts relating to asset and currency swaps totaled $225.6 million and $364.7 million at December 31, 1997 and 1996, respectively. The fair values of these instruments were an unrecognized loss of $1.7 million at December 31, 1997 and an unrecognized gain of $7.8 million at December 31, 1996. Notes To Statutory Financial Statements (Continued) Equity swap agreements are utilized to hedge exposure to market risk on public and private equity positions held in the Company's investment portfolio. Under equity swaps, the Company agrees to an exchange, at points in time specified in each contract, between streams of variable or fixed rate interest payments and the change in an underlying index, equity or basket of equities. The change in the underlying item is calculated by reference to the level of such item specified in the agreement. Net amounts receivable and payable are accrued as adjustments to interest income and included in investment and insurance amounts receivable on the Statutory Statement of Financial Position. Changes in the value of these contracts are recorded as realized gains and losses in the Statutory Statement of Income when contracts are closed. At December 31, 1997 and 1996, the Company had equity swap contracts with notional amounts of $160.0 million and $149.2 million, respectively. The fair values of these instruments were an unrealized loss of $5.1 million at December 31, 1997 and an unrealized gain of $11.9 million at December 31, 1996. The Company enters into forward U.S. Treasury commitments for the purpose of managing interest rate exposure. The Company generally does not take delivery on forward commitments. These commitments are instead settled with offsetting transactions. Gains and losses on forward commitments are recorded when the commitment is closed and amortized through the Interest Maintenance Reserve over the remaining life of the asset. At December 31, 1997 and 1996, the Company had U. S. Treasury purchase commitments which will settle during the following year with contractual amounts of $1,100.7 million and $1,639.4 million with fair values of $1,117.6 million and $1,627.4 million, respectively including net unrealized gains of $16.9 million at December 31, 1997 and net unrealized losses of $12.0 million at December 31, 1996. The Company is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. This exposure is limited to contracts with a positive fair value. The amounts at risk in a net gain position were $146.7 million and $53.9 million at December 31, 1997 and 1996, respectively. The Company monitors exposure to ensure counterparties are credit worthy and concentration of exposure is minimized. Additionally, contingent collateral positions have been obtained with counterparties when considered prudent. 8. REINSURANCE The Company cedes all of its group life and health business to UniCARE and has other reinsurance agreements with other insurance companies in the normal course of business. Premiums, benefits to policyholders and provisions for future benefits are stated net of reinsurance. The Company remains liable to the insured for the payment of benefits if the reinsurer cannot meet its obligations under the reinsurance agreements. Premiums ceded were $294.6 million in 1997, $793.5 million in 1996 and $904.1 million in 1995. 9. LIQUIDITY The withdrawal characteristics of the policyholders' reserves and funds, including separate accounts, and the invested assets which support them at December 31, 1997 are illustrated below: (In Millions) Total policyholders' reserves and funds and separate account liabilities $50,804.2 Not subject to discretionary withdrawal (5,283.7) Policy loans (4,950.4) --------- Subject to discretionary withdrawal $40,570.1 ========= Total invested assets, including separate $56,464.7 Policy loans and other invested assets (14,823.3) --------- Marketable investments $41,641.4 ========= 10. BUSINESS RISKS AND CONTINGENCIES The Company is subject to insurance guaranty fund laws in the states in which it does business. These laws assess insurance companies amounts to be used to pay benefits to policyholders and claimants of insolvent insurance companies. Many states allow these assessments to be credited against future premium taxes. The Company believes such assessments in excess of amounts accrued will not materially affect its financial position, results of operations or liquidity. In 1997 and 1996, the Company elected not to admit $21.4 million and $15.3 million, respectively, of guaranty fund premium tax offset receivables relating to prior assessments. Notes To Statutory Financial Statements (Continued) The Company is involved in litigation arising in and out of the normal course of its business. Management intends to defend these actions vigorously. While the outcome of litigation cannot be foreseen with certainty, it is the opinion of management, after consultation with legal counsel, that the ultimate resolution of these matters will not materially affect its financial position, results of operations or liquidity. 11. RECLASSIFICATIONS Certain 1996 and 1995 amounts have been reclassified to conform with the current year presentation. 12. SUBSIDIARIES AND AFFILIATED COMPANIES A summary of ownership and relationship of the Company and its subsidiaries and affiliated companies as of December 31, 1997 is illustrated below. The Company provides management or advisory services to these companies. Subsidiaries are wholly-owned, except as noted. Parent - ------ Massachusetts Mutual Life Insurance Company Subsidiaries of Massachusetts Mutual Life Insurance Company - ----------------------------------------------------------- C.M. Assurance Company C.M. Benefit Insurance Company C.M. Life Insurance Company MassMutual Holding Company MassMutual Holding Company Two, Inc. (Sold in March 1996) MassMutual of Ireland, Limited MML Bay State Life Insurance Company MML Distributors, LLC Subsidiaries of MassMutual Holding Company ------------------------------------------ GR Phelps, Inc. MassMutual Holding Trust I MassMutual Holding Trust II MassMutual Holding MSC, Inc. MassMutual International, Inc. MassMutual Reinsurance Bermuda (Sold in December 1996) MML Investor Services, Inc. State House One (Liquidated in December 1996) Subsidiaries of MassMutual Holding Trust I ------------------------------------------ Antares Leveraged Capital Corporation -- 98.5% Charter Oak Capital Management, Inc. -- 80.0% Cornerstone Real Estate Advisors, Inc. DLB Acquisition Corporation -- 84.8% Oppenheimer Acquisition Corporation -- 88.55% Subsidiaries of MassMutual Holding Trust II ------------------------------------------- CM Advantage, Inc. -- (Liquidated in December 1997) CM International, Inc. CM Property Management, Inc. -- (Liquidated in December 1997) High Yield Management, Inc. MMHC Investments, Inc. MML Realty Management Urban Properties, Inc. Westheimer 335 Suites, Inc. Notes To Statutory Financial Statements (Continued) Subsidiaries of MassMutual International ---------------------------------------- Compensa de Seguros de Vida S.A. -- 33.5% MassLife Seguros de Vida (Argentina) S. A. MassMutual International (Bermuda) Ltd. Mass Seguros de Vida (Chile) S. A. -- 33.5% MassMutual International (Luxemburg) S. A. MassMutual Holding MSC, Incorporated MassMutual/Carlson CBO N. V. -- 100% MassMutual Corporate Value Limited -- 46% 9048 -- 5434 Quebec, Inc. Affiliates of Massachusetts Mutual Life Insurance Company - --------------------------------------------------------- MML Series Investment Fund MassMutual Institutional Funds Oppenheimer Value Stock Fund MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY STATUTORY STATEMENT OF FINANCIAL POSITION (Unaudited) March 31, December 31, 1998 1997 ---------- ---------- (In Millions) Assets: Bonds $24,417.1 $23,890.3 Common stocks 349.3 354.7 Mortgage loans 4,967.1 4,863.7 Real estate 1,749.9 1,697.7 Other investments 2,166.4 1,963.8 Policy loans 5,003.8 4,950.4 Cash and short-term investments 1,847.3 1,941.2 --------- --------- Total invested assets 40,500.9 39,661.8 Investment and insurance amounts receivable 1,043.6 1,064.9 Other assets 109.6 104.8 --------- --------- 41,654.1 40,831.5 Separate account assets 18,467.1 16,803.1 --------- --------- $60,121.2 $57,634.6 ========= ========= See notes to statutory financial statements. 1 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY STATUTORY STATEMENT OF FINANCIAL POSITION, continued (Unaudited) March 31, December 31, 1998 1997 ---------- ---------- (In Millions) Liabilities: Policyholders' reserves and funds $33,858.6 $33,783.2 Policyholders' dividends 960.0 954.1 Policyholders' claims and other benefits 363.2 353.4 Federal income taxes 577.0 436.5 Asset valuation reserve 890.6 840.6 Investment reserves 135.6 132.8 Amounts due on investments purchased and other liabilities 1,866.6 1,457.9 --------- --------- 38,651.6 37,958.5 Separate account reserves and liabilities 18,466.5 16,802.8 --------- --------- 57,118.1 54,761.3 Policyholders' contingency reserves 3,003.1 2,873.3 --------- --------- $60,121.2 $57,634.6 ========= ========= See notes to statutory financial statements. 2 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY STATUTORY STATEMENT OF INCOME (Unaudited) March 31, March 31, 1998 1997 ---- ---- (In Millions) Revenue: Premium income $ 1,769.3 $ 1,625.2 Net investment 730.9 701.8 Fees and other income 6.1 8.6 --------- --------- 2,506.3 2,335.6 --------- --------- Benefits and expenses: Policy benefits and payments 1,630.9 1,584.0 Addition to policyholders' reserves and funds 287.1 187.0 Commissions 68.0 84.8 Operating expenses 105.1 80.1 State taxes, licenses and fees 30.4 19.0 --------- --------- 2,121.5 1,954.9 --------- --------- Net gain before federal income taxes and dividends 384.8 380.7 Federal income taxes 49.7 85.0 --------- --------- Net gain from operations before dividends 335.1 295.7 Dividends to policyholders 226.0 212.3 --------- --------- Net gain from operations 109.1 83.4 Net realized capital gain (loss) 1.5 (16.9) --------- --------- Net income $ 110.6 $ 66.5 ========= ========= See notes to statutory financial statements. 3 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY STATUTORY STATEMENT OF CHANGES IN POLICYHOLDERS' CONTINGENCY RESERVES (Unaudited) Three months ended March 31, 1998 1997 ---- ---- (In Millions) Policyholders' contingency reserves, beginning of year $2,873.3 $2,638.6 -------- -------- Increases (decreases) due to: Net income 110.6 66.5 Net unrealized capital gain 75.8 2.2 Change in asset valuation and investment reserves (52.8) (10.3) Change in prior year policyholders' reserves 0.5 0.4 Change in non-admitted assets and other (4.3) (6.0) -------- -------- Policyholders' contingency reserves, end of period $3,003.1 $2,691.4 ======== ======== See notes to statutory financial statements. 4 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY STATUTORY STATEMENTS OF CASH FLOWS
(Unaudited) For the Periods Ending March 31, 1998 1997 -------- -------- (In Millions) Operating activities: Net income $ 110.6 $ 66.5 Addition to policyholders' reserves and funds, net of transfers to separate accounts 85.2 34.1 Net realized capital (gain) loss (1.5) 16.9 Change in federal income taxes payable 140.5 4.9 Other changes 30.8 (10.4) ---------- ---------- Net cash provided by operating activities 365.6 112.0 ---------- ---------- Investing activities: Purchases of investments and loans (4,380.7) (4,062.9) Sales or maturities of investments and receipts from repayment of loans 3,921.2 4,069.5 ---------- ---------- Net cash provided by (used in) investing activities (459.5) 6.6 ---------- ---------- Increase (decrease) in cash and short-term investments (93.9) 118.6 Cash and short-term investments, beginning of year 1,941.2 1,075.4 ---------- ---------- Cash and short-term investments, end of year $ 1,847.3 $ 1,194.0 ========== ==========
See notes to statutory financial statements. 5 NOTES TO STATUTORY FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying interim statutory financial statements of Massachusetts Mutual Life Insurance Company (the "Company"), except as to form, have been prepared in conformity with the statutory accounting practices of the National Association of Insurance Commissioners and the accounting practices prescribed or permitted by the Division of Insurance of the Commonwealth of Massachusetts ("Division of Insurance"). 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 and variable life products, variable annuities and investment related products are reported as premium revenue, whereas under GAAP, these payments would be recorded as deposits to policyholders' account balances. The accompanying interim financial statements reflect, in the opinion of the Company's management, all adjustments (consisting of normal, recurring accruals) necessary for a fair presentation of the interim financial position and results of operations. Such statements should be read in conjunction with the annual financial statements. 2. Asset Valuation Reserve In compliance with regulatory requirements, the Company maintains the Asset Valuation Reserve. The balance as of March 31, 1998 reflects the year-to-date activity and a pro rata share of the annual contribution or amortization. The Asset Valuation Reserve and other investment reserves stabilize the policyholders' contingency reserves against fluctuations in the value of stocks, as well as declines in the value of bonds, mortgage loans and real estate investments. These other investment reserves for both periods are established each quarter based on the Company's best estimate at those dates and realized losses are taken after a complete analysis is performed during the fourth quarter. 3. Policyholders' Dividends In October, the Board of Directors annually approve dividends to be paid in the following year. The dividend liability recorded as of March 31, 1998 and December 31, 1997 is based on the dividend scales approved for those periods in October 1997 and reflects the dividends to be credited for the subsequent twelve months. In the fourth quarter of each year, the dividend liability is adjusted to reflect the dividend scale approved in October of that year. 4. New Accounting Pronouncements The NAIC is currently engaged in an extensive project to codify statutory accounting ("Codification") principles with a goal of providing a comprehensive guide of statutory accounting principles for use by insurers in all states. This comprehensive guide, which has been approved by the NAIC, but must be adopted by the Division of Insurance before the Company must comply with its provisions, includes seventy two Statements of Statutory Accounting Principles ("SSAPs"). At this time, it is uncertain when or if the Division of Insurance will adopt Codification, however, if adopted the effective date is expected to be no earlier than January 1, 1999. Management is currently reviewing the impact of Codification. 6 PART II INFORMATION NOT REQUIRED IN PROSPECTUS 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 (the "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 Article V of the Bylaws of MassMutual provide for indemnification of directors and officers as follows: Article V. Subject to limitations of law, the Company shall indemnify: (a) each director, officer or employee; (b) any individual who serves at the request of the Company as Secretary, a director, board member, committee member, officer or employee of any organization or any separate investment account; or (c) any individual who serves in any capacity with respect to any employee benefit plan; from and against all loss, liability and expense imposed upon or incurred by such person in connection with any action, claim or proceeding of any nature whatsoever, in which such person may be involved or with which he or she may be threatened, by reason of any alleged act, omission or otherwise while serving in any such capacity. Indemnification shall be provided although the person no longer serves in such capacity and shall include protection for the person's heirs and legal representatives. Indemnities hereunder shall include, but not be limited to, all costs and reasonable counsel fees, fines, penalties, judgments or awards of any kind, and the amount of reasonable settlements, whether or not payable to the Company or to any of the other entities described in the preceding paragraph, or to the policyholders or security holders thereof. Notwithstanding the foregoing, no indemnification shall be provided with respect to: (1) any matter as to which the person shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Company or, to the extent that such matter relates to service with respect to any employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan; (2) any liability to any entity which is registered as an investment company under the Federal Investment Company Act of 1940 or to the security holders thereof, where the basis for such liability is willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of office; and (3) any action, claim or proceeding voluntarily initiated by any person seeking indemnification, unless such action, claim or proceeding had been authorized by the Board of Directors or unless such person's indemnification is awarded by vote of the Board of Directors. In any matter disposed of by settlement or in the event of an adjudication which in the opinion of the General Counsel or his delegate does not make a sufficient determination of conduct which could preclude or permit indemnification in accordance with the preceding paragraphs (1), (2) and (3), the person shall be entitled to indemnification unless, as determined by the majority of the disinterested directors or in the opinion of counsel (who may be an officer of the Company or outside counsel employed by the Company), such person's conduct was such as precludes indemnification under any of such paragraphs. The Company may at its option indemnify for expenses incurred in connection with any action or proceeding in advance of its final disposition, upon receipt of a satisfactory undertaking for repayment if it be subsequently determined that the person thus indemnified is not entitled to indemnification under this Article V. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. REPRESENTATION UNDER SECTION 26(e)(2)(A) OF THE INVESTMENT COMPANY ACT OF 1940 Massachusetts Mutual Life Insurance Company hereby represents that the fees and charges deducted under the flexible premium variable whole 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 Massachusetts Mutual Life Insurance Company. CONTENTS OF FILING This Registration Statement is comprised of the following documents: The Facing Sheet. Cross-Reference to items required by Form N-8B-2. The Prospectus consisting of 67 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 accountant; 2. Counsel opining as to the legality of securities being registered; 3. Opinion and consent of Craig Waddington, FSA, MAAA, opining as to actuarial matters contained in the Registration Statement. The following Exhibits: 99.A. The following Exhibits correspond to those required by Paragraph A of the instructions as to Exhibits in Form N-8B-2: 1. a. Resolution of Board of Directors of MassMutual establishing the Separate Account./1/ b. Resolution of the Board of Directors establishing the SVUL segment of the Separate Account./2/ 2. Not Applicable. 3. Form of Distribution Agreements: a. Form of Distribution Servicing Agreement between MML Distributors, LLC and MassMutual./3/ b. Form of Co-Underwriting Agreement between MML Investors Services, Inc. and MassMutual./3/ 4. Not Applicable. 5. Form of Survivorship Flexible Premium Adjustable Variable Life Policy./2/ 6. a. Certificate of Incorporation of MassMutual./1/ b. By-Laws of MassMutual./1/ 7. Not Applicable. 8. Form of Participation Agreement. a. Oppenheimer Variable Account Fund/1/ b. Variable Insurance Products Fund II c. T. Rowe Price Equity Series, Inc. d. American Century Variable Portfolios, Inc. 9. Not Applicable. 10. Form of Application for a Survivorship Flexible Premium Adjustable Variable Life insurance policy./4/ 11. Memorandum describing MassMutual issuance, transfer, and redemption procedures for the Policy. 99.B. Opinion and Consent of Counsel as to the legality of the securities being registered./2/ 99.C. No financial statement will be omitted from the Prospectus pursuant to Instruction 1(b) or (c) of Part I. 99.D. Not Applicable. 99.E. Consent of Coopers & Lybrand L.L.P. 99.F. Opinion and consent of Craig Waddington, FSA, MAAA, as to actuarial matters pertaining to the securities being registered./2/ 99.G. Powers of Attorney/1/ 27 Not Applicable /1/ Incorporated by reference to Initial Registration Statement of the Separate Account filed with the Commission on February 28, 1997. (Registration No. 333-22557) /2/ Incorporated by reference to this Initial Registration Statement as an exhibit filed with the Commission on December 5, 1997. /3/ Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement No. 33-89798 filed with the Commission on May 1, 1997. /4/ Incorporated by reference to the Pre-Effective Amendment No. 1 to Registration Statement No. 333-41667 filed with the Commission on March 18, 1998. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has caused this pre-effective Amendment No. 2 to Registration Statement No. 333- 41657 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 22nd day of May, 1998. MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY (Depositor) By: /s/ Thomas B. Wheeler* ---------------------------------------- Thomas B. Wheeler, Chief Executive Officer Massachusetts Mutual Life Insurance Company /s/ Richard M. Howe On May 22, 1998, as Attorney-in-Fact pursuant to - -------------------- powers of attorney incorporated by reference. *Richard M. Howe As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the duties indicated.
