As filed with the SEC on April 25, 1997
Registration No. 33-42376
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 5 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [ ]
Amendment No. 6 [ X ]
EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A
(Exact name of registrant)
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(name of depositor)
One World Financial Center
New York, New York 10281
(Address of depositor's principal executive offices)
Depositor's telephone number: 1-800-544-8888
____________________________________________
RODNEY R. ROHDA
Chairman
Empire Fidelity Investments Life Insurance Company
One World Financial Center
New York, New York 10281
(Name and address of agent for service)
_________________________________________
Copy to:
MICHAEL BERENSON
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, Suite 400 East
Washington, D.C. 20007
Individual Variable Annuity Contracts -- Pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the Registrant has registered an indefinite
number of securities. Registrant's Rule 24f-2 Notice for the fiscal year
ending December 31, 1994 was filed February 26, 1997.
It is proposed that this filing will become effective (check appropriate
space):
immediately upon filing pursuant to paragraph (b) of rule 485
x on April 30, 1997, pursuant to paragraph (b) (1) (v) of rule 485
60 days after filing pursuant to paragraph (a) (1) of rule 485
on , pursuant to paragraph (a) (1) of rule 485
75 days after filing pursuant to paragraph (a) (2) of rule 485
on , pursuant to paragraph (a) (2) of rule 485 Page _ of _
Exhibit Index Appears on Page __
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
Part A
Item N-4 Item Heading in Prospectus.
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Item 1. Cover Page Cover Page
Item 2. Definitions Glossary
Item 3. Synopsis or Highlights Summary of the Contract
Item 4. Condensed Financial Information Not Applicable
Item 5. General Description of Registrant, Facts About Empire Fidelity Investments
Depositor, and The Portfolio Companies Life, The Variable Account, and the Funds
(a) Depositor Empire Fidelity Investments Life
(b) Registrant The Variable Account; The Guaranteed
Account
(c) Portfolio Company The Funds
(d) The Funds The Funds
(e) Voting Voting Rights
(f) Administrator Charges
Item 6. Deductions and Expenses Charges
a) Deductions Charges; Premium Taxes
b) Sales Load Withdrawal charge
c) Special purchase plans Dollar Cost Averaging
d) Commissions Selling the Contracts
e) Portfolio company deductions and Charges
expenses
f) Registrant's expenses Charges
g) Organizational expenses Not applicable
Item 7. General Description of Variable Annuity
Contracts
a) Rights Summary of the Contract; Investments
Allocation of Your Purchase Payments;
Withdrawals; Death Benefit; Selection of
Annuity Income Options; Reports to
Owners; Voting Rights; Other Contract
Provisions
b) Provisions and limitations Investment Allocation of Your Purchase
Payments
c) Changes in contracts or operations Changes in Investment Options
d) Contract owner inquiries Cover Page
Item 8. Annuity Period
a) Level of benefits Fixed, Variable or Combination Annuity
Income Options; Types of Annuity Income
Options
b) Annuity commencement date Annuity Date
c) Annuity payments Types of Annuity Income Options
d) Assumed investment return Fixed, Variable or Combination Annuity
Income Options
e) Minimums Types of Annuity Income Options
f) Rights to change options or transfer Investment Allocation of Your Purchase
contract value Payments
Item 9. Death Benefit
a) Death benefit Calculation Death Benefit
b) Forms of benefits Death Benefit; Types of Annuity Options
Item 10. Purchases and Contract Values
a) Procedures for purchases Purchase of a Contract
b) Accumulation unit value Accumulation Units
c) Calculation of accumulation unit Accumulation Units
value
d) Principal underwriter Selling the Contracts
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Item 11. Redemptions
a) Redemptions procedures Withdrawals
b) Texas Optional Retirement Program Not Applicable
c) Delay Postponement of Payment
d) Lapse Not Applicable
e) Revocation rights Free Look Privilege
Item 12. Taxes
a) Tax Consequences Tax Considerations; Contract Values and
Proceeds; Distributions on Death of Owner
b) Qualified plans Purchase of a Contract; Tax Considerations
c) Impact of taxes Tax Considerations
Item 13. Legal Proceedings Litigation
Item 14. Table of Contents for Statement of Table of Contents for Statement of
Additional Information Additional Information
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Part B
Item N-4 Item Heading in Statement of Additional Information.
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Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
Item 17. General Information and History
a) Name Change Not Applicable
b) Attributions of Assets Not Applicable
c) Control of Depositor Empire Fidelity Investments Life
(Prospectus)
Item 18. Services
a) Fees, expenses and costs Service Agreements;
Charges(Prospectus)
b) Management - related services Service Agreements
c) Custodian and independent Independent Accountants
public accountant
d) Other custodianship Safekeeping of Account Assets
e) Administrative servicing agent Service Agreements; Empire
Fidelity Investments Life
(Prospectus); The Variable
Account (Prospectus)
f) Depositor as principal Not Applicable
Underwriter
Item 19. Purchase of Securities Being
Offered
a) Manner of Offering Distribution of the Contracts;
Selling the Contracts; (Prospectus)
b) Sales Load Withdrawal Charge (Prospectus)
Item 20. Underwriters
a) Depositor or affiliate as Selling the Contracts (Prospectus)
principal underwriter
b) Continuous Offering Distributions of Contracts
c) Underwriting commissions Not Applicable
d) Payments to underwriter Not Applicable
Item 21. Not applicable Not applicable
Item 22. Annuity Payments Fixed Annuity Income Payments;
Variable Annuity Income
Payments; Unavailability of
Annuity Income Payments in
Certain Circumstances
Item 23. Financial Statements
a) Registrant Financial Statements
b) Depositor Financial Statements
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PROSPECTUS
1.RETIREMENT RESERVES
This prospectus describes a variable annuity contract (the "Contract")
offered by Empire Fidelity Investments Life Insurance Company ("Empire
Fidelity Investments Life", "We" or "Us"), a life insurance company that is
part of the group of financial service companies known as Fidelity
Investments. The Contract is designed for individual investors who desire
to accumulate capital on a tax-deferred basis for retirement or other
long-term purposes. It may be purchased on a non-qualified basis. It may
also be purchased on a qualified basis as an individual retirement annuity
("IRA") under Section 408(b) of the Internal Revenue Code of 1986, as
amended, in connection with a "rollover" of contributions from other
qualified plans, tax sheltered annuities or IRAs.
You may choose to have amounts paid out in a single payment or as a series
of annuity income payments, including income payments guaranteed for your
lifetime. You may purchase a Non-qualified Contract by making a payment of
at least $2,500. You may make additional payments to a Non-qualified
Contract as long as each payment is at least $250. You may purchase a
Qualified Contract by making a payment of at least $10,000. You may make
additional payments to a Qualified Contract as long as each payment is at
least $2,500. Your payments will be invested as you direct in one or more
of the t hirteen Subaccounts of the Empire Fidelity Investments
Variable Annuity Account A (the "Variable Account") and/or allocated to a
fixed-rate investment option funded through and guaranteed by Empire
Fidelity Investments Life's general account (the "Guaranteed Account"). The
Guaranteed Account may also be referred to as the "Fixed Account". Your
initial net purchase payment will be allocated to the Variable and
Guaranteed Accounts according to the instructions on your application. The
variable Subaccounts invest exclusively in the mutual fund portfolios of
the Variable Insurance Products Fund , the Variable Insurance
Products Fund II , and the Variable Insurance Products Fund III (the
"Funds"). The Funds are each managed by Fidelity Management & Research
Company. Additional Subaccounts and portfolios may be added in the future.
Empire Fidelity Investments Life credits interest on amounts allocated to
the Guaranteed Account at specified interest rates that vary from time to
time.
You may select a date on which annuity income payments may commence. Prior
to that Annuity Date, you may withdraw all or part of the Cash Surrender
Value of your Contract. The value allocated to the Variable Account will
vary with the investment performance of the Subaccounts you select, and the
value allocated to the Guaranteed Account will increase as interest is
credited. In certain circumstances, withdrawals are subject to a contingent
deferred sales charge and a tax penalty. Annuity income payments may be
fixed, variable, or a combination of both. If you elect to receive fixed
income, the value of your Contract on the Annuity Date will be applied to
provide fixed annuity income payments. If you elect variable income, the
amount of your annuity income payments will increase or decrease according
to the investment performance of the Subaccounts you select. If you elect a
combination of fixed and variable income, a portion of your income payment
will be fixed and a portion will vary according to investment performance.
This prospectus provides information that a prospective investor should
know before investing. Additional information about the Contract and the
Variable Account has been filed with the Securities and Exchange Commission
in a Statement of Additional Information dated April 30, 199 7 . The
Statement of Additional Information is incorporated by reference in this
prospectus and is available without charge by calling Empire Fidelity
Investments Life at 800-544-2442. The table of contents of the Statement of
Additional Information appears on page .
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. PLEASE READ THIS PROSPECTUS AND KEEP
IT FOR FUTURE REFERENCE. IT IS NOT VALID UNLESS ACCOMPANIED BY THE CURRENT
PROSPECTUSES FOR THE VARIABLE INSURANCE PRODUCTS FUND , THE VARIABLE
INSURANCE PRODUCTS FUND II AND THE VARIABLE INSURANCE PRODUCTS FUND
III .
FOR FURTHER INFORMATION CALL FIDELITY INVESTMENTS
Nationwide 1-800-544-2442
Date: April 30, 199 7
PROSPECTUS CONTENTS
GLOSSARY V
Summary of the Contract 1
FACTS ABOUT EMPIRE FIDELITY INVESTMENTS LIFE, THE VARIABLE ACCOUNT AND THE
FUNDS
Empire Fidelity Investments Life 10
The Variable Account 10
The Funds 11
FACTS ABOUT THE CONTRACT
Purchase of a Contract 14
Free Look Privilege 15
Investment Allocation of Your Purchase Payments 15
Accumulation Units 17
Withdrawals 17
Signature Guarantee 18
Charges 18
Death Benefit 21
Required Distributions Upon Death 22
Annuity Date 22
Selection of Annuity Income Options 23
Fixed, Variable, or Combination
Annuity Income Options 23
Types of Annuity Income Options 24
Reports to Owners 25
THE GUARANTEED ACCOUNT 25
MORE ABOUT THE CONTRACT
Tax Considerations 26
Other Contract Provisions 29
Selling the Contracts 30
Availability of Unisex 30
Dollar Cost Averaging 30
Postponement of Payment 31
MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS
Changes in Investment Options 31
Net Rate of Return for a Subaccount 32
Voting Rights 32
Resolving Material Conflicts 33
Performance 33
Litigation 34
Table of Contents of the Statement
of Additional Information 35
THE CONTRACT IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS.
GLOSSARY
ACCUMULATION UNIT - A unit of measure used prior to the Annuity Date to
calculate the value of your Contract in the Subaccounts.
ANNUITANT - The person designated by the Contract Owner, upon whose life
annuity income payments are based.
ANNUITANT'S BENEFICIARY - The person who receives the proceeds in the event
of the death of the last surviving Annuitant.
ANNUITY CONTRACT OR CONTRACT - A Contract designed to provide an Annuitant
with an income, which may be a lifetime income, beginning on the Annuity
Date.
ANNUITY DATE - The date when annuity income payments begin.
ANNUITY UNIT - A unit of measure used after the Annuity Date to calculate
the amount of variable annuity income payments.
CASH SURRENDER VALUE - The amount payable to you upon surrender of the
Contract prior to the Annuity Date during the Annuitant's lifetime.
CODE - The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT - The person who becomes the Annuitant upon the death
or removal of the Annuitant prior to the Annuity Date.
CONTRACT ANNIVERSARY - The same day and month as the Contract Date in each
later year.
CONTRACT DATE - The date your Contract becomes effective. It will be stated
in your Contract.
CONTRACT OWNER OR YOU - The person or persons who may exercise the rights
and privileges under the Contract.
CONTRACT VALUE - The total amount attributable to your Contract at any time
prior to the Annuity Date, representing amounts in the Subaccounts and the
Guaranteed Account.
CONTRACT YEAR - A year that starts on the Contract Date or on a Contract
Anniversary.
DEATH BENEFIT - Amount payable to the Annuitant's Beneficiary upon the
death of the last surviving Annuitant before the Annuity Date.
GUARANTEED ACCOUNT - A fixed-rate investment option funded through Empire
Fidelity Investments Life's general account. Empire Fidelity Investments
Life credits interest to the amount allocated to the Guaranteed Account at
a rate declared periodically in advance. The Guaranteed Account may also be
referred to as the "Fixed Account".
INVESTMENT OPTIONS - The Subaccounts and the Guaranteed Account.
IRA - Refers generally to both an individual retirement account and an
individual retirement annuity as defined in Sections 408(a) and (b),
respectively, of the Code. When used to refer to a Qualified Contract
described herein, it means a Contract that qualifies as an individual
retirement annuity as defined in Section 408(b) of the Code.
NET RATE OF RETURN - An index used to measure the investment performance of
a Subaccount from one Valuation Period to the next.
NON-QUALIFIED CONTRACT - A Contract other than a Qualified Contract.
QUALIFIED CONTRACT - A Contract that qualifies as an individual retirement
annuity under Section 408(b) of the Code.
OWNER'S BENEFICIARY - The person who receives the proceeds in the event of
the death of the Owner (if no joint Owner survives) prior to the Annuity
Date.
SUBACCOUNT - A division of the Variable Account, the assets of which are
invested in the shares of the corresponding portfolio of the Variable
Insurance Products Fund , the Variable Insurance Products Fund II ,
or the Variable Insurance Products Fund III .
VALUATION PERIOD - The period of time from one determination of
Accumulation Unit Values and Annuity Unit Values to the next determination
of such values. Such determinations are made as of the close of business
(normally 4:00 p.m. Eastern Time) each day the New York Stock Exchange is
open for trading.
VARIABLE ACCOUNT - Empire Fidelity Investments Variable Annuity Account A.
SUMMARY OF THE CONTRACT
The purpose of this variable annuity contract is to allow you, the Owner,
to accumulate funds on a tax-deferred basis by investing in one or more
investment portfolios managed by Fidelity Management & Research Company and
to permit the Annuitant (who may or may not be the Owner) to receive
annuity income payments commencing on the Annuity Date. There is no
assurance that values invested in the Subaccounts will increase. As the
Contract Owner, you bear the investment risk with respect to those values.
The Contract also allows you to allocate funds to a fixed-rate investment
option funded through Empire Fidelity Investments Life's general account
(the "Guaranteed Account"). (The Guaranteed Account may also be referred to
as the "Fixed Account ". ) We guarantee that amounts allocated to the
Guaranteed Account will earn interest at declared rates.
The Contract is designed to provide income for retirement or to meet other
long-term investment goals. It may be purchased on a non-qualified basis
or, if you so choose, it may be purchased on a qualified basis as an
individual retirement annuity ("IRA") under Section 408(b) of the Code in
connection with the "rollover" of contributions from other qualified plans,
tax sheltered annuities or IRAs. The minimum initial payment required to
purchase a Non-qualified Contract is generally $2,500. You may also make
additional payments to a Non-qualified Contract prior to the Annuity Date
as long as each payment is not less than $250 and the Annuitant is living.
The minimum initial payment required to purchase a Qualified Contract is
generally $10,000. You may make additional payments to a Qualified Contract
as long as each payment is at least $2,500. Empire Fidelity Investments
Life may consent to lower minimums. Your net purchase payments will be
invested as you direct in the Guaranteed Account and in the Subaccounts of
the Variable Account. A net purchase payment is a purchase payment less any
premium tax assessed by the jurisdiction in which the Contract is
delivered. In addition, Empire Fidelity Investments Life reserves the right
to deduct a charge for the purpose of recovering a portion of Empire
Fidelity Investments Life's Federal income tax expense that is
determined solely from the amount of premiums received. See INVESTMENT
ALLOCATION OF YOUR PURCHASE PAYMENTS on page . There are currently
thirteen variable Subaccounts. Five Subaccounts invest exclusively
in the shares of one of the mutual fund portfolios of Variable Insurance
Products Fund. The Variable Insurance Products Fund currently offers a
Money Market Portfolio, High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio. F ive Subaccounts invest
exclusively in shares of one of the mutual fund portfolios of Variable
Insurance Products Fund II. The Variable Insurance Products Fund II
currently offers an Investment Grade Bond Portfolio, Asset Manager
Portfolio, Index 500 Portfolio, Asset Manager: Growth Portfolio and
Contrafund Portfolio. Three Subaccounts invest exclusively in shares of
one of the mutual fund portfolios of Variable Insurance Products Fund III.
The Variable Insurance Products Fund III currently offers a Growth & Income
Portfolio, Balanced Portfolio, and Growth Opportunities Portfolio. The
Variable Insurance Products Fund , the Variable Insurance Products
Fund II , and the Variable Insurance Products Fund III are referred
to collectively in this prospectus as the "Funds ".
Empire Fidelity Investments Life credits interest on amounts allocated to
the Guaranteed Account at interest rates that vary from time to time.
Prior to the Annuity Date, you may withdraw all or part of the Cash
Surrender Value of your Contract. During the first five Contract Years, the
withdrawal may be subject to a contingent deferred sales charge. This
charge is a maximum of 5% of the amount of purchase payments withdrawn in
the first Contract Year and decreases 1% per year until it disappears after
five Contract Years. However, in each of the first five Contract years you
may withdraw up to 10% of your purchase payments without incurring such a
charge. In certain circumstances, Empire Fidelity Investments Life may
waive the contingent deferred sales charge. See WITHDRAWAL CHARGE on page .
The maximum partial withdrawal is one that, along with any applicable
withdrawal charge, would reduce your Contract Value to $2,500. Certain
withdrawals may be subject to a Federal penalty tax as well as to
Federal income tax. See TAX CONSIDERATIONS on page .
You may select from a number of annuity income options, including annuity
income payments for the life of the Annuitant, with or without a guaranteed
number of payments. See TYPES OF ANNUITY INCOME OPTIONS on page . You may
choose any of these annuity income options to be paid on a fixed basis, a
variable basis, or a combination of both. See FIXED, VARIABLE, OR
COMBINATION ANNUITY INCOME OPTIONS on page . If you elect a fixed income,
your Contract's participation in the investment experience of the Variable
Account will cease with the commencement of the annuity income payments. If
you elect a variable income, annuity income payments will vary in
accordance with the investment experience of the Subaccounts you select
during the payout period. If you elect a combination of fixed and variable
income, a portion of your income payment will be fixed, and a portion will
vary according to investment performance of the selected Subaccounts. On
the Annuity Date, the Annuitant becomes the Owner of the Contract.
In the event that the last surviving Annuitant dies prior to the Annuity
Date, we will pay a Death Benefit to the Annuitant's Beneficiary you
select. See DEATH BENEFIT on page . In the event that any Owner dies before
the entire value of the Contract is distributed, the remaining value of the
Contract must be distributed according to certain specified rules in order
for the Contract to qualify as an annuity for tax purposes. See REQUIRED
DISTRIBUTIONS UPON DEATH on page .
In addition to the contingent deferred sales charge applicable to
withdrawals within the first five Contract Years (other than withdrawals in
each year of up to 10% of your purchase payments), we assess an annual
maintenance charge prior to the Annuity Date currently set at $30 per year
and guaranteed not to exceed $50 per year. This charge is deducted from
your Contract Value. We currently waive this annual charge if total
purchase payments less any withdrawals equal at least $25,000. We also make
a daily charge (equivalent to an effective annual rate of 0.25%) against
the assets of each variable Subaccount for administrative expenses and a
daily asset charge (equivalent to an effective annual rate of 0.75%) for
mortality and expense risks. These daily asset charges are not assessed
against amounts allocated to the Guaranteed Account. Our current practice
is generally to deduct any applicable premium taxes from your Contract
Value on the Annuity Date or upon payment of proceeds. We reserve the right
to deduct premium taxes when we incur such taxes. See CHARGES on page .
Further, the portfolios in the Funds pay monthly management fees and other
expenses which are described in the accompanying prospectuses for the
Funds.
You may return your Contract for a refund within 30 days after you receive
the Contract. We will refund your Contract Value plus any amount deducted
from your payment prior to allocation to the variable Subaccounts or the
Guaranteed Account. See FREE LOOK PRIVILEGE on page .
This summary is intended to provide only an overview of the more
significant aspects of the Contract. More detailed information is provided
in the subsequent sections of this prospectus and in your Contract. The
Contract together with its attached application constitutes the entire
agreement between you and us and should be retained.
Following are the various investment options available to you under the
Contract.
Guaranteed Account Variable Account
Guaranteed Interest Asset Manager Portfolio
Money Market Portfolio
Investment Grade Bond Portfolio
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Overseas Portfolio
Index 500 Portfolio
Asset Manager: Growth Portfolio
Contrafund Portfolio
Growth & Income Portfolio
Balanced Portfolio
Growth Opportunities Portfolio
FEE TABLE
This information is intended to assist you in understanding the various
costs and expenses that a Contract Owner will bear directly or indirectly.
It reflects expenses of the Separate Account as well as the Portfolios. The
tables below do not reflect any deductions for premium taxes or
Federal income tax expenses that are determined solely from the
amount of premiums received. We currently deduct any applicable premium
taxes from your Contract Value on the Annuity Date or when proceeds are
paid. We do not currently deduct any Federal income tax expense. See
CHARGES on page of the prospectus for additional information.
CONTRACT OWNER EXPENSES (as a percentage of purchase payments)
Sales Charge Imposed on Purchases 0.00%
Maximum Contingent Deferred Sales Charge (1) 5.00%
Surrender Charge 0.00%
Exchange Fee 0.00%
ANNUAL MAINTENANCE CHARGE (2) $30.00
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees 0.75%
Account Fees and Expenses:
Administrative Charge 0.25%
Total Separate Account Annual Expenses 1.00%
(1) The Maximum Contingent Deferred Sales Charge decreases 1% each year so
there is no charge after 5 years. Each year up to 10% of total purchase
payments may be withdrawn without a contingent deferred sales charge. The
contingent deferred sales charge is based solely on the Contract Year -
additional purchase payments do not cause the contingent deferred sales
charge percentages to start over.
(2) The annual maintenance charge is a single $30 charge on a Contract. It
is deducted proportionally from the investment options in use at the time
of the charge. The annual maintenance charge is currently waived for
Contracts with at least $25,000 of accumulated purchase payments less any
withdrawals. In the Examples, the annual maintenance charge is approximated
as a 0.02% annual asset charge based on the experience of the contracts.
PORTFOLIO ANNUAL EXPENSES
(as a percentage of Portfolio average net assets)
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES
ASSET MANAGER 0.64% 0.10% 0.74%1
MONEY MARKET 0.21% 0.09% 0.30%
INVESTMENT GRADE BOND 0.45% 0.13% 0.58%
HIGH INCOME 0.59% 0.12% 0.71%
EQUITY-INCOME 0.51% 0.07% 0.58%1
INDEX 500 0.13% 0.15% 0.28%2
GROWTH 0.61% 0.08% 0.69%1
OVERSEAS 0.76% 0.17% 0.93%1
ASSET MANAGER: GROWTH 0.65% 0.22% 0.87%1
CONTRAFUND 0.61% 0.13% 0.74%1
GROWTH OPPORTUNITIES 0.61% 0.16% 0.77%1
BALANCED 0.48% 0.24% 0.72%1
GROWTH & INCOME 0.50% 0.20% 0.70%
(1) A portion of the brokerage commissions that certain funds pay was used
to reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Including these reductions, the total operating
expenses presented in the table would have been .56% for Equity Income
Portfolio, .67% for Growth Portfolio, .92% for Overseas Portfolio, .73% for
Asset Manager Portfolio, .71% for Contrafund Portfolio, .85% for Asset
Manager: Growth Portfolio, .76% for Growth Opportunities Portfolio, and
.71% for Balanced Portfolio.
(2) FMR agreed to reimburse a portion of Index 500 Portfolio's expenses
during the period. Without this reimbursement, the fund's management fee,
other expenses and total expenses would have been .28%, .15% and .43%,
respectively.
EXAMPLES
If you assume that Contract Owner expenses are as shown above, and that
each Portfolio's annual return is 5% annually and its operating expenses
are just as described above, then for every $1,000 of purchase payments,
here's how much you would have paid in total expenses if you surrendered
your Contract after the number of years indicated, or if you annuitized
your Contract during the first Contract year.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
ASSET MANAGER $65 $85 $105 $207
MONEY MARKET 60 72 82 159
INVESTMENT GRADE BOND 63 80 97 190
HIGH INCOME 64 84 104 204
EQUITY-INCOME 63 80 97 193
GROWTH 64 84 103 202
OVERSEAS 66 91 115 227
INDEX 500 60 71 81 157
ASSET MANAGER: GROWTH 66 89 112 221
CONTRAFUND 65 85 105 207
GROWTH OPPORTUNITIES 65 86 107 211
BALANCED 64 85 104 205
GROWTH & INCOME 64 84 103 203
If you do not surrender your Contract or if you annuitize after the first
contract year, here is what your total expenses would be on a $1,000
investment, assuming a 5% annual return on your assets:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
ASSET MANAGER $18 $55 $95 $207
MONEY MARKET 13 42 72 159
INVESTMENT GRADE BOND 16 50 87 190
HIGH INCOME 18 54 94 204
EQUITY-INCOME 16 50 87 190
GROWTH 17 54 93 202
OVERSEAS 20 61 105 227
INDEX 500 13 41 71 157
ASSET MANAGER: GROWTH 19 59 102 221
CONTRAFUND 18 55 95 207
GROWTH OPPORTUNITIES 18 56 97 211
BALANCED 18 55 94 205
GROWTH & INCOME 17 54 93 203
THESE FIGURES ILLUSTRATE THE COMBINED EFFECT OF ALL CURRENT CHARGES. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Accumulation Unit Values
Empire Fidelity Investments Variable Annuity Account A
Condensed Financial Information
Money Market Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 14.66 15.30 3,144,313
1995 13.99 14.66 2,086,339
1994 13.55 13.99 1,840,618
1993 13.26 13.55 644,024
1992* 13.07 13.26 458,774
* June 3, 1992 to December 31, 1992
High Income Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 22.05 24.89 820,013
1995 18.47 22.05 605,822
1994 18.94 18.47 413,916
1993 15.88 18.94 315,623
1992* 14.95 15.88 66,583
* June 3, 1992 to December 31, 1992
Equity-Income Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 27.44 31.05 4,755,212
1995 20.52 27.44 4,481,146
1994 19.36 20.52 3,148,692
1993 16.54 19.36 2,020,649
1992* 15.33 16.54 516,594
* June 3, 1992 to December 31, 1992
Growth Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 30.80 34.97 2,503,391
1995 22.98 30.80 2,004,576
1994 23.22 22.98 1,448,467
1993 19.64 23.22 938,534
1992* 17.67 19.64 300,602
* June 3, 1992 to December 31, 1992
Overseas Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 19.00 21.30 1,151,640
1995 17.50 19.00 930,291
1994 17.37 17.50 1,472,775
1993 12.79 17.37 863,085
1992* 15.42 12.79 57,728
* June 3, 1992 to December 31, 1992
Investment Grade Bond Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 16.99 17.36 382,801
1995 14.63 16.99 358,773
1994 15.35 14.63 270,642
1993 13.98 15.35 346,042
1992* 13.40 13.98 184,492
* June 3, 1992 to December 31, 1992
Asset Manager Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 18.29 20.76 3,900,514
1995 15.80 18.29 4,435,615
1994 16.99 15.80 6,284,783
1993 14.18 16.99 5,376,522
1992* 13.47 14.18 1,765,922
* June 3, 1992 to December 31, 1992
Index 500 Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 15.54 18.90 1,887,371
1995 11.44 15.54 802,405
1994 11.44 11.44 210,179
1993 10.53 11.44 166,568
1992* 10.17 10.53 57,596
* November 2, 1992 to December 31, 1992
Asset Manager: Growth Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 12.20 14.50 1,163,007
1995* 10.00 12.2 0 396,158
* Period from 1/3/95 (commencement of operations) to 12/31/95
Contrafund Subaccount
Accumulation Accumulation Number of
Unit Value at Unit Value at Accumulation Units
Beginning of Period End of Period at End of Period
1996 13.87 16.66 5,882,023
1995* 10.00 13.87 3,685,097
* Period from 1/3/95 (commencement of operations) to 12/31/95
FACTS ABOUT EMPIRE FIDELITY INVESTMENTS LIFE,
THE VARIABLE ACCOUNT AND THE FUNDS
EMPIRE FIDELITY INVESTMENTS LIFE
Empire Fidelity Investments Life Insurance Company is a stock life
insurance company that was organized under the laws of the State of New
York on May 1, 1991, and commenced operations on June 1, 1992. Empire
Fidelity Investments Life is part of Fidelity Investments, a group of
companies that provides investment management and other financial services.
Empire Fidelity Investments Life is a wholly-owned subsidiary of Fidelity
Investments Life Insurance Company. Fidelity Investments Life Insurance
Company is a wholly-owned subsidiary of FMR Corp., the parent company of
the Fidelity companies. Edward C. Johnson 3d, together with the various
trusts for the benefit of Johnson family members, through their ownership
of voting common stock form a controlling group with respect to FMR Corp.
THE VARIABLE ACCOUNT
The Empire Fidelity Investments Variable Annuity Account A is a separate
investment account of Empire Fidelity Investments Life established pursuant
to New York law on July 15, 1991. The Variable Account commenced operations
on June 3, 1992. It is used to support the variable annuity contracts
described herein, and for other purposes permitted by law. The Variable
Account is registered with the Securities and Exchange Commission ("SEC")
as a unit investment trust under the Investment Company Act of 1940 ("1940
Act").
We own the assets in the Variable Account. As required by law, however, the
assets of the Variable Account are kept separate from our general account
assets and from any other separate accounts we may have and may not be
charged with liabilities from any other business we conduct. The assets in
the Variable Account will always be at least equal to the reserves and
other liabilities of the Variable Account. If the assets exceed the
required reserves and other liabilities, we may transfer the excess to our
general account. We are obligated to pay all benefits provided under the
Contracts. There are currently thirteen Subaccounts in the Variable
Account. Five Subaccounts invest exclusively in shares of a specific
portfolio of the Variable Insurance Products Fund. F ive Subaccounts
invest exclusively in shares of a specific portfolio of the Variable
Insurance Products Fund II. The remaining three portfolios invest
exclusively in shares of a specific portfolio of the Variable Insurance
Products Fund III.
THE FUNDS
The Variable Insurance Products Fund , the Variable Insurance
Products Fund II and the Variable Insurance Products Fund III, each
is an open-end, diversified management investment company organized by
Fidelity Management & Research Company. Each is the type of investment
company commonly known as a series mutual fund.
The investment objectives of the Variable Insurance Products
Fund , the Variable Insurance Products Fund II , and the Variable
Insurance Products Fund III portfolios are described below. There is,
of course, no assurance that any portfolio will meet its investment
objective.
VARIABLE INSURANCE PRODUCTS FUND
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. It invests
only in high-quality U.S. dollar denominated money market instruments of
domestic and foreign issuers. The fund may be appropriate for investors
who would like to earn income at current money market rates while
preserving the value of their investment. The fund is managed to keep its
share price stable at $1.00. The rate of income will vary from day to day,
generally reflecting short-term interest rates.
HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated, fixed-income securities.
In choosing these securities growth of capital will also be considered.
High yielding, lower-quality securities involve comparatively higher risks,
including price volatility and the risk of default in the timely payment of
interest and principal. A fund's level of risk and potential reward
depend on the quality and maturity of its investments. The fund is for
long-term, aggressive investors who understand the potential risks and
rewards of investing in lower-quality debt, including defaulted securities.
Investors must be willing to accept the fund's greater price movements and
credit risks.
EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the
portfolio will also consider the potential for capital appreciation. The
portfolio's goal is to achieve a yield which exceeds the composite yield on
the securities comprising the Standard & Poor's 500 Composite Stock Price
Index. The fund may be appropriate for investors who are willing to ride
out stock market fluctuations in pursuit of potentially high long-term
returns. The fund is designed for those who want some income from equity
and bond investments, but also want to be invested in the stock market for
its long-term growth potential.
GROWTH PORTFOLIO seeks to achieve capital appreciation normally through the
purchase of common stocks (although the portfolio's investments are not
restricted to any one type of security). Capital appreciation may also be
found in other types of securities, including bonds and preferred
stocks. The fund may be appropriate for investors who are willing to
ride out stock market fluctuations in pursuit of potentially high long-term
returns. The fund is designed for those who want to pursue growth wherever
it may arise, and who understand that this strategy often leads to
investments in smaller, less well-known companies. The fund invests for
growth and does not pursue an income strategy.
OVERSEAS PORTFOLIO seeks long-term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies
and economies outside of the United States. The fund may be appropriate
for investors who want to pursue their investment goals in markets outside
of the United States. By including international investments in your
portfolio, you can achieve additional diversification and participate in
growth opportunities around the world. However, it is important to note
that investments in foreign securities involve risks in addition to those
of U.S. investments.In addition to general risks, international investing
involves different or increased risks. The performance of international
funds depends upon currency values, the political and regulatory
environment, and overall economic factors in the countries in which the
fund invests.
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the
long-term by allocating its assets among stocks, bonds and short-term,
fixed income instruments. The fund may be appropriate for investors who
want to diversify among domestic and foreign stocks, bonds, short-term
instruments and other types of securities, the fund spreads its assets
among all three asset classes moderating both its risk and return
potential. Because the fund own different types of investments, their
performance is affected by a variety of factors. The value of each fund's
investments and the income they generate will vary from day to day, and
generally reflect interest rates, market conditions, and other company,
political and economic news. Performance also depends on FMR's skills in
allocating assets.
INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current income as
is consistent with the preservation of capital by investing in a broad
range of investment-grade fixed-income securities. The fund may be
appropriate for investors who want high current income from a portfolio of
investment-grade debt securities. A fund's level of risk and potential
reward depend on the quality and maturity of its investments. With its
focus on medium- to high-quality investments, the fund has a moderate risk
level and yield potential.
INDEX 500 PORTFOLIO seeks to provide investment results that correspond to
the total return (i.e. the combination of capital changes and income) of
common stocks publicly traded in the United States. In seeking this
objective, the portfolio attempts to duplicate the composition and total
return of the Standard & Poor's 500 Composite Stock Price Index. The
fund may be appropriate for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns. The
fund is designed for those who want to pursue growth of capital and current
income through a portfolio of securities that broadly represents the U.S.
stock market, as measured by the S&P 500. The fund seeks to keep expenses
low as it attempts to match the return of the S&P 500. Because the fund
seeks to track, rather than beat, the performance of the S&P 500, it is not
managed in the same manner as other mutual funds.
ASSET MANAGER: GROWTH PORTFOLIO seeks maximum total return over the
long-term by allocating its assets among an aggressive mix of domestic and
foreign stocks, bonds and short-term fixed income instruments. The fund
may be appropriate for investors who want to diversify among domestic and
foreign stocks, bonds, short-term instruments and other types of
securities, in one fund. The fund, while spreading its assets among all
three asset classes, uses a more aggressive approach by focusing on stocks
for a higher potential return. Because the fund own different types of
investments, their performance is affected by a variety of factors. The
value of each fund's investments and the income they generate will vary
from day to day, and generally reflect interest rates, market conditions,
and other company, political and economic news. Performance also depends on
FMR's skills in allocating assets.
CONTRAFUND PORTFOLIO seeks long-term capital appreciation by investing in
equity securities of companies considered undervalued or out-of-favor by
the Fund's advisor. The fund may be appropriate for investors 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.
VARIABLE INSURANCE PRODUCTS FUND III
GROWTH & INCOME PORTFOLIO seeks High total return through a combination of
current income and capital appreciation by investing mainly in equity
securities. The fund may also invest in equity securities that are not
paying dividends, but offer the potential for capital appreciation of
future income. The fund may be appropriate for investors who are willing to
ride out stock market fluctuations in pursuit of potentially high long-term
returns. The fund is designed for those who seek a combination of growth
and income from equity and some bond investment.
GROWTH OPPORTUNITIES PORTFOLIO seeks capital growth by investing in a wide
range of common domestic and foreign stocks, and securities convertible
into common stocks. Although the fund invests primarily in common stock, it
has the ability to purchase securities, such as preferred stock and bonds
that may produce capital growth. The value of the fund's investments and,
as applicable, the income they generate will vary from day to day, and
generally reflect changes in market conditions, interest rates, and other
company, political, or economic news. In the short-term, stock prices can
fluctuate dramatically in response to these factors.
BALANCED PORTFOLIO seeks both income and growth of capital by investing in
a broad selection of stocks, bonds, and convertible securities. When FMR's
outlook is neutral, it will invest approximately 60% of the fund's assets
in equity securities and will always invest at least 25% of the fund's
assets in fixed income securities. The value of the fund's investments and,
as applicable, the income they generate will vary from day to day, and
generally reflect changes in market conditions, interest rates, and other
company, political, or economic news. In the short-term, stock prices can
fluctuate dramatically in response to these factors.
Shares of the Funds may also be sold to a variable life separate account of
Empire Fidelity Investments Life and to variable annuity and variable life
separate accounts of other affiliated and unaffiliated insurance companies.
For a discussion of the possible consequences associated with having the
Funds available to such other separate accounts, see RESOLVING MATERIAL
CONFLICTS on page .
The investment adviser for the Funds is Fidelity Management & Research
Company, a registered adviser under the Investment Advisers Act of 1940.
Fidelity Management & Research Company is the original Fidelity company and
was founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 199 6 , it advised
funds having more than 29 million shareholder accounts with a total
value of more than $ 432 billion. The portfolios of the Funds, as
part of their operating expenses, pay an investment management fee to
Fidelity Management & Research Company. These fees are part of the Funds'
expenses. See the attached prospectuses for the Funds for discussions of
the Funds' expenses.
You will find more complete information about the Funds, including the
risks associated with each portfolio, in the accompanying prospectuses. You
should read them in conjunction with this prospectus.
FACTS ABOUT THE CONTRACT
PURCHASE OF A CONTRACT
We offer the Contracts only in states in which we have obtained the
necessary approval. The Contracts are available on a non-qualified basis
("Non-qualified Contracts") and as individual retirement annuities ("IRAs")
that qualify for special Federal income tax treatment ("Qualified
Contracts"). Generally, Qualified Contracts may be purchased only in
connection with a "rollover" of funds from another qualified plan, tax
sheltered annuity or IRA and contain certain other restrictive provisions
limiting the timing and amount of payments to and distributions from the
Qualified Contract. See TAX CONSIDERATIONS on page .
To purchase a Non-qualified Contract you must generally make a purchase
payment of at least $2,500 and complete an application form. To purchase a
Qualified Contract you must generally make a purchase payment of at least
$10,000 (unless we consent to a lower minimum) and complete an application
form. The proposed Annuitant must be no older than 80 years old. If your
application and initial purchase payment can be accepted in the form
received, the payment will be applied to the purchase of a Contract within
two business days after receipt at the Annuity Service Center. The date
that the payment is credited and your Contract issued is called the
Contract Date. If an incomplete application is received, we will request
the information necessary to complete the application. Once the completed
application is received, the initial payment will be applied to the
purchase of a Contract within two business days. If the application remains
incomplete for five business days, we will return your payment unless we
obtain your specific permission to retain the payment pending completion of
the application.
You may make additional payments to a Non-qualified Contract during the
life of the Annuitant and before the Annuity Date. The smallest such
payment we will accept is generally $250. You may make additional payments
to a Qualified Contract of additional rollover contributions from another
qualified plan, tax sheltered annuity or IRA. See TAX CONSIDERATIONS on
page . The smallest such payment we will accept is generally $2,500. Net
purchase payments allocated to the variable Subaccounts will be credited to
your Contract based on the next computed value of an Accumulation Unit
following receipt of your payment at the Annuity Service Center. See
ACCUMULATION UNITS on page . Net purchase payments allocated to the
Guaranteed Account will be credited under your Contract as of the date the
payment is received at our Annuity Service Center. See THE GUARANTEED
ACCOUNT on page . We may limit the maximum amount of initial or subsequent
payments that we will accept from an individual Contract Owner.
FREE LOOK PRIVILEGE
You may return your Contract for a refund within 30 days after you receive
it (the "free look period"). If you choose not to retain your Contract,
return it to our Annuity Service Center or any authorized representative of
Empire Fidelity Investments Life within the free look period. The Contract
will be canceled and we will refund promptly your Contract Value plus any
amount deducted from your payment prior to allocation to the variable
Subaccounts or the Guaranteed Account. If you are replacing an existing
insurance product with the Contract and if you choose not to retain your
Contract, it is considered a surrender and any gain since you first
purchased your old Contract is taxable.
INVESTMENT ALLOCATION OF YOUR PURCHASE PAYMENTS
The portion of your net purchase payment allocated to the Variable Account
will be invested in the variable Subaccounts according to the instructions
on your application, based on the next computed respective Accumulation
Unit Values of the Subaccounts following receipt of your payment at the
Annuity Service Center.
The portion of your net purchase payments allocated to the Guaranteed
Account will be credited to the Guaranteed Account on the date your payment
is received at the Annuity Service Center.
If you elect to invest in a particular investment option, at least 10% of
your purchase payment must be allocated to that option. All percentage
allocations must be in whole numbers. Prior to the Annuity Date, you
generally may not allocate more than $100,000 (including transfers) to the
Guaranteed Account during any one Contract Year. Empire Fidelity
Investments Life reserves the right to limit amounts allocated (including
transfers) to the Guaranteed Account to $50,000 per Contract Year.
You may currently transfer amounts among variable Subaccounts before the
Annuity Date as often as you wish without charge. However, excessive
trading activity can disrupt portfolio management strategy and increase
portfolio expenses, which are borne by all Contract Owners participating in
the portfolio regardless of their transfer activity. Therefore, we reserve
the right to limit the number of transfers permitted, but not to fewer than
six per Contract Year. Empire Fidelity Investments Life also reserves the
right to charge no more than $15 for each transfer in excess of six per
Contract Year. Currently there is no such charge. The request may be in
terms of dollars, such as a request to transfer $5,000 from one Subaccount
to another, or may be in terms of a percentage reallocation among
Subaccounts. In the latter case, the percentages must be in whole numbers.
The minimum amount you may transfer is $250 or, if less, the entire portion
of your Contract Value allocated to a particular Subaccount. You may
transfer amounts or change your investment allocation with respect to
future payments by providing the Annuity Service Center with instructions
either in writing or by telephone.
Empire Fidelity Investments Life and the Fund reserve the right to revise
or terminate the telephone exchange provisions, limit the amount of or
reject any exchange, as deemed necessary, at any time. Telephone exchange
authorizations will be limited to eighteen per calendar year. Empire
Fidelity Invesments Life will not accept exchange requests via fax.
Empire Fidelity Investments Life will not be responsible for any losses
resulting from unauthorized telephone reallocations if it follows
reasonable procedures designed to verify the identity of the caller. Empire
Fidelity Investments Life will request your Personal Identification Number
and may also record calls. You should verify the accuracy of your
confirmation statements immediately after you receive them.
In some cases, contracts may be sold to individuals who independently
utilize the services of a firm or individual engaged in market timing.
Generally, market timing services obtain authorization from Contract
Owner(s) to make transfers and exchanges among the sub-accounts on the
basis of perceived market trends. Because the large transfers of assets
associated with market timing services may disrupt the management of the
portfolios of the Funds, such transactions may become a detriment to
Contract Owners not utilizing the market timing service.
The right to exchange contract values among sub-accounts may be subject to
modification if such rights are executed by a market timing firm or similar
third party authorized to initiate transfers or exchange transactions on
behalf of a Contract Owner(s). In modifying such rights, the Company may,
among other things, decline to accept (1) the transfer or exchange
instructions of any agent acting under a power of attorney on behalf of
more than one Contract Owner, or (2) the transfer or exchange instructions
of individual Contract Owners who have executed pre-authorized transfer or
exchange forms which are submitted by market timing firms or other third
parties on behalf of more than one Contract Owner at the same time. The
Company will impose such restrictions only if it believes that doing so
will prevent harm to other Contract Owners.
When a transfer between variable Subaccounts is requested, the redemption
of the requested amount from the Subaccount will always be effected as of
the end of the Valuation Period in which the request is received at our
Annuity Service Center. That amount will generally be credited to the new
Subaccount at the same time. However, when (1) you are making a transfer to
a Subaccount which invests in a portfolio that accrues dividends on a daily
basis and requires Federal funds before accepting a purchase order
and (2) the Subaccount from which the transfer is being made is investing
in an equity portfolio in an illiquid position due to substantial
redemptions or transfers that require it to sell portfolio securities in
order to make funds available, then the crediting of the amount transferred
to the new Subaccount may be delayed until the Subaccount from which the
transfer is being made obtains liquidity through the earliest of the
portfolio's receipt of proceeds from sales of portfolio securities, new
contributions by Contract Owners, or otherwise, but no longer than seven
days. During this period, the amount transferred will be uninvested. You
may currently transfer amounts from the variable Subaccounts to the
Guaranteed Account before the Annuity Date as often as you wish (with one
exception described below) without charge. The minimum dollar amount you
may transfer is $250 from any Subaccount or, if less, the entire portion of
your Contract Value allocated to a particular Subaccount. If you request a
percentage reallocation among the investment options, the percentages must
be in whole numbers. Transfers from the Guaranteed Account before the
Annuity Date are currently subject to the following limitations. The
maximum amount that currently may be transferred out of the Guaranteed
Account is 25% of the amount invested in the Guaranteed Account or, if
larger, the amount that you transferred from the Guaranteed Account in the
prior Contract Year. The 25% limitation will be reviewed monthly and may
be updated. When this maximum amount is less than $1,000 we permit a
transfer of up to $1,000. You may make one transfer or withdrawal out of
the Guaranteed Account during each Contract Year. A transfer or allocation
of a purchase payment into the Guaranteed Account is not permitted during
the 12 months following a transfer out of or withdrawal from the Guaranteed
Account. When amounts are withdrawn from or transferred out of the
Guaranteed Account, the amounts that have been credited to the Guaranteed
Account for the shortest time are withdrawn first. These limits are subject
to change in the future; however, you will always be permitted to make one
transfer from the Guaranteed Account per Contract Year in an amount equal
to 15% of the portion of your Contract Value invested in the Guaranteed
Account. See THE GUARANTEED ACCOUNT on page .
The portion of your Contract Value allocated to the variable Subaccounts
will change with the investment performance of the selected Subaccounts.
You should periodically review your allocation of Contract Value in light
of market conditions and your financial objectives. Transfers after the
Annuity Date are subject to different limitations. See FIXED, VARIABLE, OR
COMBINATION ANNUITY INCOME OPTIONS on page .
ACCUMULATION UNITS
When your net purchase payments are allocated to a selected variable
Subaccount, they result in a particular number of Accumulation Units being
credited to your Contract. The number of Accumulation Units credited is
determined by dividing the dollar amount allocated to each Subaccount by
the value of an Accumulation Unit for that Subaccount as of the end of the
Valuation Period in which the payment is received at the Annuity Service
Center. The value of each Subaccount's Accumulation Units varies each
Valuation Period (i.e., each day that there is trading on the New York
Stock Exchange) with the Net Rate of Return of the Subaccount. The Net Rate
of Return reflects the investment performance of the Subaccount for the
Valuation Period and is net of the asset charges to the Subaccount. See NET
RATE OF RETURN FOR A SUBACCOUNT on page .
WITHDRAWALS
You may at any time prior to the Annuity Date surrender your Contract for
its Cash Surrender Value. You may also make partial withdrawals of $500 or
more. Certain withdrawals, however, are subject to a penalty tax. See TAX
CONSIDERATIONS on page . You may not make a partial withdrawal that,
including the appropriate withdrawal charge, would reduce your Contract
Value to less than $2,500. Partial withdrawals (plus any applicable
withdrawal charge) will be taken from your Contract Value invested in the
Variable Account. If the total amount exceeds your Contract Value invested
in the Variable Account, the excess will be deducted from the Guaranteed
Account. Unless you request otherwise, the amount deducted from the
Variable Account will be allocated in the variable Subaccounts in the same
proportion as the value in each bears to the Variable Account Contract
Value on the date of the partial withdrawal. We will pay you the amount of
any surrender or partial withdrawal, less any required tax withholding,
within seven days after we receive a properly completed withdrawal request.
We may defer payment from the Variable Account under certain limited
circumstances for a longer period, and we reserve the right to defer
payment from the Guaranteed Account under any circumstances for not more
than six months. See POSTPONEMENT OF PAYMENT on page .
SIGNATURE GUARANTEE
A signature guarantee is designed to protect you and Empire Fidelity
Investments Life from fraud. Disbursement requests must include a signature
guarantee if any of the following situations apply:
1. Your account registration has changed within the last 30 days.
2. You wish to withdraw more than $25,000.
3. The check is being mailed to a different address than the one on your
account (record address).
4. The check is made payable to someone other than the Owner.
5. In other circumstances where we deem it necessary for the protection of
you, the customer ( e.g. the signature does not resemble the
signature we have on file).
You should be able to obtain a signature guarantee from a bank, broker
dealer ( including Fidelity Investor Centers), credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot provide a
signature guarantee.
CHARGES
The following are all the charges we make under your Contract.
1. PREMIUM TAXES. In general, we do not currently deduct any amount from
your payments for premium taxes. Several states assess a premium tax upon
the commencement of annuity income payments. If you live in a jurisdiction
which imposes such a tax and if annuity income payments commence under your
Contract, we will deduct a charge from your Contract Value for the tax we
incur at the Annuity Date. A few states may require us to pay premium taxes
upon receipt of your payments and we reserve the right to make the
deduction in any jurisdiction when we incur these taxes. As of the date of
this prospectus, the current range of state premium taxes is from 0% to
3.5%.
2. FEDERAL INCOME TAXES. We reserve the right to deduct a charge for
the purpose of recovering a portion of our Federal income tax
expense that is determined solely from the amount of premiums received. No
such charge is currently being deducted. Therefore, the entire amount of
your purchase payments are currently being allocated to the investment
options you select.
3. ADMINISTRATIVE CHARGES. Administrative charges compensate us for the
expenses we incur in administering the Contracts. These expenses include
the cost of issuing the Contract, maintaining necessary systems and
records, and providing reports. We seek to cover these expenses by two
types of administrative charges: an annual maintenance charge and a daily
administrative charge.
Currently, on each Contract Anniversary before the Annuity Date an annual
maintenance charge of $30 is deducted from your Contract Value. We
currently waive this annual charge prior to the Annuity Date if your total
purchase payments, less any withdrawals, equal at least $25,000. However,
we also reserve the right to assess this charge against all Contracts.
Although we do not now intend to charge more than $30 per year, we reserve
the right to increase this annual charge to up to $50 if warranted by the
expenses we incur.
Prior to the Annuity Date, the annual maintenance charge will be deducted
from each investment option in proportion to the amount of your total
Contract Value invested in that option on the date of deduction. We will
deduct a pro rata portion of the charge when the Contract is surrendered.
Each day, we also deduct from the assets of the Subaccounts a percentage of
those assets equivalent to an effective annual rate of 0.25%. As a charge
against the Subaccounts, this administrative charge is not assessed against
your Contract Value allocated to the Guaranteed Account. This charge is
guaranteed never to be increased above an effective annual rate of 0.25%.
4. MORTALITY AND EXPENSE RISK CHARGE. We deduct a daily asset charge for
our assumption of mortality and expense risks. This charge is made by
deducting daily from the assets of each Subaccount a percentage of those
assets equal to an effective annual rate of 0.75%. As with the daily
administrative charge, this charge is not assessed against your Contract
Value allocated to the Guaranteed Account. We guarantee never to increase
this charge above an effective annual rate of 0.75%. For Contract Owners
effecting a life annuity, the mortality risk we bear is that of making the
annuity income payments for the life of the Annuitant (or the life of the
Annuitant and the life of a second person in the case of a joint and
survivor annuity) no matter how long that might be. We also bear a
mortality risk under the Contracts, regardless of whether an annuity income
payment option is actually effected, in that we make guaranteed purchase
rates available. In addition, we bear a mortality risk by guaranteeing a
Death Benefit if the last surviving Annuitant dies prior to the Annuity
Date and prior to age 70. This Death Benefit may be greater than the
Contract Value. See DEATH BENEFIT on page . The expense risk we assume is
the risk that the costs of issuing and administering the Contracts will be
greater than we expected when setting the administrative charges. Of this
0.75% charge, it is estimated that 0.66% is for assuming mortality risks
and it is estimated that 0.10% is for assuming expense risks. We will
realize a gain from the charge for these risks to the extent that it is not
needed to provide for benefits and expenses under the Contracts.
5. WITHDRAWAL CHARGE. We do not assess any sales charge if you keep your
Contract in force for more than five years. If you surrender your Contract
within the first five Contract Years, we will reduce the amount payable to
you by a withdrawal charge (i.e., a contingent deferred sales charge) to
compensate us for the expenses of selling and distributing the Contracts.
In addition, we will impose a withdrawal charge for sales expenses on
certain partial withdrawals during the first five Contract Years. We do not
assess any withdrawal charge on the death of the Owner or Annuitant. We
currently assess a withdrawal charge upon annuitization if the Contract has
been in existence for less than one year. Bearing this in mind, the
Contract should be viewed as a long-term investment and insurance product.
You may surrender the Contract without any withdrawal charges for thirty
days after notification is mailed to you of any of the following events:
(1) the renewal interest rate on any portion of your Contract Value
allocated to the Guaranteed Account decreased by more than 1% from the
expiring interest rate; (2) the maintenance charge is increased above the
amount shown in the Contract at issue; or (3) the maintenance charge is
imposed on your Contract as a result of a change in practice.
There is no withdrawal charge if you withdraw the value of your Contract in
whole or in part after five Contract Years. In addition, during the first
five Contract Years, no withdrawal charge is assessed against total
withdrawals in each Contract Year of an amount up to 10% of your total
purchase payments as of the date of withdrawal. For this purpose, "total
purchase payments" refers to all purchase payments made less any amounts
previously withdrawn that were subject to a withdrawal charge.
When a partial or full withdrawal is made within the first five Contract
Years, the amount of purchase payments withdrawn from your Contract Value
(less any amount entitled to the 10% exception) will be subject to a
withdrawal charge for sales expenses as follows:
Withdrawal Charge
As Percentage of Amount of
Contract Year Purchase Payments Withdrawn
1 5%
2 4%
3 3%
4 2%
5 1%
6 and later 0%
For purposes of determining this withdrawal charge, any amount you withdraw
in excess of amounts entitled to the 10% exception will be considered as a
withdrawal of purchase payments until you have withdrawn an amount equal to
all your payments. Amounts withdrawn after an amount equal to your
aggregate purchase payments has been withdrawn are considered to be
withdrawals of investment earnings and are not subject to any withdrawal
charge.
Additional purchase payments during the first five Contract Years will
increase the dollar amount of the potential withdrawal charge by increasing
the amount of payments that may be withdrawn while the withdrawal charge is
in effect. Additional payments do not, however, cause the schedule of
possible withdrawal charges to start over again. For example, if an
additional payment is made during the fifth Contract Year and withdrawn
later during that same year, it and all payments withdrawn that year will
be subject to a 1% withdrawal charge. Additional payments after the fifth
Contract Year will not be subject to any possible withdrawal charge.
Free withdrawals are not cumulative. For example, let us assume that you
(1) make an initial purchase payment of $10,000; (2) make no withdrawals
during the first Contract Year; (3) make no additional purchase payments;
and (4) make a withdrawal of $1,500 in the second Contract Year. Given this
example, $1,000 would be free from a withdrawal charge, but $500
would be subject to a withdrawal charge.
We will waive the withdrawal charge during the free look period if (a) you
purchased your contract (1) by exchanging another annuity contract or life
insurance policy, or (2) by trustee to trustee transfer or direct rollover
from an IRA or other qualified plan, and (b) (1) you are exchanging the
Contract for another annuity contract, or (2) you are making a trustee to
trustee transfer or direct rollover of the money in a Qualified Contract to
another IRA or a qualified plan.
Since the Contract is intended to be long-term, we expect that the
withdrawal charge will not be sufficient to cover our expenses in selling
the Contracts. To the extent that the withdrawal charges are not
sufficient, we will pay these expenses from our general assets. These
assets may include proceeds from the mortality and expense risk charge
described above.
6. TRANSFER CHARGE. We reserve the right to charge no more than $15.00 for
each transfer in excess of 6 per Contract Year.
7. FUNDS' EXPENSES. The expenses and charges incurred by the Funds are
described in the accompanying prospectuses for the Funds.
8. OTHER TAXES. We reserve the right to charge for certain taxes (other
than premium taxes) that we may have to pay. See EMPIRE FIDELITY
INVESTMENTS LIFE'S TAXES on page .
DEATH BENEFIT
If the Owner is not the Annuitant and dies before the Annuity Date, we will
upon receipt of proof of death at the Annuity Service Center, pay the
Contract Value to the Owner's Beneficiary. If no Owner's Beneficiary
survives, the Contract Value will be paid to the Owner's estate. If the
Owner is the Annuitant and dies prior to the Annuity Date, the entire
interest will be paid as if the last surviving Annuitant had died.
If the last surviving Annuitant dies prior to the Annuity Date, we will,
upon receipt of proof of death at the Annuity Service Center, pay a Death
Benefit to the Annuitant's Beneficiary you have designated. If the death of
the last surviving Annuitant occurs on or before his or her 70th birthday,
the Death Benefit will equal the greater of: (1) the purchase payments
paid, less any partial withdrawals and charges thereon; and (2) the
Contract Value as of the end of the Valuation Period in which proof of
death is received at our Annuity Service Center. If the death of the last
surviving Annuitant occurs after his or her 70th birthday, the Death
Benefit will equal the Contract Value as of the end of the Valuation Period
in which proof of death is received at our Annuity Service Center.
No withdrawal charge is made in connection with the payment of a Death
Benefit. The Death Benefit may be paid in a single sum or applied under a
fixed, variable or combination annuity.
During the lifetime of the Annuitant, you may elect that the Death Benefit
be applied under any one of the annuity income options available under the
Contract or under any other annuity income option acceptable to us. If you
have not selected an annuity income option and the death of the last
surviving Annuitant occurs prior to the Annuity Date, the Annuitant's
Beneficiary may choose an available annuity income option for the Death
Benefit.
REQUIRED DISTRIBUTIONS UPON DEATH
Federal tax law requires that if any Owner dies before the Annuity
Date, the entire interest in the Contract must be distributed within 5
years after the death of the Owner (including any Owner who is also the
Annuitant), unless: the entire interest is payable over the lifetime (or
over a period not extending beyond the life expectancy) of the recipient
with distributions beginning within one year of the date of death; or, the
Owner's spouse is the recipient, in which case the spouse may elect to
continue the Contract and become the Owner.
If the Owner is a trust or other "non-natural person" and the Annuitant
dies before the Annuity Date, the Beneficiary's entire interest in the
Contract must be distributed in the same manner as if the Owner was a
living person who died prior to the Annuity Date.
If the Contract is owned jointly and either Owner dies before the Annuity
Date, we will upon receipt of proof of death at the Annuity Service Center,
pay the Contract Value to the surviving Owner. If prior to the Annuity Date
either Owner dies and the deceased Owner is also the last surviving
Annuitant, the entire interest will be paid to the Annuitant's Beneficiary.
The rules regarding required distributions after the Owner's death are
described in the Statement of Additional Information. We intend to
administer the Contracts to comply with Federal tax law.
ANNUITY DATE
When your Contract is issued, it will generally provide for the latest
permissible Annuity Date. The latest permissible date is the first day of
the calendar month following the Annuitant's 85th birthday or, if later,
the first day of the calendar month following the Contract's fifth Contract
Anniversary. When a Contingent Annuitant becomes the Annuitant, Empire
Fidelity Investments Life will change the Annuity Date to the later of the
first day of the month immediately following the latest of the three
following dates: (a) the Annuitant's 85th birthday ( b) the fifth
Contract Anniversary, and (c) the date the Contingent Annuitant becomes the
Annuitant. You may change the Annuity Date by written notice to the Annuity
Service Center at least 30 days prior to the current Annuity Date. The
Annuity Date must be the first day of a month. For both Qualified and
Non-qualified Contracts, the earliest permissible Annuity Date is the first
day of the calendar month following the expiration of the free look period.
SELECTION OF ANNUITY INCOME OPTIONS
While the Annuitant is living and at least 30 days prior to the Annuity
Date, you may elect any one of the annuity income options described in the
Contract. You may also change your election to a different annuity income
option by notifying us in writing at least 30 days prior to the Annuity
Date.
If you have not elected an annuity income option at least 30 days prior to
the Annuity Date, the automatic annuity income option will be a combination
annuity for life, with 120 monthly payments guaranteed. The Contract Value
allocated to the Guaranteed Account, less any applicable taxes, will be
applied to the purchase of the fixed portion of the annuity and the
Contract Value allocated to the Variable Account, less any applicable
taxes, will be applied to the purchase of the variable portion of the
annuity. See Annuity Option No. 3 under TYPES OF ANNUITY INCOME OPTIONS on
page .
FIXED, VARIABLE, OR COMBINATION ANNUITY INCOME OPTIONS
You may elect to have annuity income payments made on a fixed basis, a
variable basis, or a combination of both. If you choose a fixed annuity,
the amount of each payment will be set and will not change. Upon selection
of a fixed annuity, your Contract Value will be transferred to the
Guaranteed Account. The annuity income payments will be fixed in amount and
duration by the fixed annuity provisions selected, the sex (except
Contracts utilizing unisex purchase rates) and adjusted age of the
Annuitant, and the then current guaranteed interest rate used to determine
fixed annuity income payments. In no event will the guaranteed interest
rate be less than 3.5%.
If you select a variable annuity, your Contract Value will be transferred
to the Variable Account. The dollar amount of the first variable annuity
income payment will be determined in accordance with the applicable annuity
payment rates, the sex (except Contracts utilizing unisex purchase rates),
the adjusted age of the Annuitant and an assumed annual interest rate of
3.5% (unless we also offer an alternative assumed interest rate on the
Annuity Date and you select that alternative). All subsequent variable
annuity income payments are calculated based on the Subaccount Annuity
Units credited to the Contract. Annuity Units are similar to Accumulation
Units except that built into the calculation of Annuity Unit Values is the
assumption that the Net Rate of Return of a Subaccount will equal the
assumed interest rate. Thus, with a 3.5% assumed interest rate, the
Subaccount Annuity Unit Value will not change if the daily Net Rate of
Return of the Subaccount is equivalent to an annual rate of return of 3.5%.
If the Net Rate of Return is greater than the assumed interest rate, the
Subaccount Annuity Unit Value will increase; if the Net Rate of Return is
less than the assumed interest rate, the Subaccount Annuity Unit Value will
decrease.
When variable annuity income payments commence, the number of Annuity Units
credited to the Contract in a particular Subaccount is determined by
dividing that portion of the first variable annuity income payment
attributable to that Subaccount by the Annuity Unit Value of that
Subaccount for the Valuation Period in which the Annuity Date occurs. The
number of Annuity Units of each Subaccount credited to the Contract then
remains fixed unless there is a subsequent transfer involving the
Subaccount. The dollar amount of each variable annuity income payment after
the first may increase, decrease or remain constant. The income payment is
equal to the sum of the amounts determined by multiplying the number of
Annuity Units of each Subaccount credited to the Contract by the Annuity
Unit Value for the particular Subaccount for the Valuation Period in which
each subsequent annuity income payment is due.
If you select a combination annuity, your Contract Value will be split
between the Guaranteed Account and the Variable Account in accordance with
your instructions. Your annuity income payments will be the sum of the
income payment attributable to your fixed portion and the income payment
attributable to your variable portion.
After the Annuity Date, transfers between the Variable Account and the
Guaranteed Account are not permitted. Transfers among the variable
Subaccounts, however, are permitted subject to some limitations. See
TRANSFERS AMONG SUBACCOUNTS AFTER THE ANNUITY DATE in the Statement of
Additional Information.
TYPES OF ANNUITY INCOME OPTIONS
The Contract provides for three types of annuity income options. All are
available on a fixed, variable or combination basis. You may not select
more than one option. If your Contract Value would provide less than $20 of
monthly income, we may pay the proceeds in a single sum rather than
pursuant to the selected option. In addition, we may require that annuity
income payments be made entirely on a fixed basis, if the amount to be
applied on a variable basis would provide an initial monthly income of less
than $50.
1. LIFE ANNUITY. Annuity income payments will be made monthly during the
Annuitant's lifetime ceasing with the last income payment due prior to the
Annuitant's death. No income payments are payable after the death of the
Annuitant. Thus, it is quite possible that income payments will be made
that are less than the value of the Contract. Indeed, if the Annuitant were
to die within one month after the Annuity Date, only one monthly income
payment would have been made. Because of this risk, this option offers the
highest level of monthly income payments.
2. JOINT AND SURVIVOR ANNUITY. This option provides monthly annuity income
payments during the joint lifetimes of the Annuitant and a designated
second person and during the lifetime of the survivor. There are some
limitations on the use of this option for Qualified Contracts. As in the
case of the life annuity described above, there is no guaranteed number of
income payments and no income payments are payable after the death of the
Annuitant and the designated second person.
3. LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED. This option
provides monthly annuity income payments during the lifetime of the
Annuitant, and in any event for one hundred twenty (120) or two hundred
forty (240) months certain as elected. In the case of a Qualified Contract,
the guarantee period may not exceed the life expectancy of the Annuitant.
In the event of the death of the Annuitant under this option, the Contract
provides that any guaranteed monthly income payments will be paid to the
Annuitant's Beneficiary during the remaining months of the term selected.
However, the Annuitant's Beneficiary may, at any time, elect to receive the
discounted value of his or her remaining income payments in a single sum.
In such event, the discounted value for fixed or variable annuity income
payments will be based on interest compounded annually at the applicable
interest rate used in determining the first annuity income payment. Upon
the death of the Annuitant's Beneficiary receiving annuity benefits under
this option, the present value of the guaranteed benefits remaining after
we receive notice of the death of the Annuitant's Beneficiary, computed at
the applicable interest rate, shall be paid in a single sum to the estate
of the Annuitant's Beneficiary. The present value is computed as of the
Valuation Period during which notice of the death of the Annuitant's
Beneficiary is received at the Annuity Service Center.
You may choose to have annuity income payments made on a monthly basis or
at another frequency such as quarterly, semi-annually or annually. In
addition to the annuity income options provided for in the Contracts, other
annuity income options may be made available by the Company.
REPORTS TO OWNERS
During the Accumulation period, four times each Contract Year you will
receive a statement of your Contract Value and any other information
required by state law, including a summary of all transactions since the
preceding quarterly statement.
In addition, you will receive semiannual reports containing financial
statements for the Variable Account and a list of portfolio securities of
the Funds, as required by the Investment Company Act of 1940.
THE GUARANTEED ACCOUNT
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE
GUARANTEED ACCOUNT OPTION UNDER THE CONTRACT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED
AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940.
ACCORDINGLY, INTERESTS IN THE GUARANTEED ACCOUNT OPTION ARE NOT SUBJECT TO
THE PROVISIONS OF THOSE ACTS, AND EMPIRE FIDELITY INVESTMENTS LIFE HAS BEEN
ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE GUARANTEED
ACCOUNT OPTION. DISCLOSURES REGARDING THE GUARANTEED ACCOUNT OPTION 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.