Signature Title Date --------- ----- ---- /s/ Thomas B. Wheeler* Chief Executive Officer and May 22, 1998 - --------------------------- Chairman of the Board Thomas B. Wheeler /s/ John J. Pajak* President, Chief Operating Officer May 22, 1998 - --------------------------- and Director John J. Pajak /s/ Joseph M. Zubretsky* Executive Vice President, May 22, 1998 - --------------------------- Chief Financial Officer & Joseph M. Zubretsky Chief Accounting Officer /s/ Roger G. Ackerman Director May 22, 1998 - --------------------------- Roger G. Ackerman /s/ James R. Birle* Director May 22, 1998 - --------------------------- James R. Birle /s/ Gene Chao* Director May 22, 1998 - --------------------------- Gene Chao, Ph.D. /s/ Patricia Diaz Dennis* Director May 22, 1998 - --------------------------- Patricia Diaz Dennis /s/ Anthony Downs* Director May 22, 1998 - --------------------------- Anthony Downs
/s/ James L. Dunlap* Director May 22, 1998 - --------------------------- James L. Dunlap /s/ William B. Ellis* Director May 22, 1998 - --------------------------- William B. Ellis, Ph.D. /s/ Robert M. Furek* Director May 22, 1998 - --------------------------- Robert M. Furek /s/ Charles K. Gifford* Director May 22, 1998 - --------------------------- Charles K. Gifford /s/ William N. Griggs* Director May 22, 1998 - --------------------------- William N. Griggs /s/ George B. Harvey* Director May 22, 1998 - --------------------------- George B. Harvey /s/ Barbara B. Hauptfuhrer* Director May 22, 1998 - --------------------------- Barbara B. Hauptfuhrer /s/ Sheldon B. Lubar* Director May 22, 1998 - --------------------------- Sheldon B. Lubar /s/ William B. Marx, Jr.* Director May 22, 1998 - --------------------------- William B. Marx, Jr. /s/ John F. Maypole* Director May 22, 1998 - --------------------------- John F. Maypole /s/ Alfred M. Zeien* Director May 22, 1998 - --------------------------- Alfred M. Zeien /s/ Richard M. Howe* On May 22, 1998, as Attorney-in-Fact pursuant to powers of attorney. - -------------------- *Richard M. Howe
EXHIBIT LIST 99.A.8. Form of Participation Agreement b. Variable Insurance Products Fund II c. T. Rowe Price Equity Series, Inc. d. American Century Variable Portfolios, Inc. 99.A.11 Purchase, Redemption & Transfer Procedures Memorandum 99.B. Opinion and Consent of Richard M. Howe, Esq. 99.E. Consent of Coopers & Lybrand L.L.P. 99.F. Opinion and Consent of Craig Waddington, FSA, MAAA EX-99.A8B 2 FORM OF PART. AGREEMENT-VAR. INS. PROD. FUND II EXHIBIT 99.A.8.b. PARTICIPATION AGREEMENT ----------------------- Among VARIABLE INSURANCE PRODUCTS FUND II. ------------------------------------ FIDELITY DISTRIBUTORS CORPORATION --------------------------------- and MASSACHUSETTS MUTUAL INSURANCE COMPANY -------------------------------------- THIS AGREEMENT, made and entered into as of the 1st day of May, 1998 by and among MASSACHUSETTS MUTUAL 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 duly registered as an investment adviser under the federal Investment Advisers Act of 1940 and any applicable state securities law; and WHEREAS, the Company has registered or will register certain Variable Insurance Products under the 1933 Act; and WHEREAS, each Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid variable annuity contracts; and WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act; and WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (hereinafter "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios on behalf of each Account to fund certain of the aforesaid Variable Insurance Products and the Underwriter is authorized to sell such shares to unit investment trusts such as each Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and the Underwriter agree as follows: ARTICLE I. Sale of Fund Shares ------------------- 1.1. The Underwriter agrees to sell to the Company those shares of the Fund which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company shall be the designee of the Fund for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such order by 9:00 a.m. Boston time on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the Securities and Exchange Commission. 1.2. The Fund agrees to make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates its net asset value pursuant to rules of the Securities and Exchange Commission and the Fund shall use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.3. The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts. No shares of any Portfolio will be sold to the general public. 1.4. The Fund and the Underwriter will not sell Fund shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I, III, V, VII and Section 2.5 of Article II of this Agreement is in effect to govern such sales. 1.5. The Fund agrees to redeem for cash, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. For purposes of this Section 1.5, the Company shall be the designee of the Fund for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such request for redemption on the next following Business Day. 1.6. The Company agrees that purchases and redemptions of Portfolio shares offered by the then current prospectus of the Fund shall be made in accordance with the provisions of such prospectus. The Company agrees that all net amounts available under the Variable Insurance Products with the form number(s) which are listed on Schedule A attached hereto and incorporated herein by this reference, as such Schedule A may be amended from time to time hereafter by mutual written agreement of all the parties hereto, (the "Contracts") shall be invested in the Fund, in such other Funds advised by the Adviser as may be mutually agreed to in writing by the parties hereto, or in the Company's general account, provided that such amounts may also be invested in an investment company other than the Fund if (a) such other investment company, or series thereof, has investment objectives or policies that are substantially different from the investment objectives and policies of all the Portfolios of the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written notice of its intention to make such other investment company available as a funding vehicle for the Contracts; or (c) such other investment company was available as a funding vehicle for the Contracts prior to the date of this Agreement and the Company so informs the Fund and Underwriter prior to their signing this Agreement (a list of such funds appearing on Schedule C to this Agreement); or (d) the Fund or Underwriter consents to the use of such other investment company. 1.7. The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account. 1.9. The Fund shall furnish same day notice (via electronic transmission and/or facsimile, concurrent with the transmission of the net asset value per share information set forth in Section 1.10) to the Company of any income, dividends or capital gain distributions payable on the Fund's shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.10 The fund shall make the net asset value per share for each Portfolio available to the Company on each Business Day on a daily basis as soon as reasonably practical after the net asset value per share is calculated each Business Day (normally by 6:30 p.m. Boston time) via electronic transmission and/or facsimile and shall use its best efforts to make such net asset value per share available by 7 p.m. Boston time. The Underwriter shall provide the Company each Business Day with same day notice of Fund shares held by the Accounts by 3:00 p.m. Boston time via electronic transmission and/or facsimile. ARTICLE II. Representations and Warranties ------------------------------ 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable Federal and State laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account under Section 38a-433 of the Connecticut General Statutes and has registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts. 2.2. The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the Commonwealth of Massachusetts and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3. The Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Company represents that the Contracts are currently treated as life insurance or annuity contracts, under applicable provisions of the Code and that it will make every effort to maintain such treatment and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5. (a) With respect to Initial Class shares, the Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for distribution expenses. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of trustees, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. (b) With respect to Service Class shares, the Fund has adopted a Rule 12b-1 Plan under which it makes payments to finance distribution expenses. The Fund represents and warrants that it has a board of trustees, a majority of whom are not interested persons of the Fund, which has formulated and approved the Fund's Rule 12b-1 Plan to finance distribution expenses of the Fund and that any changes to the Fund's Rule 12b-1 Plan will be approved by a similarly constituted board of trustees. 2.6. The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Fund represents that the Fund's investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the 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 in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage for the benefit of the Fund, and that said bond is issued by a reputable bonding company, includes coverage for larceny and embezzlement, and is in an amount not less than $5 million. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Fund and the Underwriter in the event that such coverage no longer applies. ARTICLE III. Prospectuses and Proxy Statements; Voting ----------------------------------------- 3.1. The Underwriter shall provide the Company with as many printed copies of the Fund's current prospectus and Statement of Additional Information as the Company may reasonably request. If requested by the Company in lieu thereof, the Fund shall provide camera-ready film containing the Fund's prospectus and Statement of Additional Information, and such other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus and/or Statement of Additional Information for the Fund is amended during the year) to have the prospectus for the Contracts and the Fund's prospectus printed together in one document, and to have the Statement of Additional Information for the Fund and the Statement of Additional Information for the Contracts printed together in one document. Alternatively, the Company may print the Fund's prospectus and/or its Statement of Additional Information in combination with other fund companies' prospectuses and statements of additional information. Except as provided in the following three sentences, all expenses of printing and distributing Fund prospectuses and Statements of Additional Information shall be the expense of the Company. For prospectuses and Statements of Additional Information provided by the Company to its existing owners of Contracts in order to update disclosure annually as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the Company chooses to receive camera-ready film in lieu of receiving printed copies of the Fund's prospectus, the Fund will reimburse the Company in an amount equal to the product of A and B where A is the number of such prospectuses distributed to owners of the Contracts, and B is the Fund's per unit cost of typesetting and printing the Fund's prospectus. The same procedures shall be followed with respect to the Fund's Statement of Additional Information. The Company agrees to provide the Fund or its designee with such information as may be reasonably requested by the Fund to assure that the Fund's expenses do not include the cost of printing any prospectuses or Statements of Additional Information other than those actually distributed to existing owners of the Contracts. 3.2. The Fund's prospectus shall state that the Statement of Additional Information for the Fund is available from the Underwriter or the Company (or in the Fund's discretion, the Prospectus shall state that such Statement is available from the Fund). 3.3. The Fund, at its expense, shall provide the Company with copies of its proxy statements, reports to shareholders, and other communications (except for prospectuses and Statements of Additional Information, which are covered in Section 3.1) to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners. 3.4. If and to the extent required by law the Company shall: (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in a particular separate account in the same proportion as Fund shares of such portfolio for which instructions have been received in that separate account, so long as and to the extent that the Securities and Exchange Commission continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for assuring that each of their separate accounts participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule B attached hereto and incorporated herein by this reference, which standards will also be provided to the other Participating Insurance Companies. 3.5. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the Securities and Exchange Commission's interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the Commission may promulgate with respect thereto. 3.6 The Fund shall use its best efforts to notify the Company of any proxy proposals for shareholders 60 (sixty) days prior to the appropriate Board vote for such proposals. ARTICLE IV. Sales Material and Information ------------------------------ 4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material in which the Fund or its investment adviser or the Underwriter is named, at least five Business Days prior to its use. No such material shall be used if the Fund or its designee reasonably objects to such use within five Business Days after receipt of such material. 4.2. The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the permission of the Fund or the Underwriter or the designee of either. 4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company and/or its separate account(s), is named at least five Business Days prior to its use. No such material shall be used if the Company or its designee reasonably objects to such use within five Business Days after receipt of such material. 4.4. The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5. The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, contemporaneously with the filing of such document with the Securities and Exchange Commission or other regulatory authorities. 4.6. The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to the Contracts or each Account, contemporaneously with the filing of such document with the SEC or other regulatory authorities. 4.7. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, any of the following that refer to the Fund or any affiliate of the Fund: advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally ---- available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, Statements of Additional Information, shareholder reports, and proxy materials. ARTICLE V. Fees and Expenses ----------------- 5.1. The Fund and Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Underwriter in writing and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter or other resources available to the Underwriter. No such payments shall be made directly by the Fund. 5.2. All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund. The Fund shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Fund's shares. 5.3. The Company shall bear the expenses of distributing the Fund's prospectus, proxy materials and reports to owners of Contracts issued by the Company. ARTICLE VI. Diversification --------------- 6.1. The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. In the event of a breach of this Article VI by the Fund, it will take all reasonable steps (a) to notify Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation 1.817-5. ARTICLE VII. Potential Conflicts ------------------- 7.1. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded. 7.3. If it is determined by a majority of the Board, or a majority of its disinterested trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested trustees), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract ---- owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company or managed separate account. 7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification --------------- 8.1. Indemnification By The Company ------------------------------ 8.1(a). The Company agrees to indemnify and hold harmless the Fund and each trustee of the Board and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement or prospectus for the Contracts or contained in the Contracts or sales literature for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the Registration Statement or prospectus for the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1(b). The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 8.1(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2. Indemnification by the Underwriter ---------------------------------- 8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or prospectus or sales literature of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Underwriter or Fund by or on behalf of the Company for use in the Registration Statement or prospectus for the Fund or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Fund, Adviser or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Fund; or (iv) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 8.2(b). The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to each Company or the Account, whichever is applicable. 8.2(c). The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Underwriter to such party of the Underwriter's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). The Company agrees promptly to notify the Underwriter of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 8.3. Indemnification By the Fund --------------------------- 8.3(a). The Fund agrees to indemnify and hold harmless the Company, and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Fund and: (i) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI of this Agreement);or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. 8.3(b). The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Fund, the Underwriter or each Account, whichever is applicable. 8.3(c). The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Fund to such party of the Fund's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). The Company and the Underwriter agree promptly to notify the Fund of the commencement of any litigation or proceedings against it or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Applicable Law -------------- 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the Securities and Exchange Commission may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination ----------- 10.1. This Agreement shall continue in full force and effect until the first to occur of: (a) termination by any party for any reason by one hundred eighty (180) days advance written notice delivered to the other parties; or (b) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio based upon the Company's determination that shares of such Portfolio are not reasonably available to meet the requirements of the Contracts; or (c) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event any of the Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or (d) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that the Fund may fail to so qualify; or (e) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio fails to meet the diversification requirements specified in Article VI hereof; or (f) termination by either the Fund or the Underwriter by written notice to the Company, if either one or both of the Fund or the Underwriter respectively, shall determine, in their sole judgment exercised in good faith, that the Company and/or its affiliated companies has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (g) termination by the Company by written notice to the Fund and the Underwriter, if the Company shall determine, in its sole judgment exercised in good faith, that either the Fund or the Underwriter has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (h) termination by the Fund or the Underwriter by written notice to the Company, if the Company gives the Fund and the Underwriter the written notice specified in Section 1.6(b) hereof and at the time such notice was given there was no notice of termination outstanding under any other provision of this Agreement; provided, however any termination under this Section 10.1(h) shall be effective one hundred eighty (180) days after the notice specified in Section 1.6(b) was given. 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. 10.3 The Company shall not redeem Fund shares attributable to the Contracts (as opposed to Fund shares attributable to the Company's assets held in the Account) except (i) as necessary to implement Contract Owner initiated or approved transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally Required Redemption") or (iii) as permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, the Company shall not prevent Contract Owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Fund or the Underwriter 90 days notice of its intention to do so. ARTICLE XI. Notices ------- Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party.
If to the Fund: If to the Company: If to the Underwriter: 82 Devonshire Street Massachusetts Mutual Insurance Company 82 Devonshire Street Boston, Massachusetts 02109 1295 State Street Boston, Massachusetts 02109 Attention: Treasurer Springfield, MA 01111-0001 Attention: Treasurer Attention: Office of General Counsel
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. The Company shall promptly notify the Fund and the Underwriter of any change in control of the Company. 12.9. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee copies of the following reports: (a) the Company's annual statement (prepared under statutory accounting principles) and annual report (prepared under generally accepted accounting principles ("GAAP"), if any), as soon as practical and in any event within 90 days after the end of each fiscal year; (b) the Company's quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event within 45 days after the end of each quarterly period: (c) any financial statement, proxy statement, notice or report of the Company sent policyholders, as soon as commercially reasonable after the delivery thereof to stockholders; (d) any registration statement (without exhibits) filed on behalf of the Company pursuant to any securities offering related to a reorganization of the Company and any associated financial reports of the Company filed with the Securities and Exchange Commission or any extraordinary financial reports filed with any state insurance regulator, as soon as commercially reasonable after the filing thereof; (e) any other report submitted to the Company by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company, as soon as practical after the receipt thereof, but nothing in this subsection (e) shall require the Company to disclose any information not otherwise available to the public. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below. MASSACHUSETTS MUTUAL INSURANCE COMPANY By: ------------------------- Name: ----------------------- Title: ---------------------- VARIABLE INSURANCE PRODUCTS FUND II By: ------------------------- Robert C. Pozen Senior Vice President FIDELITY DISTRIBUTORS CORPORATION By: ------------------------- Kevin J. Kelly Vice President Schedule A ---------- Separate Accounts and Associated Contracts ------------------------------------------ Name of Separate Account and Policy Form Numbers (and Product Names) Date Established by Board of Directors of Contracts Funded - -------------------------------------- By Separate Account ------------------- Massachusetts Mutual Variable Life P1-98, P1-98M Separate Account I (Survivorship Variable Universal Life) P2-98, P2-98M (Variable Universal Life) C.M. Multi-Account A MUVA 94 (Panorama Premier) 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 #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 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 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 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. 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. SCHEDULE C Other investment companies currently available under variable annuities or variable life insurance issued by the Company: MML Series Funds MML Equity Fund MML Money Market Fund MML Managed Bond Fund MML Blend Fund Panorama Series Funds PSF Total Return Portfolio PSF Growth Portfolio PSF International Equity Portfolio PSF LifeSpan Diversified Income Portfolio PSF LifeSpan Balanced Portfolio PSF LifeSpan Capital Appreciation Portfolio Oppenheimer Variable Annuity Series Funds Oppenheimer Global Securities Fund Oppenheimer Capital Appreciation Fund Oppenheimer Strategic Bond Fund Oppenheimer Growth Fund Oppenheimer Growth & Income Fund Oppenheimer Multiple Strategies Fund Oppenheimer High Income Fund Oppenheimer Bond Fund Oppenheimer Money Fund OFFITBANK Series Funds OFFITBANK High Yield Fund OFFITBANK Investment Grade Global Debt Fund OFFITBANK Emerging Markets Fund FIDELITY Series Funds Fidelity Money Market Fund Fidelity High Income Fund Fidelity II Index 500 Fund Fidelity Variable Insurance Products Fund II DREYFUS Series Fund Dreyfus Stock Index Fund AMERICAN CENTURY Series Fund VP Income & Growth Fund (Effective 7/1/98) SUB-LICENSE AGREEMENT --------------------- Agreement effective as of this 1st of May, 1998, by and between Fidelity Distributors Corporation (hereinafter called "Fidelity"), a corporation organized and existing under the laws of the Commonwealth of Massachusetts, with a principal place of business at 82 Devonshire Street, Boston, Massachusetts, and Massachusetts Mutual Insurance Company (hereinafter called "Company"), a company organized and existing under the laws of the Commonwealth of Connecticut, with a principal place of business at Springfield, MA. WHEREAS, FMR Corp., a Massachusetts corporation, the parent company of Fidelity, is the owner of the trademark and the tradename "FIDELITY INVESTMENTS" and is the owner of a trademark in a pyramid design (hereinafter, collectively the "Fidelity Trademarks"), a copy of each of which is attached hereto as Exhibit "A"; and WHEREAS, FMR Corp. has granted a license to Fidelity (the "Master License Agreement") to sub-license the Fidelity Trademarks to third parties for their use in connection with Promotional Materials as hereinafter defined; and WHEREAS, Company is desirous of using the Fidelity Trademarks in connection with distribution of "sales literature and other promotional material" with information, including the Fidelity Trademarks, printed in said material (such material hereinafter called the Promotional Material). For the purpose of this Agreement, "sales literature and other promotional material" shall have the same meaning as in the certain Participation Agreement dated as of the 1st day of May, 1998, among Fidelity, Company and Variable Insurance Products Fund II (hereinafter "Participation Agreement"); and WHEREAS, Fidelity is desirous of having the Fidelity Trademarks used in connection with the Promotional Material. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy whereof is hereby acknowledged, and of the mutual promises hereinafter set forth, the parties hereby agree as follows: 1. Fidelity hereby grants to Company a non-exclusive, non-transferable license to use the Fidelity Trademarks in connection with the promotional distribution of the Promotional Material and Company accepts said license, subject to the terms and conditions set forth herein. 2. Company acknowledges that FMR Corp. is the owner of all right, title and interest in the Fidelity Trademarks and agrees that it will do nothing inconsistent with the ownership of the Fidelity Trademarks by FMR Corp., and that it will not, now or hereinafter, contest any registration or application for registration of the Fidelity Trademarks by FMR Corp., nor will it, now or hereafter, aid anyone in contesting any registration or application for registration of the Fidelity Trademarks by FMR Corp. 1 3. Company agrees to use the Fidelity Trademarks only in the form and manner approved by Fidelity and not to use any other trademark, service mark or registered trademark in combination with any of the Fidelity Trademarks without approval by Fidelity. 4. Company agrees that it will place all necessary and proper notices and legends in order to protect the interests of FMR Corp. and Fidelity therein pertaining to the Fidelity Trademarks on the Promotional Material including, but not limited to, symbols indicating trademarks, service marks and registered trademarks. Company will place such symbols and legends on the Promotional Material as requested by Fidelity or FMR Corp. upon receipt of notice of same from Fidelity or FMR Corp. 5. Company agrees that the nature and quality of all of the Promotional Material distributed by Company bearing the Fidelity Trademarks shall conform to standards set by, and be under the control of, Fidelity. 6. Company agrees to cooperate with Fidelity in facilitating Fidelity's control of the use of the Fidelity Trademarks and of the quality of the Promotional Material to permit reasonable inspection of samples of same by Fidelity and to supply Fidelity with reasonable quantities of samples of the Promotional Material upon request. 7. Company shall comply with all applicable laws and regulations and obtain any and all licenses or other necessary permits pertaining to the distribution of said Promotional Material. 8. Company agrees to notify Fidelity of any unauthorized use of the Fidelity Trademarks by others promptly as it comes to the attention of Company. Fidelity or FMR Corp. shall have the sole right and discretion to commence actions or other proceedings for infringement, unfair competition or the like involving the Fidelity Trademarks and Company shall cooperate in any such proceedings if so requested by Fidelity or FMR Corp. 9. This agreement shall continue in force until terminated by Fidelity. This agreement shall automatically terminate upon termination of the Master License Agreement. In the event that the Master License agreement is terminated, Fidelity will so notify Company. In addition, Fidelity shall have the right to terminate this agreement at any time upon notice to Company, with or without cause. Upon any such termination, Company agrees to cease immediately all use of the Fidelity Trademarks and shall destroy, at Company's expense, any and all materials in its possession bearing the Fidelity Trademarks, and agrees that all rights in the Fidelity Trademarks and in the goodwill connected therewith shall remain the property of FMR Corp. Unless so terminated by Fidelity, or extended by written agreement of the parties, this agreement shall expire on the termination of that certain Participation Agreement. 10. Company shall indemnify Fidelity and FMR Corp. and hold each of them harmless from and against any loss, damage, liability, cost or expense of any nature whatsoever, including without limitation, reasonable attorneys' fees and all court costs, arising out of use of the Fidelity Trademarks by Company that is not consistent with the terms and conditions of this Agreement. 2 11. In consideration for the promotion and advertising of Fidelity as a result of the distribution by Company of the Promotional Material, Company shall not pay any monies as a royalty to Fidelity for this license. 12. This agreement is not intended in any manner to modify the terms and conditions of the Participation Agreement. In the event of any conflict between the terms and conditions herein and thereof, the terms and conditions of the Participation Agreement shall control. 13. This agreement shall be interpreted according to the laws of the Commonwealth of Massachusetts. IN WITNESS WHEREOF, the parties hereunto set their hands and seals, and hereby execute this agreement, as of the date first above written. FIDELITY DISTRIBUTORS CORPORATION By: --------------------------- Kevin J. Kelly Vice President MASSACHUSETTS MUTUAL INSURANCE COMPANY By: --------------------------- Name: ------------------------- Title: ------------------------ 3 EXHIBIT A Int. Cl.: 36 Prior U.S. Cls.: 101 and 102 Reg. No. 1,481,040 United States Patent and Trademark Office Registered Mar. 15, 1988 -------------------------------------------------------------------- SERVICE MARK PRINCIPAL REGISTER FIDELITY INVESTMENTS FMR CORP. (MASSACHUSETTS CORPORATION) FIRST USE 2-22-1984; IN COMMERCE 2-22-1984. 82 DEVONSHIRE STREET BOSTON, MA 02109, ASSIGNEE OF FIDELITY NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO USE DISTRIBUTORS CORPORATION "INVESTMENTS", APART FROM THE MARK AS SHOWN. (MASSACHUSETTS CORPORATION) BOSTON, MA 02109 SER. NO. 641,707, FILED 1-28-1987 FOR: MUTUAL FUND AND STOCK BROKERAGE SERVICES, IN CLASS 36 (U.S. CLS. 101 AND 102) RUSS HERMAN, EXAMINING ATTORNEY
4 EX-99.A8C 3 FORM OF PART. AGREEMENT - T. ROWE PRICE EQUITY SERIES, INC EXHIBIT 99.A.8.C PARTICIPATION AGREEMENT ----------------------- Among T. ROWE PRICE EQUITY SERIES, INC., T. ROWE PRICE INVESTMENT SERVICES, INC., and MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY THIS AGREEMENT, made and entered into as of this ________ day of ________________________, 1998 by and among Massachusetts Mutual Life Insurance Company (hereinafter, the "Company"), a Massachusetts insurance company, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be amended from time to time (each account hereinafter referred to as the "Account" or "Accounts", as applicable), and the undersigned fund, a corporation organized under the laws of Maryland (each hereinafter referred to as the "Fund") and T. Rowe Price Investment Services, Inc. (hereinafter the "Underwriter"), a Maryland corporation. WHEREAS, the Fund engages in business as an open-end management investment company and is or will be available to act as the investment vehicle for separate accounts established for variable life insurance and variable annuity contracts (the "Variable Insurance Products") to be offered by insurance companies which have entered into participation agreements with the Fund and Underwriter (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each designated a "Portfolio" and representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission ("SEC") granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T) (b)(15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and shares of the Portfolios are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, T. Rowe Price Associates, Inc. and Rowe Price-Fleming International, Inc. (each hereinafter referred to as the "Adviser") are each duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and any applicable state securities laws; and WHEREAS, the Company has registered or will register certain variable life insurance or variable annuity contracts supported wholly or partially by the Account (the "Contracts") under the 1933 Act, and said Contracts are listed in Schedule A hereto, as it may be amended from time to time by mutual written agreement; and WHEREAS, the Account is duly established and maintained as a segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid Contracts; and -2- WHEREAS, the Company has registered or will register the Account as a unit investment trust under the 1940 Act; and WHEREAS, the Underwriter is registered as a broker dealer with the SEC under the Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (hereinafter "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios listed in Schedule A hereto, as it may be amended from time to time by mutual written agreement (the "Designated Portfolios") on behalf of the Account to fund the aforesaid Contracts, and the Underwriter is authorized to sell such shares to unit investment trusts such as the Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and the Underwriter agree as follows: ARTICLE I. Sale of Fund Shares ------------------- 1.1 The Underwriter agrees to sell to the Company those shares of the Designated Portfolios which the Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Designated Portfolios. 1.2 The Fund agrees to make shares of the Designated Portfolios available for purchase at the applicable net asset value per share by the Company and the Account on those days on which the Fund calculates its net asset value pursuant to rules of the SEC, and the Fund shall use its best efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter the "Board") may refuse to sell shares of any Designated Portfolio to any person, or suspend or terminate the offering of shares of any Designated Portfolio if such action is required by law or by regulatory authorities having jurisdiction, or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Designated Portfolio. 1.3 The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts. No shares of any Designated Portfolios will be sold to the general public. The Fund and the Underwriter will not sell Fund shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I, III and VII of this Agreement is in effect to govern such sales. 1.4 The Fund agrees to redeem, on the Company's request, any full or fractional shares of the Designated Portfolios held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption, except that the Fund reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any sales thereunder, and in accordance with the procedures and policies of the Fund as described in the then current prospectus. 1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the designee of the Fund for receipt of purchase and redemption orders from the Account, and receipt by such designee shall constitute receipt by the Fund; provided that the Company receives the order by 4:00 p.m. Eastern time and the Fund receives notice of such order by 9:30 a.m. Eastern time on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the SEC. 1.6 The Company agrees to purchase and redeem the shares of each Designated Portfolio offered by the then current prospectus of the Fund and in accordance with the provisions of such prospectus. 1.7 The Company shall pay for Fund shares one Business Day after receipt of an order to purchase Fund shares is made in accordance with the provisions of Section 1.5 hereof. Payment shall be in federal funds transmitted by wire by 3:00 p.m. Eastern time. If payment in Federal Funds for any purchase is not received or is received by the Fund after 3:00 p.m. Eastern time on such Business Day, the Company shall promptly, upon the Fund's request, reimburse the Fund for any charges, costs, fees, interest or other expenses incurred by the Fund in connection with any advances to, or borrowings or overdrafts by, the Fund, or any similar expenses incurred by the -3- Fund, as a result of portfolio transactions effected by the Fund based upon such purchase request. For purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund. 1.8 Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account. 1.9 The Fund shall furnish same day notice (by electronic transmission and/or facsimile as outlined in Section 1.10 hereof) to the Company of any income, dividends or capital gain distributions payable on the Designated Portfolios' shares. The Company hereby elects to receive all such income, dividends, and capital gain distributions as are payable on Designated Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.10 The Fund shall make the net asset value per share, including total shares outstanding, for each Designated Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated (normally each business day by 6:30 p.m. Eastern time via electronic transmission and/or facsimile) and shall use its best efforts to make such net asset value per share available by 7 p.m. Eastern time. If the net asset value is materially incorrect through no fault of the Company, the Company on behalf of each Account, shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the correct net asset value in accordance with Fund procedures, and the Company shall not bear the cost of such correction. Any material error in the net asset value shall be reported to the Company promptly upon discovery (via telephone followed by written documentation of the error). 1.11 The Parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Fund's shares may be sold to other insurance companies (subject to Section 1.3 and Article VI hereof) and the cash value of the Contracts may be invested in other investment companies. ARTICLE II. Representations and Warranties ------------------------------ 2.1 The Company represents and warrants that the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws, and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established the Account prior to any issuance or sale thereof as a segregated asset account under the Massachusetts insurance laws and has registered or, prior to any issuance or sale of the Contracts, will register the Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts. 2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the State of Massachusetts and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3 The Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may make such payments in the future. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have the Board, a majority of whom are not interested persons of the Fund, formulate and approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses. 2.4 The Fund makes no representations as to whether any aspect of its operations, including but not limited to, investment policies, fees and expenses, complies with the insurance and other applicable laws of the various states, except that the Fund represents that the Fund's investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the State of Massachusetts to the extent required to perform this Agreement. -4- 2.5 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Maryland and that it does and will comply in all material respects with the 1940 Act. 2.6 The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. The Underwriter further represents that it will sell and distribute the Fund shares in accordance with the laws of the State of Massachusetts and any applicable state and federal securities laws. 2.7 The Underwriter represents and warrants that the Adviser is and shall remain duly registered under all applicable federal and state securities laws and that the Adviser shall perform its obligations for the Fund in compliance in all material respects with the laws of the State of Massachusetts and any applicable state and federal securities laws. 2.8 The Fund and the Underwriter represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals or entities dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimum coverage as required currently by Rule 17g-1 of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.9 The Company represents and warrants that all of its directors, officers, employees, and other individuals/entities employed or controlled by the Company dealing with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage in an amount not less than $5 million. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. The Company agrees that any amounts received under such bond in connection with claims that arise from the arrangements described in this Agreement will be held by the Company for the benefit of the Fund. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Fund and the Underwriter in the event that such coverage no longer applies. The Company agrees to exercise its best efforts to ensure that other individuals/entities not employed or controlled by the Company and dealing with the money and/or securities of the Fund maintain a similar bond or coverage in a reasonable amount. ARTICLE III. Prospectuses, Statements of Additional Information, and Proxy ------------------------------------------------------------- Statements; Voting - ------------------ 3.1 The Underwriter shall provide the Company with as many copies of the Fund's current prospectus (describing only the Designated Portfolios listed on Schedule A) as the Company may reasonably request for distribution to existing owners of the Contracts. If requested by the Company, the Fund shall provide the Company with, at the Company's option, camera ready or pdf files, of fund prospectuses, Statements of Additional Information, proxy material, annual reports and any similar material that is to be distributed to Contract owners and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the Fund prospectus is amended) to have the prospectus for the Contracts and the Fund's prospectus printed together in one document (such printing to be at the Company's expense). The Fund will use its best efforts to provide such Fund prospectus or Statement of Additional Information, in the format (camera ready or pdf files) selected by the Company, within a reasonable period of the preparation of such material to ensure that they can be integrated into Company material also being distributed to Contract owners. The Company will give the Fund reasonable advance notice of the date when such material is being prepared. 3.2 The Fund's prospectus shall state that the current Statement of Additional Information ("SAI") for the Fund is available from the Company (or, in the Fund's discretion, from the Fund), and the Underwriter (or the Fund), at its expense, shall print, or otherwise reproduce, and provide a copy of such SAI free of charge to the Company for itself and for any owner of a Contract who requests such SAI. 3.3 The Fund, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders, and other communications to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners in the Fund. The Underwriter (at the Company's expense) shall provide the Company with copies of the Fund's annual and semi- annual reports to shareholders in such quantity as the Company shall reasonably request for use in connection with offering the Variable Contracts issued by the Company. If requested by the Company in lieu thereof, the Underwriter shall provide such documentation to the Company with, at the Company's option, camera ready or pfd files and other assistance as is reasonably necessary in order for the -5- Company (at the Company's expense) to print such shareholder communications for distribution to Contract owners. The Underwriter shall use its best efforts to notify the Company of any proxy proposals for shareholders as soon as Underwriter is aware of such proposals and provided that such notice is permissible under applicable state and federal securities laws. 3.4 The Company shall: (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in the same proportion as Fund shares of such Designated Portfolio for which instructions have been received, so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners or to the extent otherwise required by law. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. 3.5 Participating Insurance Companies shall be responsible for assuring that each of their separate accounts participating in a Designated Portfolio calculates voting privileges as required by the Shared Funding Exemptive Order and consistent with any reasonable standards that the Fund may adopt. 3.6 The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the SEC's interpretation of the requirements of Section 16(a) with respect to periodic elections of directors or trustees and with whatever rules the SEC may promulgate with respect thereto. ARTICLE IV. Sales Material and Information ------------------------------ 4.1 The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material that the Company develops or uses and in which the Fund (or a Portfolio thereof) or the Adviser or the Underwriter is named, at least five business days prior to its use. No such material shall be used if the Fund or its designee reasonably object to such use within five business days after receipt of such material. The Fund or its designee reserves the right to reasonably object to the continued use of such material, and no such material shall be used if the Fund or its designee so object. The review procedures of this paragraph shall not apply to any advertising or sales literature produced by the Company if all references in such literature regarding the Fund are identical to those that appear in the Fund's prospectus or Statement of Additional Information. 4.2 The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus or SAI for the Fund shares, as such registration statement and prospectus or SAI may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the permission of the Fund or the Underwriter or the designee of either. 4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company, and/or its Account, is named at least five business days prior to its use. No such material shall be used if the Company reasonably objects to such use within ten calendar days after receipt of such material. The Company reserves the right to reasonably object to the continued use of such material and no such material shall be used if the Company so objects. 4.4. The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, the Account, or the Contracts other than the information or representations contained in a registration statement, prospectus, or SAI for the Contracts, as such registration statement, prospectus or SAI may be amended or supplemented from time to time, or in published reports for the Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales -6- literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5 The Fund will provide to the Company at the Company's request, at least one complete copy of all registration statements, prospectuses, SAIs, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, within a reasonable time after the filing of such document(s) with the SEC or other regulatory authorities. 4.6 The Company will provide to the Fund, at the Fund's request, at least one complete copy of all registration statements, prospectuses, SAIs, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Contracts or the Account, within a reasonable time after the filing of such document(s) with the SEC or other regulatory authorities. 4.7 For purposes of this Article IV, the phrase "sales literature and other promotional materials" includes, but is not limited to, any of the following that refer to the Fund or any affiliate of the Fund: advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally ---- available to customers or the public, including brochures, circulars, reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, SAIs, shareholder reports, proxy materials, and any other communications distributed or made generally available with regard to the Funds. ARTICLE V. Fees and Expenses ----------------- 5.1 The Fund and the Underwriter shall pay no fee or other compensation to the Company under this Agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Underwriter in writing, and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter, or other resources available to the Underwriter. No such payments shall be made directly by the Fund. Currently, no such payments are contemplated. 5.2 All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund, except as otherwise provided herein. The Fund shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Fund's shares. 5.3 The Company shall bear the expenses of printing the Fund's prospectus (in accordance with 3.1) and of distributing the Fund's prospectus, proxy materials, and reports to Contract owners and prospective Contract owners. ARTICLE VI. Diversification and Qualification --------------------------------- 6.1 The Fund will invest the assets of each Designated Portfolio in such a manner as to ensure that the Contracts will be treated as annuity, endowment, or life insurance contracts, whichever is appropriate, under the Internal Revenue Code of 1986, as amended (the "Code") and the regulations issued thereunder (or any successor provisions). Without limiting the scope of the foregoing, each Designated Portfolio of the Fund will comply with Section 817(h) of the Code and Treasury Regulation (S)1.817-5, and any Treasury interpretations thereof, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts, and any amendments or other modifications or successor provisions to such Section or Regulations. In the event of a breach of this -7- Article VI by the Fund, it will take all reasonable steps (a) to notify the Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation (S)1.817-5. 6.2 The Fund represents that each Designated Portfolio is or will be qualified as a Regulated Investment Company under Subchapter M of the Code, and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provisions) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 6.3 The Company represents that the Contracts are currently, and at the time of issuance shall be, treated as life insurance, endowment contracts, or annuity insurance contracts, under applicable provisions of the Code, and that it will make every effort to maintain such treatment, and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing the Contracts have ceased to be so treated or that they might not be so treated in the future. The Company agrees that any prospectus offering a contract that is a "modified endowment contract" as that term is defined in Section 7702A of the Code (or any successor or similar provision), shall identify such contract as a modified endowment contract. ARTICLE VII. Potential Conflicts. ------------------- 7.1 The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever Contract owner voting instructions are disregarded. 7.3 If it is determined by a majority of the Board, or a majority of its disinterested members, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested Board members), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract ---- owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company or managed separate account. 7.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. -8- 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 Fund shall continue to accept and implement orders by the company for the purchase (and redemption) of shares of the Fund. 7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contract if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification --------------- 8.1 Indemnification By the Company ------------------------------ 8.1(a). The Company agrees to indemnify and hold harmless the Fund and the Underwriter and each of their officers and directors and each person, if any, who controls the Fund or the Underwriter within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement, prospectus, or statement of additional information ("SAI") for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the Registration Statement, prospectus or SAI for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature or other promotional material of the Fund not supplied by the Company or persons under its -9- control) or wrongful conduct of the Company or persons under its authorization or control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, SAI, or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any material failure by the Company to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the qualification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1(b). The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of its obligations or duties under this Agreement. 8.1(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action and to settle the claim at its own expense; provided, however, that no such settlement shall, without the Indemnified Parties' written consent, include any factual stipulation referring to the Indemnified Parties or their conduct. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2 Indemnification by the Underwriter ---------------------------------- 8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and each of it directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts; and (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or prospectus or SAI -10- or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Underwriter or Fund by or on behalf of the Company for use in the Registration Statement or prospectus for the Fund or in sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature or other promotional material for the Contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Fund or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, SAI, or sales literature or other promotional material of the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Fund; or (iv) arise as a result of any material failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 8.2(b). The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance or such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company or the Account, whichever is applicable. 8.2(c). The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Party, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action and to settle the claim at its own expense; provided, however, that no such settlement shall, without the Indemnified Parties' written consent, include any factual stipulation referring to the Indemnified Parties or their conduct. After notice from the Underwriter to such party of the Underwriter's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the -11- Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). The Company agrees promptly to notify the Underwriter of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of the Account. 8.3 Indemnification By the Fund --------------------------- 8.3(a). The Fund agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may be required to pay or may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, expenses, damages, liabilities or expenses (or actions in respect thereof) or settlements, are related to the operations of the Fund and: (i) arise as a result of any material failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. 8.3(b). The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Fund, the Underwriter or the Account, whichever is applicable. 8.3(c). The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the expense thereof, with counsel satisfactory to the party named in the action and to settle the claim at its own expense; provided, however, that no such settlement shall, without the Indemnified Parties' written consent, include any factual stipulation referring to the Indemnified Parties or their conduct. After notice from the Fund to such party of the Fund's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). The Company and the Underwriter agree promptly to notify the Fund of the commencement of any litigation or proceeding against it or any of its respective officers or directors in connection with the Agreement, the issuance or sale of the Contracts, the operation of the Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Applicable Law -------------- -12- 9.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Maryland. 9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, any Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination ----------- 10.1 This Agreement shall continue in full force and effect until the first to occur of: (a) termination by any party, for any reason with respect to some or all Designated Portfolios, by six (6) months' advance written notice delivered to the other parties; or (b) termination by the Company by written notice to the Fund and the Underwriter with respect to any Designated Portfolio based upon the Company's determination that shares of the Fund are not reasonably available to meet the requirements of the Contracts; provided that such termination shall apply only to the Designated Portfolio not reasonably available; or (c) termination by the Company by written notice to the Fund and the Underwriter in the event any of the Designated Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or (d) termination by the Fund or Underwriter in the event that formal administrative proceedings are instituted against the Company by the NASD, the SEC, the Insurance Commissioner or like official of any state or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the operation of any Account, or the purchase of the Fund shares; provided, however, that the Fund or Underwriter determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or (e) termination by the Company in the event that formal administrative proceedings are instituted against the Fund or Underwriter by the NASD, the SEC, or any state securities or insurance department or any other regulatory body; provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund or Underwriter to perform its obligations under this Agreement; or (f) termination by the Company by written notice to the Fund and the Underwriter with respect to any Designated Portfolio in the event that such Designated Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M or fails to comply with the Section 817(h) diversification requirements specified in Article VI hereof, or if the Company reasonably believes that such Designated Portfolio may fail to so qualify or comply; or (g) termination by the Fund or Underwriter by written notice to the Company in the event that the Contracts fail to meet the qualifications specified in Section 6.3 hereof; or if the Fund or Underwriter reasonably believes that such Contracts may fail to so qualify; or (h) termination by either the Fund or the Underwriter by written notice to the Company, if either one or both of the Fund or the Underwriter respectively, shall determine, in their sole judgment exercised in good faith, that the Company has suffered a material adverse change in its business, operations, financial condition, or prospects since the date of this Agreement or is the subject of material adverse publicity; or -13- (i) termination by the Company by written notice to the Fund and the Underwriter, if the Company shall determine, in its sole judgment exercised in good faith, that the Fund or the Underwriter has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity. 10.2 Effect of Termination. Notwithstanding any termination of this --------------------- Agreement, the Fund and the Underwriter shall, at the option of the Company, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, the owners of the Existing Contracts may be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.2 shall not apply to any termination under Article VII and the effect of such Article VII termination shall be governed by Article VII of this Agreement. The parties further agree that this Section 10.2 shall not apply to any termination under Section 10.1(g) of this Agreement. 10.3 The Company shall not redeem Fund shares attributable to the Contracts (as opposed to Fund shares attributable to the Company's assets held in the Account) except (i) as necessary to implement Contract owner initiated or approved transactions, (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally Required Redemption"), or (iii) pursuant to the terms of a substitution order issued by the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, the Company shall not prevent Contract owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Fund or the Underwriter 90 days notice of its intention to do so. 10.4 Notwithstanding any termination of this Agreement, each party's obligation under Article VIII to indemnify the other parties shall survive. ARTICLE XI. Notices ------- Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund: T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, Maryland 21202 Attention: Henry H. Hopkins, Esq. If to the Company: Massachusetts Mutual Life Insurance Company Office of the General Counsel 1295 State Street Springfield, MA 01111-0001 If to Underwriter: T. Rowe Price Investment Services 100 East Pratt Street Baltimore, Maryland 21202 Attention: Henry H. Hopkins, Esq. -14- ARTICLE XII. Miscellaneous ------------- 12.1 All references herein to the Fund are to each of the undersigned Funds as if this agreement were between such individual Fund and the Underwriter and the Company. All references herein to the Adviser relate solely to the Adviser of such individual Fund, as appropriate. All persons dealing with a Fund must look solely to the property of such Fund, and in the case of a series company, the respective Designated Portfolio listed on Schedule A hereto as though such Designated Portfolio had separately contracted with the Company and the Underwriter for the enforcement of any claims against the Fund. The parties agree that neither the Board, officers, agents or shareholders assume any personal liability or responsibility for obligations entered into by or on behalf of the Fund. 12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information without the express written consent of the affected party until such time as such information may come into the public domain. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD, and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the Massachusetts Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the variable annuity operations of the Company are being conducted in a manner consistent with Massachusetts variable annuity laws and regulations and any other applicable law or regulations. 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies, and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.8 This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto. 12.9 The Company shall furnish or cause to be furnished, to the Fund or its designee copies of the following reports: (a) the Company's annual statement (prepared under statutory accounting principles) and annual report (prepared under generally accepted accounting principles ("GAAP"), if any), as soon as practical and in any event within 90 days after the end of each fiscal year. (b) the Company's quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event within 45 days after the end of each quarterly period. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below. COMPANY: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY -15- By its authorized officer By: Title: Date: FUND: T. ROWE PRICE EQUITY SERIES, INC. By its authorized officer By: Title: Vice President ----------------------------------- Date: UNDERWRITER: T. ROWE PRICE INVESTMENT SERVICES, INC. By its authorized officer By: Title: Vice President ----------------------------------- Date: -16- SCHEDULE A ----------