As noted earlier, you may allocate net purchase payments or transfer all or
a part of your Contract Value to a fixed-rate investment option funded
through and guaranteed by Empire Fidelity Investments Life's general
account (the "Guaranteed Account"). The Guaranteed Account may also be
referred to as the "Fixed Account ". Funds allocated or transferred
to the Guaranteed Account do not fluctuate with the investment experience
of Empire Fidelity Investments Life's general account. We guarantee that
the portion of your Contract Value that is held in the Guaranteed Account
will accrue interest daily at an annual rate that will never be less than
3.5%. When a purchase payment is received or an amount is transferred into
the Guaranteed Account, an interest rate will be assigned to that amount.
That rate will be guaranteed for a certain period of time depending on when
the amount was allocated to the Guaranteed Account. When this initial
period expires, a new interest rate will be assigned to that amount which
will be guaranteed for a period of at least a year. Thereafter, interest
rates credited to that amount will be similarly guaranteed for successive
periods of at least one year. Therefore, different interest rates may apply
to different amounts in the Guaranteed Account depending on when the amount
was initially allocated. Furthermore, the interest rate applicable to any
particular amount may vary from time to time.
MORE ABOUT THE CONTRACT
TAX CONSIDERATIONS
The following discussion is not intended as tax advice. For tax advice you
should consult a tax advisor. Although the following discussion is based on
our understanding of Federal income tax laws as currently
interpreted, there is no guarantee that those laws or interpretations will
not change. The following discussion does not take into account state or
local income tax or other considerations which may be involved in the
purchase of a Contract or the exercise of options under the Contract. In
addition, the following discussion assumes that the Contract is owned by an
individual, and we do not intend to offer the Contracts to "non natural"
persons such as corporations, unless the Contract is held by such person as
a nominee for an individual. (If the Contract is not owned by or held for a
natural person, the contract will generally not be treated as an annuity
for tax purposes.)
The following discussion assumes that the Contract will be treated as an
annuity for Federal income tax purposes. Section 817(h) of the Code
provides that the investments of a separate account underlying a variable
annuity contract (or the investments of a mutual fund, the shares of which
are owned by the variable annuity separate account) must be "adequately
diversified" in order for the Contract to be treated as an annuity for tax
purposes. The Treasury Department has issued regulations prescribing such
diversification requirements. The Variable Account, through each of the
portfolios of the Funds, intends to comply with these requirements. We have
entered into agreements with the Funds that require the Funds to operate in
compliance with the Treasury Department's requirements. In connection with
the issuance of prior regulations relating to diversification requirements,
the Treasury Department announced that such regulations do not provide
guidance concerning the extent to which owners may direct their investments
to particular divisions of a separate account. Additional guidance relating
to this subject is expected in the near future. It is not clear what this
guidance will provide or whether it will be prospective only. It is
possible that when this guidance is issued the Contract may need to be
modified to comply with it.
In addition, to qualify as an annuity for Federal tax purposes, the
Contract must satisfy certain requirements for distributions in the event
of the death of any Owner of the Contract. The Contract contains such
required distribution provisions. For further information on these
requirements see the Statement of Additional Information.
The individual situation of each Owner or Beneficiary will determine the
Federal estate taxes and the state and local estate, inheritance and
other taxes due if the Owner or the Annuitant dies.
QUALIFIED CONTRACTS
The Contract may be used as a qualified individual retirement annuity.
Under Section 408(b) of the Code, eligible individuals may contribute to an
individual retirement annuity ("IRA"). The Code permits certain "rollover"
contributions to be made to an IRA. In particular, certain qualifying
distributions from another qualified plan, tax sheltered annuity or IRA may
be received tax-free if rolled over to an IRA within 60 days of receipt.
Because the Contract's minimum initial payment is greater than the maximum
annual contribution permitted to an IRA, a Qualified Contract may be
purchased only in connection with a "rollover" of the proceeds from another
qualified plan, tax sheltered annuity or IRA. IN ADDITION, QUALIFIED
CONTRACTS WILL NOT ACCEPT ANY SUBSEQUENT CONTRIBUTIONS OTHER THAN
ADDITIONAL ROLLOVER CONTRIBUTIONS FROM ANOTHER QUALIFIED PLAN, TAX
SHELTERED ANNUITY OR IRA. In order to qualify as an IRA under Section
408(b) of the Code, a Contract must contain certain provisions: (1) the
Owner of the Contract must be the Annuitant and, except for certain
transfers incident to a divorce decree, the Owner cannot be changed and the
Contract cannot be transferable; (2) the Owner's interest in the Contract
cannot be forfeitable; and (3) annuity and death benefit payments must
satisfy certain minimum distribution requirements. Contracts issued on a
qualified basis will conform to the requirements for an IRA and will be
amended to conform to any future changes in the requirements for an IRA.
CONTRACT VALUES AND PROCEEDS
Under current law, you will not be taxed on increases in the value of your
Contract until a distribution occurs. A distribution may occur in the form
of a withdrawal, death benefit payment, or payments under an annuity income
option. An amount received as a loan under, or the assignment or pledge of
any portion of the value of, a Contract may also be treated as a
distribution. In the case of a Qualified Contract, you may not receive or
make any such loan or pledge. Any such loan or pledge will result in
disqualification of the Contract and inclusion of the value of the entire
Contract in income. Additionally, a transfer of a Non-qualified Contract
for less than full and adequate consideration will result in a deemed
distribution, unless the transfer is to your spouse (or to a former spouse
pursuant to a divorce decree). The taxable portion of a distribution is
generally taxed as ordinary income.
If you fully surrender your Contract before annuity income payments
commence, you will be taxed on the portion of the distribution that exceeds
your cost basis in your Contract. For Non-qualified Contracts, the cost
basis is generally the amount of your payments, and the taxable portion of
the proceeds is taxed as ordinary income. For Qualified Contracts, the cost
basis is generally zero, and the entire amount of the surrender payment is
generally taxed as ordinary income. In addition, for both Qualified and
Non-qualified Contracts, amounts received as the result of the death of the
Owner or Annuitant that are in excess of your cost basis will also be
taxed.
Partial withdrawals under a Non-qualified Contract are treated for tax
purposes as first being taxable withdrawals of investment income, rather
than as return of purchase payments, until all investment income earned by
your Contract has been withdrawn. You will be taxed on the amount withdrawn
to the extent that your Contract Value at that time, unreduced by the
withdrawal charge, exceeds your payments. Partial withdrawals under a
Qualified Contract are prorated between taxable income and non-taxable
return of investment. Generally, the cost basis of a qualified Contract is
zero, and the partial withdrawal will be fully taxed.
All annuity contracts issued by the same company (or an affiliated company)
to the same contract owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includible in
income of any distribution that is not received as an annuity payment. In
the case of a qualified contract, the tax law requires for all post-1986
contributions and distributions that all individual retirement accounts and
annuities be treated as one contract.
Although the tax consequences may vary depending on the form of annuity
selected under the Contract, the recipient of an annuity income payment
under the Contract generally is taxed on the portion of such income payment
that exceeds the cost basis in the Contract. For variable annuity income
payments, the taxable portion is determined by a formula that establishes a
specific dollar amount that is not taxed. This dollar amount is determined
by dividing the Contract's cost basis by the total number of expected
periodic income payments. However, the entire distribution will be fully
taxable once the recipient is deemed to have recovered the dollar amount of
the investment in the Contract. For Qualified Contracts, the cost basis is
generally zero and each annuity income payment is fully taxed.
A penalty tax equal to 10% of the amount treated as taxable income may be
imposed on distributions. The penalty tax applies to early withdrawals or
distributions. The penalty tax is not imposed on: (1) distributions made to
persons on or after age 59 1/2; (2) distributions made after death of the
Owner; (3) distributions to a recipient who has become disabled; (4)
distributions in substantially equal installments made for the life of the
taxpayer or the lives of the taxpayer and a designated second person; and
(5) in the case of Qualified Contracts, distributions received from the
rollover of the Contract into another qualified contract or IRA. In the
case of a Contract held in custody for a minor under the Uniform Gifts to
Minors Act or the Uniform Transfers to Minors Act, a distribution under the
Contract ordinarily is taxable to the minor. Whether the penalty tax
applies to such a distribution ordinarily is determined by the circumstance
or characteristics of the minor, not the custodian. Thus, for example, a
distribution taxable to a minor will not qualify for the exception to the
penalty tax for distributions made on or after age 59 1/2, even if the
custodian is 59 1/2 or older. In addition, in the case of a Qualified
Contract, a 50% excise tax is imposed on the amount by which minimum
required annuity or death benefit distributions exceed actual
distributions. Penalty taxes also are imposed on aggregate distributions
from specified retirement programs (including IRAs) in excess of a
specified amount annually and in certain other circumstances.
We will withhold and remit to the U.S. Government a part of the taxable
portion of each distribution made under the Contract, unless the Owner,
Annuitant or Beneficiary files a written election prior to the distribution
stating that he or she chooses not to have any amounts withheld.
EMPIRE FIDELITY INVESTMENTS LIFE'S TAXES
The earnings of the Variable Account are taxed as part of the operations of
Empire Fidelity Investments Life. Under the current provisions of the Code,
we do not expect to incur Federal income taxes on earnings of the
Variable Account to the extent the earnings are credited under the
Contracts. Based on this, no charge is being made currently to the Variable
Account for our Federal income taxes. We will periodically review
the need for a charge to the Variable Account for company Federal
income taxes. Such a charge may be made in future years for any
Federal income taxes that would be attributable to the Contracts.
Under current laws we may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not
significant and are not charged against the Contracts or the Variable
Account. If the amount of these taxes changes substantially, we may make
charges for such taxes against the Variable Account.
OTHER CONTRACT PROVISIONS
You should also be aware of the following important provisions of your
Contract.
1. OWNER. As the Owner named in the application, you have the rights and
privileges specified in the Contract.
Prior to the Annuity Date and during the lifetime of the Annuitant, you may
change the Owner, Annuitant or any beneficiary by notifying us in writing.
The Annuitant may only be changed once. You may not, however, change the
Owner or Annuitant of a Qualified Contract. A change in the Owner of a
Non-qualified Contract will take effect on the date the request was signed,
but it will not apply to any payments made by us before the request was
received and recorded at the Annuity Service Center. On the Annuity Date,
all of the Owner's rights pass to the Annuitant.
2. ANNUITANT'S BENEFICIARY. The Annuitant's Beneficiary is named on the
application unless later changed. The Death Benefit will be paid to the
Annuitant's Beneficiary upon the death of the last surviving Annuitant
prior to the Annuity Date. If no Annuitant's Beneficiary survives, the
Death Benefit will be paid to the Owner or the Owner's estate.
3. OWNER'S BENEFICIARY. The Owner's Beneficiary is named on the
application unless later changed. The Contract Value will be paid to the
joint Owner, if any, otherwise to the Owner's Beneficiary upon the death of
any Owner (unless such Owner is also the last surviving Annuitant) prior to
the Annuity Date. If no Owner's Beneficiary survives, the Contract Value
will be paid to the Owner's estate. If at the time of the death of any
Owner prior to the Annuity Date, that Owner is also the last surviving
Annuitant, proceeds will be paid to the Annuitant's Beneficiary. A
Beneficiary may be a "Primary Beneficiary" or a "Contingent Beneficiary".
No Contingent Beneficiary has the right to proceeds unless all of the
Primary Beneficiaries die before proceeds are determined.
4. CONTINGENT ANNUITANT. Once prior to the Annuity Date, the Owner may
name a Contingent Annuitant. If a Contingent Annuitant has been named, the
Owner may remove either the Annuitant or the Contingent Annuitant. If the
Contingent Annuitant dies or is removed, another Contingent Annuitant
cannot be named. Upon the death (if the Annuitant is not an Owner) or
removal of the Annuitant prior to the Annuity Date, the Contingent
Annuitant, if any, becomes the Annuitant. When a Contingent Annuitant
becomes the Annuitant, we will change the Annuity Date to the later of the
first day of the month immediately following the latest of the three
following dates: (a) the Annuitant's 85th birthday ( b) the
Contract's fifth anniversary; and (c) the date the Contingent Annuitant
becomes the Annuitant. A Contingent Annuitant cannot be named for Qualified
Contracts or if a Non-Qualified Contract is owned by a non-natural person.
5. MISSTATEMENT OF AGE OR SEX. If the age or sex of the Annuitant has been
misstated, we will change the benefits to those which the proceeds would
have purchased had the correct age and sex been stated. If the misstatement
is not discovered until after annuity income payments have started, we will
take the following action: (1) if we made any overpayments, we may add
interest at the rate of 6% per year compounded annually and charge them
against income payments to be made in the future; (2) if we made any
underpayments, the balance plus interest at the rate of 6% per year
compounded annually will be paid in a single sum.
6. ASSIGNMENT. You may assign a Non-qualified Contract at any time during
the lifetime of the Annuitant and before the Annuity Date. See TAX
CONSIDERATIONS on page . No assignment will be binding on us unless it is
written in a form acceptable to us and received at our Annuity Service
Center. Your rights and the rights of any Beneficiary will be affected by
an assignment. We will not be responsible for the validity of any
assignment. No assignment may be made of a Qualified Contract.
7. DIVIDENDS. Our variable annuity Contracts are
"non-participating ". This means that they do not provide for
dividends. Investment results under the Contracts are reflected in
benefits.
SELLING THE CONTRACTS
The Contracts will be distributed through Fidelity Brokerage Services, Inc.
and Fidelity Insurance Agency, Inc., both of which are affiliated with FMR
Corp., the ultimate parent company of Empire Fidelity Investments Life.
Fidelity Brokerage Services, Inc. is the principal underwriter
(distributor) of the Contracts. Fidelity Distributors Corporation is the
distributor of the Fidelity family of funds, including the Funds.
The principal business address of Fidelity Brokerage Services, Inc. and
Fidelity Distributors Corporation is 82 Devonshire Street, Boston,
Massachusetts 02109. We pay Fidelity Insurance Agency, Inc. sales
compensation of no more than 3% of payments received.
AVAILABILITY OF UNISEX
Annuity income payments are based, in part, on the sex of the Annuitant.
For certain situations where the Contracts are to be used in connection
with an employer sponsored benefit plan or arrangement, Federal law
may require that annuity income payments be determined without regard to
sex. A special endorsement to the Contract is available for this purpose.
For questions regarding unisex requirements, you should consult with
qualified counsel.
DOLLAR COST AVERAGING
Dollar cost averaging allows you to make automatic monthly dollar amount
transfers from the Money Market Subaccount to any of the other variable
Subaccounts. Dollar cost averaging transfers are not permitted to the
Guaranteed Account. These monthly transfers will take effect on the same
day each month. You may select any date between the 1st and 28th as the
date of your dollar cost averaging transfers (the "Transfer Date"). If the
Transfer Date occurs on a day the New York Stock Exchange is closed
( i.e., weekend or holiday), the dollar cost averaging transfer will
take effect as of the next business day that the New York Stock Exchange is
open. Your transfers will continue until the amount in your Money Market
Subaccount is not sufficient to make the monthly transfer for the amount
you requested or until you notify us of cancellation of dollar cost
averaging for your Contract.
The minimum monthly transfer allowed to any variable Subaccount is $250.
Dollar cost averaging is currently available at no charge to the Contract
Owner. Empire Fidelity Investments Life reserves the right to modify or
terminate the dollar cost averaging feature.
POSTPONEMENT OF PAYMENT
In general, we will ordinarily pay any partial or full cash withdrawal
within seven days after we receive your written request at our Annuity
Service Center. We will usually pay any Death Benefit within seven days
after we receive proof of the Annuitant's death.
However, we may delay payment if (1) the disposal or valuation of the
Variable Account's assets is not reasonably practicable because the New
York Stock Exchange is closed for other than a regular holiday or weekend,
trading is restricted by the SEC, or the SEC declares that an emergency
exists; or (2) the SEC by order permits postponement of payment to protect
our Contract Owners. In addition, we reserve the right to delay payment of
any partial or full cash withdrawal from the Guaranteed Account for not
more than six months. If payment from the Guaranteed Account is delayed for
more than 30 days or if less, the period required by law, it will be
credited with interest from the date of withdrawal at a rate not less than
3.5% per year compounded annually or, if greater, the rate required by law.
MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS
CHANGES IN INVESTMENT OPTIONS
We may from time to time make additional Subaccounts available to you.
These Subaccounts will invest in investment portfolios that we find
suitable for the Contracts. We also have the right to eliminate Subaccounts
from the Variable Account, to combine two or more Subaccounts, or to
substitute a new portfolio or fund for the portfolio in which a Subaccount
invests. A substitution may become necessary if, in our judgment, a
portfolio or fund no longer suits the purposes of the Contracts. This may
happen due to a change in laws or regulations, or a change in a portfolio's
investment objectives or restrictions, or because the portfolio is no
longer available for investment, or for some other reason. We would obtain
prior approval from the SEC and any other required approvals before making
such a substitution.
We also reserve the right to operate the Variable Account as a management
investment company under the 1940 Act or any other form permitted by law or
to deregister the Variable Account under such Act in the event such
registration is no longer required.
NET RATE OF RETURN FOR A SUBACCOUNT
A Subaccount's Net Rate of Return depends on how the investments of the
Subaccount perform. We determine the Net Rate of Return of a Subaccount at
the end of each Valuation Period. Such determinations are made as of the
close of business each day the New York Stock Exchange is open for
business. The Net Rate of Return reflects the investment performance of the
Subaccount for the Valuation Period and is net of the asset charges to the
Subaccounts.
Shares of the Funds are valued at net asset value. Any dividends or capital
gains distributions of a portfolio of the Funds are reinvested in shares of
that portfolio.
VOTING RIGHTS
We will vote shares of the Funds owned by the Variable Account according to
your instructions. However, if the Investment Company Act of 1940 or any
related regulations or interpretations should change, and we decide that we
are permitted to vote the shares of the Funds in our own right, we may
decide to do so.
Before the Annuity Date, we calculate the number of shares that you may
instruct us to vote by dividing your Contract Value in a Subaccount by the
net asset value of one share of the corresponding portfolio. If variable
annuity income payments have commenced, we calculate the number of shares
that the payee may instruct us to vote by dividing the reserve maintained
in each Subaccount to meet the obligations under the Contract by the net
asset value of one share of the corresponding portfolio. Fractional votes
will be counted. We reserve the right to modify the manner in which we
calculate the weight to be given to your voting instructions where such a
change is necessary to comply with then current Federal regulations
or interpretations of those regulations.
We will determine the number of shares you can instruct us to vote 90 days
or less before the applicable Fund shareholder meeting. At least 14 days
before the meeting, we will send you material by mail for providing us with
your voting instructions.
If your voting instructions are not received in time, we will vote the
shares in the same proportion as the instructions received from other
Contract Owners. We will also vote shares we hold in the Variable Account
that are not attributable to Contract Owners in the same proportionate
manner.
Under certain circumstances, we may be required by state regulatory
authorities to disregard voting instructions. This may happen if following
such instructions would change the sub-classification or investment
objectives of the portfolios, or result in the approval or disapproval of
an investment advisory contract.
Under Federal regulations, we may also disregard instructions to
vote for Contract Owner-initiated changes in investment policies or the
investment adviser if we disapprove of the proposed changes. We would
disapprove a proposed change only if it were contrary to state law,
prohibited by state regulatory authorities, or if we decided that the
change would result in overly speculative or unsound investments. If we
ever disregard voting instructions, we will include a summary of our
actions in the next semiannual report.
RESOLVING MATERIAL CONFLICTS
The investment portfolios of the Funds are available to registered separate
accounts offering variable annuity and variable life products of other
participating insurance companies, as well as to the Variable Account and
other separate accounts we establish. Although we do not anticipate any
disadvantages to this, there is a possibility that a material conflict may
arise between the interest of the Variable Account and one or more of the
other separate accounts participating in the Funds. A conflict may occur
due to a change in law affecting the operations of variable life and
variable annuity separate accounts, differences in the voting instructions
of our Contract Owners and those of other companies, or some other reason.
In the event of a conflict, we will take any steps necessary to protect our
Contract Owners and variable annuity payees.
PERFORMANCE
Performance information for the variable Subaccounts may appear in reports
and advertising to current and prospective Contract Owners. The performance
information is based on historical investment experience of the Funds and
does not indicate or represent future performance.
Total returns are based on the overall dollar or percentage change in value
of a hypothetical investment. Total return quotations reflect changes in
fund share price, the automatic reinvestment by the separate account of all
distributions and the deduction of applicable annuity charges (including
any contingent deferred sales charges that would apply if a Contract Owner
surrendered the Contract at the end of the period indicated). Quotations of
total return may also be shown that do not take into account certain
contractual charges such as a maintenance charge or a contingent deferred
sales load. The total return percentage will be higher under this method
than under the standard method described above.
A cumulative total return reflects a Subaccount's performance over a stated
period of time. An average annual total return reflects the hypothetical
annually compounded return that would have produced the same cumulative
total return if the Subaccount's performance had been constant over the
entire period. Because average annual total returns tend to smooth out
variations in a Subaccount's returns, you should recognize that they are
not the same as actual year-by-year results.
Some Subaccounts may also advertise yield. These measures reflect the
income generated by an investment in the Subaccount over a specified period
of time. This income is annualized and shown as a percentage. Yields do not
take into account capital gains or losses or the contingent deferred sales
load. The standard quotations of yield reflect the maintenance charge.
Quotations of yield may also be shown that do not reflect the maintenance
charge. The yield calculation will be higher under this method than under
the standard method.
The Money Market Subaccount may advertise its current and effective yield.
Current yield reflects the income generated by an investment in the
Subaccount over a 7 day period. Effective yield is calculated in a similar
manner except that income earned is assumed to be reinvested. The
Investment Grade Bond and the High Income Subaccounts may advertise a 30
day yield which reflects the income generated by an investment in the
Subaccount over a 30 day period.
LITIGATION
No litigation is pending that would have a material effect on us or the
Variable Account.
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
Accumulation Units
Fixed Annuity Income Payments
Variable Annuity Income Payments
Hypothetical Illustrations of Annuity Income Payouts
General Information
Performance
Transfers Among Subaccounts After the Annuity Date
Unavailability of Annuity Income Options in Certain Circumstances
IRS Required Distributions
Safekeeping of Variable Account Assets
Distribution of the Contracts
State Regulation
Legal Matters
Registration Statement
Independent Accountants
Financial Statements
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
1. Internal Revenue Service Regulations require you be given this
Disclosure Statement to make certain that you fully understand the nature
of an Individual Retirement Account (IRA). For this reason, it is important
that you read this statement carefully.
REVOCATION
2. You are allowed to revoke or cancel your IRA within thirty (30) days of
the date you receive the IRA contract. A revocation treats an IRA as if it
never existed, and entitles you to a full refund of your contract value at
the time of revocation plus any amount deducted from your contribution
prior to such time. If you revoke within the first seven (7) days you will
receive the entire amount you paid if it is greater than the contract
value.
You may revoke your IRA by mailing or delivering a notice of revocation
to:
Empire Fidelity Investments Life Insurance Company
Annuity Service Center
P.O. Box 3767
New York, NY 10277-0433
Any question regarding this procedure may be directed to a Fidelity
Insurance Specialist at 1-800-544-2442.
CONTRIBUTIONS
3. You may establish an IRA for the purpose of rolling over all or a
portion of your distribution from a qualified plan, tax sheltered annuity
or other IRA. If you retire, terminate your employment prior to retirement
age, or become disabled, and you are entitled to a single sum distribution,
all or a portion of the distribution may be transferred to a qualifying IRA
tax-free if done within 60 days of receipt of the single sum distribution.
The amount of your rollover IRA contribution will not be included in your
taxable income for the year in which you receive the qualified plan
distribution.
4. Subsequent contributions, other than additional rollover contributions
from another qualified plan, tax sheltered annuity or IRA, will not be
accepted.
5. No deduction is allowed for a rollover contribution which is not treated
as income to the individual.
INVESTMENTS
6 The assets in your IRA are nonforfeitable, subject to the surrender
charges specified in the IRA contract.
7. The assets in your IRA cannot be commingled with other property except
in a common trust fund or common investment fund.
8. No part of the IRA may be invested in life insurance or endowment
contracts.
DISTRIBUTIONS
9. Distributions from your IRA will be included in your gross income for
federal income tax purposes for the year in which you receive them.
10. To the extent they are included in taxable income, distribution from
your IRA made before age 59 1/2 will be subject to a 10% non-deductible
penalty tax (in addition to being taxable as ordinary income) unless the
distribution is rolled over to another qualified plan, tax sheltered
annuity or IRA, or the distribution is made on account of your death or
disability, or the distribution is one of a scheduled series of payments
over your life or life expectancy or the joint life expectancies of
yourself and the second person designated by you.
11. You must begin receiving distributions of the assets in your IRAs by
April 1 of the calendar year following the calendar year in which you reach
70 1/2. Subsequent distributions must be made by December 31 of each year.
12. You may select one of the following methods of distribution for the
assets of this IRA:
(a) Distribution over your life or your life and the life of a second
person designated by you;
(b) Distribution over a period certain not to exceed your life
expectancy or your life expectancy and that of a second person
designated by you;
(c) Single sum payment; or
(d) Partial withdrawals that, together with withdrawals from your
other IRAs, satisfy the minimum distribution requirements
discussed below.
(See Contract and Endorsement for a full description of these distribution
methods.)
13. Once distributions are required to begin, they must not be less than
the amount each year (determined by actuarial tables) which would exhaust
the value of all your IRAs over the required distribution period, which is
generally your life expectancy or the joint life and last survivor
expectancy of you and your spouse. You will be subject to a 50% excise tax
on the amount by which the distribution you actually received in any year
falls short of the minimum distribution required for the year.
14. If you die after distribution of the IRA has commenced, the remaining
balance must continue to be distributed under the same or a more rapid
method of distribution.
15. If you die before distribution of the IRA commences, the entire balance
must be distributed to the beneficiary within five (5) years unless:
(a) The beneficiary is your surviving spouse and the beneficiary either
treats the IRA as his or her own IRA or elects within a five (5) year
period to receive payments over his or her own life expectancy commencing
at any date prior to the date you would have reached age 70 1/2; or
(b) The beneficiary is not your surviving spouse and the beneficiary
elects to have the IRA distributed over his or her life expectancy
commencing within one (1) year of your death.
16. There is a 15% excise tax assessed against annual distribution from
tax-favored retirement plans, including IRAs, which exceed the greater of
(a) $150,000; and (b) $112,500 adjusted after 1988 to reflect
cost-of-living increases. To determine whether you have distributions in
excess of this limit you must aggregate the amounts of all distributions
received by you during the calendar year from all retirement plans,
including IRAs. Please consult with your tax advisor for more complete
information including favorable elections.
17. You may rollover all or a portion of your IRA into another IRA or
individual retirement annuity and maintain the tax-deferred status of these
assets. Tax-free rollovers between IRAs may be made no more than once every
twelve months.
OTHER TAX CONSIDERATIONS
18. Distributions are taxed as ordinary income under federal income tax
laws.
19. The tax treatment of single sum distributions under Section 402(e) of
the Code is not applicable to distributions from IRAs.
20. Reporting to the IRS will be required by you in the event that special
taxes or penalties described herein are due. You must file Treasury Form
5329 with the IRS for each taxable year in which a premature distribution
takes place or less than the required minimum amount is distributed from
your IRA. The Tax Reform Act of 1986 also requires you to report the amount
of all distributions you received from your IRA and the aggregate balance
of all IRAs as of the end of the calendar year.
PROHIBITED TRANSACTIONS
21. If any of the events prohibited by Section 4975 of the Code (such as
any sale, exchange or leasing of any property between you and your IRA)
occurs during the existence of your IRA, your account will be disqualified
and the entire balance in your account will be treated as if distributed to
you, as of the first day of the year in which the prohibited event occurs.
This "distribution" would be subject to ordinary income tax and, if you
were under age 59 1/2 at the time, to the 10% penalty tax on premature
distributions.
22. If you or your beneficiary borrow any money under, or by use of, all or
a portion of your IRA, then the portion pledged will be treated as if
distributed to you, and will be taxable to you as ordinary income and
subject to the 10% penalty during the year in which you make such a pledge.
IRS PROCEDURES
23. The form of your IRA has been submitted to the Internal Revenue Service
for approval. Approval by the IRS is a determination only as to the form of
the IRA and does not represent a determination on the merits of such IRA.
24. You may obtain further information with respect to your IRA from any
district office of the Internal Revenue Service.
FINANCIAL INFORMATION
25. The value of your investment will depend on how you allocate funds
between the Guaranteed Account and the subaccounts of the Variable Account.
The Company guarantees that the portion of your contract value that is held
in the Guaranteed Account will accrue interest daily at specified interest
rates that vary from time to time. With respect to funds allocated to the
Variable Account, the value will depend upon the actual investment
performance of the subaccounts that you choose; no minimum value is
guaranteed. See your prospectus for a more detailed description.
26. As further described in the prospectus, the following are all the
charges that the Company currently makes:
(a) ADMINISTRATIVE CHARGE
The Company currently deducts an annual maintenance charge of $30 on each
contract anniversary. This charge is currently waived if total payments,
less any withdrawals, equal at least $25,000.
The Company also deducts a daily charge from the assets of the subaccounts
equivalent to an effective annual rate of 0.25%. This charge is not made
against the Guaranteed Account.
(b) MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a daily charge from the assets of the subaccounts
equivalent to an effective annual rate of 0.75%. This charge is not made
against the Guaranteed Account.
(c) WITHDRAWAL CHARGE
During the first five contract years the Company assesses a charge upon
the surrender of the contract or the withdrawal of more than the Exempt
Withdrawal Amount. This charge in the first year is 5% of the purchase
payments withdrawn. The factor decreases by 1% per year so that no
withdrawal charge is made after the fifth contract year.
(d) PORTFOLIO EXPENSES
The portfolios associated with the Variable Account incur operating
expenses and pay monthly management fees to Fidelity Management & Research
Company. The level of expenses vary by portfolio. This charge is not made
against the Guaranteed Account.
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
RETIREMENT RESERVES
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1997
This Statement of Additional Information supplements the information found
in the current Prospectus for the variable annuity contracts ("Contracts")
offered by Empire Fidelity Investments Life Insurance Company through its
Empire Fidelity Investments Variable Annuity Account A (the "Variable
Account"). You may obtain a copy of the Prospectus dated April 30, 1997,
without charge by calling 800-544-2442.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ TOGETHER WITH THE PROSPECTUS FOR THE CONTRACT.
TABLE OF CONTENTS PAGE
Service Agreements 2
Accumulation Units 2
Fixed Annuity Income Payments 2
Variable Annuity Income Payments 2
Hypothetical Illustrations of Annuity Income Payouts 6
General Information 9
Performance 9
Transfers Among Subaccounts After the Annuity Date 9
Unavailability of Annuity Income Options in Certain Circumstances 14
IRS Required Distributions 14
Safekeeping of Variable Account Assets 14
Distribution of the Contracts 14
State Regulation 15
Legal Matters 15
Registration Statement 15
Independent Accountants 15
Financial Statements 15
SERVICE AGREEMENTS
We have entered into a service agreement with Fidelity Investments Life
Insurance Company ("FILI"), our parent. FILI may provide accounting,
underwriting, claims, actuarial and data processing services.
ACCUMULATION UNITS
We credit your payments allocated to the variable Subaccounts in the form
of Accumulation Units. The number of Accumulation Units credited to each
Subaccount is determined by dividing the net payment allocated to that
Subaccount by the Accumulation Unit Value for that Subaccount for the
Valuation Period during which the payment is received. In the case of the
initial payment, we credit Accumulation Units as explained in the
Prospectus. Accumulation Units are adjusted for any transfers into or out
of a Subaccount.
For each variable Subaccount, the Accumulation Unit Value for the first
Valuation Period of the Subaccount was set at the Accumulation Unit Value
of the comparable subaccount of similar contracts offered by an affiliated
company. The Accumulation Unit Value for each subsequent Valuation Period
is the Net Investment Factor for that period, multiplied by the
Accumulation Unit Value for the immediately preceding Valuation Period.
The Accumulation Unit Value may increase or decrease from one Valuation
Period to the next.
Each variable Subaccount has a Net Investment Factor (also referred to as
the "Net Rate of Return"). The Net Investment Factor is an index that
measures the investment performance of a Subaccount from one Valuation
Period to the next. The Net Investment Factor for each Subaccount for a
Valuation Period is determined by adding (a) and (b), subtracting (c) and
then dividing the result by (a) where:
(a) Is the value of the assets at the end of the preceding Valuation
Period;
(b) Is the investment income and capital gains, realized or unrealized,
credited during the current valuation period;
(c) Is the sum of:
(1) The capital losses, realized or unrealized, charged during the current
valuation period plus any amount charged or set aside for taxes during the
current Valuation Period; plus
(2) The deduction from the Subaccount during the current Valuation Period
representing a daily charge equivalent to an effective annual rate of 1%.
The Net Investment Factor may be greater than or less than one. If it is
greater than one, the Accumulation Unit Value will increase; if less than
one, the Accumulation Unit Value will decrease.
FIXED ANNUITY INCOME PAYMENTS
The amount of monthly annuity income payments for a selected fixed annuity
income option or the fixed portion of a selected combination annuity income
option is calculated by applying the proceeds payable to the income payment
rates for the option selected. Annuity income payments will be the larger
of:
(a) The income based on the rates shown in the Contract's Annuity Tables
for the option chosen; and
(b) The income calculated by applying the proceeds as a single premium to
our single premium annuity rates in effect on the date of the first income
payment for the same option.