Name of Separate Account and Contracts Funded by Date Established by Board of Directors Separate Account Designated Portfolios - -------------------------------------- ------------------- --------------------- Massachusetts Mutual Variable Strategic Life 10 T. Rowe Price Equity Series, Inc.: Life Separate Account I: ---------------------------------- July 13, 1988 Strategic GVUL T. Rowe Price Mid-Cap Growth Portfolio Survivorship Variable Universal Life Variable Universal Life
EX-99.A8D 4 FORM OF PART. AGREEMENT - AMERICAN CENTURY VAR. PORT. INC. SHAREHOLDER SERVICES AGREEMENT THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of ___________, 1998 by and among MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY ("Mass Mutual") and C.M. LIFE INSURANCE COMPANY ("C.M. Life," and collectively with MassMutual, the "Company") on behalf of the separate accounts listed on EXHIBIT A hereto (the "Accounts"), and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("ACIM"). WHEREAS, the Company offers to the public certain group and individual variable annuity and variable life insurance contracts (the "Contracts"); and WHEREAS, the Company wishes to make available as investment options under the Contracts, one or more of the funds identified in EXHIBIT B attached hereto (the "Funds"), each of which is a series of mutual fund shares registered under the Investment Company Act of 1940, as amended, and issued by American Century Variable Portfolios, Inc. (the "Issuer"); and WHEREAS, on the terms and conditions hereinafter set forth, ACIM desires to make shares of the Funds available as investment options under the Contracts and to retain the Company to perform certain administrative services on behalf of the Funds, and the Company is willing and able to furnish such services; NOW, THEREFORE, the Company and ACIM agree as follows: 1. Transactions in the Funds. Subject to the terms and conditions of this Agreement, ACIM will cause the Issuer to make shares of the Funds available to be purchased, exchanged, or redeemed, by or on behalf of the Accounts through a single account per Fund at the net asset value applicable to each order. The Funds' shares shall be purchased and redeemed on a net basis in such quantity and at such time as determined by the Company to satisfy the requirements of the Contracts for which the Funds serve as underlying investment media. Dividends and capital gains distributions will be automatically reinvested in full and fractional shares of the Funds. 2. Administrative Services. The Company agrees to provide all administrative services for the Contract owners, including but not limited to those services specified in EXHIBIT C (the "Administrative Services"). Neither ACIM nor the Issuer shall be required to provide Administrative Services for the benefit of Contract owners. The Company agrees that it will maintain and preserve all records as required by law to be maintained and preserved in connection with providing the Administrative Services, and will otherwise comply with all laws, rules and regulations applicable to the marketing of the Contracts and the provision of the Administrative Services. Upon request, the Company will provide ACIM or its representatives reasonable information regarding the quality of the Administrative Services being provided and its compliance with the terms of this Agreement. 3. Timing of Transactions. ACIM hereby appoints the Company as agent for the Funds for the limited purpose of accepting purchase and redemption orders for Fund shares from the Contract owners. On each day the New York Stock Exchange (the "Exchange") is open for business (each, a "Business Day"), the Company may receive instructions from the Contract owners for the purchase or redemption of shares of the Funds ("Orders"). Orders received and accepted by the Company prior to the close of regular trading on the Exchange (the "Close of Trading") on any given Business Day (currently, 4:00 p.m. Eastern time) and transmitted to the Funds' transfer agent by 10:00 p.m. Eastern time on such Business Day will be executed at the net asset value determined as of the Close of Trading on such Business Day. Any Orders received by the Company on such day but after the Close of Trading, and all Orders that are transmitted to the Funds' transfer agent after 10:00 p.m. Eastern time on such Business Day, will be executed at the net asset value determined as of the Close of Trading on the next Business Day following the day of receipt of such Order. The day as of which an Order is executed by the Funds' transfer agent pursuant to the provisions set forth above is referred to herein as the "Trade Date". 4. Processing of Transactions. (a) If transactions in Fund shares are to be settled through the National Securities Clearing Corporation's Mutual Fund Settlement, Entry, and Registration Verification (Fund/SERV) system, the terms of the FUND/SERV AGREEMENT, between Company and American Century Services Corporation, shall apply. 1 (b) If transactions in Fund shares are to be settled directly with the Funds' transfer agent, the following provisions shall apply: (1) By 6:30 p.m. Eastern time on each Business Day, ACIM (or one of its affiliates) will provide to the Company via facsimile or other electronic transmission acceptable to the Company the Funds' net asset value, dividend and capital gain information and, in the case of income funds, the daily accrual for interest rate factor (mil rate), determined at the Close of Trading. (2) By 10:00 p.m. Eastern time each Business Day, the Company will provide to ACIM via fascsimile or other electronic transmission acceptable to ACIM a report stating whether the instructions receive by the Company from Contract owners by the Close of Trading on such Business Day resulted in the Accounts being a net purchaser or net seller of shares of the Funds. As used in this Agreement, the phrase "other electronic transmission acceptable to ACIM" includes the use of remote computer terminals located at the premises of the Company, its agents or affiliates which terminals may be linked electronically to the computer system of ACIM, its agents or affiliates (hereafter, "Remote Computer Terminals"). (3) Upon the timely receipt from the Company of the report described in (2) above, the Funds' transfer agent will execute the purchase or redemption transactions (as the case may be) at the net asset value computed as of the Close of Trading on the Trade Date. Payment for net purchase transactions shall be made by wire transfer to the applicable Fund custodial account designated by the Funds on the Business Day next following the Trade Date. Such wire transfers shall be initiated by the Company's bank prior to 4:00 p.m. Eastern time and received by the Funds prior to 6:00 p.m. Eastern time on the Business Day next following the Trade Date ("T+1"). If payment for a purchase Order is not timely received, such Order will be executed at the net asset value next computed following receipt of payment. Payments for net redemption transactions shall be made by wire transfer by the Issuer to the account(s) designated by the Company on T+1; provided, however, the Issuer reserves the right to settle -------- ------- redemption transactions within the time period set forth in the applicable Fund's then-current prospectus. On any Business Day when the Federal Reserve Wire Transfer System is closed, all communication and processing rules will be suspended for the settlement of Orders. Orders will be settled on the next Business Day on which the Federal Reserve Wire Transfer System is open and the original Trade Date will apply. (4) ACIM shall provide to the Company by 10:00 a.m. Eastern Time on each Business Day a confirmation of outstanding Fund shares owned by the Accounts as of the prior Business Day. Such confirmation shall be provided by facsimile or other electronic transmission. 5. Prospectus and Proxy Materials. (a) ACIM shall provide the Company with copies of the Issuer's proxy materials, periodic fund reports to shareholders and other materials that are required by law to be sent to the Issuer's shareholders. In addition, ACIM shall provide the Company with a sufficient quantity of prospectuses of the Funds to be used in conjunction with the transactions contemplated by this Agreement, together with such additional copies of the Issuer's prospectuses as may be reasonably requested by Company. If the Company provides for pass-through voting by the Contract owners, or if the Company determines that pass-through voting is required by law, ACIM will provide the Company with a sufficient quantity of proxy materials for each, as directed by the Company. If requested by the Company, ACIM shall provide each Fund's prospectus and statement of additional information in PDF or camera-ready format. (b) The cost of preparing, printing and shipping of the prospectuses, proxy materials, periodic fund reports and other materials of the Issuer to the Company shall be paid by ACIM or its agents or affiliates; provided, however, -------- ------- that if at any time ACIM or its agent reasonably deems the usage by the Company of such items to be excessive, it may, prior to the delivery of any quantity of materials in excess of what is deemed reasonable, request that the Company demonstrate the reasonableness of such usage. If ACIM believes the reasonableness of such usage has not been adequately demonstrated, it may request that the party responsible for such excess usage pay the cost of printing (including press time) and delivery of any excess copies of such materials. Unless the Company agrees to make such payments, ACIM may refuse to supply such additional materials and ACIM shall be deemed in compliance with this SECTION 5 if it delivers to the Company at least the number of prospectuses and other materials as may be required by the Issuer under applicable law. 2 (c) The cost of any distribution of prospectuses, periodic fund reports and other materials of the Issuer to the Contract owners shall be paid by the Company and shall not be the responsibility of ACIM or the Issuer. ACIM shall be responsible for the cost of any distribution of proxy materials for any Fund. (d) ACIM shall notify the Company of any proxy proposals for any Fund as soon as reasonably practicable. 6. Compensation and Expenses. (a) The Accounts shall be the sole shareholder of Fund shares purchased for the Contract owners pursuant to this Agreement (the "Record Owner"). The Record Owner shall properly complete any applications or other forms required by ACIM or the Issuer from time to time. (b) ACIM acknowledges that it will derive a substantial savings in administrative expenses, such as a reduction in expenses related to postage, shareholder communications and recordkeeping, by virtue of having a single shareholder account per Fund for the Accounts rather than having each Contract owner as a shareholder. In consideration of the Administrative Services and performance of all other obligations under this Agreement by the Company, ACIM will pay the Company a fee (the "Administrative Services Fee") equal to 15 basis points (0.15%) per annum of the average aggregate amount invested by the Company and any of its affiliates in any series of mutual fund shares issued by the Issuer and used by any line of business of the Company or its affiliates (hereinafter "Aggregate Funds"), commencing with the month in which the average aggregate market value of investments by the Company and any of its affiliates in the Aggregate Funds exceeds $10 million. With respect to any month in which the average aggregate market value of investments by the Company and any of its affiliates in the Aggregate Funds exceeds $25 million, ACIM will pay the Company 20 basis points (0.20%) per annum on the excess amount. With respect to any month in which the average aggregate market value of investments by the Company and any of its affiliates in the Aggregate Funds exceeds $50 million, ACIM will pay the Company 25 basis points (0.25%) per annum on the average of such excess amount. (c) The payments received by the Company under this Agreement are for administrative and shareholder services only and do not constitute payment in any manner for investment advisory services or for costs of distribution. (d) For the purposes of computing the payment to the Company contemplated by this SECTION 6, the average aggregate amount invested by the Company on behalf of the Accounts in the Aggregate Funds over a one month period shall be computed by totaling the Company's aggregate investment (share net asset value multiplied by total number of shares of the Aggregate Funds held by the Company) on each Business Day during the month and dividing by the total number of Business Days during such month. (e) ACIM will calculate the amount of the payment to be made pursuant to this SECTION 6 at the end of each calendar quarter and will make such payment to the Company within 30 days thereafter. The check for such payment will be accompanied by a statement showing the calculation of the amounts being paid by ACIM for the relevant months and such other supporting data as may be reasonably requested by the Company and shall be mailed to: Massachusetts Mutual Life Ins. Co. 1295 State Street Springfield, MA 01111-0001 Attention: Treasurer's Dept. Phone No.: (413) 744-8702 Fax No.: (413) 711-6038 7. Representations. (a) The Company represents and warrants that (i) this Agreement has been duly authorized by all necessary corporate action and, when executed and delivered, shall constitute the legal, valid and binding obligation of the Company, enforceable in accordance with its terms; (ii) it has established the Accounts, each of which is a duly authorized and established separate account under, Section 38a-433 of the Connecticut General Statutes (for C.M. Multi- Account A and C.M. Life Variable Life Separate Account I) and Section 132G of Chapter 175 of the Massachusetts General Laws (for Massachusetts Mutual Variable Life Separate Account I), and has registered each Account as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act") to serve as an investment vehicle for the Contracts; (iii) each Contract provides for the allocation of net amounts received by the Company to an Account for investment in the shares of one or more specified investment 3 companies selected among those companies available through the Account to act as underlying investment media; (iv) selection of a particular investment company is made by the Contract owner under a particular Contract, who may change such selection from time to time in accordance with the terms of the applicable Contract; and (v) the activities of the Company contemplated by this Agreement comply in all material respects with all provisions of federal and state securities laws applicable to such activities. (b) ACIM represents that (i) this Agreement has been duly authorized by all necessary corporate action and, when executed and delivered, shall constitute the legal, valid and binding obligation of ACIM, enforceable in accordance with its terms; (ii) the prospectus of each Fund complies in all material respects with federal and state securities laws, and (iii) shares of the Issuer are registered and authorized for sale in accordance with all federal and state securities laws. 8. Additional Covenants and Agreements. (a) Each party shall comply with all provisions of federal and state laws applicable to its respective activities under this Agreement. All obligations of each party under this Agreement are subject to compliance with applicable federal and state laws. (b) Each party shall promptly notify the other parties in the event that it is, for any reason, unable to perform any of its obligations under this Agreement. (c) The Company covenants and agrees that all Orders accepted and transmitted by it hereunder with respect to each Account on any Business Day will be based upon instructions that it received from the Contract owners, in proper form prior to the Close of Trading of the Exchange on that Business Day. The Company shall time stamp all Orders or otherwise maintain records that will enable the Company to demonstrate compliance with SECTION 8(C) hereof. (d) The Company covenants and agrees that all Orders transmitted to the Issuer, whether by telephone, telecopy, or other electronic transmission acceptable to ACIM, shall be sent by or under the authority and direction of a person designated by the Company as being duly authorized to act on behalf of the owner of the Accounts. ACIM shall be entitled to rely on the existence of such authority and to assume that any person transmitting Orders for the purchase, redemption or transfer of Fund shares on behalf of the Company is "an appropriate person" as used in Sections 8-107 and 8-401 of the Uniform Commercial Code with respect to the transmission of instructions regarding Fund shares on behalf of the owner of such Fund shares. The Company shall maintain the confidentiality of all passwords and security procedures issued, installed or otherwise put in place with respect to the use of Remote Computer Terminals and assumes full responsibility for the security therefor. The Company further agrees to be responsible for the accuracy, propriety and consequences of all data transmitted to ACIM by the Company by telephone, telecopy or other electronic transmission acceptable to ACIM. (e) The Company agrees that, to the extent it is able to do so, it will use its best efforts to give equal emphasis and promotion to shares of the Funds as is given to other underlying investments of the Accounts, subject to applicable Securities and Exchange Commission rules. In addition, the Company shall not impose any fee, condition, or requirement for the use of the Funds as investment options for the Contracts that operates to the specific prejudice of the Funds vis-a-vis the other investment media made available for the Contracts --------- by the Company. (f) The Company shall not, without the written consent of ACIM, make representations concerning the Issuer or the shares of the Funds except those contained in the then-current prospectus and in current printed sales literature approved by ACIM or the Issuer. (g) Advertising and sales literature with respect to the Issuer or the Funds prepared by the Company or its agents, if any, for use in marketing shares of the Funds as underlying investment media to Contract owners shall be submitted to ACIM for review and approval before such material is used. ACIM shall use its best efforts to conduct all such reviews within 5 business days of its receipt of the materials. If the Company has not received approval of a submitted piece within the 5 business day time frame, a representative of the Company may call the Advertising Compliance Manager at ACIM and that individual, or his or her designated representative, shall provide to the Company representative the status of the review process for that piece and a good faith estimate of the additional time the review may take. In no event shall ACIM take more that 10 business days to conduct a review of such materials under normal circumstances. This subsection shall not apply to any advertising or sales literature produced by the Company if all references in such literature to the Issuer or the Funds are identical to those that appear in the Funds' prospectus(es) or Statement of Additional Information. 