Annuity income payments under a fixed annuity or fixed portion of a
combination annuity will not vary in dollar amount and will not be affected
by the investment performance of the Variable Account. Amounts used to
purchase a fixed annuity may not be later transferred to a variable
annuity.
VARIABLE ANNUITY INCOME PAYMENTS
If a variable annuity is selected, annuity income payments will vary in
amount in accordance with the investment performance of the elected
Subaccounts of the Variable Account. If a combination annuity is selected,
annuity income payments attributable to the variable portion of the annuity
will likewise vary. On the Annuity Date, the amount of the first annuity
income payment is calculated by applying the proceeds payable to the
annuity table shown in the Contract (or any more favorable annuity rates we
may offer on the Annuity Date) for the option chosen.
The dollar amount of the first annuity income payment attributable to each
variable Subaccount is then divided by each Subaccount's then current
Annuity Unit Value (Annuity Units are explained in the Prospectus) to
establish the total number of Annuity Units that will be the basis for
determining later annuity income payments. Annuity income payments after
the first will be equal to the sum of the number of Annuity Units
determined in this manner for each Subaccount multiplied by the then
current Annuity Unit Value for each Subaccount, which (as explained in the
Prospectus) depends upon the Net Investment Factor for the Subaccount
adjusted by a factor to neutralize the assumed rate of return used in the
calculation of annuity income payments. The number of Annuity Units
remains fixed for all annuity income payments, unless a transfer is made.
The dollar amount of the annuity income payments may change from payment to
payment. We guarantee that the dollar amount of each annuity income
payment after the first will not be affected by variations in mortality
experience from the mortality assumptions used to determine the first
annuity income payment.
To illustrate the above description of how annuity income payments are
determined, consider the following example. A male age 65 applies $50,000
to purchase a lifetime income for himself with payments to be made for at
least 10 years (even if the Annuitant dies shortly after payments have
begun). Annuity income payments are to be made on a monthly basis with the
first annuity income payment to be made immediately. The variable pay-out
option is chosen with the amount of each income payment dependent on the
actual investment performance of the Subaccounts that are selected. Using
an Assumed Investment Rate of 3.5%, the initial monthly income amount is
$283.77 The investment selection is 50% in Portfolio A and 50% in
Portfolio B.
At Annuitization Portfolio A Portfolio B
(a) Initial Monthly Annuity Income Payment $141.89 $141.89
(b) Annuity Unit Value 1.23456 1.32465
(c) Income in Units 114.928 107.111
The monthly annuity income payment allocated to each Subaccount is
translated into Annuity Units using the Annuity Unit Value at the time of
annuitization. Since each Subaccount is likely to have a different Annuity
Unit Value, the total number of Annuity Units is not informative -- rather
you need to look at:
X = Annuity
# Annuity Annuity Income
Units Unit Value Payment
Portfolio A 114.928 1.23456 141.89
Portfolio B 107.111 1.32465 141.89
$283.77
Assume that during the next month, the investment results for each
subaccount are:
Portfolio A Portfolio B
(d) Actual Net Investment Results .4074% .1652%
(e) Assumed Investment Results .2871% .2871%
(f) Relative Performance Factor 1.00120 .99878
Line (d) shows the net investment result after the charge for assuming
mortality and expense risks and the administrative charge (1% on an annual
basis) and the charge for investment advisory fees and fund expenses. Line
(e) shows the investment results that were assumed in the calculation of
the initial monthly annuity income payment, 3.5% on an annual basis. Line
(f) represents how much $1 invested at the start of the month in each of
the subaccounts would have grown relative to $1 earning 3.5%. (The formula
for calculating the Relative Performance Factor is 1+ (d) divided by 1 +
(e)).
Note that since line (f) is more than 1 for Portfolio A and less than 1 for
Portfolio B, the Portfolio A subaccount has earned more than 3.5% on an
annual basis while the Portfolio B subaccount has earned less than 3.5% on
an annual basis.
The Annuity Unit Value grows with the actual investment performance
relative to the assumption of 3.5%. If a Subaccount earns more than 3.5%
on an annual basis, then the Annuity Unit Value will increase. Conversely,
if less than 3.5% is earned, the Annuity Unit Value will decrease. The
Annuity Unit Value at the time of the second monthly income payment is the
Annuity Unit Value for the prior month (line b) multiplied by the Relative
Performance Factor (line f).
Portfolio A Portfolio B
(b) Annuity Unit Value (prior) 1.23456 1.32465
(f) Relative Performance Factor 1.00120 .99878
(g) Annuity Unit Value (current)1.23604 1.32303
Except for exchanges between Subaccounts, the number of Annuity Units
remains fixed throughout the lifetime of the Annuitant. The value of each
annuity income payment, however, varies because the Annuity Unit Value is
usually changing as a result of investment experience. The second monthly
payment is calculated by multiplying the number of payment units by the
current Annuity Unit Value.
Portfolio A Portfolio B
(c) Monthly Income in Units 114.928 107.111
(g) Annuity Unit Value (current) 1.23604 1.32303
(h) Monthly Income (in Dollars) $142.06 $147.71
Note that the Annuity Unit Value and the Monthly Income for the Portfolio A
portion of the payment has increased whereas the opposite is true for the
Portfolio B portion. The second monthly annuity income payment would be
the sum for each Subaccount, or $283.77.
To illustrate the possible volatility of the annuity income payments,
assume that during the following month, the investment results for each
Subaccount are:
Portfolio A Portfolio B
i) Actual Net Investment Results 15.50% -13.00%
e) Assumed Investment Results .2871% .2871%
j) Relative Performance Factor 1.15169 .86751
The Annuity Unit Value at the time of the third monthly annuity income
payment is the Annuity Unit Value for the prior month (line g) multiplied
by the Relative Performance Factor (line j):
Portfolio A Portfolio B
(g) Annuity Unit Value (prior) 1.23604 1.32303
(j) Relative Performance Factor 1.15169 .86751
(k) Annuity Unit Value (current) 1.42353 1.14774
The third monthly annuity income amount is calculated by multiplying the
number of payment units by the current Annuity Unit Value:
Portfolio A Portfolio B
(c) Income in Units 114.928 107.111
(k) Annuity Unit Value (current) 1.42353 1.14774
(l) Monthly Income (in dollars) $163.60 $122.94
Note that the Annuity Unit Value and the Monthly Income for Portfolio A
portion of the income amount have again increased but to a much greater
extent than before whereas the opposite is true for the Portfolio B
portion. The third monthly annuity income payment would be the sum for
each subaccount, or $286.54.
An illustration of annuity income payments under various rates appears in
the tables on pages 6 and 7. The monthly equivalents of the annual net
returns of -1.65%, 3.50%, 4.25%, 6.21, 8.18% and 10.15% shown in the
tables are -0.14%, 0.29%, 0.35%, 0.50%, 0.66% and 0.81%
.
HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS
The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. The tables illustrate how monthly annuity income
payments would vary over time if the return on the assets in the selected
portfolios were a uniform gross annual rate of 0%, 5.24%, 6%, 8%, 10% and
12%. The values would be different from those shown if the returns
averaged 0%, 5.24%, 6%, 8%, 10% or 12% but fluctuated over and under those
averages throughout the years.
The tables reflect the fact that the Net Investment Return on the assets
held in the Subaccounts is lower than the gross return of the selected
portfolios. The tables reflect the daily charge to the Subaccounts for
assuming mortality and expense risks, which is equivalent to an effective
annual charge of 0.75% and the daily administrative charge which is
equivalent to an effective annual charge of 0.25%. The amounts shown in
the tables also take into account the portfolios' management fees and
operating expenses which are assumed to be at an annual rate of 0.66% of
the average daily net assets of the selected portfolios. This 0.66% figure
consists of assumed management fees of 0.52% and assumed operating expenses
of 0.17%, figures based on the average of current management fees and
operating expenses. Actual fees and expenses of the portfolios associated
with your Contract may be more or less than 0.66%, will vary from year to
year, and will depend on how you allocate your investment base. See the
current prospectuses for the Funds for more complete information. The
monthly annuity income payments illustrated are on a pre-tax basis. The
federal income tax treatment of annuity income payments is generally
described in the section of your current prospectus entitled "Tax
Considerations."
The tables show both the gross rate and the net rate. The difference
between gross and net rates represent the 1% risk and administrative
charges and the assumed 0.66% for investment management and operating
expenses. Since these charges are deducted daily from assets, the
difference between the gross and net rate is not exactly 1.66%.
Two tables follow. The first table assumes 100% of the Contract Value is
allocated to a variable annuity income option; the second table assumes 50%
of the Contract Value is placed under a fixed annuity income option, using
the fixed crediting rate Empire Fidelity Investments Life offered on the
fixed annuity income option at the date of the illustration. Both
illustrations assume that the final value of the accumulation account is
$50,000 and is applied at age 65 to purchase a life annuity for a
guaranteed period of 10 years certain and life thereafter. When part of
the Contract Value has been allocated to the fixed annuity income option,
the guaranteed minimum annuity income payment resulting from this
allocation is also shown. The illustrated variable annuity income payments
are determined through the use of standard mortality tables and the
assumption that the net investment return will be 3.5% per year. Thus,
actual performance greater than a net return of 3.5% will result in
increasing annuity income payments and performance less than 3.5% per year
will result in decreasing annuity income payments. We may offer
alternative Assumed Investment Returns from which you may select. Fixed
annuity income payments remain constant. Initial monthly annuity income
payments under a fixed annuity income payout are generally higher than
initial payments under a variable income payout option.
These tables show the monthly income payments for several hypothetical
constant rates of return. Of course, actual investment performance will
not be constant and may be volatile. Actual monthly income amounts would
differ from those shown if the actual rate of return averaged the rate
shown over a period of years, but also fluctuated above or below those
averages for individual contract years. Upon request and when you are
considering an annuity income option, we will furnish a comparable
illustration based on your individual circumstances.
ANNUITY PAY-OUT ILLUSTRATION
(100% VARIABLE PAYOUT)
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE APPLIED: $50,000
DATE OF BIRTH: 3/1/32 STATE PREMIUM TAX: 0%
SEX: Male DATE OF ILLUSTRATION: 3/1/97
ANNUITY OPTION SELECTED: Lifetime Income with annuity income payments
guaranteed for 10 years(1)
FREQUENCY OF ANNUITY INCOME
PAYMENTS: Monthly payments with first payment the first of
the month after annuitization
FIXED MONTHLY ANNUITY INCOME PAYMENT AVAILABLE ON THE DATE OF THE
ILLUSTRATION IF 100% FIXED ANNUITY OPTION SELECTED: $312.73
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS
ALLOCATED TO THE VARIABLE PAYOUT
NET RETURN AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.50%
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, NO MINIMUM
DOLLAR
AMOUNT IS GUARANTEED
AMOUNT OF FIRST MONTHLY ANNUITY INCOME PAYMENT IN YEAR
SHOWN ASSUMING A CONSTANT ANNUAL INVESTMENT RETURN OF:
Gross: 0% 5.25% 6% 8% 10% 12%
PAYMENT CALENDAR
YEAR YEAR AGE Net(2):-1.65% 3.50% 4.25% 6.21% 8.18% 10.15%
********* ******** **** ******* ****** ************************
1 1997 65 284 284 284 284 284 284
2 1998 66 270 284 286 291 297 302
3 1999 67 256 284 288 299 310 321
4 2000 68 243 284 290 307 324 342
5 2001 69 231 284 292 315 339 364
10 2006 74 179 284 303 358 423 497
15 2011 79 139 284 314 407 527 679
20 2016 84 108 284 326 464 657 926
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE 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 AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE VARIOUS RATES
OF RETURN OF THE PORTFOLIOS SELECTED. THE AMOUNT OF THE INCOME PAYMENT
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN
AVERAGED THE RATES SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. SINCE IT IS
HIGHLY LIKELY THAT INVESTMENT RETURNS WILL FLUCTUATE FROM MONTH TO MONTH,
MONTHLY INCOME (TO THE EXTENT THAT IS BASED ON THE VARIABLE ACCOUNT) WILL
ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY EMPIRE FIDELITY
INVESTMENTS LIFE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
(1) Monthly annuity income payments cease upon the death of the Annuitant
if the Annuitant dies after the 10 year Guarantee Period. If the Annuitant
dies during the Guarantee period, annuity income payments will continue
until the end of the Period. The cumulative amount of annuity income
payments received under the annuity depends on how long the Annuitant lives
after the Guarantee Period. An annuity pools the mortality experience of
annuitants. Annuitants who die earlier, in effect, subsidize the payments
for those who live longer.
(2) The illustrated net return reflects the deduction of average fund
expenses and the 1% risk/administrative charge from the gross return.
ANNUITY PAY-OUT ILLUSTRATION
(50% VARIABLE - 50% FIXED PAYOUT)
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE APPLIED: $50,000
DATE OF BIRTH: 3/1/32 STATE PREMIUM TAX: 0%
SEX: Male DATE OF ILLUSTRATION: 3/1/97
ANNUITY OPTION SELECTED: Lifetime Income with annuity income payments
guaranteed for 10 years(1)
FREQUENCY OF ANNUITY INCOME
PAYMENTS: Monthly payments with first payment the first of
the month after annuitization
FIXED MONTHLY ANNUITY INCOME PAYMENT AVAILABLE ON THE DATE OF THE
ILLUSTRATION IF 100% FIXED ANNUITY OPTION SELECTED: $312.73 ILLUSTRATIVE
AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS ALLOCATED TO THE
VARIABLE PAYOUT AND 50% TO THE FIXED PAYOUT
NET RETURN AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.50%
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, BUT WILL
NEVER BE LESS THAN $156.37. THE MONTHLY GUARANTEED PAYMENT OF $312.73 IS
BEING PROVIDED BY THE $25,000 APPLIED UNDER THE FXED ANNUITY OPTION.
AMOUNT OF FIRST MONTHLY ANNUITY INCOME PAYMENT IN YEAR SHOWN ASSUMING A
CONSTANT ANNUAL INVESTMENT RETURN OF:
Gross: 0% 5.25% 6% 8% 10% 12%
PAYMENT CALENDAR
YEAR YEAR AGE Net(2):-1.65% 3.50% 4.25% 6.21% 8.18% 10.15%
********* ******** **** ******* ************************ ******
1 1997 65 298 298 298 298 298 298
2 1998 66 291 298 299 302 305 307
3 1999 67 284 298 300 306 311 317
4 2000 68 278 298 301 310 318 327
5 2001 69 272 298 302 314 326 338
10 2006 74 246 298 308 335 368 405
15 2011 79 226 298 313 360 420 496
20 2016 84 210 298 319 388 485 620
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE 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 AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE VARIOUS RATES
OF RETURN OF THE PORTFOLIOS SELECTED. THE AMOUNT OF THE INCOME PAYMENT
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN
AVERAGED THE RATES SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. SINCE IT IS
HIGHLY LIKELY THAT INVESTMENT RETURNS WILL FLUCTUATE FROM MONTH TO MONTH,
MONTHLY INCOME (TO THE EXTENT THAT IS BASED ON THE VARIABLE ACCOUNT) WILL
ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY EMPIRE FIDELITY
INVESTMENTS LIFE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
(1) Monthly annuity income payments cease upon the death of the Annuitant
if the Annuitant dies after the 10 year Guarantee Period. If the Annuitant
dies during the Guarantee period, annuity income payments will continue
until the end of the Period. The cumulative amount of annuity income
payments received under the annuity depends on how long the Annuitant lives
after the Guarantee Period. An annuity pools the mortality experience of
annuitants. Annuitants who die earlier, in effect, subsidize the payments
for those who live longer.
(2) The illustrated net return reflects the deduction of average fund
expenses and the 1% risk/administrative charge from the gross return.
GENERAL INFORMATION
We may advertise quotes of Contract Owners discussing ways to use
Retirement Reserves in retirement planning, its efficiency and ease of use,
and the level of service provided by Empire Fidelity Investments Life. Any
such advertisements will not include testimonials concerning the Funds or
the Funds' investment adviser. We may also advertise examples of the
effects of periodic investment plans, including the principle of dollar
cost averaging. In such a plan, a policyowner invests a fixed dollar
amount in a Subaccount thereby purchasing fewer units when prices are high
and more units when prices are low. While such a strategy does not assure
a profit nor guard against a loss in a declining market, the Contract
Owner's average cost per unit can be lower than if fixed numbers of units
had been purchased at those intervals. In evaluating such a plan, Contract
Owners should consider their ability to continue purchasing units through
periods of low price levels. In addition, we may from time to time use
statistics in advertising to support the growth of annuity sales.
Information to support these statistics may be obtained from the Life
Insurance Marketing Research Association, A.M. Best, American Council of
Life Insurance or the Variable Annuity Research and Data Service.
From time to time, we may reprint and use as advertising and sales
literature, articles or quotes from financial or business publications and
periodicals. In addition, we may reference or discuss the products and
services of other affiliated companies, which may include: Fidelity funds;
retirement investing; brokerage products and services; saving for college;
charitable giving; and the Fidelity credit card.
We may also provide information to help individuals understand their
investment goals and explore various financial strategies. In
communicating these strategies, we may:
compare the differences between tax deferred and taxable investments;
discuss factors to consider when purchasing the contract;
discuss the effects of probate when transferring the contract to heirs;
discuss traditional sources of retirement income and products which may be
used to supplement that income;
discuss effects of inflation on fixed-income sources and how the variable
investment options may be used as a potential hedge against inflation
during the deferral and income periods;
illustrate and compare the effects additional payments have on a contract;
discuss strategies of reducing risk through diversification of purchase
payments and providing hypothetical investment mixes;
discuss past returns of different classes of investments based on data
supplied through various sources such as Ibbotson Associates of Chicago,
Illinois; and
assist policyholders with inquiries regarding their annuity.
This information may be obtained from various sources such as The U.S.
Department of the Treasury, U.S. Department of Labor, Statistical Abstract
of the U.S. and Individual Annuitant Mortality Table. We may present this
information through various methods such as charts, graphs, illustrations,
and tables.
You may purchase the contract with proceeds from various sources such as
transactions qualifying for a tax-free exchange under Section 1035 of the
Internal Revenue Code.
PERFORMANCE
Performance information for any Subaccount may be compared, in reports and
advertising to: (1) the Standard & Poor's 500 Composite Stock Price Index
("S & P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue's Money
Market Institutional Averages; (2) other variable annuity separate accounts
or other investment products tracked by Lipper Analytical Services,
Morningstar, or the Variable Annuity Research and Data Service, widely used
independent research firms which rank mutual funds and other investment
companies by overall performance, investment objectives, and assets; and
(3) the Consumer Price Index (measure for inflation) to assess the real
rate of return from an investment in a contract Unmanaged indices may
assume the reinvestment of dividends but generally do not reflect
deductions for annuity charges and investment management costs.
Total returns, yields and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Reports and
advertising may also contain other information including (i) the ranking of
any subaccount derived from rankings of variable annuity separate accounts
or other investment products tracked by Lipper Analytical Series or by
rating services, companies, publications or other persons who rank separate
accounts or other investment products on overall performance or other
criteria, and (ii) the effect of tax deferred compounding on a subaccount's
investment returns, or returns in general, which may be illustrated by
graphs, charts, or otherwise, and which may include a comparison, at
various points in time, of the return from an investment in a Contract (or
returns in general) on a tax-deferred basis (assuming one or more tax
rates) with the return on a taxable basis.
The tables below provide performance results for each Subaccount through
12/31/94. The performance information is based on the historical
investment experience of the Subaccounts and of the Portfolios. It does
not indicate or represent future performance.
Total Return
Total returns quoted in advertising reflect all aspects of a Subaccount's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the Subaccount's value over the period.
Average annual returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in the Subaccount over a
stated period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative
return of 100% over ten years would produce an average annual return of
7.18%, which is the steady rate that would equal 100% growth on a
compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors should
realize that the subaccount's performance is not constant over time, but
changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of a
subaccount.
Table 1 shows the average annual total return on a hypothetical investment
in the Subaccounts for the last year, from the date that the Portfolios
began operations, and, for Portfolios in existence for five years or more,
for five years, assuming that the Contract was surrendered December 31,
1996 For any Portfolio in existence ten years or more, figures are shown
for a ten year period rather than for the life of the Portfolio. The
average annual total returns shown in Table 1 are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance
with the following formula: P(1 +T)n = ERV where P is a hypothetical
investment payment of $1,000, T is the average annual total return, n is
the number of years, and ERV is the withdrawal value at the end of the
periods shown. The returns reflect the risk and administrative charge (1%
on an annual basis) and the maintenance charge. Since the Contract is
intended as a long-term product, the table also shows the average annual
total return assuming that no money was withdrawn from the Contract. The
average annual total return is also shown for Contracts with at least
$25,000 of premium and assuming no money is withdrawn from the Contract.
The average annual total return would be larger for these Contracts because
there is currently no maintenance charge on these larger Contracts. The
first column shows the average annual total return if you surrender the
contract at the end of the period, the second column shows the average
annual total return if you do not surrender the Contract and the third
column shows the average annual total return if you do not surrender the
Contract and no maintenance charge is applied to the Contract.
Table 1: Average Annual Total Return for Period Ending on 12/31/96
(a) One Year Average Annual Total Return For Contracts Issued on December
29, 1995
Return Return
If Contract If Contract
Return Continued and Continued and
If Contract Maintenance Maintenance
Surrendered Charge Applied Charge Not Applicable
Asset Manager 8.43% 13.43% 13.45%
Money Market <0.39>% 4.32% 4.34%
Investment Grade Bond <2.48>% 2.13% 2.15%
Equity-Income 8.11% 12.11% 13.13%
Growth 8.53% 13.53% 13.55%
High Income 7.86% 12.86% 12.88%
Overseas 7.06% 12.06% 12.08%
Index 500 16.57% 21.57% 21.59%
Asset Manager: Growth 13.71% 18.71% 18.73%
Contrafund 15.07% 20.07% 20.09%
(b) Average Annual Total Return If Contract Issued at Commencement of
Portfolio
Return Return
If Contract If Contract
Return Continued and Continued and
Portfolio's If Contract Maintenance Maintenance
Subaccount Start Date Surrendered Charge Applied Charge Not
Applicable
Asset Manager 9/6/89 10.54% 10.54% 10.58%
Investment Grade
Bond 12/5/88 7.07% 7.07% 7.12%
High Income 9/19/85 10.80% 10.80% 10.88%
Overseas 1/28/87 6.74% 6.74% 6.81%
Index 500 8/27/92 15.76% 15.76% 15.93%
Asset Manager: Growth
1/3/95 18.68% 20.36% 20.38%
Contrafund 1/3/95 27.35% 28.92% 28.95%
(c) Five Year Average Annual Total Return If Contract Issued on December
31, 1991
Return Return
If Contract If Contract
Continued and Continued and
If Contract Maintenance Maintenance
Surrendered Charge Applied Charge Not Applicable
Asset Manager 9.98% 10.11% 10.13%
Money Market 3.28% 3.45% 3.48%
Investment Grade Bond 5.38% 5.54% 5.56%
Equity-Income 16.66% 16.75% 16.78%
Growth 13.87% 13.97% 14.00%
High Income 13.66% 13.77% 13.79%
Overseas 7.86% 8.00% 8.03%
(d) Ten Year Average Annual Total For Contracts Issued on December 31,
1986
Return Return
If Contract If Contract
Continued and Continued and
If Contract Maintenance Maintenance
Surrendered Charge Applied Charge Not Applicable
Money Market 4.83% 4.83% 4.89%
High Income 9.93% 9.93% 10.01%
Equity-Income 12.52% 12.52% 12.59%
Growth 13.92% 13.92% 13.99%
In addition to average annual returns, the Subaccounts may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Table 2 shows the cumulative total return
on a hypothetical investment in the Subaccounts for from the date the
Portfolios began operations, and assuming that the Contract was surrendered
December 31, 1996. For any Portfolio in existence five years or more, five
year figures are also shown. For any Portfolio in existence ten years or
more, figures are shown for a ten year period rather than for the life of
the Portfolio. The returns reflect the risk and administrative charge (1%
on an annual basis) and the maintenance charge. Since the Contract is
intended as a long-term product, the table also shows the cumulative total
return assuming that no money was withdrawn from the Contract. The
cumulative total return is also shown for Contracts with at least $25,000
of premium and assuming no money is withdrawn from the Contract. The
cumulative total return for these Contracts would be larger because there
is currently no maintenance charge on these larger Contracts. The first
column shows the cumulative total return if you surrender the Contract at
the end of the period, the second column shows the cumulative total return
if you do not surrender the Contract and the third column shows the
cumulative total return if you do not surrender the Contract and no
maintenance charge is applied to the Contract.
Table 2: (a) Cumulative Total Return For Periods Beginning at Commencement
of Portfolios and Ending on 12/31/96
Return Return
If Contract If Contract
Return Continued and Continued and
Portfolio's If Contract Maintenance Maintenance
Subaccount Start Date Surrendered Charge Applied Charge Not Applicable
Asset Manager 9/6/89 108.26% 108.26% 108.83%
Investment
Grade Bond 12/5/88 73.65% 73.65% 74.25%
High Income 9/19/85 218.33% 218.33% 220.97%
Overseas 1/28/87 91.07% 91.07% 92.32%
Index 500 8/27/92 88.94% 89.94% 90.14%
Asset Manager:
Growth 1/3/95 40.71% 44.71% 44.77%
Contrafund 1/3/95 61.97% 65.97% 66.04%
(b) Cumulative Total Return For Five Year Period From 12/31/91 Through
12/31/96
Return If Contract Return If Contract
Return Continued and Continued and
If Contract Maintenance Maintenance
Subaccount Surrendered Charge Applied Charge Not Applicable
Asset Manager 60.91% 61.91% 62.12%
Money Market 17.50% 18.50% 18.66%
Investment
Grade Bond 29.96% 30.96% 31.13%
Equity-Income 116.11% 117.11% 117.36%
Growth 91.42% 92.42% 92.65%
High Income 89.72% 90.72% 90.95%
Overseas 46.00% 47.00% 47.19%
(c) Cumulative Total Return For Ten Year Period From 12/31/86 Through
12/31/96
Return If Contract Return If Contract
Return Continued and Continued and
If Contract Maintenance Maintenance
Subaccount Surrendered Charge Applied Charge Not Applicable
Money Market 60.28% 60.28% 61.33%
High Income 158.02% 158.02% 159.71%
Equity-Income 225.65% 225.65% 227.72%
Growth 268.54% 268.54% 270.84%
Yields
Some Subaccounts may also advertise yields. Yields quoted in advertising
reflect the change in value of a hypothetical investment in the Subaccount
over a stated period of time, not taking into account capital gains or
losses. Yields are annualized and stated as a percentage. Yields do not
reflect the impact of any contingent deferred sales load. Yields quoted in
advertising may be based on historical seven day periods.
Current yield for Money Market Subaccount reflects the income generated by
a Subaccount over a 7 day period. Current yield is calculated by
determining the net change, exclusive of capital changes, in the value of a
hypothetical account having one Accumulation Unit at the beginning of the
period adjusting for the maintenance charge, and dividing the difference by
the value of the account at the beginning of the base period to obtain the
base period return, and multiplying the base period return by (365/7). The
resulting yield figure is carried to the nearest hundredth of a percent.
Effective yield for the Money Market Subaccount is calculated in a similar
manner to current yield except that investment income is assumed to be
reinvested throughout the year at the 7 day rate. Effective yield is
obtained by taking the base period returns as computed above, and then
compounding the base period return by adding 1, raising the sum to a power
equal to (365/7) and subtracting one from the result, according the formula
Effective Yield = [(Base Period Return + 1) 365/7] - 1. Since the
reinvestment of income is assumed in the calculation of effective yield, it
will generally be higher than current yield. For the 7 day period ending
on 12/31/96, the Money Market Subaccount had a current yield of 4.22% and
an effective yield of 4.31%. For Contracts on which there is currently no
maintenance charge, the current yield would be 4.24% and the effective
yield would be 4.33%.
A 30 day yield for bond subaccounts reflects the income generated by a
Subaccount over a 30 day period. Yield will be computed by dividing the
net investment income per Accumulation Unit earned during the period by the
maximum offering price per Accumulation Unit on the last day of the period,
according to the following formula: Yield = 2[(a-b/cd + 1)6 - 1] where a=
net investment income earned by the applicable portfolio, b = expenses for
the period including expenses charged to the contract owner accounts, c =
the average daily number of Accumulation Units outstanding during the
period, and d = the maximum offering price per Accumulation Unit on the
last day of the period. The 30 day yield for the period ending on 12/31/96
was 4.98% for the Investment Grade Bond Subaccount and 6.25% for the High
Income Subaccount. For Contracts on which there is no maintenance charge,
the 30 day yield would be 5.00% for the Investment Grade Bond Subaccount
and 6.27% for the High Income Subaccount.
TRANSFERS AMONG SUBACCOUNTS AFTER THE ANNUITY DATE
After the Annuity Date, you may instruct us to reallocate the value of some
or all of the Annuity Units of a variable Subaccount then credited to your
Contract into an equal value of Annuity Units of one or more other
Subaccounts. The transfer shall be based on the relative value of the
Subaccount Annuity Units at the end of the Valuation Period in which the
request is received and will affect income payments determined after that
Valuation Period. To make such a transfer, you must contact the Annuity
Service Center. The value of the Annuity Units exchanged must provide at
least a $50 annuity income payment at the time of the exchange, unless all
of the Annuity Units of a Subaccount are being exchanged. We reserve the
right to limit transfers after the Annuity Date to six per Contract Year.
UNAVAILABILITY OF ANNUITY INCOME OPTIONS IN CERTAIN CIRCUMSTANCES
We do not offer annuity income options to any corporate beneficiary,
partnership or trustee; any assignee, unless that assignee is a
beneficiary; or the executors or administrators of the Annuitant's estate.
IRS REQUIRED DISTRIBUTIONS
If the Owner of the Contract dies (or either Joint Owner if the Contract is
owned jointly) before the entire interest in the Contract is distributed,
the value of the Contract must be distributed to the designated beneficiary
as described in this section so that the Contract qualifies as an annuity
under the Internal Revenue Code.
If the death occurs on or after the Annuity Date, the remaining portion of
the interest in the Contract must be distributed at least as rapidly as
under the method of distribution being used as of the date of death. If
the death occurs before the Annuity Date, the entire interest in the
Contract must be distributed within five years after the date of death,
unless the following conditions are met. If an annuity income option is
selected by the designated beneficiary and if annuity income payments begin
within one year of the Owner's death, the value of the Contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. However, for Qualified Contracts where the
owner's spouse is the beneficiary, annuity income payments need not begin
within one year after the Owner's death, rather they need only begin on or
before April 1 of the calendar year following the calendar year in which
the Owner would have attained age 70 1/2. The Owner's designated
beneficiary is the person to whom proceeds of the Contract pass by reason
of the death of the Owner.
If the Contract Owner is a trust or other "non-natural person", and the
Annuitant dies before the Annuity Date, the required distribution upon
death rules will apply.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
The assets of the Variable Account are held by Empire Fidelity Investments
Life. The assets of the Variable Account are held apart from our general
account assets and any other separate accounts we may establish. We
maintain records of all purchases and redemptions of the shares of the
Funds held by the variable Subaccounts. We maintain fidelity bond coverage
for the acts of our officers and employees.
DISTRIBUTION OF THE CONTRACTS
As explained in the Prospectus, the Contracts are distributed through
Fidelity Brokerage Services, Inc. and Fidelity Insurance Agency, Inc.,
which are affiliated with FMR Corp. and Empire Fidelity Investments Life.
The offering of the contracts is continuous, and we do not anticipate
discontinuing offering the Contracts. However, we reserve the right to
discontinue offering the Contracts.
STATE REGULATION
Empire Fidelity Investments Life is subject to regulation by the Department
of Insurance of the State of New York, which periodically examines our
financial condition and operations. We are also subject to the insurance
laws and regulations of all jurisdictions where we do business. The
Contract described in the Prospectus and Statement of Additional
Information has been filed with and, where required, approved by, insurance
officials in those jurisdictions where it is sold.
We are required to submit annual statements of our operations, including
financial statements, to the insurance departments of the various
jurisdictions where we do business to determine solvency and compliance
with applicable insurance laws and regulations.
LEGAL MATTERS
The legal validity of the Contracts described in the Prospectus and
Statement of Additional Information has been passed on by David J.
Pearlman, Senior Legal Counsel of FMR Corp. Jorden Burt Berenson & Johnson
LLP of Washington, D.C. has passed on matters relating to federal
securities laws.
REGISTRATION STATEMENT
We have filed a Registration Statement under the Securities Act of 1933
with the SEC relating to the Contracts. The Prospectus and Statement of
Additional Information do not include all the information in the
Registration Statement. We have omitted certain portions pursuant to SEC
rules. You may obtain the omitted information from the SEC's main office
in Washington, D.C. by paying the SEC's prescribed fees.
INDEPENDENT ACCOUNTANTS
The statements of financial condition of Empire Fidelity Investments Life
Insurance Company as of December 31, 1996 and 1995 and the related
statements of income, stockholder's equity, and cash flows for each of the
three years in the period ended December 31, 1996, and the statement of
assets and liabilities of the Empire Fidelity Investments Variable Annuity
Account A as of December 31, 1996, and the related statements of operations
and changes in net assets for the years ended December 31, 1996 and 1995
included in this registration statement have been included herein in
reliance on the reports of Coopers & Lybrand L.L.P., independent
accountants, on the authority of that firm as experts in accounting and
auditing.
FINANCIAL STATEMENTS
The financial statements of Empire Fidelity Investments Life included
herein should be distinguished from the financial statements of the
Variable Account and should be considered only as bearing upon our ability
to meet our obligations under the Contracts.
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Ultimate Subsidiary of FMR Corp.)
FINANCIAL STATEMENTS
for the years ended December 31, 1996, 1995 and 1994
Page(s)
Report of Independent Accountants 1
Statements of Financial Condition 2
Statements of Income 3
Statements of Stockholder's Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-12
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Empire Fidelity Investments Life Insurance Company:
We have audited the accompanying statements of financial condition of
Empire Fidelity Investments Life Insurance Company (a wholly-owned ultimate
subsidiary of FMR Corp.) as of December 31, 1996 and 1995, and the related
statements of income, stockholder's equity, and cash flows for each of the
three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial condition of Empire Fidelity
Investments Life Insurance Company as of December 31, 1996 and 1995, and
the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
January 29, 1997
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Ultimate Subsidiary of FMR Corp.)
STATEMENTS OF FINANCIAL CONDITION
December 31, 1996 and 1995
ASSETS
1996 1995
Debt securities available
for sale $16,377,959 $16,049,538
Cash 940,264 238,986
Accrued investment income 265,264 261,132
Deferred policy acquisition
costs 12,588,658 9,639,824
Other assets 121,736 50,855
Separate account assets 578,323,382 408,308,869
Total assets $608,617,263 $434,549,204
LIABILITIES
Future contract benefits 7,057,409 7,631,476
Payable to affiliates 544,059 513,137
Other liabilities and accrued
expenses 338,406 379,886
Deferred tax liability 2,778,525 2,316,120
Separate account
liabilities 578,073,237 407,806,191
Total liabilities 588,791,636 418,646,810
Commitments and contingencies (Note 7)
STOCKHOLDER'S EQUITY
Common stock, par value $10 per
share - 200,000 shares authorized,
issued and outstanding 2,000,000 2,000,000
Additional paid-in capital 11,500,000 10,000,000
Unrealized gain on available
for sale securities, net of
tax 183,909 421,830
Retained earnings 6,141,718 3,480,564
Total stockholder's equity 19,825,627 15,902,394
Total liabilities and
stockholder's equity $608,617,263 $434,549,204
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Ultimate Subsidiary of FMR Corp.)
STATEMENTS OF INCOME
for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Revenues:
Fees charged to
contractholders $5,324,274 $3,499,018 $2,519,300
Net investment
income 947,831 1,060,440 453,029
Realized gains
(losses), net (600) 919 (556)
6,271,505 4,560,377 2,971,773
Benefits and expenses:
Return credited to
contractholders
and other benefits 336,079 442,617 155,126
Underwriting,
acquisition and
insurance expenses
(1) 1,900,291 1,345,682 1,061,561
2,236,370 1,788,299 1,216,687
Income before
provision for
income taxes 4,035,135 2,772,078 1,755,086
Provision for
income taxes 1,373,981 986,816 614,280
Net income $2,661,154 $1,785,262 $1,140,806
(1) Includes affiliated party transactions (Note 5)
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Ultimate Subsidiary of FMR Corp.)
STATEMENTS OF STOCKHOLDER'S EQUITY
for the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Unrealized
Gain (Loss)
Additional on Available Total
Common Paid-in for Sale Retained Stockholder's
Stock Capital Securities Earnings Equity
Balance at
January 1,
1994 $2,000,000 $8,000,000 $554,496 $10,554,496
Adjustment to
beginning balance
for change in
accounting principle,
net of tax of $66,176 $122,897 122,897
Capital contribution
from parent 2,000,000 2,000,000
Net income 1,140,806 1,140,806
Change in unrealized
gain (loss), net of
tax benefit of
$154,940 (287,745) (287,745)
Balance at
December 31,
1994 2,000,000 10,000,000 (164,848) 1,695,302 13,530,454
Net income 1,785,262 1,785,262
Change in unrealized
gain (loss), net of
tax of $315,904 586,678 586,678
Balance at
December 31,
1995 2,000,000 10,000,000 421,830 3,480,564 15,902,394
Capital contribution
from parent 1,500,000 1,500,000
Net income 2,661,154 2,661,154
Change in unrealized
gain (loss), net of
tax benefit of $128,112 (237,921) (237,921)
Balance at
December 31,
1996 $2,000,000 $11,500,000 $183,909 $6,141,718 $19,825,627
</TABLE>
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Ultimate Subsidiary of FMR Corp.)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
Cash flows from operating activities:
Net income $2,661,154 $1,785,262 $1,140,806
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Amortization of bond discount and
premium 100,738 61,980 148,820
Realized (gain) loss on investments 600 (919) 556
Depreciation and amortization 592,524 432,840 290,982
Deferred tax on earnings 590,517 484,464 570,118
Increase in future contract benefits 284,757 324,703 147,414
Addition to deferred policy acquisition
costs (3,531,030) (2,613,570) (2,687,700)
Change in assets and liabilities:
Accrued investment income (4,132) (55,244) (78,466)
Amounts due to (from) separate account 252,533 (95,735) (15,940)
Payable to parent and affiliates, net 30,922 331,828 86,802
Other assets and liabilities (122,689) 231,875 275,934
Net cash provided by (used in) operating
activities 855,894 887,484 (120,674)
Cash flows from investing activities:
Purchase of debt securities (5,060,540) (5,352,430) (15,183,971)
Proceeds from disposal of debt
securities 4,264,748 2,078,307 9,597,665
Additions to fixed assets - (7,501) (5,660)
Additions to separate account (105,762,522) (76,952,370) (81,541,668)
Net cash used in investing
activities (106,558,314) (80,233,994) (87,133,634)
Cash flows from financing activities:
Considerations and deposits on variable
annuity products 117,681,324 87,118,309 89,591,046
Payments to contractholders (12,777,626) (8,229,336) (4,357,091)
Capital contribution from parent 1,500,000 - 2,000,000
Net cash provided by financing
activities 106,403,698 78,888,973 87,233,955
Net increase (decrease) in cash 701,278 (457,537) (20,353)
Cash:
Beginning of year 238,986 696,523 716,876
End of year $940,264 $238,986 $696,523
</TABLE>
The accompanying notes are an integral part of the financial statements.
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Ultimate Subsidiary of FMR Corp.)
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Organization
Empire Fidelity Investments Life Insurance Company (the "Company") is a
wholly-owned subsidiary of Fidelity Investment Life Insurance Company
("FILI"), which is a wholly-owned subsidiary of FMR Corp. The Company
operates exclusively in the State of New York.
The Company issues variable deferred and immediate annuity contracts.
Amounts invested in the fixed option of the contracts are allocated to the
General Account of the Company. Amounts invested in the variable option of
the contract are allocated to the Variable Annuity Account A, a separate
account of the Company. The assets of the Variable Annuity Account A are
invested in the portfolios of the Variable Insurance Products Fund and the
Variable Insurance Products Fund II, which are reported at the net asset
value of such portfolios.
Basis of Presentation
The accompanying financial statements of the Company have been prepared on
the basis of generally accepted accounting principles (GAAP), which vary in
certain respects from reporting practices prescribed by state insurance
regulatory authorities (Note 4).
Investments
Investments in debt securities available for sale are reported at fair
value. Fair values are derived from external market quotations.
Unrealized gains or losses on debt securities are excluded from earnings
and reported as a separate component of stockholder's equity, net of taxes,
until realized. The discount or premium on debt securities is amortized
using the interest method. Loan-backed and structured securities are
amortized including anticipated prepayments at the date of purchase.
Investment income is recognized on the accrual basis. Realized gains or
losses on investments sold are determined on the basis of specific
identification method. Unrealized and realized gains or losses on the
Company's funds retained in the separate account are reflected in income.
Separate Account
Separate account assets represent funds held for the exclusive benefit of
variable annuity contractholders and are reported at fair value. Since the
contractholders receive the full benefit and bear the full risk of the
separate account investments, the income and realized and unrealized gains
and losses from such investments are offset by an increase in the amount of
liabilities related to the separate account. The excess of separate
account assets over separate account liabilities represents funds of the
Company retained in the separate account.
Future Contract Benefits and Fees Charged to Contractholders
Future contract benefits represent the reserve liability which approximates
the contractholder's account balance. Fees charged to contractholders
include mortality and expense risk charges, surrender charges and an annual
administrative charge.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally first-year commissions and
certain expenses of policy issue and underwriting, all of which vary with
and are related to the production of new business, have been deferred.
These acquisition costs are being amortized in proportion to the present
value of expected future gross profits from interest margins, mortality and
other elements of performance under the contracts.
Income Taxes
The Company is included in the consolidated life insurance tax return filed
by FILI. Under a tax-sharing agreement, each company is charged or
credited its share of taxes as determined on a separate-company basis.
The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted rates and laws that will be
in effect when the differences are expected to reverse.
Use of Estimates
The preparation of the statement of financial condition in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
Reclassifications
Certain prior year balances have been reclassified to conform with the
current year presentation.
2.Investments:
The sources of net investment income are as follows:
Years ended December 31,
1996 1995 1994
Debt securities $1,029,347 $1,050,500 $492,970
Short-term
investments and
cash 23,821 22,150 27,824
Investment in separate
account 16,036 94,136 2,934
Total investment
income 1,069,204 1,166,786 523,728
Investment expenses 121,373 106,346 70,699
Net investment
income $947,831 $1,060,440 $453,029
Gross realized gains and losses from the sale of debt securities were as
follows:
Years Ended December 31,
1996 1995 1994
Gross realized gains $92 $2,873
Gross realized losses 692 1,954 $556
Gross unrealized appreciation (depreciation) for debt securities by type of
issuer was as follows:
December 31, 1996
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $8,878,712 $218,868 $(18,523) $9,079,057
Corporate securities 5,853,124 66,855 (314) 5,919,665
Asset-backed securities 1,363,186 16,051 1,379,237
Totals $16,095,022 $301,774 $(18,837) $16,377,959
December 31, 1995
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $4,811,518 $411,444 $5,222,962
Corporate securities 8,094,646 178,930 $(193) 8,273,383
Asset-backed securities 2,494,404 58,832 (43) 2,553,193
Totals $15,400,568 $649,206 $(236) $16,049,538
The amortized cost and fair value of debt securities at December 31, 1996,
by contractual maturity, are shown below. Expected maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
Amortized Fair
Cost Value
Due in 1 year or less $3,484,549 $3,501,412
Due after 1 year
through 5 years 6,710,901 6,854,776
Due after 5 years
through 10 years 4,346,842 4,449,610
Due after 10 years 189,544 192,924
Subtotal 14,731,836 14,998,722
Asset-backed securities 1,363,186 1,379,237
$16,095,022 $16,377,959
All debt securities are investment grade and there are no significant
concentrations by issuer or by industry other than U.S. government
securities.
3. Income Taxes:
Significant components of the provision for income taxes attributable to
operations were as follows:
Years Ended December 31,
1996 1995 1994
Current $783,464 $502,352 $44,162
Deferred 590,517 484,464 570,118
Provision for income
taxes $1,373,981 $986,816 $614,280
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liability were as
follows:
Years Ended December 31,
1996 1995
Deferred policy acquisition costs $2,854,442 $2,161,421
Unrealized gain (loss) on
available-for-sale securities 99,028 227,140
Reserves (186,765) (88,631)
Other, net 11,820 16,190
Total net deferred tax liabilities $2,778,525 $2,316,120
The Company paid FILI federal income taxes of $816,323, $355,974 and
$71,681 in 1996, 1995 and 1994, respectively, related to the Company's
separate-company basis net operating results for the year. Payables of
$86,000 and $118,859 have been recorded to reflect an underpayment of taxes
to FILI in 1996 and 1995, respectively. Intercompany tax balances are
settled within 30 days of the actual tax payments.
The effective tax rates approximate the statutory federal income tax rates
for the years ended 1996, 1995 and 1994.
4. Stockholder's Equity and Dividend Restrictions:
Generally, the net assets of the Company available for transfer to FILI are
limited to the excess of the Company's net assets, as determined in
accordance with statutory accounting practices, over minimum statutory
capital requirements; however, payments of such amounts as dividends may be
subject to approval by regulatory authorities.
Net income (loss) and capital stock and surplus as determined in accordance
with statutory accounting practices were as follows:
Years Ended December 31,
1996 1995 1994
Net income (loss) $305,357 $100,694 $(717,766)
Capital stock and surplus $9,640,629 $7,834,233 $7,749,185
5. Affiliated Company Transactions:
The Company's insurance contracts are distributed through Fidelity
Brokerage Services, Inc. (FBSI) and Fidelity Insurance Agency, Inc. (FIA),
both of which are affiliated with FMR Corp. The Company has entered into
an agreement with FIA under which the Company pays FIA sales compensation
of 3% of payments received. The Company compensated FIA in the amount of
$3,521,413, $2,618,195 and $2,689,382 in 1996, 1995 and 1994, respectively.
The Company has entered into an administrative services agreement with FMR
Corp. and its subsidiaries whereby they provide certain administrative and
special services for the Company. The Company paid FMR Corp. and its
subsidiaries $404,779, $337,760 and $359,343 in 1996, 1995 and 1994,
respectively, for such services.
FMR Corp. maintains a noncontributory trusteed defined benefit pension plan
covering substantially all eligible Company employees. The benefits earned
are based on years of service and the employees' compensation during the
last five years of employment. FMR Corp.'s policy for the plan is to fund
the maximum amount deductible for income tax purposes, and to charge each
subsidiary for its share of such contributions. Pension costs of $8,628,
$9,989 and $11,628 were charged to the Company in 1996, 1995 and 1994,
respectively.
FMR Corp. sponsors a trusteed Profit-Sharing Plan and a contributory 401(k)
Thrift Plan covering substantially all eligible Company employees.
Payments are made to the trustee by FMR Corp. annually for the
Profit-Sharing Plan and monthly for the 401(k) Thrift Plan. FMR Corp.'s
policy is to fund all costs accrued and to charge each subsidiary for its
share of the cost. The cost charged to the Company for these plans
amounted to $46,836, $44,598 and $47,662 in 1996, 1995 and 1994,
respectively.
6. Underwriting, Acquisition, and Insurance Expenses:
Underwriting, acquisition and insurance expenses were as follows:
Years Ended December 31,
1996 1995 1994
Amortization of deferred policy
acquisition costs $582,196 $419,934 $277,975
Taxes, licenses and fees 388,542 122,918 77,249
General insurance expenses 929,553 802,830 706,337
$1,900,291 $1,345,682 $1,061,561
7. Commitment and Contingencies:
Reinsurance
The Company has entered into agreements to reinsure certain guarantee
provisions and mortality losses on its annuity contracts. The Company is
contingently liable for claims reinsured that the assuming company is
unable to pay. Premiums and deposits ceded under these reinsurance
contracts were not material to the financial statements.
(2_FIDELITY_LOGOS)EMPIRE FIDELITY INVESTMENTS
VARIABLE ANNUITY ACCOUNT A
ANNUAL REPORT
DECEMBER 31, 1996
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE
COMPANY VARIABLE ANNUITY OWNERS. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS. NEITHER EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE
COMPANY NOR FIDELITY BROKERAGE SERVICES, INC. IS A BANK, AND NEITHER THE
ANNUITY NOR MUTUAL FUND SHARES ARE BACKED OR GUARANTEED BY ANY BANK OR
INSURED BY THE FDIC.
STATEMENT OF ASSETS AND LIABILITIES
EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A
OF
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
<S> <C>
ASSETS DECEMBER 31, 1996
Investments at Current Market Value:
Variable Insurance Products Fund (VIP)
Money Market Portfolio - 48,675,092 shares (cost $48,675,092) $ 48,675,092
High Income Portfolio - 1,673,528 shares (cost $19,657,604) 20,952,574
Equity-Income Portfolio - 7,203,986 shares (cost $119,283,610) 151,499,819
Growth Portfolio - 2,856,346 shares (cost $74,838,138) 88,946,602
Overseas Portfolio - 1,309,265 shares (cost $21,866,193) 24,666,557
Variable Insurance Products Fund II (VIP II)
Investment Grade Bond Portfolio - 567,868 shares (cost $6,863,356) 6,950,703
Asset Manager Portfolio - 4,882,698 shares (cost $71,794,963) 82,664,084
Index 500 Portfolio - 413,235 shares (cost $31,573,421) 36,831,595
Asset Manager: Growth Portfolio - 1,312,416 shares (cost $16,229,806) 17,192,654
Contrafund Portfolio - 6,035,248 shares (cost $80,549,919) 99,943,702
Total Assets $ 578,323,382
LIABILITIES
Total Liabilities 0
NET ASSETS
Variable Annuity Contracts $ 566,276,569
Annuity Reserves 11,796,668
Retained in Variable Account by Empire Fidelity Investments Life Insurance Company 250,145
Total Net Assets $ 578,323,382
</TABLE>
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1995
EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A
OF
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUBACCOUNTS INVESTING IN:
VIP - VIP -
MONEY MARKET HIGH INCOME
12/31/96 12/31/95 12/31/96 12/31/95
INCOME:
Dividends $ 1,786,77 $ 1,580,34 $ 1,344,29 $ 573,316
0 0 3
EXPENSES:
Mortality, expense risk
and administrative
charges 369,246 276,570 173,493 108,556
Net investment
income (loss) 1,417,524 1,303,770 1,170,800 464,760
Realized gain 0 0 234,379 311,021
Unrealized appreciation
(depreciation) during
the year 0 0 650,495 1,066,452
Net increase in net
assets 1,417,524 1,303,770 2,055,674 1,842,233
from operations
Payments received
from contract owners 27,250,68 20,298,08 4,106,021 3,421,140
1 8
Transfers between
subaccounts and the (9,795,25 (15,358,1 1,458,992 881,407
fixed account, net 3) 81)
Transfers for contract
benefits and
terminations (1,159,04 (980,351) (381,564) (145,903)
7)
Other transfers (to) from
Empire Fidelity
Investments Life
Insurance Co., net 6,590 (277,715) (4,989) 27,410
Net increase (decrease)
in net assets from
contract transactions 16,302,97 3,681,841 5,178,460 4,184,054
1
Retained in (returned
from) Variable Annuity
Account A, net (6,995) 793 (6,253) 4,568
Total increase 17,713,50 4,986,404 7,227,881 6,030,855
(decrease) 0
in net assets
Net assets at beginning
of period 30,961,59 25,975,18 13,724,69 7,693,838
2 8 3
Net assets at end
of period $48,675,0 $ 30,961,5 $ 20,952,5 $ 13,724,6
92 92 74 93
SUBACCOUNTS INVESTING IN:
VIP -
EQUITY-INCOME VIP - GROWTH
12/31/96 12/31/95 12/31/96 12/31/95
INCOME:
Dividends $ 5,937,08 $ 5,704,765 $ 4,634,81 $ 181,456
3 9
EXPENSES:
Mortality, expense risk
and administrative
charges 1,445,756 935,882 811,476 476,876
Net investment
income (loss) 4,491,327 4,768,883 3,823,343 (295,420)
Realized gain 4,329,089 980,837 3,059,832 1,347,836
Unrealized appreciation
(depreciation) during
the year 8,576,967 21,037,305 2,520,593 10,737,43
0
Net increase in net
assets 17,397,38 26,787,025 9,403,768 11,789,84
from operations 3 6
Payments received
from contract owners 21,584,75 18,539,810 16,074,27 11,525,14
9 9 4
Transfers between
subaccounts and the (9,221,15 15,778,134 2,515,925 6,180,796
fixed account, net 7)
Transfers for contract
benefits and
terminations (3,177,33 (1,432,870 (1,354,75 (701,855)
3) ) 0)
Other transfers (to) from
Empire Fidelity
Investments Life
Insurance Co., net (35,670) 75,515 (30,252) (23,291)
Net increase (decrease)
in net assets from
contract transactions 9,150,599 32,960,589 17,205,20 16,980,79
2 4
Retained in (returned
from) Variable Annuity
Account A, net (78,836) 45,421 (40,650) 24,882
Total increase 26,469,14 59,793,035 26,568,32 28,795,52
(decrease) 6 0 2
in net assets
Net assets at beginning
of period 125,030,6 65,237,638 62,378,28 33,582,76
73 2 0
Net assets at end
of period $ 151,499, $ 125,030,6 $ 88,946,6 $62,378,2
819 73 02 82
SUBACCOUNTS INVESTING IN:
VIP - OVERSEAS
12/31/96 12/31/95
INCOME:
Dividends $ 525,818 $ 186,371
EXPENSES:
Mortality, expense risk
and administrative
charges 231,350 199,920
Net investment
income (loss) 294,468 (13,549)
Realized gain 484,088 948,661
Unrealized appreciation
(depreciation) during
the year 1,781,995 483,715
Net increase in net
assets 2,560,551 1,418,827
from operations
Payments received
from contract owners 3,046,601 1,796,064
Transfers between
subaccounts and the 1,632,798 (10,927,72
fixed account, net 3)
Transfers for contract
benefits and
terminations (312,776) (412,022)
Other transfers (to) from
Empire Fidelity
Investments Life
Insurance Co., net (20,485) 5,414
Net increase (decrease)
in net assets from
contract transactions 4,346,138 (9,538,267
)
Retained in (returned
from) Variable Annuity
Account A, net (7,308) (10,255)
Total increase 6,899,381 (8,129,695
(decrease) )
in net assets
Net assets at beginning
of period 17,767,17 25,896,871
6
Net assets at end
of period $ 24,666,5 $ 17,767,17
57 6
VIP II - VIP II -
INVESTMENT ASSET MANAGER
GRADE BOND
12/31/96 12/31/95 12/31/96 12/31/95
INCOME:
Dividends $ 337,043 $ 143,740 $ 5,293,83 $ 2,010,35
5 7
EXPENSES
:
Mortality,
expense
risk and 68,068 48,624 815,364 875,116
administrat
ive
charges
Net
investment 268,975 95,116 4,478,471 1,135,241
income
(loss)
Realized 75,367 57,874 1,663,095 2,777,299
gain
Unrealized
appreciatio
n (227,009) 563,142 4,022,895 8,678,445
(depreciati
on) during
the year
Net
increase in 117,333 716,132 10,164,46 12,590,98
net assets 1 5
from
operations
Payments
received 1,204,243 663,948 3,467,114 2,478,825
from
contract
owners
Transfers
between 976,244 (11,063,5 (30,622,5
subaccoun (177,798) 77) 61)
ts and the
fixed
account,
net
Transfers
for
contract (443,215) (148,176) (2,267,35 (2,796,51
benefits 7) 9)
and
termination
s
Other
transfers
(to) from
Empire 1,167 (1,477) (18,904) 75,768
Fidelity
Investment
s Life
Insurance
Co., net
Net
increase
(decrease) 584,397 1,490,539 (9,882,72 (30,864,4
in net 4) 87)
assets
from
contract
transaction
s
Retained
in
(returned (4,101) (4,949) (59,436) (21,367)
from)
Variable
Annuity
Account A,
net
Total 2,201,722 222,301 (18,294,8
increase 697,629 69)
(decrease)
in net
assets
Net assets
at 6,253,074 4,051,352 82,441,78 100,736,6
beginning 3 52
of period
Net assets
at end of $ 6,950,70 $ 6,253,07 $82,664,0 $ 82,441,7
period 3 4 84 83
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 1995.
VIP II - VIP II -
INDEX 500 ASSET MANAGER:
GROWTH
12/31/96 12/31/95 12/31/96 12/31/95*
INCOME:
Dividends $ 620,782 $ 48,377 $ 862,945 $ 209,986
EXPENSES
:
Mortality,
expense
risk and 242,314 65,235 98,994 29,423
administrat
ive
charges
Net
investment 378,468 (16,858) 763,951 180,563
income
(loss)
Realized 702,643 399,595 239,532 178,391
gain
Unrealized
appreciatio
n 3,762,268 1,451,439 801,887 160,962
(depreciati
on) during
the year
Net
increase in 4,843,379 1,834,176 1,805,370 519,916
net assets
from
operations
Payments
received 9,153,239 3,472,817 5,577,602 2,910,699
from
contract
owners
Transfers
between 10,692,00 6,054,548 5,074,653 1,484,390
subaccoun 5
ts and the
fixed
account,
net
Transfers
for
contract (760,330) (919,227) (154,535) (9,486)
benefits
and
termination
s
Other
transfers
(to) from
Empire (4,432) (3,338) (3,396) (694)
Fidelity
Investment
s Life
Insurance
Co., net
Net
increase
(decrease) 19,080,48 8,604,800 10,494,32 4,384,909
in net 2 4
assets
from
contract
transaction
s
Retained
in
(returned (8,563) 5,281 (16,199) 4,334
from)
Variable
Annuity
Account A,
net
Total 23,915,29 10,444,25 12,283,49 4,909,159
increase 8 7 5
(decrease)
in net
assets
Net assets
at 12,916,29 2,472,040 4,909,159 0
beginning 7
of period
Net assets
at end of $ 36,831,5 $ 12,916,2 $ 17,192,6 $ 4,909,15
period 95 97 54 9
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 1995.
VIP II - TOTAL
CONTRAFUND
12/31/96 12/31/95* 12/31/96 12/31/95
INCOME:
Dividends $ 526,257 $ 666,687 $ 21,869,6 $ 11,305,39
45 5
EXPENSES
:
Mortality,
expense
risk and 786,431 277,494 5,042,492 3,293,696
administrat
ive
charges
Net
investment (260,174) 389,193 16,827,15 8,011,699
income 3
(loss)
Realized 1,823,791 369,981 12,611,81 7,371,495
gain 6
Unrealized
appreciatio
n 13,273,28 6,120,498 35,163,37 50,299,388
(depreciati 6 7
on) during
the year
Net
increase in 14,836,90 6,879,672 64,602,34 65,682,582
net assets 3 6
from
operations
Payments
received 25,690,73 20,852,56 117,155,2 85,959,095
from 5 0 74
contract
owners
Transfers
between 9,364,673 24,300,25 481,261 (1,252,696
subaccoun 0 )
ts and the
fixed
account,
net
Transfers
for
contract (1,779,16 (150,792) (11,790,0 (7,697,201
benefits 1) 68) )
and
termination
s
Other
transfers
(to) from
Empire (71,396) (2,577) (181,767) (124,985)
Fidelity
Investment
s Life
Insurance
Co., net
Net
increase
(decrease) 33,204,85 44,999,44 105,664,7 76,884,213
in net 1 1 00
assets
from
contract
transaction
s
Retained
in
(returned (24,192) 47,027 (252,533) 95,735
from)
Variable
Annuity
Account A,
net
Total 48,017,56 51,926,14 170,014,5 142,662,53
increase 2 0 13 0
(decrease)
in net
assets
Net assets
at 51,926,14 0 408,308,8 265,646,33
beginning 0 69 9
of period
Net assets
at end of $ 99,943,7 $ 51,926,1 $ 578,323, $ 408,308,8
period 02 40 382 69
</TABLE>
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 1995.
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1996 and 1995
EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A
OF
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
1. ORGANIZATION.
Empire Fidelity Investments Variable Annuity Account A (the Account), a
unit investment trust registered under the Investment Company Act of 1940
as amended, was established by Empire Fidelity Investments Life Insurance
Company (EFILI) on July 15, 1991 and exists in accordance with the
regulations of the New York Insurance Department. The Account is a funding
vehicle for individual Retirement Reserves and Income Advantage variable
annuity contracts. EFILI is a wholly-owned subsidiary of Fidelity
Investments Life Insurance Company which is a wholly-owned subsidiary of
FMR Corp.
Beginning in 1995, EFILI added two new subaccounts to the Account; Asset
Manager: Growth and Contrafund.
2. SIGNIFICANT ACCOUNTING POLICIES.
Investments are made in the portfolios of the Variable Insurance Products
Fund and the Variable Insurance Products Fund II and are valued at the
reported net asset values of such portfolios. Transactions are recorded on
the trade date. Income from dividends is recorded on the ex-dividend date.
Realized gains and losses on the sales of investments are computed on the
basis of the identified cost of the investment sold.
In addition to the Account, a contractholder may also allocate funds to the
Fixed Account, which is part of EFILI's general account. Because of
exemptive and exclusionary provisions, interests in the Fixed Account have
not been registered under the Securities Act of 1933 and EFILI's general
account has not been registered as an investment company under the
Investment Company Act of 1940.
Annuity reserves are computed for contracts in the income stage according
to the 1983 Individual Annuitant Mortality Table. The assumed investment
return is 3.5% unless the annuitant elects otherwise, in which case the
rate may vary from 3.5% to 7%, as regulated by the laws of New York. The
mortality risk is fully borne by EFILI and may result in additional amounts
being transferred into the Account by EFILI.
The operations of the Account are included in the federal income tax return
of EFILI, which is taxed as a Life Insurance Company under the provisions
of the Internal Revenue Code (the Code).
The preparation of the statement of assets and liabilities and the
statements of operations and changes in net assets in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of liabilities
at the date of the financial statements and the reported amounts of income
and expense during the reporting period. Actual results could differ from
those estimates.
Certain amounts in the financial statements for 1995 have been reclassified
to correspond to the 1996 presentation.
3. EXPENSES.
EFILI deducts a daily charge from the net assets of the Account (equivalent
to an effective annual rate of 1% of net assets) for administrative
expenses and for the assumption of mortality and expense risks. EFILI also
deducts an annual maintenance charge of $30 from the Fidelity Retirement
Reserves contract value. The maintenance charge is waived on certain
contracts.
Under the current provisions of the Code, EFILI does not expect to incur
federal income taxes on the earnings of the Account to the extent the
earnings are credited under the contracts. EFILI incurs federal income
taxes on the difference between the financial statement carrying value of
reserves for contracts in the income stage and those reserves held for
federal income tax purposes. The tax effect of this temporary difference is
expected to be recovered by EFILI. As such, no charge is being made
currently to the Account for federal income taxes. EFILI will review
periodically the status of such decision based on changes in the tax law.
Such a charge may be made in future years for any federal income taxes that
would be attributable to the contracts.
4. AFFILIATED COMPANY TRANSACTIONS.
The contracts are distributed through Fidelity Brokerage Services, Inc.
(FBSI) and Fidelity Insurance Agency, Inc. (FIA), both of which are
affiliated with FMR Corp. FBSI and FIA are the distributors and FBSI is the
principal underwriter of the contracts. Fidelity Management & Research
Company, an affiliate of FMR Corp., acts as investment advisor to each
portfolio. Fidelity Investments Institutional Operations Co., an affiliate
of FMR Corp., is the transfer and shareholder servicing agent for the
portfolios.
5. PURCHASES AND SALES OF INVESTMENTS.
The following table shows aggregate cost of shares purchased and proceeds
from sales of each subaccount for the year ended December 31, 1996:
PURCHASES SALES
Money Market $ $
46,259,773 28,546,273
High Income 10,434,586 4,091,580
Equity-Income 28,080,139 14,517,049
Growth 30,543,657 9,555,762
Overseas 8,676,063 4,042,764
Investment Grade 4,085,263 3,235,991
Asset Manager 7,199,467 12,663,155
Index 500 21,687,531 2,237,145
Asset Manager: Growth 12,668,815 1,426,740
Contrafund 38,392,223 5,471,738
6. UNIT VALUES.
A summary of changes in accumulation units and accumulation units
outstanding for variable annuity contracts at December 31, 1996 and 1995
are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PAYMENTS
BEGINNING RECEIVED TRANSFERS
BALANCE FROM CONTRACT BETWEEN
OWNERS SUBACCOUNTS,
NET
UNITS
JANUARY 1, 1996 TO DECEMBER 31, 1996
Money Market Subaccount 2,086,339 1,396,811 (671,222)
High Income Subaccount 605,822 175,020 61,177
Equity-Income Subaccount 4,481,146 751,876 (315,456)
Growth Subaccount 2,004,576 487,213 73,706
Overseas Subaccount 930,291 154,412 85,133
Investment Grade Subaccount 358,773 71,690 (12,681)
Asset Manager Subaccount 4,435,615 181,581 (584,908)
Index 500 Subaccount 802,405 537,084 624,968
Asset Manager: Growth 396,158 419,484 378,254
Subaccount*
Contrafund Subaccount* 3,685,097 1,742,216 631,751
JANUARY 1, 1995 TO DECEMBER 31, 1995
Money Market Subaccount 1,840,618 1,212,366 (887,953)
High Income Subaccount 413,916 164,126 48,831
Equity-Income Subaccount 3,148,692 755,226 681,199
Growth Subaccount 1,448,467 395,023 194,334
Overseas Subaccount 1,472,775 100,194 (621,187)
Investment Grade Subaccount 270,642 41,606 58,920
Asset Manager Subaccount 6,284,783 146,335 (1,848,581)
Index 500 Subaccount 210,179 240,442 433,808
Asset Manager: Growth 0 264,392 138,263
Subaccount*
Contrafund Subaccount* 0 1,655,600 2,096,508
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CONTRACT
TERMINATION ENDING BALANCE
S
UNITS UNIT VALUE DOLLARS
JANUARY 1, 1996 TO DECEMBER 31, 1996
Money Market Subaccount 332,385 3,144,313 $15.30 $ 48,101,350
High Income Subaccount (22,006) 820,013 $24.89 20,409,560
Equity-Income Subaccount (162,354) 4,755,212 $31.05 147,641,357
Growth Subaccount (62,104) 2,503,391 $34.97 87,540,085
Overseas Subaccount (18,195) 1,151,640 $21.29 24,519,804
Investment Grade Subaccount (34,981) 382,801 $17.36 6,644,585
Asset Manager Subaccount (131,774) 3,900,514 $20.75 80,953,438
Index 500 Subaccount (77,086) 1,887,371 $18.89 35,655,373
Asset Manager: Growth (30,890) 1,163,007 $14.49 16,853,490
Subaccount*
Contrafund Subaccount* (177,041) 5,882,023 $16.65 97,957,527
$ 566,276,569
JANUARY 1, 1995 TO DECEMBER 31, 1995
Money Market Subaccount (78,693) 2,086,339 $14.66 $ 30,587,979
High Income Subaccount (21,052) 605,822 $22.05 13,357,546
Equity-Income Subaccount (103,971) 4,481,146 $27.44 122,982,339
Growth Subaccount (33,248) 2,004,576 $30.80 61,732,843
Overseas Subaccount (21,490) 930,291 $19.00 17,672,782
Investment Grade Subaccount (12,394) 358,773 $16.99 6,096,643
Asset Manager Subaccount (146,921) 4,435,615 $18.29 81,145,514
Index 500 Subaccount (82,024) 802,405 $15.54 12,467,512
Asset Manager: Growth (6,497) 396,158 $12.21 4,835,356
Subaccount*
Contrafund Subaccount* (67,011) 3,685,097 $13.87 51,105,632
$ 401,984,146
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 1995.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of Empire Fidelity Investments
Variable Annuity Account A:
We have audited the accompanying statement of assets and liabilities of
Empire Fidelity Investments Variable Annuity Account A (comprised of Money
Market Subaccount, High Income Subaccount, Equity-Income Subaccount, Growth
Subaccount, Overseas Subaccount, Investment Grade Bond Subaccount, Asset
Manager Subaccount, Index 500 Subaccount, Asset Manager: Growth Subaccount
and Contrafund Subaccount) of Empire Fidelity Investments Life Insurance
Company as of December 31, 1996, and the related statements of operations
and changes in net assets for each of the periods indicated therein. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the aforementioned
subaccounts comprising Empire Fidelity Investments Variable Annuity Account
A of Empire Fidelity Investments Life Insurance Company as of December 31,
1996, and the results of their operations and the changes in their net
assets for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 29, 1997
(registered trademark)
America's largest privately-held investment management organization.