4 9. Use of Names. Except as otherwise expressly provided for in this Agreement, neither ACIM nor any of its affiliates or the Funds shall use any trademark, trade name, service mark or logo of the Company, or any variation of any such trademark, trade name, service mark or logo, without the Company's prior written consent, the granting of which shall be at the Company's sole option. Except as otherwise expressly provided for in this Agreement, the Company shall not use any trademark, trade name, service mark or logo of the Issuer, ACIM or any of its affiliates or any variation of any such trademarks, trade names, service marks, or logos, without the prior written consent of either the Issuer or ACIM, as appropriate, the granting of which shall be at the sole option of ACIM and/or the Issuer. 10. Proxy Voting. (a) The Company shall provide pass-through voting privileges to all Contract owners so long as the SEC continues to interpret the 1940 Act as requiring such privileges. It shall be the responsibility of the Company to assure that it and the separate accounts of the other Participating Companies (as defined in SECTION 12(A) below) participating in any Fund calculate voting privileges in a consistent manner. (b) The Company will distribute to Contract owners all proxy material furnished by ACIM and will vote shares in accordance with instructions received from such Contract owners. The Company shall vote Fund shares for which no voting instructions are received in the same proportion as shares for which such instructions have been received. The Company and its agents shall not oppose or interfere with the solicitation of proxies for Fund shares held for such Contract owners. 11. Indemnity. (a) ACIM agrees to indemnify and hold harmless the Company and its officers, directors, employees, agents, affiliates and each person, if any, who controls the Company within the meaning of the Securities Act of 1933 (collectively, the "Indemnified Parties" for purposes of this SECTION 11(A)) against any losses, claims, expenses, damages or liabilities (including amounts paid in settlement thereof) or litigation expenses (including legal and other expenses) (collectively, "Losses"), to which the Indemnified Parties may become subject, insofar as such Losses result from a breach by ACIM of a material provision of this Agreement, including, but not limited to, any incorrect calculation or any incorrect report by ACIM to the Company of the net asset value. ACIM will reimburse any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such Losses. ACIM shall not be liable for indemnification hereunder if such Losses are attributable to the negligence or misconduct of the Company in performing its obligations under this Agreement. (b) The Company agrees to indemnify and hold harmless ACIM and the Issuer, and their respective officers, directors, employees, agents, affiliates and each person, if any, who controls Issuer or ACIM within the meaning of the Securities Act of 1933 (collectively, the "Indemnified Parties" for purposes of this SECTION 11(B)) against any Losses to which the Indemnified Parties may become subject, insofar as such Losses result from a breach by the Company of a material provision of this Agreement or the use by any person of the Remote Computer Terminals. The Company will reimburse any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such Losses. The Company shall not be liable for indemnification hereunder if such Losses are attributable to the negligence or misconduct of ACIM or the Issuer in performing their obligations under this Agreement. (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this SECTION 11. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish to, assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this SECTION 11 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. (d) If the indemnifying party assumes the defense of any such action, the indemnifying party shall not, without the prior written consent of the indemnified parties in such action, settle or compromise the liability of the indemnified parties in such action, or permit a default or consent to the entry of any judgment in respect thereof, unless in connection with such settlement, 5 compromise or consent, each indemnified party receives from such claimant an unconditional release from all liability in respect of such claim. 12. Potential Conflicts (a) The Company has received a copy of an application for exemptive relief, as amended, filed by the Issuer on December 21, 1987, with the SEC and the order issued by the SEC in response thereto (the "Shared Funding Exemptive Order"). The Company has reviewed the conditions to the requested relief set forth in such application for exemptive relief. As set forth in such application, the Board of Directors of the Issuer (the "Board") will monitor the Issuer for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts ("Participating Companies") investing in funds of the Issuer. An irreconcilable material conflict may arise for a variety of reasons, including: (i) an action by any state insurance regulatory authority; (ii) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar actions by insurance, tax or securities regulatory authorities; (iii) an administrative or judicial decision in any relevant proceeding; (iv) the manner in which the investments of any portfolio are being managed; (v) a difference in voting instructions given by variable annuity contract owners and variable life insurance contract owners; or (vi) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. (b) The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded. (c) If a majority of the Board, or a majority of its disinterested Board members, determines that a material irreconcilable conflict exists with regard to contract owner investments in a Fund, the Board shall give prompt notice to all Participating Companies. If the Board determines that the Company is responsible for causing or creating said conflict, the Company shall at its sole cost and expense, and to the extent reasonably practicable (as determined by a majority of the disinterested Board members), take such action as is necessary to remedy or eliminate the irreconcilable material conflict. Such necessary action may include but shall not be limited to: (i) withdrawing the assets allocable to the Accounts from the Fund and reinvesting such assets in a different investment medium or submitting the question of whether such segregation should be implemented to a vote of all affected contract owners and as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and/or (ii) establishing a new registered management investment company or managed separate account. (d) If a material irreconcilable conflict arises as a result of a decision by the Company to disregard its contract owner voting instructions and said decision represents a minority position or would preclude a majority vote by all of its contract owners having an interest in the Issuer, the Company at its sole cost, may be required, at the Board's election, to withdraw an Account's investment in the Issuer and terminate this Agreement; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. (e) For the purpose of this SECTION 12, a majority of the disinterested Board members shall determine whether or not any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Issuer be required to establish a new funding medium for any Contract. The Company shall not be required by this SECTION 12 to establish a new funding medium for any Contract if an offer to do so has been declined by vote of a majority of the Contract owners materially adversely affected by the irreconcilable material conflict. 13. Termination; Withdrawal of Offering. This Agreement may be terminated by either party upon 180 days' prior written notice to the other parties. Notwithstanding the above, the Issuer reserves the right, without prior notice, to suspend sales of shares of any Fund, in whole or in part, or to make a limited offering of shares of any of the Funds in the event that (A) any regulatory body commences formal proceedings against the Company, ACIM, affiliates of ACIM, or the Issuer, which 6 proceedings ACIM reasonably believes may have a material adverse impact on the ability of ACIM, the Issuer or the Company to perform its obligations under this Agreement or (B) in the judgment of ACIM, declining to accept any additional instructions for the purchase or sale of shares of any such Fund is warranted by market, economic or political conditions. Notwithstanding the foregoing, this Agreement may be terminated immediately (i) by any party as a result of any other breach of this Agreement by another party, which breach is not cured within 30 days after receipt of notice from the other party, or (ii) by any party upon a determination that continuing to perform under this Agreement would, in the reasonable opinion of the terminating party's counsel, violate any applicable federal or state law, rule, regulation or judicial order. Termination of this Agreement shall not affect the obligations of the parties to make payments under SECTION 4 for Orders received by the Company prior to such termination and shall not affect the Issuer's obligation to maintain the Accounts as set forth by this Agreement. Following termination, ACIM shall not have any Administrative Services payment obligation to the Company (except for payment obligations accrued but not yet paid as of the termination date). 14. Non-Exclusivity. Each of the parties acknowledges and agrees that this Agreement and the arrangement described herein are intended to be non-exclusive and that each of the parties is free to enter into similar agreements and arrangements with other entities. 15. Survival. The provisions of SECTION 9 (use of names) and SECTION 11 (indemnity) of this Agreement shall survive termination of this Agreement. 16. Amendment. Neither this Agreement, nor any provision hereof, may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed by all of the parties hereto. 17. Notices. All notices and other communications hereunder shall be given or made in writing and shall be delivered personally, or sent by telex, telecopier, express delivery or registered or certified mail, postage prepaid, return receipt requested, to the party or parties to whom they are directed at the following addresses, or at such other addresses as may be designated by notice from such party to all other parties. To the Company: Massachusetts Mutual Life Ins. Co. 1295 State Street Springfield, MA 01111-0001 Attn: Office of General Counsel (413) 744-6053 (office number) (413) 744-6279 (telecopy number) To the Issuer or ACIM: American Century Investment Management, Inc. 4500 Main Street Kansas City, Missouri 64111 Attention: Charles A. Etherington, Esq. (816) 340-4051 (office number) (816) 340-4964 (telecopy number) Any notice, demand or other communication given in a manner prescribed in this SECTION 17 shall be deemed to have been delivered on receipt. 18. Successors and Assigns. This Agreement may not be assigned without the written consent of all parties to the Agreement at the time of such assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. 19. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any party hereto may execute this Agreement by signing any such counterpart. 20. Severability. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 7 21. Entire Agreement. This Agreement, including the attachments hereto, constitutes the entire agreement between the parties with respect to the matters dealt with herein, and supersedes all previous agreements, written or oral, with respect to such matters. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above. MASSACHUSETTS MUTUAL AMERICAN CENTURY INVESTMENT LIFE INSURANCE COMPANY MANAGEMENT, INC. By: By: ---------------------------- ----------------------------- Name: William M. Lyons -------------------------- Executive Vice President Title: ------------------------- C.M. LIFE INSURANCE COMPANY By: ---------------------------- Name: -------------------------- Title: ------------------------- 8 EXHIBIT A ACCOUNTS Massachusetts Mutual Variable Life Separate Account I C.M. Multi-Account A C.M. Life Variable Life Separate Account I A-1 EXHIBIT B FUNDS AVAILABLE VP Income & Growth Fund B-1 EXHIBIT C ADMINISTRATIVE SERVICES Pursuant to the Agreement to which this is attached, the Company shall perform all administrative and shareholder services required or requested under the Contracts with respect to the Contract owners, including, but not limited to, the following: 1. Maintain separate records for each Contract owner, which records shall reflect the shares purchased and redeemed and share balances of such Contract owners. The Company will maintain a single master account with each Fund on behalf of the Contract owners and such account shall be in the name of the Company (or its nominee) as the record owner of shares owned by the Contract owners. 2. Disburse or credit to the Contract owners all proceeds of redemptions of shares of the Funds and all dividends and other distributions not reinvested in shares of the Funds. 3. Prepare and transmit to the Contract owners, as required by law or the Contracts, periodic statements showing the total number of shares owned by the Contract owners as of the statement closing date, purchases and redemptions of Fund shares by the Contract owners during the period covered by the statement and the dividends and other distributions paid during the statement period (whether paid in cash or reinvested in Fund shares), and such other information as may be required, from time to time, by the Contracts. 4. Transmit purchase and redemption orders to the Funds on behalf of the Contract owners in accordance with the procedures set forth in SECTION 4 to the Agreement. 5. Distribute to the Contract owners copies of the Funds' prospectus, proxy materials, periodic fund reports to shareholders and other materials that the Funds are required by law or otherwise to provide to their shareholders or prospective shareholders. 6. Maintain and preserve all records as required by law to be maintained and preserved in connection with providing the Administrative Services for the Contracts. C-1 EX-99.A11 5 PROCEDURES MEMORANDUM Purchase, Redemption and Transfer Procedures and Method of Computing Adjustments on Payments and Account Value MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY & C.M. Life Insurance Company --------------------------- This document sets forth, as required by Rule 6e-3 (T) (b) (12) (ii) adopted pursuant to the Investment Company Act of 1940, as amended, the administrative procedures that will be followed by Massachusetts Mutual Life Insurance Company ("MassMutual") and C.M. Life Insurance Company ("CML") (collectively and individually MassMutual and CML are referred to as the "Company") in connection with the issuance of the Survivorship Variable Universal Life Policy described in this Registration Statement ("SVUL" or the "Policy"), the transfer of assets held thereunder, and the redemption by Policyowners of their interests in the Policy. Set forth below is a summary of the principal Policy provisions and administrative procedures which might be deemed to constitute, either directly or indirectly, purchase, transfer or redemption transactions. The summary shows that, because of the insurance nature of the Policy, the procedures involved necessarily differ in certain significant respects from the purchase procedures for mutual funds and other contractual plans. A. AVAILABILITY AND UNDERWRITING--Upon receipt of a completed application, the Company will follow certain insurance underwriting (i.e., evaluation of risks) procedures designed to determine whether the applicant is insurable. This process may involve verification procedures, such as medical examinations, and may require that further information be provided by the proposed Insured before an underwriting determination can be made. The rating classifications assigned will impact the mortality and risk charges assessed against a Policy. The minimum Face Amount is $500,000. B. DEATH BENEFIT--SVUL insures two lives and pays a death benefit at the second death. As long as the Policy remains in force, the Company will pay a Death Benefit to the named Beneficiary(ies) in accordance with the designated settlement option, generally within seven days after the Company receives due proof of death of the second Insured to die and verifies the validity of the claim. Payment of Death Benefits may, however, be postponed under certain circumstances. Additionally, during the first two Policy Years, during the first two years after an increase in Selected Face Amount, and in any other circumstances in which the Company may have a basis for contesting the claim, there can be a delay beyond the seven day period. All or part of the Death Benefit can be paid in cash or under one or more of the payment options set forth in the Policy. We will investigate most death claims arising within the two-year contestable period. Upon receiving the information from a completed investigation, we will generally make a determination within five days as to whether the claim should be authorized for payment. Payments will be made promptly after authorization. The amount of the death benefit is determined as of the date of the insured's death. The Company pays interest from the date of the insured's death at the Option D rate or, if greater, at a state mandated rate. SVUL provides a choice of three death benefit options: 1. Under Death Benefit Option 1 ("DBO 1") the death benefit is the greater of: (a) The Face Amount ("FA") in effect on the date of the second death; and (b) The Minimum Death Benefit in effect on the date of the second death. 2. Under Death Benefit 2 ("DBO 2"), the death benefit is the greater of: (a) The FA in effect on the date of the second death plus the account value on that date; and (b) The Minimum Death Benefit in effect on the date of the second death. 3. Under Death Benefit Option 3 ("DBO 3"), the death benefit is the greater of: (a) The FA in effect on the date of the second death plus the sum of all premiums paid (and not refunded) to that date; and (b) The Minimum Death Benefit in effect on the date of the second death. THE MINIMUM DEATH BENEFIT--is equal to the account value multiplied by the Death Benefit Factor for the younger insured's attained age. The Death Benefit Factor depends on the IRC 7702 test chosen at issue by the Owner (Cash Value or Guideline Premium test). Refer to Section II for the formulas to calculate these factors. ADJUSTED DEATH BENEFIT--The Death Benefit, as determined earlier, is adjusted as follows: (a) We deduct any policy debt outstanding on the date of the second death (including any accrued loan interest); (b) We deduct any unpaid premium amount needed to avoid termination during the policy grace period to the date of the second death. OVER AGE 99 OF YOUNGER INSURED--The policy provides coverage for as long as it remains in force. The policy does not provide for an endowment in any year except where a state requires a maturity date. While the policy is in force, we will maintain all policy features (i.e. we will accept premium payments, take monthly deductions, honor all policy provisions, etc.). All rates applicable at attained age 99 will apply for attained ages 99+. INTEREST ON DEATH BENEFIT--We will add interest from the date of the second death to the date of payment. The amount of interest will be computed using an effective annual rate not less than 3% or, if greater, the annual rate required by law. We currently use 3%. CHANGES IN DBO--After the first policy year, the Owner may change the death benefit option of his/her policy, upon written request, while both insureds are living and the older insured is younger than attained age 86. A DBO change will be effective on the Monthly Charge Date ("MCD") which is on, or precedes, the date we approve the change, unless a later date is requested. A change in the DBO may follow one or more increases in the FA of the policy. In this case, the change will increase (decrease) the most recent increase(s) if the FA increases (decreases). No change in DBO will be allowed if the FA after the change would be less than $500,000. If the DBO is changed, we will send the Owner any revised or additional Policy Specifications for attachment to the policy. C. INCREASES IN FACE AMOUNTS ("FA") 1. While both insureds are living, the FA may be increased by written request. Any increases in FA is subject to the following conditions: (a) Submission of a written application for increase; (b) Satisfactory evidence of insurability must be provided for both insureds; (c) No increase may be made after the Policy Anniversary Date nearest the younger insured's 85th birthday or, if earlier, the Policy Anniversary Date nearest the older insured's 90th birthday; (d) The minimum amount of any increase is $50,000. 