Retirement Reserves and Income Advantage are issued by Empire Fidelity
Investments Life Insurance Company. N.Y., N.Y.
Fidelity Brokerage Services, Inc., member NYSE, SIPC, and Fidelity
Insurance Agency, Inc. are the distributors.
82 Devonshire Street, Boston, MA 02109
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a) Financial Statements included in Part B
The following financial statements of Empire Fidelity Investments Life
Insurance Company are filed in Part B. There are no financial statements
included in Part A, other than Accumulation Unit Values.
Statement of Assets and Liabilities for Empire Fidelity Investments
Variable Annuity Account A as of December 31, 1996.
Statements of Operations and Changes in Net Assets for Empire Fidelity
Investments Variable Annuity Account A for Years ended December 31, 1996
and 1995.
Report of Coopers & Lybrand on the Financial Statements of Empire Fidelity
Investments Variable Annuity Account A.
Balance Sheets of Empire Fidelity Investments Life Insurance Company as of
December 31, 199 and 1995.
Statements of Income for Empire Fidelity Investments Life Insurance
Company for the Year Ended December 31, 1996 and 1995.
Statements of Changes in Stockholder's Equity for Empire Fidelity
Investments Life Insurance Company for the Year Ended December 31, 1996 and
1995.
Statements of Cash Flows for Empire Fidelity Investments Life Insurance
Company for the Year Ended December 31, 1996 and 1995.
Notes to Financial Statements of Empire Fidelity Investments Life
Insurance Company.
Report of Coopers & Lybrand on Financial Statements of Empire Fidelity
Investments Life Insurance Company.
b) Exhibits
(1) Resolution of Board of Directors of Empire Fidelity Investments Life
Insurance Company ("Empire Fidelity Investments Life") establishing the
Empire Fidelity Investments Variable Annuity Account A. (Note 1).
(2) Not Applicable.
(3) (a) Distribution Agreement between Empire Fidelity Investments Life
and Fidelity Brokerage Services, Inc. (Note 1).
(4) (a) Specimen Variable Annuity Contract. (Note 1)
(b) Endorsement for Unisex Contract. (Note 1)
(c) Endorsement for Qualified Contracts. (Note 1)
(5) (a) Application for Variable Annuity Contract. (Note 1)
(6) (a) Charter of Empire Fidelity Investments Life. (Note 1)
(b) Amended Bylaws of Empire Fidelity Investments Life. (Note 1)
(7) Not Applicable.
(8) (a) Service Agreement between Empire Fidelity
Investments Life and Fidelity Investments Life. (Note 1)
(b) Service Agreement between Empire Fidelity
Investments Life and Fidelity Investments
Corporate Services. (Note 1)
(9) Opinion and consent of David J. Pearlman, as to the legality
of securities being issued. (Note 1)
(10) (a) Written consent of Coopers & Lybrand. (Note 1)
(b) Written consent of Jorden Burt Berenson & Johnson LLP
(Note 1)
(11) Not Applicable
(12) Not Applicable
(13) Performance Advertising Calculations (Note 2)
(14) (a) Participation Agreement among Empire Fidelity
Investments Life, Variable Insurance Products Fund and Fidelity
Distributors Corporation. (Note 1)
(b) Participation Agreement among Empire Fidelity Investments
Life, Variable Insurance Products Fund II and Fidelity Distributors
Corporation (Note 1)
(c) Participation Agreement among Empire Fidelity Investments
Life, Variable Insurance Products Fund III and Fidelity Distributors
Corporation (Note 1)
(15) (a) Powers of Attorney (Note 3)
(Note 1) Fil;es electronically herein
(Note 2) Incorporated by reference to Post-Effective Amendment No. 11 to
Registration Statement No.33-24400 filed April 24, 1997.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 4 to
this Registration Statement filed April 26, 1996.
Item 25. Directors and Officers of the Depositor
The Directors and officers of Empire Fidelity
Investments Life are as follows:
Directors of Empire Fidelity Investments Life
J. GARY BURKHEAD, Director
JAMES C. CURVEY, Director
ROBERT C. POZEN, Director
JOHN J. REMONDI, Director
RODNEY R. ROHDA, Director and Chairman
DAVID C. WEINSTEIN, Director and Secretary
DENIS M. McCARTHY, Director
ROY BALLENTINE, Director
PETER JOHANNSEN, Director
JOSHUA BERMAN, Director
MALCOLM MACKAY, Director
FLOYD L. SMITH, Director
The addresses of Roy Ballentine, Joshua Berman, Peter Johannsen, Malcolm
MacKay, and Floyd L. Smith are 11 Depot Street, P. O. Box 1860, Wolfboro,
New Hampshire 03894; 919 Third Avenue, New York, New York 10022; One Post
Office Square, Boston, Massachusetts 02109; and 4 Peter Cooper Road, # 9G,
New York, New York 10010, respectively. The principal business address of
each of the other above persons is 82 Devonshire Street, Boston,
Massachusetts 02109.
Executive Officers Who Are not Directors
Executive officers of Empire Fidelity Investments Life who are not
directors are as follows.
ALLAN BRANDON, Vice President and Chief Administrative Officer
DAVID J. PEARLMAN, Vice President, Secretary and General Counsel
The principal business address of Allan Brandon is One World Financial
Center, 200 Liberty Street, Tower A, New York, New York 10281. The
principal business address of Messrs. Kurtzer, Jameison and Pearlman is 82
Devonshire Street, Boston, Massachusetts 02109.
Item 26. Persons Controlled By or Under Common control with the Depositor
or Registrant.
See Exhibit 26 of the original registration statement filed on Form N-4
on August 17, 1991, Reg. No. 33-42376, on behalf of Empire Fidelity
Investments Variable Annuity Account A.
Item 27. Number of Contract Owners.
As of December 31, 1996 there were 567 Qualified Contracts and 8,229
Non-qualified Contracts outstanding.
Item 28. Indemnification
FMR Corp. and its subsidiaries own a directors' and officers' liability
reimbursement contract (the "Policy"), issued by National Union Fire
Insurance Company, that provides coverage for "Loss" (as defined in the
Policy) arising from any claim or claims by reason of any breach of duty,
neglect, error, misstatement, misleading statement, omission or other act
done or wrongfully attempted by a person while he or she is acting in his
or her capacity as a director or officer. The coverage is provided to
these insureds, including Empire Fidelity Investments Life, to the extent
required or permitted by applicable law, common or statutory, or under
their respective charters or by-laws, to indemnify directors or officers
for Loss arising from the above-described matters. Coverage is also
provided to the individual directors or officers for such Loss, for which
they shall not be indemnified, subject to relevant contract exclusions.
Loss is essentially the legal liability on claims against a director or
officer, including damages, judgments, settlements, costs, charges and
expenses (excluding salaries of officers or employees) incurred in the
defense of actions, suits or proceedings and appeals therefrom.
There are a number of exclusions from coverage. Among the matters excluded
are Losses arising as a result of (1) fines or penalties imposed by law or
other matters that may be deemed uninsurable under the law pursuant to
which Policy is construed, (2) claims brought about or contributed to by
the fraudulent, dishonest, or criminal acts of a director or officer, (3)
any claim made against the directors or officers for violation of any of
the responsibilities, obligations, or duties imposed upon fiduciaries by
the Employee Retirement Income Security Act of 1974 or amendments thereto,
(4) professional errors or omission, and (5) claims for an accounting or
profits in fact made from the purchase or sale by a director or officer of
any securities of the insured corporations within the meaning of section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any state law.
The limit of coverage of the Policy is $10 million, as an annual aggregate
limit, with 95% co-insurance for the first $1 million of coverage, and with
a deductible of $500,000 in the event that Empire Fidelity Investments Life
indemnifies the director or officer (with a maximum aggregate per loss
deductible of $25,000) if Empire Fidelity Investments Life does not
indemnify the director or officer.
New York law (N.Y. Bus. Corp. 722) provides, in part, that a corporation
may indemnify a director, officer, employee or agent against liability if
he acted in good faith and in a manner he reasonably believed to be in the
best interests of the corporation and, in respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The text of Article VI of Empire Fidelity Investment Life's By-Laws, which
relates to indemnification of the directors and officers, is as follows:
Section 6.1. Indemnification of Directors, Officers, Employees and Agents.
Any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action or suit by
or in the right of the Corporation to procure a judgment in its favor) by
reason of the fact that he is or was a director, officer, employee or agent
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
be indemnified to the extent permitted by the laws of the State of New
York, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with the defense of settlement of such action, suit or
proceeding. The indemnification expressly provided by statute in a
specific case shall not be deemed entitled under any lawful agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office, and shall continue as a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
The Board of Directors may purchase and maintain insurance on behalf on
any person who is or was a director, officer, employee of agent of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture or trust or other enterprise
against any liability incurred by him in any such capacity or arising out
of his status as such, whether or not the Corporation would have the power
to indemnify against such liability.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer, or
controlling person in connection with the securities being registered), the
Registrant will, unless in the opinion of is counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by its against is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 29. Principal Underwriters.
(a) Fidelity Brokerage Services, Inc. acts as distributor for other
variable life and variable annuity contracts registered by separate
accounts of Empire Fidelity Investments Life Insurance Company, Fidelity
Investments Life Insurance Company and PFL Life Insurance Company.
(b)
Name and Principal Positions and Offices with Underwriter
Business Address
Roger T. Servison Director
Steven Akin Director and President
Rodney Rohda Director
Edward L. McCartney Executive Vice President
Thomas E. Lewis Executive Vice President
Bruce MacAlpine Executive Vice President
Shaugn S. Stanley Treasurer and Chief Financial Officer
Jeffrey R. Larsen Legal Counsel & Clerk
Linda Holland Compliance Officer
(c) Commissions and other compensation was received by the principal
underwriter.
See Item 24 (b) (3). No compensation was received by the principal
underwriter from the registrant or depositor during the registrant's or
depositor's last fiscal year.
Item 30. Location of Accounts and Records
The records regarding the Account required to be maintained by Section
31(a) of the Investment Company Act of 1940, and Rules 31a-1 to 31a-3
promulgated thereunder, are maintained at Empire Fidelity Investments Life
Insurance Company at One World Financial Center New York, New York 10281.
Item 31. Management Services
The contracts for management-related services between (a) Fidelity
Investments Life and Empire Fidelity Investments Life is summarized in Part
B. Payments under these contracts for 1996 and 1995 were $ 343,376 and
$297,600, respectively.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never than
16 months old for so long as payments under the variable annuity contracts
may be accepted.
(b) Registrant undertakes to include either (1) as part of any application
to purchase a contract offered by the prospectus, a space that an applicant
can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in a
prospectus that the applicant can remove to send for a Statement of
Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
(d) Registrant represents that it meets the definition of a "separate
account" under the federal securities laws.
(e) Empire Fidelity Investment Life Insurance Company hereby represents
that the aggregate charges under the variable annuity policy ("the
contract") offered by Empire Fidelity Investment Life Insurance Company are
reasonable in relation to services rendered, the expenses expected to be
incurred, and the risks assumed by Empire Fidelity Investment Life
Insurance Company
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Empire Fidelity Investments Variable Annuity Account
A, certifies that it meets the requirements of the Securities Act Rule
485(b) for effectiveness of this Registration Statement and has caused this
Post-Effective Amendment No.5 to the Registration Statement to be signed on
its behalf in the city of Boston and the Commonwealth of Massachusetts, on
this 24th day of April, 1997.
EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A
(Registrant)
By: EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(Depositor)
By: _________________________ Attest:_____________________
Rodney R. Rohda, Chairman and David J. Pearlman,
Chief Executive Officer Secretary
As required by the Securities Act of 1933 , this Registration Statement
has been signed below by the following persons in the capacities indicated
on this 24th day of April, 1997.
Signature Title
________________ Chairman and Director
Rodney R. Rohda (Chief Executive Officer)
)
By:/s/David J. Pearlman)
) David J. Pearlman
________________ Director ) (Attorney-in-Fact)
J. Gary Burkhead )
)
________________ Director )
James C. Curvey )
)
________________ Director )
John J. Remondi )
)
________________ Director )
Robert C. Pozen )
)
)
_______________ Director )
Roy Ballentine )
)
_______________ Director )
Peter Johannsen )
)
_______________ Director )
Joshua Berman
)By:/s/David J. Pearlman
) David J. Pearlman
_______________ Director ) (Attorney-in-Fact)
Malcolm MacKay )
)
_______________ Director )
Denis M. McCarthy )
)
_______________ Director )
Floyd L. Smith )
)
_______________ Director )
David Weinstein )
EXHIBIT INDEX
Exhibit
(1) Resolution of Board of Directors of Empire Fidelity Investments
Life Insurance Company ("Empire Fidelity Investments Life") establishing
the
Empire Fidelity Investments Variable Annuity Account A.
(2) Not Applicable.
(3) (a) Distribution Agreement between Empire Fidelity Investments Life
and Fidelity Brokerage Services, Inc. .
(4) (a) Specimen Variable Annuity Contract.
(b) Endorsement for Unisex Contract.
(c) Endorsement for Qualified Contracts.
(5) (a) Application for Variable Annuity Contract.
(6) (a) Charter of Empire Fidelity Investments Life.
(b) Amended Bylaws of Empire Fidelity Investments Life.
(7) Not Applicable.
(8) (a) Service Agreement between Empire Fidelity
Investments Life and Fidelity Investments Life.
(b) Service Agreement between Empire Fidelity
Investments Life and Fidelity Investments
Corporate Services.
(9) Opinion and consent of David J. Pearlman, as to the legality
of securities being issued.
(10) (a) Written consent of Coopers & Lybrand.
(b) Written consent of Jorden Burt Berenson & Johnson LLP
(14) (a) Participation Agreement among Empire Fidelity
Investments Life, Variable Insurance Products Fund and Fidelity
Distributors Corporation.
(b) Participation Agreement among Empire Fidelity Investments
Life, Variable Insurance Products Fund II and Fidelity Distributors
Corporation
(c) Participation Agreement among Empire Fidelity Investments
Life, Variable Insurance Products Fund III and Fidelity Distributors
Corporation
EXHIBIT 1
ACTION BY UNANIMOUS WRITTEN CONSENT
IN LIEU OF THE FIRST MEETING
OF THE BOARD OF DIRECTORS OF
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
We, the undersigned, being all of the Directors of EMPIRE FIDELITY
INVESTMENTS LIFE INSURANCE COMPANY (the "Company"), a New York corporation,
do hereby adopt the following resolutions by unanimous written consent in
accordance with Section 708 of the Business Corporation Law of the State of
New York, by written consent without a meeting and in lieu of the
Organizational Meeting of the Board of Directors, with full force and
effect as if adopted by the unanimous affirmative vote of the Board of
Directors at a duly constituted meeting:
1. RESOLVED, that all acts of the Incorporators of the Company, taken in
their capacity as such through the Statement of Organization by the
Incorporators or otherwise, be, and hereby are in all respects ratified,
confirmed and approved and that the Secretary of the Company be, and hereby
is, authorized and directed to file such Statement with the minutes of the
Company;
2. RESOLVED, that all acts of the Directors of the Company, taken in their
capacity as such in connection with the organization and licensing of the
Company, be and hereby are in all respects ratified, confirmed and approved
and that the Secretary of the Company be, and hereby is, authorized and
directed to file any resolutions adopted in connection with such
organization and licensing with the minutes of the Corporation;
3. RESOLVED, that a certified copy of the Charter as filed with the New
York Insurance Department on May 1, 1991 be inserted in the minute book of
this Company;
4. RESOLVED, that the following persons be, and they hereby are, elected to
the offices of the Company set forth opposite their respective names below
to serve in such capacity until their successors have been duly elected and
qualified:
Rodney R. Rohda, President and Chief Executive Officer
Allan Brandon, Chief Administrative Officer
Michael G. Kafantis II, Treasurer
David C. Weinstein, Secretary
Judith Hogan, Assistant Secretary
5. RESOLVED, that this Company shall have a corporate seal in the usual
form, having in its circumference Empire Fidelity Investments Life
Insurance Company, and in the center thereof INCORPORATED 1991 NEW YORK,
and that an impression of said seal shall be affixed at the margin of this
resolution for the purpose of identification;
6. RESOLVED, that the By-Laws for the regulation of the affairs of the
Company, be, and hereby are in all respects ratified, confirmed and
approved, and that the Secretary of the Company is authorized and directed
to file such By-Laws with the minutes of the Company;
7. RESOLVED, that the officers of this Company are hereby empowered to
enter into Investment Advisory Agreements, Administrative Services
Agreements and such other agreements, contracts or arrangements as they
deem necessary or appropriate to assist the Company in the transaction of
its insurance business, subject to and in accordance with the provisions of
the New York Insurance Law;
8. RESOLVED, that the following persons shall serve on the Committee of
Independent Disinterested Directors pursuant to Section 7 of the By-Laws of
the Company:
John H. Stimpson
Roy C. Ballentine
Peter G. Johannsen
Joshua M. Berman
Malcolm MacKay
9. RESOLVED, that the Company, pursuant to the provisions of Section 4240
of the New York Insurance Law hereby establishes two separate accounts
designated Empire Fidelity Investments Variable Annuity Account A and
Empire Fidelity Investments Variable Life Account A, respectively
(collectively, the "Accounts") or such other name(s) as the officers of the
Company deem appropriate;
10. RESOLVED, that the President, Treasurer, or Secretary, each be
authorized to take all necessary and appropriate action to accomplish the
registration of the Accounts as investment companies under the Investment
Company Act of 1940 and the registration of the variable annuity contracts
and variable life policies issued in connection with the Accounts as
securities under the Securities Act of 1933, and to take all action
necessary to comply with such Acts, including but not limited to the
execution and filing of registration statements and amendments thereto,
(including the payment of registration fees), execution and filing of
applications for exemptions (and amendments thereto) from the provisions of
the Acts as may be necessary or desirable, and execution of agreements for
the management of the Accounts and for the distribution of variable annuity
contracts and variable life policies funded through the Accounts;
11. RESOLVED, that the Company receive and hold in the Accounts (i) amounts
arising from premium payments received by the Company under certain
variable annuity contracts and variable life policies (in accordance with
the provisions of such contracts and policies) and (ii) such other assets
of the Company as the officers of the Company may deem prudent and
appropriate to support the issuance and maintenance of such contracts and
policies;
12. RESOLVED, that the assets held in the Accounts be invested and
reinvested in shares of Variable Insurance Products Fund, Variable
Insurance Products Fund II or such other open-end management investment
companies registered under the Investment Company Act of 1940 and advised
by Fidelity Management & Research Company;
13. RESOLVED, that the signature of any Director or Officer of the Company
required by law to affix his or her signature to a registration statement
under the Investment Company Act of 1940 and/or Securities Act of 1933, or
any amendment thereof, may be affixed by said Director or Officer
personally or by an attorney-in-fact duly constituted in writing by said
Director or Officer to sign his or her name thereto;
14. RESOLVED, that the President is hereby appointed agent of the Company
to receive any and all notices from the Securities and Exchange Commission
relating to the registration statements for the Accounts and the contracts
or the policies, and all amendments thereof; and
15. RESOLVED, that the President, Treasurer, or Secretary, each be
authorized to take whatever steps as may be necessary to comply with such
laws and regulations of the several states as may be applicable to the
Accounts or the contracts or the policies.
IN WITNESS WHEREOF, the undersigned have executed this Written Consent as
of the 15th day of July, 1991.
\s\ Edward C. Johnson 3d \s\ J. Gary Burkhead
Edward C. Johnson 3d J. Gary Burkhead
\s\ John J. Cook, Jr. \s\ James C. Curvey
John J. Cook, Jr. James C. Curvey
\s\ John J. Remondi \s\ Rodney R. Rohda
John J. Remondi Rodney R. Rohda
\s\ Robert C. Pozen \s\ David C. Weinstein
Robert C. Pozen David C. Weinstein
\s\ John H. Stimpson \s\ Joshua M. Berman
John H. Stimpson Joshua M. Berman
\s\ Roy C. Ballentine \s\ Peter G. Johannsen
Roy C. Ballentine Peter G. Johannsen
\s\ Malcolm Mackay
Malcolm MacKay
EXHIBIT 3(a)
DISTRIBUTION AGREEMENT
This agreement dated as of October 1, 1991 (the "Agreement"), among Empire
Fidelity Investments Life Insurance Company ("EFILI"), a New York
corporation, Fidelity Brokerage Services, Inc. ("FBSI"), a Massachusetts
corporation and Fidelity Insurance Agency ("FIA"), a Massachusetts company:
WITNESSETH:
In consideration of the mutual covenants and conditions herein contained
EFILI, FBSI and FIA agree as follows:
A. Definitions
(1) "Contracts" shall mean the variable life insurance policies and the
variable annuity contracts which EFILI issues and can use a Variable
Account as hereinafter defined, and for which FBSI, a registered
broker-dealer, has been appointed the principal underwriter;
(2) "Fund" shall mean a registered investment company under the 1940 Act,
as shown on Schedule A hereto, which is incorporated herein by this
reference as said schedule may be amended from time to time by written
agreement of all parties hereto.
(3) "1933 Act" shall mean the Securities Act of 1933, as may be amended
from time to time.
(4) "1934 Act" shall mean the Securities Exchange Act of 1934, as may be
amended from time to time.
(5) "1940 Act" shall mean the Investment Company Act of 1940, as may be
amended from time to time.
(6) "Participation Agreement" shall mean one of the Participation
Agreements among EFILI, a Fund and Fidelity Distributors Corporation, as
shown on Schedule B hereto, which is incorporated herein by this reference
as said schedule may be amended from time to time by written agreement of
all parties hereto.
(7) "Payments" shall mean all purchase payments made on Contracts including
initial and any subsequent purchase payments made.
(8) "Prospectus" shall mean the prospectus included within any Registration
Statement referred to herein, including any such prospectus filed pursuant
to any subsection of Rule 424 or Rule 429 under the 1933 Act.
(9) "Registration Statement" shall mean the currently effective
registration statement or currently effective post-effective amendment
thereto relating to the Contracts and a Variable Account as hereinafter
defined as required by the 1933 Act and the 1940 Act, including financial
statements and all exhibits thereto.
(10) "Variable Account" shall mean any of the separate accounts as shown on
Schedule C hereto, which is incorporated herein by this reference as said
schedule may be amended from time to time by written agreement of all
parties hereto which are established by EFILI for the Contracts.
(11) "SEC" shall mean the United States Securities and Exchange Commission.
B. Agreements of EFILI
(1) EFILI hereby appoints FBSI as its principal underwriter and FIA as its
independent general agent during the term of the Agreement for sale of the
Contracts. During such term, FIA is authorized to undertake a marketing
program for the Contracts; provided (a) there is an effective Registration
Statement relating to such Contracts, and (b) with respect to each state or
jurisdiction in which applications are to be solicited, that EFILI has
notified FIA that the Contracts are qualified for sale under all applicable
securities laws and insurance laws of the state or jurisdiction in which
the application will be solicited.
(2) EFILI, during the term of the Agreement, will immediately notify FBSI
and FIA:
(a) When the Registration Statement for any Contract has become effective
or when any amendment with respect to the Registration Statement thereafter
becomes effective;
(b) Of any request by the SEC for any amendments or supplements to the
Registration Statement for any Contract or of any request for additional
information that must be provided by FBSI;
(c) Of the issuance by the SEC of any stop order with respect to the
Registration Statement for any Contract or any amendments thereto or the
initiation of any proceedings for that purpose or for any other purpose
relating to the registration and/or offering of the Contracts;
(d) Of the states or jurisdictions where approval of the Contract forms is
required under the applicable insurance laws and regulations, and when such
approvals have been obtained; and
(e) Of the states or jurisdictions where any Contract may not be lawfully
sold.
(3) EFILI will compile periodic marketing reports summarizing sales results
to the extent reasonably requested by FBSI or FIA.
(4) EFILI will provide to FBSI 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 a Variable Account, contemporaneously with
the filing of such document with the SEC.
(5) During the term of this Agreement, EFILI will provide FIA, with as many
copies of the Prospectus for any Contract (and any amendments or
supplements thereto) as FIA may reasonably request. If however, the
prospectus for the Contracts is to be printed as one document, EFILI will
provide to FIA typeset and camera ready copies of the Contract portion of
the prospectus and/or other necessary documentation.
C. Agreements of FBSI and FIA
(1) FBSI is a registered broker/dealer under the 1934 Act and a member of
the NASD.
(2) FIA will be duly licensed to sell variable annuities and variable life
insurance policies in any state or jurisdiction in which it performs
functions under this Agreement.
(3) FBSI and FIA shall each be responsible for carrying out their
respective sales, administrative and supervisory obligations under this
Agreement in material compliance with applicable Federal and state laws.
(4) FIA agrees that it shall be fully responsible for ensuring that no
agent, representative, telephone salesperson or employee shall offer any
Contract on its behalf until such person is duly licensed and appointed by
EFILI and appropriately licensed, registered or otherwise qualified to
offer and sell such Contract under federal securities laws, NASD rules and
regulations, and under the insurance laws of each state or other
jurisdiction in which such person intends to offer such Contract. EFILI
reserves the right to refuse to appoint any proposed agent or, once
appointed, to terminate such agent.
(5) FBSI and FIA each understand that the public offering of the Contracts
will commence as soon as possible after the effective date of the
Registration Statement. Beginning at that time, and during the term of
this Agreement, FIA agrees to use its best efforts to solicit applications
for the Contracts.
(6) All Payments and applications for Contracts sold by FIA or its agents,
representatives, telephone salespersons or employees through direct mail
solicitation should be sent directly to the EFILI Service Center. To the
extent that FIA solicits applications for Contracts through an agent or
that Payments are incorrectly sent to FIA rather than the Service Center,
all Payments received by FIA shall be remitted promptly in full together
with such application, forms and any other required documentation to the
Service Center. Checks or money orders in payment of Payments shall be
drawn to the order of "Empire Fidelity Investments Life Insurance Company."
EFILI shall have the unconditional right to reject, in whole or in part,
any application for any Contract. In the event an application is rejected,
the amount of the Payment received by EFILI will be returned directly to
the purchaser and EFILI will notify FIA of such action. In the event that
a Contract is returned to EFILI, FIA within the applicable "free-look"
period, the Payment received by EFILI (adjusted for investment performance,
as provided in the Contract) will be refunded to the purchaser and EFILI
will notify FIA of such action. In the event FIA has received compensation
based on any such returned Payments, FIA agrees to promptly repay such
compensation to EFILI.
(7) FIA shall, in soliciting applications for the Contracts, engage in
direct marketing of the Contracts using various means of communications.
FIA will provide telephone salespersons and such other personnel it deems
necessary to respond to inquiries from the general public regarding the
Variable Accounts, the Contracts and the portfolios underlying the Variable
Accounts. In connection with such marketing efforts:
(a) FIA shall furnish, or shall cause to be furnished, to EFILI each piece
of sales literature or other promotional material in which EFILI or a
Variable Account is named. No such material shall be used without the
prior written consent of EFILI.
(b) FIA, its agents, representatives, telephone salespersons or employees
shall not give without the prior written consent of EFILI, any information
or make any representations on behalf of or concerning EFILI, a Variable
Account, or the Contracts other than the information or representations
contained in the Registration Statement or Prospectus for the Contracts (as
each may be amended or supplemented from time to time) or in reports for
the Variable Accounts prepared by EFILI for distribution to Contract
owners, or in sales literature or other promotional material approved in
writing by EFILI.
(c) FBSI, in accordance with its obligations under federal securities laws
and regulations, shall establish and implement reasonable procedures
acceptable to EFILI for periodic inspection and ongoing supervision of
sales practices of FIA's agents, employees, telephone salespersons and
representatives and, upon request, shall make available to EFILI periodic
reports on the results of such inspections and the compliance with such
procedures.
(d) In compliance with EFILI's written rules and procedures and with
applicable rules and regulations of any governmental or other agency that
has jurisdiction over variable life insurance or variable annuity
activities, FBSI and FIA are responsible for the training, supervision, and
control of the agents, representatives, telephone salespersons and other
employees of FIA involved in the marketing program for the Contracts by
FIA. FBSI and FIA will also undertake to have all agents, representatives,
telephone salespersons and employees of FIA who must be licensed pursuant
to federal or state insurance and/or securities laws in order to sell the
Contracts, duly licensed.
(e) For purposes of this paragraph 7 and its subparagraphs and the
Indemnification provisions in Sections E and F hereof, the phrase, "sales
literature or other promotional material" includes, but is not limited to,
advertisements (including material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone
script or sound recording, video display, signs or billboards, motion
pictures, or other public media), written communications 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 articles), educational or training materials or other
communications distributed or made generally available to agents,
representatives, telephone salespersons or employees, and registration
statements, prospectuses, Statements of Additional Information, shareholder
reports, proxy materials, applications for the Contracts and application
kits.
(8) FIA shall act as an independent general agent, and nothing herein
contained shall constitute FIA or its agents, representatives, telephone
salespersons or employees, as employees of EFILI in connection with the
marketing program for the Contracts.
(9) FIA shall not directly or by means of its agents, representatives,
telephone salespersons or other employees offer, nor attempt to offer, nor
solicit applications for the Contracts or deliver Contracts in any state or
jurisdiction in which the Contracts may not legally be sold or offered for
sale.
(10) Neither FBSI nor FIA shall have authority on behalf of EFILI to: (i)
make, alter or discharge any Contract; and (ii) receive any monies or
Payments, except as set forth in Section C(6) of this Agreement. Neither
FBSI nor FIA shall expend, or contract for the expenditure of, the funds of
EFILI nor shall FBSI or FIA possess or exercise any authority on behalf of
EFILI other than that expressly conferred on FBSI or FIA by this Agreement.
(11) FBSI and FIA agree to maintain appropriate books and records
concerning the variable annuity and variable life business transacted by
FBSI and FIA under this Agreement as required by either (a) any
governmental authority (including without limitation the SEC, the NASD and
state insurance regulators) or (b) EFILI. Such books and records shall be
considered to be the books and records of EFILI and shall be available to
EFILI at any reasonable time upon its written request. FBSI and FIA shall
permit such governmental authorities reasonable access to such books and
records in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated thereby.
(12) FIA shall pay the following expenses related to its distribution of
the Contracts: (i) expenses associated with the initial licensing and
training of its agents, representatives, telephone salespersons and
employees necessary for the marketing of the Contracts, (ii) the costs of
any advertisements and marketing material which it develops for use in
connection with the marketing program for the Contracts, and (iii) any
other expenses incurred by FBSI, FIA or the agents or employees of either
FBSI or FIA for the purpose of carrying out the obligations of FBSI or FIA
hereunder will be paid by FBSI and/or FIA, respectively.
D. Compensation
(1) EFILI shall pay to FIA for Contracts issued by EFILI and sold by FIA a
commission as set forth on Schedule D hereto, which is incorporated herein
by this reference as said schedule may be amended from time to time by
written agreement of all parties hereto.
E. Indemnification by EFILI
(1) EFILI agrees to indemnify and hold harmless FBSI and FIA against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of EFILI) or litigation (including
legal and other expenses), to which FBSI or FIA 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 of the Contracts and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration Statement,
Prospectus, 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 if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information furnished to
EFILI by FBSI or FIA for use in the Registration Statement, Prospectus,
Contracts or sales literature for the Contracts (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts; or
(b) arise as a result of any failure by EFILI to provide the services and
furnish the materials under the terms of this Agreement; or
(c) arise out of or result from any material breach of any representation
and/or warranty made by EFILI in this Agreement or arise out of or result
from any other material breach of this Agreement by EFILI, as limited by
and in accordance with the provisions of Sections E.1.(a) and E.1.(b)
hereof.
(2) EFILI shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against FBSI or FIA as such may arise from FBSI's or FIA's
willful misfeasance, bad faith, or gross negligence in the performance of
its duties or by reason of its reckless disregard of obligations or duties
under this Agreement.