2. . A FA increase is effective on the MCD that is on, or precedes, the date we approve the application. A FA increase is accomplished by issuing an additional insurance coverage segment. Each such segment has distinct issue ages, risk classes, target premiums, monthly charges, premium expense charges, surrender charges and commissions. The insuring ages for the increase segment are determined as of the policy anniversary on or just preceding the MCD on which the increase becomes effective. It is possible for risk classes of prior segments to change in order to match the risk class of the new segment. This will happen only if the underwriter indicates that it should. The general rule is that if the new segment has a risk class worse than prior segments, then the prior segments will not change. Conversely, if the new segment has a risk class better than prior segments, then the prior segments will change. The monthly charges that apply to each elected FA increase are the FA charge and the insurance charge. The administrative charge applies once to the policy as a whole. The premium expense charge also applies to each elected FA increase. The charges associated with the increase will be deducted from the account value beginning on the effective date of the increase. 3. Premium payments received once an increase becomes effective will be allocated to each segment of the FA. The premium allocation will be made on a pro rata basis using the expense premium for each segment. If the net surrender value is insufficient to continue the changed policy in force for three months at the new monthly charges, we may require a payment sufficient to increase the net surrender value to such amount. The contestable and suicide periods begin again on the date of the FA increase for the increase in FA. If the FA is changed, we will send the Owner any revised or additional Policy Specifications for attachment to the policy. D. DECREASES IN FA 1. After the first policy year, the FA may be decreased by the Owner's written request while either insured is living. No decrease is permitted within one year following the effective date of any increase. Any decrease will be effective 2 on the MCD that is on, or precedes, the date we receive the written request. The FA remaining after any decrease (both elected and non-elected) must be at least $500,000. 2. Elected decreases in FA (i.e., decreases resulting from other than a withdrawal or a change in the DBO) are taken on a last-in-first-out basis. In other words, the decrease is taken from the most recent increase. For a discussion of surrender charges as to elected decreases in FA, see K(3) herein. Any canceled segments remain active in the administrative system with a zero FA. 3. Non-elected decreases in FA (i.e., decreases resulting from a withdrawal or a change in the DBO) are accompanied by canceling previously issued segments on a last-in-first-out basis. No surrender charge is assessed when the FA is reduced as the result of a non-elected decrease. If the FA is changed, we will send the Owner any revised or additional Policy Specifications for attachment to the policy. E. DEATH BY SUICIDE--If either insured commits suicide within 2 years after the issue date of the policy and while the policy is in force, the policy will terminate. In this case, we will refund the amount of premiums paid for the policy, less any amounts withdrawn and less any policy debt. If either insured commits suicide within 2 years after the policy is reinstated and while the policy is in force, the policy will terminate. In this case, we will refund any amount paid to reinstate the policy and any premiums paid thereafter, less any amounts withdrawn and less any policy debt. If either insured commits suicide within 2 years after the effective date of any increase in the FA, the increase will terminate. In this case, we will refund the monthly charges made for that increase. However, if a refund as described in either of the two preceding paragraphs is payable, there will be no additional refund for the increase. F. CONTESTABILITY--The Company cannot contest the Policy with respect to any material misrepresentation in the application regarding the insurability of insured 1, once the policy has been in force during the lifetime of insured number 1 for 2 years after its issue date; or with respect to any material misrepresentation in the application regarding the insurability of insured number 2, once the policy has been in force during the lifetime of insured number 2 for 2 years after its issue date. For any policy change requiring evidence of insurability, we cannot contest the validity of the change with respect to each insured after the change has been in effect for 2 years during the lifetime of that insured. If evidence of insurability is required to reinstate the policy, our right to contest the validity of the policy begins again on the date of reinstatement. For each insured living on that date, we cannot contest once the reinstated policy has been in force during the lifetime of that insured for 2 years after that reinstatement date. If the date of birth or gender of either insured as given in the application is not correct, the FA will be adjusted. The administrative system will initially handle misstatements as follows. If the misstatement is discovered after the second death, the adjustment will reflect the amount provided by the most recent monthly insurance charges using the correct ages and genders. If the misstatement is found before the second death, the policy will be reissued to reflect the correct ages and genders. This reissue leads to gains and losses if any units of a SA need to be sold. The Company reserves the right to not reissue the policy. G. PREMIUM PAYMENTS 1. GENERAL--Premium payments are flexible as to both timing and amount. Any amount of premium may be paid at any time while either insured is living, subject to the minimums and maximums stated below. If the premium payment effective date is prior to the issue date of the policy, then the premium payment is considered "cash with app" and it is placed in a general account fixed fund. Interest is credited as of the date the premium payment is received at the Administrative Office designated by the Company. Deductions will come out of this fund if a MCD occurs before the premium is moved out of the fund. Money remains in this fund until one day after the Register Date. The amount refunded under the policy's "free-look" provision will vary by contract state. The refund will generally be: (a) any premium (either gross or net) paid for the policy, plus (b) interest credited to the policy under the GPA, plus or minus (c) an amount that reflects the investment experience of the investment divisions of the SA under the policy to the date the policy is received by us. Each premium payment, less a premium expense charge, is added to the account value and allocated to the investment funds as elected in the application. The allocation of premiums must be specified as whole percentages. After the policy is issued and during the free look period in a state that requires the return of gross premiums paid, the cash with app will be placed in a money market account for the number of free look days plus an additional six days, then transferred to the GPA and divisions of the SA as elected 3 in the application. Deductions are taken from the money market account if a MCD occurs before the money is moved out of the fund. 2. INITIAL PREMIUMS--Except as noted above, initial net premiums are allocated to the GPA and the Divisions as of the Register Date plus one, provided such funds and application are in good order and are received on a given business day by the time the New York Stock Exchange closes, normally 4:00 PM EST. If receipt is after such time, the allocation will occur on the next business day following the Register Date. "Good order" requires that Part 1 of the Application is completed, a suitability review and approval has occurred, all licensing issues are resolved, all owner and insured information is furnished, and all signatures are obtained. Subsequent premium payments received in good order on a given business day by the time the New York Stock Exchange closes, normally 4:00 PM EST, will be processed on a "same day" basis. If receipt, however, is after such time, the subsequent premium payment will be credited on the next business day. Allocation instructions can be changed prospectively, but allocations must be in whole percentage points. 3. PLANNED PREMIUMS--The planned premium is the premium the Owner plans to pay. It is chosen by the Owner at issue. The frequency of planned premiums for the policy is as elected in the application. The frequency and amount of the planned premium may be changed by written request. The Owner does not have to pay the planned premium. Timely payment of the planned premium does not guarantee that the policy will stay in force until both insureds have died. 4. MAXIMUM PREMIUM PAYMENTS IN ANY POLICY YEAR--For the Cash Value Test, the maximum premium which may be paid during any policy year is the greatest of: (1) The largest premium which will not increase the insurance risk; (2) $100 plus 2 times the annual target premium; and (3). The amount of premiums paid in the preceding policy year. For the Guideline Premium Test, the maximum premium which may be paid during any policy year is the lesser of the maximum premium calculated for the Cash Value Test and the guideline premium limitation for the Guideline Premium Test. 5. MINIMUM PREMIUM PAYMENTS IN ANY POLICY YEAR--The initial premium paid must be at least $20 or, if greater, the amount needed to prevent termination before the next billing date. Each premium paid must be at least $20 or, if greater, the amount needed to prevent termination. Refer to section on Lapse Logic for termination rules. 6. SECONDARY GUARANTEE PREMIUMS--The policy offers a safety test in the form of two no-lapse guarantees. Each has a corresponding Guarantee Period and Guarantee Premium. The two Guarantee Periods are: (1) The earlier of 20 years or to age 90 of the younger insured, and (2) To age 100 of the younger insured. The First Guaranteed Premium will be table driven, utilizing a joint equal age. The Second Guaranteed Premium will be equal to the Guideline Level Premium. The Guaranteed Premiums will vary by issue age, gender, underwriting class and death benefit option. 7. BILLING--The billed premium is equal to the planned premium. Premium notices will be sent for the planned premium based on the amount and frequency in effect. The frequency or amount of the planned premium may be changed by written request. We will stop sending notices for the planned premium upon receipt of the Owner's written request to do so. Available premium frequencies and billing types are: (1) Regular - Annual, Semiannual, and Quarterly; (2) Triple M - Monthly Check Service; and (3) Pension, Plan C and Invoice - Annual, Semiannual, Quarterly and Monthly. If payment of the planned premium exceeds the maximum premium limit, the planned premium (and, hence, the billed premium) for the policy will be changed to the maximum premium. Government Allotment and Federal Employee payment plans are not available. Money-purchase is also not available. There is no frequency loading, i.e., the modal planned premium is the annual amount divided by the frequency factor (i.e., 2 for semiannual, 4 for quarterly, or 12 for monthly). 8. TARGET PREMIUMS--Each policy has an annual target premium. At any time, a policy's target is equal to the sum of the target for each insurance coverage segment in force on that date. For each segment, the target is the segment's FA (in thousands) multiplied by the unit target at the issue age for that segment. The target premium will be table driven, utilizing a joint equal age. The target premium will vary by issue age, gender, underwriting class and death benefit option. Unisex targets equal the male targets. 4 H Charges 1. Monthly Charges--The policy is assessed monthly charges based on current rates. These may be changed periodically to reflect expectations for future mortality, investment, persistency and expense results; however, the current rates may not exceed the maximum guaranteed rates. Monthly charges will be deducted from the account value on each MCD. Monthly charges will be taken from the divisions of the SA and from the GPA in proportion to the values of the policy in each of those divisions and in the GPA (excluding any outstanding loans). Deductions will be made and values will be determined on the Valuation Date that is on, or next follows, the latest of: (i) The Register Date; (ii) The date the charges are due; and (iii) The date we receive the amount of premium needed to prevent termination. SVUL has four types of monthly charges: a. Administrative Charge--An Administrative Charge of $12 per policy ------------------------- will be deducted monthly from the account value on each MDC during the first ten policy years. A lower Administrative Charge of $6 per policy will be deducted monthly from the account value on each MDC after the tenth policy year. The Maximum Monthly Administrative Charge is $12 per policy. b. Face Amount Charge - The Face Amount Charge is the FA multiplied by a ---------------------- rate per $1,000. The charge resulting from the year 1-10 rate of $0.13 per $1,000 will be deducted monthly from the account value on each MDC during the first through tenth policy years. The charge resulting from the year 11+ rate of $0.00 per $1,000 will be deducted monthly from the account value on each MDC after the tenth policy year. The Maximum Monthly Face Amount Charge is $0.13 per $1,000 in policy years 1-10 and $0.00 per $1,000 in policy years 11+. If the FA has been increased, the Face Amount Charge for each month will be the sum of the charges determined separately for each segment of the FA. c. Insurance Charge--The Insurance Charge is the monthly insurance charge -------------------- rate per $1,000 of insurance risk multiplied by the insurance risk. There is a separate monthly insurance charge rate per $1,000 of insurance risk for each FA segment. The insurance risk is computed as of the date the charge is due. If the insurance risk is increased due to the minimum death benefit, the table that applies to the most recent increase requiring evidence of insurability will be used for such increase. d. Rider Charge - The monthly rider charge is the sum of the monthly ---------------- charges for any riders in effect on the MCD. 2. PREMIUM EXPENSE CHARGE--The policy is assessed a premium expense charge based on current rates. These may be changed periodically to reflect expectations for future mortality, investment, persistency and expense results; however, the current rates may not exceed the maximum guaranteed rates. The expense premium will be table driven, utilizing a joint equal age. The expense premium will vary by issue age, gender and underwriting class. The current and maximum premium expense charges are as follows: Current Maximum -------- -------- Years 1-10 Up to expense premium 13% 13% Above expense premium 3% 3% Years 11+ Up to expense premium 3% 13% Above expense premium 3% 3% 3. Surrender Charges--A surrender charge is imposed if the policy is surrendered at any time before the 10th policy year. The first year surrender charge will equal 100% of the target premium not to exceed a flat dollar amount (less than or equal to $60) per thousand (a lower number, less than or equal to $50 in New York). The surrender charge will grade down by 10% of the first year surrender charge per year over 10 years. There will be a surrender charge calculated for each FA segment. Each FA segment will have its own ten year surrender charge, the first year of which is based on the target premium for the attained age at the time the additional FA segment is added. Elected decreases in FA (i.e. decreases resulting from other than a withdrawal or a change in the DBO) result in canceling previously issued segments. This is last-in-first-out processing. Under such a decrease, a partial surrender charge is assessed and deducted from the account value. It is equal to the surrender charge as of the date of the decrease for that portion of any segment which is canceled under the decrease. Whenever a partial 5 surrender charge is assessed, the ongoing surrender charges for each segment which is canceled (in full or in part) are reduced in proportion to the amount of the reduction in FA for that segment. No surrender charge is assessed when the FA is reduced as the result of a withdrawal or a change in the DBO. If the partial surrender charge for a decrease is greater than the account value of the policy, then the partial surrender charge for that decrease is equal to the account value on the date of the surrender. The surrender charge after the decrease equals the surrender charge prior to the decrease, less the partial surrender charge taken. If the full surrender charge cannot be taken from one segment, it will be taken from prior segments. Any segment that "goes away" as a result of a FA decrease remains active with zero units and the surrender charge remains active on that segment. The surrender charge on such a segment will only be recovered in the event of a full surrender. I. SEPARATE ACCOUNTS (SA) DIVISIONS--The cumulative limit on the number of distinct SA divisions to which net premiums are allocated and transfers are made is currently 16, with plans to increase this number in coming years. Accounting for the allocation of the account value within the divisions of the SA is done by holding units within each, much the same as under our variable annuities. All charges and credits to that part of the account value which is allocated to a division of the SA are made by selling or purchasing units in that division at the current unit value. J. POLICY VALUES/INVESTMENT FUNDS--Date the date on which the first premium payment for the policy is allocated to the SA or the GPA. It is the Valuation Date that is on, or next follows, the later of: (1) The day after the issue date; and (2) The day we receive the first premium for the policy. 1. ACCOUNT VALUE--The account value is the sum of all premium payments adjusted by periodic charges and credits and partial withdrawals. The policy value is equal to the account value less any surrender charge. The policy's net surrender value is equal to the policy value less any policy debt. The policy's account value will be allocated among the various investment funds available. Investment performance from each of the divisions of the SA is reflected through the value of the units held in each division. Each unit within a division has the same value. Unit values will be the same regardless of which company issues the policy (CM Life or MassMutual). Unit values are determined on each valuation date based on the investment performance of the underlying funds, such as MML Series Investment Fund or the Oppenheimer Variable Account Funds. Valuation Date is any date on which the New York Stock Exchange is open for trading. The unit values will reflect a mortality and expense risk charge (M&E). On an annual basis, the "current" M&E is 0.25% for all policy years. It is guaranteed not to exceed 0.90%. The amount of any account value allocated to any division of the SA is not guaranteed. This means the amount of this portion of the account value may increase or decrease by any amount depending upon the investment performance of the underlying investment fund. 2. Account Valuation--A policy's account value is equal to: (a) the sum of all premiums paid less the premium expense charge; (b) less the monthly charges, which consist of an administrative charge, a face amount charge, an insurance charge and a rider charge; (c) less any withdrawals (including any withdrawal fees); (d) less surrender charges assessed under an elected decrease in FA; (e) plus any interest earned on the account value held in the GPA; (f) plus or minus investment experience on the account value held in the divisions of the SA. The items in the list above are not in processing order. They appear here so one can see what additions and deductions apply to the account value. The account value is allocated between the GPA and each division of the SA and the value within each fund is maintained separately. The account value for the policy is the sum of its account value held in the GPA (fixed account value) and its account value held in each division of the SA (variable account value). 3. GPA VALUE--The fixed account value is accounted for in dollars and cents. Its value at any time is the sum of all charges and credits plus earned interest. The decrease in the GPA resulting from a withdrawal is equal to the dollar amount withdrawn from the GPA as specified in the withdrawal request. 4. THE VARIABLE ACCOUNT VALUE--Each division of the SA is accounted for through holding units within each division. Charges and credits are accomplished by increasing (purchasing) or decreasing (selling) the number of units of each division held under the policy. Investment experience on the variable account value is reflected through the change in the value of each unit. Therefore, the policy's variable account value in any division is the total number of units for that division held under the policy multiplied by the value of each unit on the date of the valuation. 