(3) EFILI shall not be liable under this indemnification provision with
respect to any claim made against FBSI or FIA unless FBSI or FIA shall have
notified EFILI 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 FBSI or FIA (or after FBSI or FIA shall have
received notice of such service on any designated agent), but failure to
notify EFILI of any such claim shall not relieve EFILI from any liability
which it may have to FBSI or FIA otherwise than on account of this
indemnification provision. In case any such action is brought against FBSI
or FIA, EFILI shall be entitled to participate, at its own expense, in the
defense of such action. EFILI shall be entitled to assume the defense
thereof, with counsel satisfactory to FBSI or FIA. After notice from EFILI
to FBSI or FIA of the election by EFILI to assume the defense thereof, FBSI
or FIA shall bear the fees and expenses of any additional counsel retained
by it, and EFILI will not be liable to FBSI under this Agreement for any
legal or other expenses subsequently incurred by FBSI or FIA independently
in connection with the defense thereof other than reasonable costs of
investigation.
(4) FBSI or FIA will promptly notify EFILI of the commencement of any
litigation or proceedings against it in connection with the issuance or
sale of the Contracts.
F. Indemnification by FBSI or FIA
(1) FBSI and FIA agree to indemnify and hold harmless EFILI against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of FBSI or FIA) or litigation
(including legal and other expenses), to which EFILI 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 of the Contracts and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration Statement,
Prospectus, 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 if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information furnished to
FBSI or FIA by EFILI for use in the Registration Statement, Prospectus,
Contracts or sales literature for the Contracts (or any amendment or
supplement) or otherwise for use in connection with sale of the Contracts;
or
(b) arise as a result of any failure by FBSI or FIA to provide the services
and furnish the materials under the terms of this Agreement; or
(c) arise out of or result from any material breach of any representation
and/or warranty made by FBSI or FIA in this Agreement or arise out of or
result from any other material breach of this Agreement by FBSI or FIA, as
limited by and in accordance with the provisions of Sections F.1.(a) and
F.1.(b) hereof.
(2) Neither FBSI nor FIA shall be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against EFILI as such may arise from
EFILI's willful misfeasance, bad faith, or gross negligence in the
performance of their duties or by reason of their reckless disregard of
obligations or duties under this Agreement.
(3) Neither FBSI nor FIA shall be liable under this indemnification
provision with respect to any claim made against EFILI unless EFILI shall
have notified FBSI and FIA 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 EFILI (or after EFILI shall have
received notice of such service on any designated agent), but failure to
notify FBSI and FIA of any such claim shall not relieve FBSI and FIA from
any liability which it may have to EFILI otherwise than on account of this
indemnification provision. In case any such action is brought against
EFILI, FBSI and FIA shall be entitled to participate, at their own expense,
in the defense of such action. FBSI and FIA shall be entitled to assume
the defense thereof, with counsel satisfactory to EFILI. After notice from
FBSI or FIA to EFILI of the election by FBSI or FIA to assume the defense
thereof, EFILI shall bear the fees and expenses of any additional counsel
retained by it, and FBSI or FIA will not be liable to EFILI under this
Agreement for any legal or other expenses subsequently incurred by EFILI
independently in connection with the defense thereof other than reasonable
costs of investigation.
(4) EFILI will promptly notify FBSI and FIA of the commencement of any
litigation or proceedings against them in connection with the issuance or
sale of the Contracts.
G. Confidentiality
(1) Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses
contained in FIA's mailing list 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, provided, that to the extent any name and address is
available to a party through a source independent of the relationship
defined in this Agreement, such name and address shall not be treated as
confidential.
H. Term of Agreement
(1) The term of this Agreement, shall be for an initial period of one year,
and shall be automatically renewed from year to year thereafter, unless
terminated by at least 30 days prior written notice given at any time by
any party, except that this Agreement will automatically terminate upon the
termination of all the Participation Agreements.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the indemnification provisions set forth
above between EFILI, FBSI and FIA and in the Participation Agreements, and
the provisions of Section C(11) above that require FBSI and FIA to maintain
certain books and records.
I. Non-Exclusivity of Agreement
EFILI may, at any time, distribute all or a portion of the Contracts
through any other distribution system or third parties selected by EFILI.
J. Assignability
This Agreement may not be assigned without the prior written consent of all
parties hereto.
K. Governing Law
This Agreement shall be in all respects governed by and construed in
accordance with the laws of the State of New York.
L. Notice
Any notice shall be sufficiently given when personally received by the
other party, or when sent by registered or certified mail to the other
party at the following address, or to such other address as may be
designated by any party:
If to EFILI:
Empire Fidelity Investments Life Insurance Company
One World Financial Center
New York, NY 10281
Attention: Allan Brandon
If to FBSI:
Fidelity Brokerage Services, Inc.
82 Devonshire Street
Boston, MA 02109
Attention: Michael Rothmeier, Executive Vice President
If to FIA:
Fidelity Insurance Agency, Inc.
82 Devonshire Street
Boston, MA 02109
Attention: Rodney R. Rohda
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
By: \s\ Rodney R. Rohda
Title: Rodney R. Rohda
Date: President
FIDELITY BROKERAGE SERVICES, INC.
By: \s\ Michael Rothmeier
Title: Michael Rothmeier
Date: Executive Vice President
FIDELITY INSURANCE AGENCY, INC.
By: \s\ Rodney R. Rohda
Title: Rodney R. Rohda
Date: President
SCHEDULE A
TO DISTRIBUTION AGREEMENT AMONG
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY,
FIDELITY BROKERAGE SERVICES, INC. AND
FIDELITY INSURANCE AGENCY, INC.
FUNDS
Variable Insurance Products Fund
Variable Insurance Products Fund II
Dated as of: October 1, 1991
SCHEDULE B
TO DISTRIBUTION AGREEMENT AMONG
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY,
FIDELITY BROKERAGE SERVICES, INC. AND
FIDELITY INSURANCE AGENCY, INC.
PARTICIPATION AGREEMENTS
Participation Agreement among Variable Insurance Products Fund, Fidelity
Distributors Corporation and Empire Fidelity Investments Life Insurance
Company dated as of October 1, 1991
Participation Agreement among Variable Insurance Products Fund II, Fidelity
Distributors Corporation and Empire Fidelity Investments Life Insurance
Company dated as of October 1, 1991
Dated as of: October 1, 1991
SCHEDULE C
TO DISTRIBUTION AGREEMENT AMONG
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY,
FIDELITY BROKERAGE SERVICES, INC. AND
FIDELITY INSURANCE AGENCY, INC.
VARIABLE ACCOUNTS
Empire Fidelity Investments Life Insurance Company:
Variable Annuity Account A
Variable Life Account A
Dated as of: October 1, 1991
SCHEDULE D
TO DISTRIBUTION AGREEMENT AMONG
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY,
FIDELITY BROKERAGE SERVICES, INC. AND
FIDELITY INSURANCE AGENCY, INC.
COMPENSATION
3.00% of life premiums and annuity considerations, payable monthly.
Dated as of: October 1, 1991
EXHIBIT 4(a)
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
200 Liberty Street, Tower A
One World Financial Center
NEW YORK, NEW YORK 10281
VARIABLE ANNUITY
Flexible Purchase Payment Annuity
with Variable and Guaranteed Accounts
Nonparticipating
Empire Fidelity Investments Life Insurance Company agrees to pay income to
the Annuitant starting on the Annuity Date and to provide the other rights
and benefits of this Contract.
These agreements are subject to all the provisions of this Contract.
This Contract has been issued in return for the attached application and
for the initial Purchase Payment made.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. (SEE CONTRACT VALUE, PAGE 11.)
Signed for the Company at its Home Office, New York, New York.
\s\ Rodney R. Rohda \s\ David C. Weinstein
President Secretary
RIGHT TO RETURN THE CONTRACT
To be sure you are satisfied with this Contract, you have 30 days after you
receive it from the Company to examine it. Within those 30 days you can
return the Contract for any reason. If you do, the Contract will be
canceled and the Company will pay you the Contract Value as of the date of
surrender, plus any deductions made from your Purchase Payments.
PLEASE READ YOUR CONTRACT CAREFULLY
This is a legal contract between you and the Company.
EVA-91100
GUIDE TO CONTRACT PROVISIONS
CONTRACT SCHEDULE PAGE 4
DEFINITIONS 5
GENERAL PROVISIONS 8
Entire Contract
Misstatement of Age or Sex
Reports to Owner
Proof of Survival
Protection of Proceeds
Termination
Basis of Values
Nonparticipating
Determination of Values
PURCHASE PAYMENTS 10
Purchase Payments
Net Purchase Payments
Additional Purchase Payments
Allocation of Purchase Payments
Remaining Purchase Payments
CONTRACT VALUE 11
Contract Value
Deductions from the Contract Value
THE GUARANTEED ACCOUNT 12
Guaranteed Account
Guaranteed Account Contract Value
Interest on the Guaranteed Account
Transfers of Contract Value Between the Guaranteed and Variable Accounts
THE VARIABLE ACCOUNT 13
Variable Account
Subaccounts
Accumulation Units
Accumulation Unit Value
Variable Account Contract Value
Net Investment Factor
Charges Against the Subaccounts
Transfers Among Subaccounts During Accumulation Period
Valuation Days and Valuation Periods
Additions, Deletions or Substitutions
Reserved Rights
EVA-91100 -2-
PROCEEDS 17
Proceeds on Surrender Prior to Annuity Date
Proceeds on Death of Owner Prior to the Annuity Date
Proceeds on Death of Last Surviving Annuitant Prior to Annuity Date
Proceeds on Death of Annuitant On or After Annuity Date
Required Distribution of Proceeds
Payment of Proceeds
Interest on Proceeds
Postponement of Payment of Proceeds
OWNER, BENEFICIARIES AND CONTINGENT ANNUITANT 20
Owner
Annuitant's Beneficiary
Owner's Beneficiary
Contingent Annuitant
Change of Owner, Annuitant and Beneficiary
Assignments
Designation of Beneficiary
SURRENDER PROVISIONS 22
Cash Surrender
Cash Surrender Value
Partial Withdrawals
Amounts Exempt from Surrender Charge
Surrender Charge
Waiver of Surrender Charge
ANNUITY PROVISIONS 24
Annuity Income Payments
Change of Annuity Date
Election of Annuity Income Option
Annuity Income Options
Fixed Annuity
Variable Annuity
Annuity Unit Value
Determination of First Variable Annuity Income Payment
Variable Annuity Income Payments After the First Payment
Exchange of Annuity Units
Adjusted Age
ANNUITY TABLES 28
EVA-91100 -3-
DEFINITIONS
ACCUMULATION PERIOD:
The period between the date your Contract is issued and the Annuity Date.
ACCUMULATION UNITS:
The measure used to calculate the Variable Account Contract Value during
the Accumulation Period. P
Period.
ANNUITANT:
The person on whose life Annuity Income Payments depend.
ANNUITANT'S BENEFICIARY:
The person who receives the proceeds in the event of the death of the last
surviving Annuitant.
ANNUITY DATE:
The date on which Annuity Income Payments are to begin. You may change
this date as provided in this Contract.
ANNUITY INCOME OPTION:
One of the choices offered by the Company for Annuity Income Payments. The
Annuity Income Option is elected by the Owner.
ANNUITY INCOME PAYMENTS:
Payments made to the Annuitant after the Annuity Date under an Annuity
Income Option. Annuity Income Payments may be made on a fixed dollar basis,
a variable basis, or a combination of both.
ANNUITY PERIOD:
The period starting on the Annuity Date, during which the Annuitant
receives Annuity Income Payments from the Contract.
ANNUITY UNITS:
The measure used to calculate the amount of variable Annuity Income
Payments during the Annuity Period.
THE COMPANY:
Empire Fidelity Investments Life Insurance Company.
CONTINGENT ANNUITANT:
The person who becomes the Annuitant upon the death or removal of the
Annuitant prior to the Annuity Date.
CONTRACT DATE:
The date the Contract becomes effective, from which contract anniversaries,
contract years, and contract months are determined. Your Contract Date is
shown on the Contract Schedule.
EVA-91100 -5-
CONTRACT VALUE:
The sum of the Guaranteed Account Contract Value and the Variable Account
Contract Value.
EXEMPT WITHDRAWAL AMOUNT:
The amount that may be withdrawn from the Contract without paying a
surrender charge.
FIXED ANNUITY:
An annuity with fixed Annuity Income Payments which are guaranteed by the
Company. The amount of the Annuity Income Payment, once begun, will not
change.
GUARANTEED ACCOUNT:
A guaranteed-rate investment option funded through the Company's general
account.
OWNER:
The person or persons who have the ownership rights and privileges of the
Contract.
OWNER'S BENEFICIARY:
The person who receives the proceeds in the event of the death of the Owner
(if no Joint Owner survives) prior to the Annuity Date.
PURCHASE PAYMENTS:
The amounts you pay for this Contract.
SUBACCOUNTS:
The divisions of the Variable Account. The Subaccounts available on the
Contract Date are named on the Contract Schedule.
VALUATION DAY:
Each day the New York Stock Exchange is open for trading and any other day
on which the Securities and Exchange Commission requires the Variable
Account to be valued.
VALUATION PERIOD:
The time between the close of business on a Valuation Day and the close of
business on the next Valuation Day.
VARIABLE ACCOUNT:
The Empire Fidelity Investments Variable Annuity Account A.
VARIABLE ANNUITY:
An annuity with Annuity Income Payments which vary in amount with the
investment experience of elected Subaccounts.
WRITTEN REQUEST:
A request in a form acceptable to the Company, signed and dated by you and
delivered to the Company at the Annuity Service Center.
EVA-91100 -6-
YOU, YOUR:
The Owner of this Contract. The Owner may be someone other than the
Annuitant. The Owner is shown on the application and may be changed as
provided in this Contract.
EVA-91100 -7-
GENERAL PROVISIONS
ENTIRE CONTRACT
This Contract and the application, a copy of which is attached, are the
entire contract between you and the Company. No change in or waiver of the
provisions of the Contract is valid unless the change or waiver is signed
by the President or Secretary of the Company.
MISSTATEMENT OF AGE OR SEX
If the Annuitant's age or sex has been misstated, payments under this
Contract will be adjusted. They will be based on what would have been
provided at the correct age and sex. Any underpayments by us will be made
up in a single sum, with interest at the rate of 6% per year compounded
yearly. Any overpayments by us will be subtracted from the future
payments, with interest at the rate of 6% per year compounded yearly.
REPORTS TO OWNER
At least once each year during the Accumulation Period, the Company will
send you a statement of the Contract Value and the Annual Report of the
Separate Account. The Company will also send you any other reports that
may be required by the state in which this Contract is delivered.
PROOF OF SURVIVAL
Where any payments under this contract depend on the Annuitant or other
recipient being alive on a given date, proof of survival may be required by
the Company prior to making the payments.
PROTECTION OF PROCEEDS
Income under this Contract can not be assigned by any beneficiary prior to
the time it is due. To the extent allowed by law, income is not subject to
the claims of creditors or to legal process.
TERMINATION
This Contract will terminate on the earliest of:
The death of any Owner prior to the Annuity Date;
The death of the last surviving Annuitant prior to the Annuity Date;
The Surrender of the Contract; and
The final payment under any Annuity Income Option.
BASIS OF VALUES
All values are at least as great as those required by the law of the state
in which this Contract is delivered. A statement of the method used to
compute the minimum values has been filed with the insurance department of
the state in which this Contract is delivered.
NONPARTICIPATING
This Contract does not share in the profits or surplus of the Company.
EVA-91100 -8-
DETERMINATION OF VALUES
The method of determination by the Company of the number and value of
Accumulation Units, Annuity Units and other values shall be binding upon
any Owner, Annuitant, and beneficiary.
EVA-91100 -9-
PURCHASE PAYMENTS
PURCHASE PAYMENTS
Purchase Payments are the amounts you pay for this Contract.
NET PURCHASE PAYMENTS
A Net Purchase Payment is a Purchase Payment less any premium tax assessed
by the jurisdiction in which this Contract is delivered. In addition, the
Company reserves the right to deduct a charge reflecting any federal income
tax attributable to premium.
ADDITIONAL PURCHASE PAYMENTS
You may make additional Purchase Payments during the Accumulation Period.
The minimum additional Purchase Payment is shown on the Contract Schedule.
The Company reserves the right to limit the amount of additional Purchase
Payments it will accept.
ALLOCATION OF PURCHASE PAYMENTS
You may allocate your Net Purchase Payments to the Guaranteed Account and
among one or more of the Subaccounts of the Variable Account. The Company
may limit amounts allocated (including transfers) to the Guaranteed
Account, but not to less than $50,000 per contract year. The Company may
also restrict allocations (including transfers) to the Guaranteed Account
for up to twelve months following a withdrawal or transfer from the
Guaranteed Account. Net Purchase Payments will be allocated to the
Guaranteed Account and to the Subaccounts as you elected on the application
unless you elect a different allocation.
REMAINING PURCHASE PAYMENTS
Remaining Purchase Payments are all Purchase Payments made less any amounts
withdrawn that were subject to a surrender charge.
EVA-91100 -10-
CONTRACT VALUE
CONTRACT VALUE
The Contract Value at any time is:
The Guaranteed Account Contract Value PLUS The Variable Account
Contract Value.
The portion of the Contract Value invested in the Subaccounts of the
Variable Account is not guaranteed and will vary with the performance of
the elected Subaccounts.
DEDUCTIONS FROM THE CONTRACT VALUE
The Maintenance Charge is deducted from the Contract Value on each Contract
anniversary during the Accumulation period. A pro rata portion of the
charge will be deducted from the Contract Value when the Contract is
surrendered. The Maintenance Charge is not guaranteed and may be changed
by the Company. The Maintenance Charge as of the Contract Date and the
maximum Maintenance Charge are shown on the Contract Schedule.
Deductions for the Maintenance Charge will be taken from the Guaranteed
Account and from the Subaccounts of the Variable Account in the same
proportion as the value in each bears to the Contract Value on the date of
the deduction.
EVA-91100 -11-
THE GUARANTEED ACCOUNT
GUARANTEED ACCOUNT
The Guaranteed Account is part of the Company's general account. The
general account consists of all of our assets other than those in any
separate account.
GUARANTEED ACCOUNT CONTRACT VALUE
The Guaranteed Account Contract Value at any time will be:
The sum of all amounts credited to the Guaranteed Account for this
Contract;
LESS
Any amounts deducted for charges, transfers or withdrawals.
INTEREST ON THE GUARANTEED ACCOUNT
The Company will credit interest on the Guaranteed Account Contract Value.
Interest will accrue from the date a Purchase Payment is received in good
order at the Annuity Service Center or an amount is transferred into the
Guaranteed Account. Different interest rates may apply to different amounts
in the Guaranteed Account depending on when the amount came into the
Guaranteed Account. The interest rate applicable to any particular amount
may vary from time to time. However, the interest rate will never be less
than the Minimum Guaranteed Account Interest Rate shown on the Contract
Schedule.
TRANSFERS OF CONTRACT VALUES BETWEEN THE GUARANTEED AND VARIABLE ACCOUNTS
During the Accumulation Period and subject to the rules of the Company, you
may transfer values:
Held in one or more of the Subaccounts of the Variable Account into the
Guaranteed Account; and
Held in the Guaranteed Account into one or more of the Subaccounts of the
Variable Account.
The Company may limit transfers from the Guaranteed Account to one per
Contract year. The Company may also limit the amount of the transfer, but
the yearly limit will never be less than 15% of the Guaranteed Account
Contract Value at the time of the transfer.
Generally, a different set of rules will apply to the transfer of Contract
Value from the Guaranteed Account than from the Variable Account. Since
transfer rules reflect economic conditions, there could be substantial
changes to these rules.
EVA-91100 -12-
THE VARIABLE ACCOUNT
VARIABLE ACCOUNT
The Company established the Empire Fidelity Investments Variable Annuity
Account A to support the operation of this Contract. It may also be used
with other variable annuity contracts we may offer.
The Company owns the assets in the Variable Account. Income, gains and
losses, whether or not realized, from assets allocated to the Variable
Account will be credited to or charged against the Account without regard
to our other income, gains or losses.
Assets equal to the reserves and other liabilities of the Variable Account
will not be charged with liabilities that arise from any other business the
Company conducts. The Company has the right to transfer to our general
account any assets of the Variable Account which are in excess of those
reserves and liabilities.
All transactions (e.g., additional payments, withdrawals, and transfers)
are executed as of the date the request is received in good order at the
Annuity Service Center. All values that depend on the performance of a
Subaccount will be determined as of the end of the Valuation Period in
which the transaction is executed.
When you request a transfer from a Subaccount which invests in an
investment portfolio which is permitted, under Federal Securities
regulation, to delay the payment of proceeds to the Subaccount, then the
crediting of the amount transferred may be delayed until the subaccount
receives the proceeds from the investment portfolio. During this period,
the amount transferred will be uninvested.
The Variable Account is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940. The Variable Account
is also subject to the laws of the State of New York.
SUBACCOUNTS
On the Contract Date, the Variable Account consists of the Subaccounts
listed on the Contract Schedule. The Company reserves the right to delete
any Subaccount of the Variable Account or to add new Subaccounts. The
Variable Account may invest in a series type of mutual fund, unit
investment trusts and other investment portfolios which the Company
determines to be suitable for this Contract. The assets of the Variable
Account are valued each Valuation Period.
You will share the income, gains and losses only of the Subaccounts in
which the Contract Value for this Contract has been allocated. The values
and benefits of this Contract depend on the investment performance of the
elected Subaccounts. The Company does not guarantee the investment
performance of the Subaccounts. You bear the full investment risk for
amounts applied to the elected Subaccounts.
The investment policies of a Subaccount may not be changed without all
necessary approvals of the New York State Insurance Department.
EVA-91100 -13-
ACCUMULATION UNITS
The portion of your Contract Value in the Variable Account is measured by
Accumulation Units. The Company will credit Net Purchase Payments in the
form of Accumulation Units. The number of Accumulation Units to be
credited to each Subaccount will be determined by dividing the Net Purchase
Payment allocated to that Subaccount by the Accumulation Unit Value of the
Subaccount. In the case of the initial Net Purchase Payment, we will
credit Accumulation Units on the Contract Date.
The amount of any partial withdrawal or charge deducted from the Variable
Account Contract Value will reduce the number of Accumulation Units
credited to the Contract in the Subaccounts. A transfer out of a Subaccount
will reduce the number of Accumulation Units credited to the Contract in
that Subaccount while a transfer into a Subaccount will increase the number
of Accumulation Units.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Valuation Period is the Net Investment
Factor for that period multiplied by the Accumulation Unit Value for the
immediately preceding Valuation Period. The Accumulation Unit Value for a
Valuation Period applies to each day in the period. The Accumulation Unit
Value may increase or decrease from one Valuation Period to the next.
VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value at any time will be the sum of the
values of all Accumulation Units credited to the Contract.
NET INVESTMENT FACTOR
The Net Investment Factor is an index used to measure the investment
performance of a Subaccount from one Valuation Period to the next. The Net
Investment Factor can be greater or less than one; therefore, the value of
a Subaccount Accumulation Unit may increase or decrease.
The Net Investment Factor for each Subaccount for a Valuation Period is
determined by adding (a) and (b), subtracting (c) and then dividing the
result by (a) where:
(A) is the value of the assets at the end of the preceding Valuation
Period;
(B) is the investment income and capital gains, realized or unrealized,
credited at the end of the current Valuation Period;
(C) is the sum of:
(1) the capital losses, realized or unrealized, charged during the current
Valuation Period plus any amount charged or set aside for taxes during the
current Valuation Period;
PLUS
(2) the deduction from the Subaccount during the current Valuation Period
representing a daily charge equivalent to an annual rate of 1%.
EVA-91100 -14-
CHARGES AGAINST THE SUBACCOUNTS
In determining the values for both the Accumulation and Annuity Units, the
Company makes a daily charge equivalent to an effective annual rate of 1%
against the assets of each Subaccount.
The earnings of the Variable Account are taxed as part of the operations of
the Company. At the present time, the Company does not expect to incur
taxes on the earnings of any Subaccount to the extent that earnings are
credited under the Contract. If the Company incurs taxes due to the
operation of the Variable Account, it may make charges for such taxes
against the Subaccounts.
As of the Contract Date, the Variable Account was operated as a unit
investment trust and investment and management expenses are reflected in
the value of the assets of the Subaccounts. However, if the Variable
Account is ever operated other than as a unit investment trust, investment
and management expenses may be deducted from the Variable Account.
TRANSFERS AMONG SUBACCOUNTS DURING ACCUMULATION PERIOD
You may transfer amounts among the Subaccounts by Written Request. The
minimum dollar amount you may transfer is $250 per Subaccount or, if less,
the entire amount in a Subaccount. The Company reserves the right to limit
transfers among Subaccounts, but not to fewer than six transfers per
contract year. The Company reserves the right to charge no more than
$15.00 for each transfer in excess of six per contract year.
VALUATION DAYS AND VALUATION PERIODS
A Valuation Day is:
(A) Each day the New York Stock Exchange is open for trading: and
(B) Any other day on which the Securities and Exchange Commission requires
the Variable Account to be valued.
A Valuation Period is the interval of time beginning at the close of
business on each Valuation Day and ending at the close of business on the
next Valuation Day.
ADDITIONS, DELETIONS OR SUBSTITUTIONS
The Company reserves the right to make additions to, deletions from or
substitutions for any of the investment portfolios in which the Subaccounts
invest. Such an addition, deletion or substitution would be subject to all
necessary approvals required by Federal or state law.
RESERVED RIGHTS
The Company reserves the right to:
(A) Combine the Variable Account with other variable accounts.
(B) Deregister the Variable Account under the Investment Company Act of
1940 if registration is no longer required.
EVA-91100 -15-
(C) Operate the Variable Account as a management investment company under
the Investment Company Act of 1940 or in any other form allowed by law.
(D) Make changes required by any change in the Investment Company Act of
1940 or other applicable federal or state law.
EVA-91100 -16-
PROCEEDS
PROCEEDS ON SURRENDER PRIOR TO ANNUITY DATE
If you surrender this Contract prior to the Annuity Date, the proceeds will
be the Cash Surrender Value.
PROCEEDS ON DEATH OF OWNER PRIOR TO ANNUITY DATE
If any Owner dies before the Annuity Date, the proceeds are the Contract
Value on the date proof of death is received by the Company. The proceeds
are payable to the Joint Owner, if living on the date proof of death is
received; otherwise, to the Owner's Beneficiary. If no Owner's Beneficiary
is living on the date proof of death is received, the proceeds will be paid
to the estate of the Owner.
PROCEEDS ON DEATH OF LAST SURVIVING ANNUITANT PRIOR TO ANNUITY DATE
If the last surviving Annuitant dies prior to the Annuity Date, the
proceeds will be the Death Benefit. The Death Benefit is payable to the
Annuitant's Beneficiary, if living on the date proof of death is received;
otherwise, the Death Benefit will be paid to the Owner.
If the death of the last surviving Annuitant occurs prior to the Annuity
Date and on or before his or her 70th birthday, the Death Benefit will be
the greater of:
(A) the Purchase Payments paid, adjusted for any partial withdrawals and
any applicable taxes; and
(B) the Contract Value on the date that proof of death is received by the
Company.
If the death of the last surviving Annuitant occurs prior to the Annuity
Date and after his or her 70th birthday, the Death Benefit will be the
Contract Value on the date that proof of death is received by the Company.
PROCEEDS ON DEATH OF ANNUITANT ON OR AFTER ANNUITY DATE
If the Annuitant dies on or after the Annuity Date, the proceeds will be
any remaining Annuity Income Payments due under the Annuity Income Option
selected.
REQUIRED DISTRIBUTION OF PROCEEDS
To the extent this Contract conflicts with any applicable provision of the
Internal Revenue Code with respect to distributions on death, this Contract
shall be considered amended to conform to the Code.
The proceeds must be distributed within five years after the date of death
of any Owner (including any Joint Owner) prior to the Annuity Date unless:
(A) The proceeds are payable over the lifetime (or over a period not
extending beyond the life expectancy) of the recipient of the proceeds with
distributions beginning within one year of the date of death; or
EVA-91100 -17-
(B) Your spouse is the recipient of the proceeds, in which case your spouse
may elect to continue this Contract and become the Owner.
For purposes of the distribution rules, if the Owner of the Contract is a
corporation or other non-individual, the Annuitant shall be treated as the
Owner of the Contract.
If the Owner dies on or after the Annuity Date, any proceeds must be
distributed as rapidly as under the Annuity Income Option being used as of
the date of death.
PAYMENT OF PROCEEDS
If at the time of death of any Owner prior to the Annuity Date, that Owner
is also the last surviving Annuitant, proceeds will be paid as if the last
surviving Annuitant had died.
Before payment of any proceeds, the Company will determine what proof is
needed as to:
(A) The time of death of any Owner or Annuitant; and
(B) The identity, age or other facts about any person designated to receive
the proceeds.
The payment of proceeds on the basis of such proof shall satisfy all
liability of the Company for the payment of proceeds under this Contract.
Proceeds will be paid as a single sum unless applied to an Annuity Income
Option. It is currently the Company's practice to deduct any applicable
tax at the time proceeds become payable; however, the Company reserves the
right to deduct the tax when due. The Company may require that you return
this Contract before the proceeds are paid. Any proceeds will be paid in
accordance with the applicable law governing such payments.
INTEREST ON PROCEEDS
If the proceeds are not paid within 10 days after they become payable, we
will pay interest on the unpaid proceeds. Interest will accrue from the
date the proceeds are payable to the date of payment at a rate of 3.5% per
year compounded annually or, if greater, at the rate required by law.
POSTPONEMENT OF PAYMENT OF PROCEEDS
The Company will usually pay proceeds payable on surrender or partial
withdrawal within seven days after it receives your Written Request. The
Company will usually pay proceeds payable as a result of the death of any
Owner or the last surviving Annuitant within seven days after it receives
proof of death. However, any payment involving a determination of the
Variable Account Contract Value may be postponed whenever:
(A) The New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading is restricted as determined by the Securities
and Exchange Commission; or
(B) The Securities and Exchange Commission by order permits postponement
for the protection of contract owners; or
EVA-91100 -18-
(C) A state of emergency exists, as determined by the Securities and
Exchange Commission, which would make valuation of the net assets of the
Variable Account impracticable.
The Company can postpone the date of any surrender or partial withdrawal
payment from the Guaranteed Account for not more than six months. If
payment is postponed for more than 10 days, it will be credited with
interest from the date of surrender or partial withdrawal. The rate of
interest will not be less than 3.5% per year or, if greater, the rate
required by law.
EVA-91100 -19-
OWNER, BENEFICIARIES AND CONTINGENT ANNUITANT
OWNER
The Owner of the Contract is named on the application unless later changed.
The new Owner will succeed to all rights of ownership, including the right
to make a further change of owner. Joint Owners own the Contract as joint
tenants. On the Annuity Date the Annuitant becomes the Owner and all
rights of ownership pass to the Annuitant.
ANNUITANT'S BENEFICIARY
The Annuitant's Beneficiary is named on the application unless later
changed. The Death Benefit will be paid to the Annuitant's Beneficiary
upon the the death of the last surviving Annuitant prior to the Annuity
Date. If no Annuitant's Beneficiary survives, the Death Benefit will be
paid to the Owner or to the Owner's estate.
OWNER'S BENEFICIARY
The Owner's Beneficiary is named on the application unless later changed.
The Contract Value will be paid to the Joint Owner, if any, otherwise to
the Owner's Beneficiary upon the death of any Owner prior to the Annuity
Date. If no Owner's Beneficiary survives, the Contract Value will be paid
to the Owner's estate.
If at the time of death of any Owner prior to the Annuity Date, that Owner
is also the last surviving Annuitant, proceeds will be paid to the
Annuitant's Beneficiary.
CONTINGENT ANNUITANT
Once prior to the Annuity Date, the Owner may name a Contingent Annuitant.
If a Contingent Annuitant has been named, the Owner may remove either the
Annuitant or Contingent Annuitant. If the Contingent Annuitant dies or is
removed, another Contingent Annuitant can not be named. Upon the death (if
the Annuitant is not an Owner) or removal of the Annuitant prior to the
Annuity Date, the Contingent Annuitant, if any, becomes the Annuitant. When
a Contingent Annuitant becomes the Annuitant, the Company will change the
Annuity Date to the later of the first day of the month immediately
following the latest of three following dates: (a) the Annuitant's 85th
birthday, (b) the fifth contract anniversary, and (c) the date the
Contingent Annuitant becomes the Annuitant.
The Contingent Annuitant feature will not be applicable if the Contract is
owned by a corporation or other non-natural person.
CHANGE OF OWNER, ANNUITANT AND BENEFICIARY
You may change any Owner, Annuitant or beneficiary by a Written Request.
The change will be subject to all payments made and actions taken by the
Company under the Contract before the Written Request is received by the
Company.
EVA-91100 -20-
ASSIGNMENTS
An absolute assignment of the Contract by the Owner is a change of owner
and beneficiary to the assignee. A collateral assignment of the Contract
by the Owner is not a change of owner or beneficiary; but their rights will
be subject to the terms of the assignment. Assignments will be subject to
all payments made and actions taken by the Company before a signed copy of
the assignment form is received by the Company at the Annuity Service
Center. The Company will not be responsible for determining whether or not
an assignment is valid.
DESIGNATION OF BENEFICIARY
A numbered sequence can be used to name contingent beneficiaries. Multiple
beneficiaries will receive equal shares unless otherwise stated. In naming
beneficiaries, unless otherwise stated:
"Child" includes an adopted or posthumous child;
"Provision for issue" means that if a beneficiary does not survive the
Owner or Annuitant, the share of that beneficiary will be taken by his or
her living issue by right of representation; and
A family relation such as "wife", "husband", or "child" means the
relationship to the:
Owner, for an Owner's Beneficiary; and
Annuitant, for an Annuitant's Beneficiary.