6 K. GUARANTEED PRINCIPAL ACCOUNT (GPA)--Amounts allocated to this fund will be invested within the Company's General Account. For MassMutual policies, these funds will be part of the non-traditional segment of the MassMutual General Account. For CM Life policies, these funds will be part of CM Life's General Account. Amounts allocated to the GPA will be accounted for in dollars and cents. Interest is earned and credited on a daily basis on the portion of the account value which is allocated to the GPA, including any loaned values. The portion of the account value equal to the loan balance earns interest at the policy loan rate less a company declared charge for expenses and taxes (currently 0.5% in the first 10 policy years and 0.25% thereafter, and guaranteed not to exceed 2%), or, if greater, 3% per annum. The account value allocated to the GPA in excess of any loan balance earns interest at a company declared rate. This rate is guaranteed to be not less than 3% per annum. The declared rate will be the portfolio earnings rate of the GPA less a spread. The declared rate will reflect our expectations for future investment results, profits and expenses. The rate will be declared monthly in advance. Once declared for a calendar month, it cannot be changed. L. CHANGES IN CURRENT RATES--Current rates are expected to be revised periodically at the discretion of the company as follows: 1. REVISED CHARGES--Insurance Charge Rates, monthly Policy Loan Expense Charge (PLEC), Premium Expense Charge (PEC), Face Amount Charge (FAC), and Monthly Administrative Charge (MAC) are (1) Revised annually; (2) Approved and announced on or about November 1, and (3) Effective from the MCD on or next following January 1 for all new issues and all in force policies. 2. ADJUSTABLE POLICY LOAN RATES--The same as ALR rate for Whole Life. 3. INTEREST--is (1) Revised monthly; (2) Approved and announced 1 to 2 weeks prior to the beginning of each calendar month; and, (3) Effective from the first day of a month through the last day of that month or until the date of an earlier special revision. 4. SA UNIT VALUES--Are valued on each valuation date for each division. Changes described above will affect only "current" rates, not guaranteed rates. We reserve the right to change any non-guaranteed rate more frequently than indicated above, but such changes are not anticipated. M. TRANSFERS--The transfer of account value between or among investment funds is allowed without charge subject to the following restrictions: (1) Transfer requests must be in writing, and (2) Only one transfer will be permitted from the GPA in each policy year. Each such transfer may not exceed 25% of the account value, less any policy debt, in the GPA at the time of transfer. There is an extra contractual (by company practice; not in contract, but in the prospectus) exception to this rule. We will allow a 100% transfer from the GPA following three consecutive years of 25% transfers from the GPA, provided no value has been transferred into the GPA and no premiums have been allocated to the GPA during this period. The following types of transfers can be made: (1) Transfers of values between the divisions of the SA. These transfers will be made by selling all or part of the accumulation units in a division and applying the value of the sold units to purchase units in any other division; (2) Transfers of values from one or more divisions of the SA to the GPA. These transfers will be made by selling all or part of the accumulation units in a division and applying the value of the sold units to the GPA; (3) Transfers of values from the GPA to one or more divisions of the SA. These transfers will be made by applying all or part of the value in the GPA (excluding any outstanding policy loans) to purchase accumulation units in one or more divisions of the SA. There is currently no limit to the number of transfers in a policy year other than from the GPA; however, we will reserve the right to limit transfers to not more than one every 90 days, with one exception. There are no restrictions on a transfer of all funds in the SA to the GPA. There is no minimum transfer amount nor minimum value which must be maintained within an investment fund except as noted earlier. Transfers must be in whole-number percentages or in dollar-and- cent amounts. Transfers will be made as of the Valuation Date, provided the request is received in good order. All transfers made on the Valuation Date will be considered one transfer. Transfer requests received in good order for transfers between divisions generally will be done on a "same day" basis. N. WITHDRAWALS & SURRENDERS--After the first policy year, partial withdrawals may be made by written request at any time the policy is in force and either insured is living. The request for a withdrawal must state the account(s) from which the withdrawal will be made. From any withdrawal from the SA, the request must also state the division(s) from 7 which the withdrawal will be made. A withdrawal will be effective on the date we receive the written request in good order. On the effective date of the withdrawal, the non-loaned account value is reduced by the amount of the withdrawal. The withdrawal amount includes the withdrawal fee. The maximum withdrawal fee is $25. There is no plan at this time to charge less than the maximum. The withdrawal from the GPA will be made by reducing the non-loaned account value in that account to provide the amount of the withdrawal. A withdrawal from a division of the SA will be made by selling a sufficient number of accumulation units to provide the amount of the withdrawal. There is no surrender charge levied when a partial withdrawal is taken. Full surrenders will generally be processed within fourteen days of receipt of the written request in good order, and partial withdrawals within seven days of receipt in good order of the written request./1/ The FA will be decreased by the amount of the withdrawal if: (a) DBO 1 or DBO 3 is in effect. FA decreases of this type are considered as "non- elected" and do not cancel or reduce previously issued coverage segments for purposes of ongoing targets or surrender charges, and (b) We have not received evidence of insurability satisfactory to us. Under DBO 2, there is no reduction in the FA. If a decrease follows one or more FA increases, the decrease is taken from the most recent increase(s). The last-in-first- out rule applies. Withdrawals will be subject to the following limits: (1) The minimum amount of a withdrawal (including the withdrawal fee) is $100; (2) The maximum amount of a withdrawal on any date is 75% of the net surrender value on that date; (3) The FA after a withdrawal must not be less than $500,000; and (4) The withdrawal from each fund cannot exceed the non-loaned account value allocated to that fund as of the date of the withdrawal. If the FA is reduced due to a withdrawal, we will send the Owner any revised or additional Policy Specifications for attachment to the policy. O. POLICY LOANS--After the first policy year, while either insured is living, loans can be made at any time. The maximum amount which can be borrowed on any date is: (1) 90% of the policy value (i.e., account value less surrender charge), less (2) any outstanding policy debt (including accrued policy loan interest). Loan repayments will be credited on the date we receive them. 1. All or part of any policy debt may be repaid at any time while the policy is in force and either insured is living. Loan repayments will be credited on the date we receive them. In the event that there are several loans against a policy, the oldest loan is repaid first. A loan is attributed to each division of the SA and to the GPA in proportion to the values of the policy in each of those divisions and in the GPA (excluding any outstanding policy loans) at the time of the loan. Any loan repayment received by us within 30 days of the policy anniversary date will be used first to pay off any loan interest due and then applied to principal. Any loan repayment received by us on a date other than within 30 days of the policy anniversary date will be allocated first to the GPA until the Owner has repaid any loan amounts, excluding loan interest (both outstanding and previously capitalized), that originated from the GPA. In other words, only the original principal borrowed from the GPA will be paid back to the GPA first. Any additional loan repayments, including loan interest, will be allocated to the GPA and the divisions of the SA according to the premium allocation factors then in effect. 2. Loan repayments must be clearly identified as such; otherwise, they will be considered premium payments. The amount equal to any outstanding policy loans will be held in the GPA and will earn interest as described herein. The above amounts are determined as of the effective date of the new loan. Policy loan interest is charged in arrears at a rate determined by the policy loan rate provision, which may be either (1) the variable policy loan rate, or (2) the 5% fixed loan rate. The choice of loan rate provision will be elective at the time of application, except in those states requiring the fixed rate provision. Once elected, this choice cannot be changed. The variable loan rate is an annual rate set by the company. This rate may change from year to year. Each year we will set the rate that will apply for the next policy year. The rate will apply to all policy debt under the policy. Each year there is a maximum limit on - -------------------- /1/ Payment from the Separate Account may be postponed whenever: (i) the New York Stock Exchange is closed for other than for customary week-end and holiday closings, or trading on the New York Stock Exchange is restricted as determined by the SEC; (ii) the SEC by order permits postponement for the protection of Policyowners; or (iii) 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 from the portion of the Account Value held in the GPA may be postponed for up to six months. Payments under the Policy of any amount paid to the Company by check may be postponed until such time as the check has cleared the Policyowner's bank. 8 the variable loan interest rate we can set. That limit is based on a published monthly average. That average will be the Monthly Average Corporate yield shown in Moody's Corporate Bond Yield Averages, as published by Moody's Investors Service, Inc. The maximum limit is the published Monthly Average for the calendar month ending 2 months before the month in which the policy year begins or, if higher, the minimum annual interest rate for the GPA plus 1%. 3. If the maximum limit for a policy year is at least 1/2% higher than the loan interest rate in effect for the previous year, we may increase the rate to a rate not higher than that limit. If the maximum limit for a policy year is at least 1/2% lower than the loan interest rate in effect for the previous year, we must decrease the rate to a rate not exceeding that limit. Any policy loan, either elected or for capitalizing loan interest, automatically will result in a transfer of part of the account value from the divisions of the SA to the GPA. The amount transferred from each division of the SA will be in proportion to the non-loaned value in each of the funds as of the effective date of the loan. Any such transfer is made by selling accumulation units in the division of the SA and applying the value of those units to the GPA on the date the loan is made. Any interest added to the loan will be treated as a new loan. However, no part of this new loan will be treated as a loan from the GPA when it comes time to repaying the loans taken against the GPA before loans taken against the SA. SVUL does not provide automatic premium loans. P. RIDERS--The following riders will be available: (a) Policy Split Option Rider ("PSO"),and (b) Estate Protection Rider. The PSO allows the insureds, while the SVUL policy is in force and both are living, to exchange their SVUL policy for two policies, one on the life of each insured, without evidence of insurability, in the event of divorce, business dissolution or certain changes in estate tax law. The split must be 50%/50%. The date of exchange will be the MCD that is on, or precedes, the later of the date we approve both applications for exchange and the date we have received the first premiums due under both policies. The SVUL policy will continue in force to, but not including, the date of exchange. The FA and account value less policy loans and accrued loan interest will be divided evenly between the two new policies. Any net surrender value will be applied to reduce the premiums for the first year under the new policies. For an exchange to a fixed premium policy, any net surrender value not needed for this purpose will be paid in cash when the exchange is complete. The cost of this rider is included in the monthly insurance charge rates, so there will be no explicit charge for the rider except in New York. The SVUL policy can be split contractually into universal life policies and, by Company practice, variable universal life insurance policies which become available in the Fall of 1998. In New York, PSO Rider may be attached as long as the issue age of both insureds is less than 80 and neither insured is uninsurable. The cost of the Rider in New York is 8% of first year premium. The Estate Protection Rider may be attached at-issue to any SVUL policy at an extra charge. After-issue attachments will not be allowed. This rider provides an additional death benefit during the first four policy years if both insureds die during the period. Q. LAPSE LOGIC--Policy debt (which includes accrued interest) may not equal or exceed the policy value. If this limit is reached, the policy will terminate after the following happens: (1) We mail written notice to the Owner. This notice will state the amount needed to bring the policy debt back within the limit; (2) If we do not receive payment within 31 days after the date we mail the notice, the account value will be reduced by any surrender charges that apply and this policy will terminate without value at the end of those 31 days. During the first 3 policy years, if the account value less any outstanding debt is not enough to cover the monthly charges due on a MCD and the safety test is not met on that date, the policy may terminate without value. After the first 3 policy years, if the net surrender value is not enough to cover the monthly charges due on a MCD and the safety test is not met on that date, the policy may terminate without value. However, we allow a grace period for payment of the amount of premium (not less than $20) needed to avoid termination. During the first 3 policy years, if the account value cannot cover the monthly charges due on a MCD but the safety test is met on that date, then the monthly charges for that date will be reduced to an amount equal to the account value less any policy debt. After the first 3 policy years, if the net surrender value cannot cover the monthly charges due on a MCD but the safety test is met on that date, the monthly charges for that date will be reduced to an amount equal to the account value less any policy debt. Safety Test: The safety test can be met only during the First and Second Guarantee Periods. Each Guarantee Period is paired with a Guarantee Premium. The First Guarantee Period is the earlier of 20 years or to age 90 of the younger insured. The Second Guarantee Period is to age 100 of the younger insured. The Guarantee Periods may be different in Texas, New York, New Jersey and Massachusetts. These states may only have one Guarantee Period and the Guarantee 9 Period(s) may be of different length. For any day during the First Guarantee Period, the safety test is met if the result of premiums paid less amounts withdrawn, accumulated with interest to that day, equals or exceeds the result of payments of the First Guarantee Premium accumulated with interest from the policy date to that day. For any day after the First Guarantee Period but during the Second Guarantee Period, the safety test is met if the result of premiums paid less amounts withdrawn, accumulated with interest to that day, equals or exceeds the result of payments of the Second Guarantee Premium accumulated with interest from the policy date to that day. In the safety test, interest is accumulated at an effective annual rate equal to the minimum annual interest rate for the GPA. Also, we assume in this test that Guarantee Premiums are paid on each MCD. R REINSTATEMENT--A policy may be reinstated within five years as long as the policy was not surrendered for its net surrender value and neither insured has died since the policy terminated.. Reinstatement requires a written application, evidence of insurability on both insureds and payment of a cost. This cost is an amount of premium necessary to keep the policy in force for 3 months from the date of reinstatement. This amount will be quoted upon request. Reinstatement will not be allowed if an insured has died since the date of termination. The policy will be reinstated on the MCD on or next following the date we approve the application. Upon reinstatement, the cost is applied as a premium and the premium expense charge is deducted. The following changes apply to the policy upon reinstatement. 1. Monthly deductions begin as of the MCD on or next following the effective date of reinstatement. 2. Surrender charges are the same as those had the policy not terminated. However, if the surrender charge was taken when the policy terminated, the applicable surrender charges will not be reinstated. 3. Any account value or policy debt as of the date of termination is not reinstated, i.e., there is no loan and the account value is based solely on the payment of the cost of reinstatement. 4. The PSO will be reinstated. However, the EPR will not be reinstated. 5. The contestability and suicide periods begin again on the date of reinstatement. S. DIVIDENDS--The CM Life policy is non-participating. The MassMutual policy is participating, but no dividends will be payable. 973000059 10 EX-99.B 6 OPINION AND CONSENT OF RICHARD M. HOWE, ESQ. EXHIBIT 99.B (MASSMUTUAL LETTERHEAD) May 22, 1998 Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111-0001 RE: Re: Pre-Effective Amendment No. 2 to Registration Statement 333-41657 --------------------------------------------------------------------- filed on Form S-6 Ladies and Gentlemen: This opinion is furnished in connection with the filing of Pre-Effective Amendment No. 2 to Registration Statement 333-41657 under the Securities Act of 1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual") Survivorship Flexible Premium Adjustable Variable Life Insurance Policies (the "Policies"). Massachusetts Mutual Variable Life Separate Account I issues the Policies. As 2nd Vice President & Associate General Counsel for MassMutual, I provide legal advice to MassMutual in connection with the operation of its variable products. In such role I am familiar with the filing for the Policies. In so acting, I have made such examination of the law and examined such records and documents as in my judgment are necessary or appropriate to enable me to render the opinion expressed below. I am of the following opinion: 1. MassMutual is a valid and subsisting corporation, organized and operated under the laws of the state of Massachusetts and is subject to regulation by the Massachusetts Commissioner of Insurance. 2. Massachusetts Mutual Variable Life Separate Account I is a separate account validly established and maintained by MassMutual in accordance with Massachusetts law. 3. All of the prescribed corporate procedures for the issuance of the Policies 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 filing. Very truly yours, /s/ Richard M. Howe - ------------------------ Richard M. Howe 2nd Vice President & Associate General Counsel EX-99.E 7 CONSENT OF COOPERS & LYBRAND L.L.P. EXHIBIT 99.E. CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Massachusetts Mutual Life Insurance Company We consent to the inclusion in this Pre-Effective Amendment No. 2 to the Registration Statement of Massachusetts Mutual Variable Life Separate Account I (Survivorship Variable Universal Life segment) on Form S-6 (Registration No. 333-41657) of our report dated February 6, 1998 on our audits of the statutory financial statements of Massachusetts Mutual Life Insurance Company, which includes explanatory paragraphs relating to the use of statutory accounting practices, which differ from generally accepted accounting principles. We also consent to the reference to our Firm under the caption "Experts." Coopers & Lybrand L.L.P. Springfield, Massachusetts May 26, 1998 EX-99.F 8 OPINION AND CONSENT OF CRAIG WADDINGTON, FSA, MAAA EXHIBIT 99.F. May 22, 1998 Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Re: Pre-Effective Amendment No. 2 to Registration Statement 333-41657 - ---------------------------------------------------------------------- Ladies and Gentlemen: This opinion is furnished in connection with Pre-Effective Amendment No. 2 to Registration Statement 333-41657 for Massachusetts Mutual Life Insurance Company's Survivorship Flexible Premium Adjustable Variable Life Insurance Policies (the "Policies") under the Securities Act of 1933. The prospectus included in the filing 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 Registration Statement filing and to the reference of my name under the heading "Experts" in the prospectus. Sincerely, /s/ Craig Waddington - ------------------------- Craig Waddington, FSA, MAAA Vice President and Actuary -----END PRIVACY-ENHANCED MESSAGE-----