At the time for payment of any proceeds, the Company can rely on an
affidavit of any Owner or other responsible person to determine family
relations or members of a class.
EVA-91100 -21-
SURRENDER PROVISIONS
CASH SURRENDER
You may surrender this Contract for the Cash Surrender Value at any time
prior to the Annuity Date by Written Request. The Cash Surrender Value
will be paid in a single sum unless applied to an Annuity Income Option.
CASH SURRENDER VALUE
The Cash Surrender Value is the Contract Value on the date the Company
receives your request for surrender, less any surrender charge, less any
pro-rata Maintenance Charge and less any applicable charges for taxes.
PARTIAL WITHDRAWALS
You may withdraw part of the Cash Surrender Value at any time during the
Accumulation Period by Written Request. The request for a partial
withdrawal will be effective as of the date the Written Request is received
by the Company. The partial withdrawal may not be less than $500.
On the date of withdrawal, the amount withdrawn plus any surrender charge
will be subtracted from the Death Benefit and the Contract Value.
The Company will deduct the amount withdrawn plus any surrender charge from
the Variable Account. If the total amount exceeds your Variable Account
Contract Value, the excess will be deducted from the Guaranteed Account.
Unless you request otherwise, the amount deducted from the Variable Account
will be allocated to the Subaccounts of the Variable Account in the same
proportion as the value in each bears to the Variable Account Contract
Value on the date of the partial withdrawal.
The maximum withdrawal allowed will be an amount that, along with the
appropriate surrender charges, will not reduce the Contract Value to less
than $2,500.
AMOUNTS EXEMPT FROM SURRENDER CHARGE
During each of the first five contract years, you may withdraw up to the
Exempt Withdrawal Amount without incurring a surrender charge. The Exempt
Withdrawal Amount equals:
(A) 10% of Remaining Purchase Payments;
LESS
(B) Any amounts previously withdrawn during the contract year that were not
subject to a surrender charge.
SURRENDER CHARGE
After the fifth contract year there will never be a surrender charge. In
each of the first five contract years, a surrender or partial withdrawal in
excess of the Exempt Withdrawal Amount will incur a surrender charge. The
amount of the surrender charge deducted from the Contract Value will equal:
EVA-91100 -22-
(A) The applicable surrender charge percentage:
MULTIPLIED BY
(B) The lesser of the:
(1) Amount surrendered or withdrawn in excess of the Exempt Withdrawal
Amount;
and
(2) Remaining Purchase Payments.
The surrender charge percentages are shown in the Table of Surrender Charge
Percentages on the Contract Schedule.
There will be no surrender charge on the Annuity Date when the Contract
Value is applied to an Annuity Income Option.
WAIVER OF SURRENDER CHARGE
The Company will notify you of the occurrence of any of the following
events:
(A) The renewal interest rate on any portion of the Contract Value
allocated to the Guaranteed Account decreases by more than 1% from the
expiring interest rate.
(B) The Maintenance Charge is increased above the amount stated in the
Contract Schedule.
(C) The Company, as a result of a change in practice, imposes the
Maintenance Charge if that charge had been waived for this Contract.
The Company will allow you to surrender this Contract without imposition of
the surrender charge for thirty days after notification is mailed to the
Owner.
EVA-91100 -23-
ANNUITY PROVISIONS
ANNUITY INCOME PAYMENTS
On the Annuity Date the Contract Value, less any applicable taxes, will be
applied to make Annuity Income Payments. All Annuity Income Payments will
be determined as of the first business day of a month. The first payment
will be determined as of the Annuity Date. This date is shown on the
Contract Schedule unless later changed. Before payments begin we may
require proof of the Annuitant's age and sex. We may offer Annuity Income
Options other than those described in this contract. If you select one of
these options, we may require that you exchange this Contract for a
supplemental contract.
Annuity Income Payments under the Annuity Income Options will be based on
the sex and adjusted age of the Annuitant on the Annuity Date. The Annuity
Income Payment will be the greater of:
(A) The payment based on the rates shown in the Annuity Table for the
Annuity Income Option chosen; and
(B) The payment based on the annuity rates in effect on the Annuity Date
for the same class of annuitants with the same Annuity Income Option.
In lieu of providing Annuity Income Payments, the company may make a single
sum payment of the Contract Value if the Contract Value would provide less
than $20.00 of monthly income.
CHANGE OF ANNUITY DATE
You may change the Annuity Date shown for this Contract by Written Request.
The Annuity Date must be the first day of a month. Any change must be
received by the Company at least 30 days prior to the Annuity Date being
changed. However, the Annuity Date may not be later than the first day of
the month immediately following the Annuitant's 85th birthday or, if later,
the fifth contract anniversary. The new date you select must be at least
30 days after the Company receives your Written Request.
ELECTION OF ANNUITY INCOME OPTION
By Written Request to the Company at least 30 days before the Annuity Date,
you may elect an Annuity Income Option and whether Annuity Income Payments
are to be paid on a fixed dollar basis, a variable basis, or a combination
of both. The Annuity Income Option may not be changed during the Annuity
Period.
The Company may require that Annuity Income Payments be made on a fixed
dollar basis if the amount to be applied to a variable basis would provide
an initial monthly income of less than $50.00.
EVA-91100 -24-
If the Company has not received your Written Request at least 30 days
before the Annuity Date:
(A) Annuity Income Payments will be made according to Option 3 with Annuity
Income Payments guaranteed for ten years.
(B) The Guaranteed Account Contract Value less any applicable taxes will be
applied to purchase a Fixed Annuity, and the Variable Account Contract
Value less any applicable taxes will be applied to purchase a Variable
Annuity.
ANNUITY INCOME OPTIONS
Subject to the terms of this Contract, Annuity Income Payments may be made
on a fixed dollar basis, a variable basis, or a combination of both. You
may choose Annuity Income Payments according to one of the options below or
another option agreed to by the Company.
OPTION 1: LIFE ANNUITY
Annuity Income Payments will be made during the lifetime of the Annuitant.
No income will be paid after the Annuitant dies.
OPTION 2: JOINT AND SURVIVOR ANNUITY
Annuity Income Payments will be made during the lifetime of the Annuitant
and a designated second person.
OPTION 3: ANNUITY FOR A GUARANTEED PERIOD AND LIFE THEREAFTER
Annuity Income Payments will be made for a guaranteed period as elected.
If the Annuitant lives beyond the guaranteed period, the Annuity Income
Payments will continue until the Annuitant's death.
If the Annuitant dies before the end of the guaranteed period, Annuity
Income Payments will be continued to the Annuitant's Beneficiary until the
end of the guaranteed period. If no Annuitant's Beneficiary is living on
the date proof of death is received, any remaining unpaid guaranteed
Annuity Income Payments will be paid to the Annuitant's estate.
The Annuitant's Beneficiary may elect to have the remaining unpaid
guaranteed Annuity Income Payments paid in a single sum. If the Annuitant's
Beneficiary dies before the remaining guaranteed Annuity Income Payments
have been paid, the remaining unpaid guaranteed Annuity Income Payments
will be paid in a single sum to the estate of the Annuitant's Beneficiary.
The remaining guaranteed Annuity Income Payments will be discounted to
reflect the interest rate used to determine the payments.
EVA-91100 -25-
FIXED ANNUITY
A Fixed Annuity is an annuity with income that is guaranteed by the Company
as to dollar amount. The income is determined by applying the portion of
the Contract Value (less any applicable taxes) that you allocate to
providing fixed payments to the appropriate Annuity Table for the Option
chosen. Annuity Income Payments under a Fixed Annuity will not vary.
VARIABLE ANNUITY
A Variable Annuity is an annuity with income which:
(A) Is not guaranteed as to dollar amount; and
(B) Varies in amount with the investment experience of the elected
Subaccounts.
ANNUITY UNIT VALUE
The Annuity Unit Value for each Subaccount for any Valuation Period is
equal to (a) multiplied by (b) multiplied by (c) where:
(A) Is the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated;
(B) Is the Annuity Unit Value for the preceding Valuation Period; and
(C) Is the investment result adjustment factor (.99990575 per day) which
recognizes an annual interest rate of 3.5% used in determining the variable
annuity income amount. A different investment result adjustment factor
will be used with different assumed interest rates.
DETERMINATION OF FIRST VARIABLE ANNUITY INCOME PAYMENT
The portion of the Contract Value (less any applicable taxes) that you
allocate to providing variable payments, will be applied to the appropriate
Annuity Table. This will be done for the Valuation Period in which the
Annuity Date occurs and in accordance with the Annuity Income Option
chosen. The minimum amount payable for the first payment for each $1,000
so applied is shown in the Annuity Table for the Option chosen based on an
assumed interest rate of 3.5%. The Company may make available variable
Annuity Income Payments based on other assumed interest rates.
VARIABLE ANNUITY INCOME PAYMENTS AFTER THE FIRST PAYMENT
Variable Annuity Income Payments after the first vary in amount. The amount
changes with the investment performance of the elected Subaccounts. The
dollar amount of variable Annuity Income Payments after the first is not
fixed. It may change from payment to payment. The dollar amount of such
payments is determined as follows:
EVA-91100 -26-
(A) The dollar amount of the first Annuity Income Payment is divided by the
Annuity Unit Value as of the Valuation Period in which the Annuity Date
occurs. This result establishes the fixed number of Annuity Units for each
Annuity Income Payment after the first. This number of Annuity Units
remains fixed during the Annuity Period, except for the effect of any
exchange of Annuity Units.
(B) The fixed number of Annuity Units is multiplied by the Annuity Unit
Value as of the Valuation Period in which the payment is due. This result
establishes the dollar amount of the payment.
The dollar amount of each Annuity Income Payment after the first will not
be affected by variations in expenses or mortality experience.
EXCHANGE OF ANNUITY UNITS
Annuity Units of any Subaccount may be exchanged for Annuity Units of any
other Subaccount by Written Request. The exchange will affect Annuity
Income Payments determined after that valuation period. The exchange will
be based on the relative value of the Subaccount Annuity Units. The value
of the Annuity Units being exchanged must provide at least a $50.00 annuity
income payment at the time of the exchange, unless all of the Annuity Units
of a Subaccount are being exchanged. Once Annuity Income Payments start,
no exchanges may be made to or from any Fixed Annuity. The Company
reserves the right to limit exchanges to six per contract year.
ADJUSTED AGE
Annuity Income Payments are based on the adjusted age of the Annuitant as
of the Annuity Date. The joint and survivor annuity income rates are based
on the adjusted ages of both the Annuitant and the designated second person
as of the Annuity Date. The adjusted age is:
(a) The age on the Annuity Date;
LESS
(b) The age adjustment shown below which is based on the calendar year in
which the Annuity Date occurs.
Calendar
Years 1990-99 2000-09 2010-19 2020-29 2030-39 After 2039
Age adjustment 0 1 2 3 4 5
EVA-91100 -27-
ANNUITY TABLES
DOLLAR AMOUNT OF THE ANNUITY INCOME WHICH IS PURCHASED WITH
EACH $1,000 OF PROCEEDS APPLIED
GUARANTEED MONTHLY INCOME
OPTION 1 OPTION 3
Life Annuity Life Annuity Life Annuity
ADJUSTED 10 Years Guaranteed 20 Years Guaranteed
AGE MALE FEMALE MALE FEMALE MALE FEMALE
60 5.21 4.69 5.10 4.64 4.77 4.48
61 5.33 4.79 5.20 4.73 4.83 4.55
62 5.47 4.89 5.32 4.82 4.90 4.62
63 5.61 5.00 5.44 4.92 4.96 4.69
64 5.76 5.11 5.57 5.03 5.03 4.76
65 5.93 5.24 5.70 5.14 5.09 4.83
66 6.10 5.37 5.84 5.26 5.16 4.90
67 6.29 5.52 5.98 5.38 5.22 4.97
68 6.50 5.67 6.13 5.52 5.27 5.05
69 6.71 5.84 6.29 5.66 5.33 5.12
70 6.95 6.02 6.45 5.81 5.38 5.19
71 7.19 6.22 6.62 5.96 5.43 5.25
72 7.46 6.43 6.79 6.13 5.48 5.32
73 7.74 6.66 6.97 6.30 5.52 5.38
74 8.05 6.92 7.14 6.49 5.56 5.43
75 8.38 7.19 7.33 6.68 5.59 5.49
76 8.73 7.49 7.51 6.87 5.62 5.53
77 9.11 7.81 7.69 7.07 5.65 5.57
78 9.52 8.16 7.87 7.28 5.67 5.61
79 9.96 8.54 8.05 7.49 5.69 5.64
80 10.42 8.96 8.22 7.70 5.71 5.67
81 10.93 9.41 8.39 7.90 5.72 5.69
82 11.47 9.90 8.55 8.11 5.73 5.71
83 12.04 0.43 8.70 8.30 5.74 5.73
84 12.65 11.01 8.85 8.49 5.75 5.74
85 13.30 11.64 8.98 8.67 5.75 5.74
JOINT AND SURVIVOR ANNUITY
OPTION 2
Male Adjusted Female Adjusted Age
Age 60 65 70 75 80 85
60 4.27 4.48 4.68 4.86 4.99 5.08
65 4.39 4.68 4.98 5.26 5.50 5.68
70 4.49 4.85 5.26 5.70 6.10 6.43
75 4.57 4.99 5.51 6.12 6.75 7.32
80 4.62 5.09 5.70 6.48 7.38 8.29
85 4.65 5.15 5.83 6.75 7.92 9.24
Basis = Modification of 1983a Individual Annuitant Mortality at 3.5% annual
interest, using age nearest birthday.
The amount of annuity income for any age or combination of ages not shown
in the Annuity Tables, or for any other annuity option agreed to by us,
will be furnished on request.
EVA-91101 -28-
ANNUITY TABLES
DOLLAR AMOUNT OF THE ANNUITY INCOME WHICH IS PURCHASED WITH
EACH $1,000 OF PROCEEDS APPLIED
GUARANTEED MONTHLY INCOME
OPTION 1 OPTION 3
ADJUSTED 10 Years Guaranteed 20 Years Guaranteed
AGE Life Annuity Life Annuity Life Annuity
60 4.69 4.64 4.48
61 4.79 4.73 4.55
62 4.89 4.82 4.62
63 5.00 4.92 4.69
64 5.11 5.03 4.76
65 5.24 5.14 4.83
66 5.37 5.26 4.90
67 5.52 5.38 4.97
68 5.67 5.52 5.05
69 5.84 5.66 5.12
70 6.02 5.81 5.19
71 6.22 5.96 5.25
72 6.43 6.13 5.32
73 6.66 6.30 5.38
74 6.92 6.49 5.43
75 7.19 6.68 5.49
76 7.49 6.87 5.53
77 7.81 7.07 5.57
78 8.16 7.28 5.61
79 8.54 7.49 5.64
80 8.96 7.70 5.67
81 9.41 7.90 5.69
82 9.90 8.11 5.71
83 10.43 8.30 5.73
84 11.01 8.49 5.74
85 11.64 8.67 5.74
JOINT AND SURVIVOR ANNUITY
OPTION 2
Adjusted Age Adjusted Age Second Annuitant
First Annuitant 60 65 70 75 80 85
60 4.15 4.30 4.42 4.52 4.59 4.63
65 4.30 4.52 4.73 4.90 5.04 5.13
70 4.42 4.73 5.05 5.35 5.60 5.78
75 4.52 4.90 5.35 5.83 6.28 6.64
80 4.59 5.04 5.60 6.28 7.00 7.68
85 4.63 5.13 5.78 6.64 7.68 8.78
Basis = Modification of 1983a Individual Annuitant Mortality at 3.5% annual
interest, using age nearest birthday.
The amount of annuity income for any age or combination of ages not shown
in the Annuity Tables, or for any other annuity option agreed to by us,
will be furnished on request.
EVA-91-unisex -28-
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
NEW YORK, NEW YORK
VARIABLE ANNUITY
FLEXIBLE PURCHASE PAYMENT ANNUITY
WITH VARIABLE AND GUARANTEED ACCOUNTS
NONPARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. (SEE CONTRACT VALUE, PAGE 11.)
EVA-91100
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
ENDORSEMENT
As of the Date of Issue of this Contract all references to sex are deleted.
All values and benefits are determined without regard to gender.
Secretary President
EVA-91-unisex
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
ENDORSEMENT: INDIVIDUAL RETIREMENT ANNUITY
This Endorsement is a part of the Contract. The effective date of this
Endorsement is the Contract Date shown on the Contract Schedule.
This Contract is issued on a tax qualified basis under Section 408(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), so the
following provisions apply and replace any contrary Contract provisions:
(1) The Owner of the Contract must also be the Annuitant. A Contingent
Annuitant cannot be designated. The Contract is not transferable (other
than a transfer incident to a divorce decree in accordance with Section
408(d)(6) of the Code) and is established for the exclusive benefit of the
Owner and his or her designated beneficiary.
(2) Any premium for this Contract must be a rollover contribution, as
permitted by Sections 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), or
408(d)(3) of the Code. No other premium may be paid. Premiums will not be
refunded except that within 30 days of the date of the receipt of the
Contract, the application may be revoked and the Company will pay you the
Contract Value as of the date it receives your Contract, plus any
deductions made from your Purchase Payment.
(3) The Owner's entire interest in the Contract is nonforfeitable, subject
to the surrender charges specified in the Contract.
(4) In order to satisfy the minimum distribution requirements of Code
Section 408(b)(3), the Owner's interest in the Contract must be paid in a
single sum or distributed in equal or substantially equal payments at least
annually over: the life of the Owner or the lives of the Owner and a second
person designated by the Owner; or a period not to extend beyond the life
expectancy of the Owner or the joint and last survivor expectancy of the
Owner and a designated second person. If the designated second person is
not the Owner's spouse, payments will comply with the minimum distribution
incidental benefit requirements applicable to IRAs. This will require a
specified percentage of the distributions be distributed to the Owner
depending on the age of the Owner and the designated second person. The
Owner may elect:
(A) that the Company pay the Cash Surrender Value;
(B) that the Contract Value be applied to an Annuity Income Option that
complies with Code Section 408(b)(3); or
EVA-91200
(C) to take a series of partial withdrawals from the Contract that,
together with distributions from other IRA's, comply with Code Section
408(b)(3). Such withdrawals will be subject to the terms described in the
contract to which this endorsement applies. Withdrawals cannot be taken
after the Annuity Date. The latest permissible Annuity Date is described
in the Contract.
(5) Unless the Owner elects otherwise by Written Request, the Annuity Date
will be April 1 of the calendar year following the calendar year in which
the Owner attains age 70 1/2 (the "Required Beginning Date.")
(6) If this Contract is the Owner's only IRA, the Owner must begin taking
distributions from the Contract no later than the Required Beginning Date.
(7) If this Contract is not the Owner's only IRA, the Owner may satisfy the
minimum distribution requirements by taking a series of partial withdrawals
from this Contract or from any other IRAs he or she owns beginning no later
than the Required Beginning Date.
(8) By Written Request to the Company at least 30 days prior to the Annuity
Date, the Owner may elect an Annuity Income Option or other disposition of
any amount to be paid under the contract. Unless the Owner elects
otherwise by Written Request, payments will be made according to Annuity
Income Option 3 of the Contract with Annuity Income Payments guaranteed for
ten years.
(9) In the event of the Owner's death, the entire interest in this Contract
must be distributed in accordance with Code Section 408(b)(3), and the
Contract's provisions relating to the death of the Owner are changed to the
extent necessary to conform with the Code as follows:
(A) If the Owner dies after the Required Beginning Date, the remaining
portion of his or her interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the Owner's
death.
(B) If the Owner dies before the Required Beginning Date, the Owner's
entire interest will be distributed in accordance with one of the following
four provisions:
(1) The Owner's entire interest will be paid in full before December 31
of the calendar year containing the fifth anniversary of the date of the
Owner's death.
EVA-91200
(2) If the Owner's interest is payable to a designated Beneficiary of the
Owner and the designated Beneficiary has not elected (1) above, then the
entire interest will be distributed in substantially equal installments at
least annually over the life or a period not to extend beyond the life
expectancy of the designated Beneficiary commencing no later than December
31 of the year following the date of the Owner's death. The designated
Beneficiary may, at any time prior to the commencement of distribution,
elect to accelerate the payments, that is, increase the frequency or amount
of the payments.
(3) If the designated Beneficiary of the Owner is the Owner's surviving
spouse, distributions are not required to begin until December 31 of the
later of: (i) the calendar year following the date of death of the Owner
or (ii) the calendar year in which the deceased Owner would have attained
age 70 1/2. The surviving spouse may, at any time prior to the
commencement of distribution, elect to accelerate the payments, that is,
increase the frequency or amount of the payments.
(4) If the designated Beneficiary of the Owner is the Owner's surviving
spouse, the spouse may treat the Contract as his or her own individual
retirement annuity (IRA).
For purposes of this requirement, any amount paid to a child of the Owner
will be treated as if it had been paid to the surviving spouse if the
remainder of the interest becomes payable to the surviving spouse when the
child reaches the age of majority.
(10) For purposes of any distribution rule, life expectancies will be
calculated by use of the return multiples specified in Section 1.72-9 of
the Treasury Regulations.
(11) This Contract cannot be sold, assigned, discounted or pledged as
collateral for a loan or as security for the performance of an obligation
or for any other purpose (other than a transfer incident to a divorce
decree in accordance with Section 408(d)(6) of the Code).
(12) The Company reserves the right to amend this Endorsement in any aspect
at any time so that it may conform to the applicable provisions of the Code
as in effect from time to time. Any such amendment will be subject to any
necessary regulatory approvals.
Signed for the Company at its Home Office, New York, New York.
President Secretary
EVA-91200
ANNUITY SERVICE CENTER
P.O. BOX 3767, NEW YORK, NEW YORK 10277-0433
CONTRACT SCHEDULE
CONTRACT NUMBER EF0000000
CONTRACT DATE APRIL 1, 1991
ANNUITY DATE APRIL 1, 2041
ANNUITANT PETER MINUIT
ISSUE AGE/SEX 35/MALE
CONTINGENT ANNUITANT PAULA MINUIT
INITIAL PURCHASE PAYMENT $5,000
VARIABLE ACCOUNT SUBACCOUNTS
MONEY MARKET EQUITY-INCOME
HIGH INCOME GROWTH
ASSET MANAGER OVERSEAS
INVESTMENT GRADE BOND INDEX 500
MINIMUM GUARANTEED ACCOUNT INTEREST RATE: 3.5% per year
compounded annually
MINIMUM ADDITIONAL PURCHASE PAYMENT: $250
DEDUCTIONS FROM THE CONTRACT VALUE:
MAINTENANCE CHARGE: $30 per year on the Contract Date not to exceed $50 per
year.
TABLE OF SURRENDER CHARGES
CONTRACT PERCENTAGE OF
YEAR PURCHASE PAYMENTS
1 5%
2 4%
3 3%
4 2%
5 1%
THEREAFTER 0%
If you choose to receive income from your Annuity based upon an assumed
interest rate of 3.5%, the smallest annual rate of investment return which
a Subaccount would have to earn to prevent a decrease in the dollar amount
of income payments from that Subaccount is 4.55%.
EVA-91100 -4-
EMPIRE FIDELITY INVESTMENT APPLICATION FOR VARIABLE ANNUITY ISSUED
LIFE INSURANCE COMPANY TM AND ADMINISTERED BY EMPIRE FIDELITY
INVESTMENTS LIFE INSURANCE COMPANY
Complete the application and mail to
Empire Fidelity Investments Life
Insurance Company P.O.Box 3???,
New York, New York 10277-0433
1. WHO WILL BE THE OWNER OF THIS CONTRACT?
Name Date of Birth Male Female Soc. Sec. or Tax ID #
[ ] [ ]
___________________ _____________ ___ ___ _____________________
Permanent Address City State Zip
______________________________ __________________________ ____ _____
Home Phone Best Time to Call Business Phone Best Time to Call
( ) AM PM ( ) AM PM
___________ _________________ _______________ _____________________
Joint Owner Name, Date of Birth Male Female Soc. Sec. or Tax ID #
if any [ ] [ ]
___________________ _____________ ___ ___ _____________________
2. IS THIS AN IRA ROLLOVER?
__Yes If yes, Annuitant must also be Owner __No
3. WHO IS THE PROPOSED ANNUITANT?
__Owner __Joint Owner __Other(if other, please complete below)
Name Date of Birth Male Female Soc. Sec. or Tax ID #
[ ] [ ]
___________________ _____________ ___ ___ _____________________
4. HOW WILL YOU PAY FOR THIS CONTRACT?
A. __Check for an initial payment of $____ enclosed made payable to
Empire Fidelity Investments Life Insurance Co
B. __Exchange of shares from /_/_/_/_/_/_/_/_/_/_/ in _________
Fund Name
Registered to_________
Name
_Exchange of all shares OR _Exchange of $___________worth of shares
dollar amount
A signature guarantee is required ONLY for payment by exchange of Fidelity
mutual fund shares that are not registered to you. It must be by a
national bank or state chartered commercial bank or trust company (except
by a savings bank) or by a member firm of the New York, American, Boston,
Midwest or Pacific Stock Exchange.
Share Owner Authorization Joint Owner Authorization
X________________________________________ X___________________________
Signature Guarantee
Stamp and Signature
5. WHO WILL BE THE BENEFICIARY(IES) 6. PLEASE ALLOCATE THE PAYMENT TO
OF THIS CONTRACT? THE FOLLOWING PORTFOLIOS(S):
A. Annuitant's Beneficiary The Amounts allocated are in
Please list the Name and percentages or dollars (in
relationship to the Proposed whole numbers of not less than
Annuitant. 10% or $250)
_Guaranteed Account __% or $__
Name _Asset Manager __ __
_____________________________ _Money Market __ __
Relationship _Investment Grade Bond __ __
_____________________________ _High Income __ __
B. Owner's Beneficiary (Complete _Equity-Income __ __
only if Owner's Beneficiary is _Growth __ __
different from Annuitant's _Overseas __ __
Beneficiary) _Other __ __
Total 100% or __
Please lis the Name and
Relationship to the Owner
Name
_____________________________
Relationship
_____________________________
7. WILL THIS CONTRACT REPLACE OR CHANGE ANY EXISTING LIFE INSURANCE
OR ANNUITY?
__Yes (if yes, please list below) __No
Company Name P??? Number Estimated Contract Value
__________________________ _________________ _________________________
8. ADDITIONAL INFORMATION
______________________________________________________________________
______________________________________________________________________
9. PLEASE READ THESE SECTIONS AND SIGN BELOW.
SUITABILITY
I HAVE RECEIVED AND READ THE PROSPECTUS. THE CONTRACT VALUE, WHEN BASED ON
THE VARIABLE PORTFOLIOS, MAY INCREASE OR DECREASE ON ANY DAY DEPENDING UPON
THE INVESTMENT RESULTS AND NO MINIMUM CONTRACT VALUE IS GUARANTEED. ALL
VALUES AND PAYMENTS UNDER THE VARIABLE ANNUITY PROVISIONS ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
If this Contract is for an IRA rollover, I have received and understand the
Disclosure Statement. If I am opening an IRA with a distribution from an
employer-sponsored retirement plan, I certify that such distribution is a
partial or qualified total distribution which qualifies for rollover
treatment and I irrevocably elect to treat this contribution as a rollover
contribution. I am of legal age to enter into this agreement. I certify
under penalties of perjury that my Social Security Number listed on this
application is correct.
AGREEMENT
Each signer agrees that to the best of his or her knowledge and belief, all
statements and answers on this application are complete and true and may be
relied upon in issuing the contract. The answers will form a part of any
contract issued, and no registered representative has the authority to
modify this agreement or waive any of the Company's rights or requirements.
The company will furnish any information that may be currently required by
the jurisdiction in which this policy is delivered.
I recognize that neither Empire Fidelity Investments Life Insurance Company
nor Fidelity Brokerage Services, Inc. is a bank. The annuity is not backed
or guaranteed by any bank or insured by the FDIC.
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO EMPIRE FIDELITY INVESTMENTS LIFE
INSURANCE COMPANY.
Signed at
City State on(Date)
______________________________________________________________________
Owner Proposed Annuitant (if other than Owner)
X___________________________ X_______________________________________
Joint Owner (if any)
X___________________________
EXHIBIT 6(c)
CHARTER
ARTICLE I
The name of the Corporation shall be Empire Fidelity Investments Life
Insurance Company.
ARTICLE II
The principal office of the Corporation shall be located in the County of
New York in the State of New York.
ARTICLE III
The Corporation is formed for the purpose of transacting the following
kinds of insurance business as defined in paragraphs 1, 2 and 3 of
subsection (a) of Section 1113 of the Insurance Law of the State of New
York:
1. "Life insurance", means every insurance upon the lives of human beings
and every insurance appertaining thereto, including the granting of
endowment benefits, additional benefits in the event of death by accident,
additional benefits to safeguard the contract from lapse, or provide a
special surrender value, upon total and permanent disability of the
insured, and optional modes of settlement of proceeds. Amounts paid the
insurer for life insurance and proceeds applied under optional modes of
settlement or under dividend options may be allocated by the insurer to one
or more separate accounts pursuant to section four thousand two hundred
forty of this chapter.
2. "Annuities", meaning all agreements to make periodical payments for a
period certain or where the making or continuance of all or some of a
series of such payments, or the amount of any such payment, depends upon
the continuance of human life, except payments made under the authority of
paragraph one hereof. Amounts paid the insurer to provide annuities and
proceeds applied under the optional modes of settlement or dividend options
may be allocated by the insurer to one or more separate accounts pursuant
to section four thousand two hundred forty of this chapter.
3. "Accident and health insurance" means (i) insurance against death or
personal injury by accident or by any specified kind or kinds of accident
and insurance against sickness, ailment or bodily injury, including
insurance providing disability benefits pursuant to article nine of the
workers' compensation law, except as specified in item (ii) hereof; and
(ii) noncancellable disability insurance, meaning insurance against
disability resulting from sickness, ailment or bodily injury (but excluding
insurance solely against accidental injury) under any contract which does
not give insurer the option to cancel or otherwise terminate the contract
at or after one year from its effective date or renewal date.
ARTICLE IV
The amount of the capital shall be Two Million Dollars ($2,000,000) to
consist of Two Hundred Thousand (200,000) shares of Capital Stock of the
par value of Ten Dollars ($10.00) each.
ARTICLE V
Section 1. The corporate powers shall be exercised by a Board of not less
than thirteen nor more than twenty Directors.
Section 2. At all times, the majority of Directors shall be citizens and
residents of the United States and not less than three thereof shall be
residents of the State of New York, and none shall be less than eighteen
years of age. Directors need not be Stockholders.
ARTICLE VI
Section 1. The Directors shall be elected by Stockholders, as prescribed
by the laws of the State of New York or by by-laws not inconsistent with
this Charter or the laws of the State of New York. An election of
Directors shall be held annually on the first Monday in May at 4:00 p.m.,
if not a legal holiday, and, if a legal holiday, then on the next
succeeding business day not a legal holiday, at a place designated in the
Notice of Meeting. The Stockholders by a majority vote of outstanding
shares at a meeting may remove any Directors with or without cause. Any
Director may be removed by the Board of Directors for cause, at any time,
or whenever such action is requested by the Superintendent of Insurance of
the State of New York.
Section 2. Whenever any vacancy or vacancies shall occur in the Board of
Directors by death, resignation, removal or otherwise, a majority of the
remaining members of the Board, at a meeting called for that purpose, or at
any regular meeting, shall elect a Director or Directors to fill the
vacancy or vacancies thus occasioned and each Director so elected shall
serve until his or her successor is selected and is qualified. If, because
of any vacancy or vacancies in the Board of Directors, the number of
Directors shall be less than thirteen, the Corporation shall not for that
reason be dissolved, but every Director shall continue to hold office and
discharge his or her duties until his or her successor shall have been
elected and qualified.
Section 3. Vacancies in any office may be filled for the remainder of the
term in which the same shall occur by a majority vote of the Board of
Directors.
ARTICLE VII
Section 1. The Board of Directors may from time to time, by resolution
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of five or more directors of the Corporation, and
not less than one-third of the members of each committee shall be persons
who are not officers or employees of the Corporation or of any entity
controlling, controlled by, or under common control with the Corporation
and who are not beneficial owners of a controlling interest in the voting
stock of the Corporation or any such entity ("disinterested directors").
The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. The resolution of the Board of Directors
may, in addition or alternatively, provide that in the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he
or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it, except as
otherwise provided by law. Unless the resolution of the Board of Directors
expressly so provides, no such committee shall have the authority to
declare a dividend or to authorize the issuance of stock. Any such
committee may adopt rules governing the method of calling and time and
place of holding its meetings unless otherwise provided by the Board of
Directors, a majority of any such committee shall constitute a quorum for
the transaction of business, and the vote of the majority of the members of
such committee present at a meeting at which a quorum is present shall be
the act of such committee if at least one disinterested director is
included in such quorum. Each such committee shall keep a record of its
acts and proceedings and shall report thereon the Board of Directors
whenever requested so to do. Any or all members of any such committee may
be removed, with or without cause, by resolution of the Board of Directors,
passed by a majority of the whole Board.
Section 2. The Board of Directors shall establish one or more committees
comprised solely of disinterested directors. Such committee or committees
shall have responsibility for recommending the selection of independent
certified public accountants, reviewing the Corporation's financial
condition, the scope and results of the independent audit and any internal
audit, nominating candidates for director for election by shareholders, and
evaluating the performance of officers deemed by such committee or
committees to be principal officers of the Corporation and recommending to
the Board of Directors the selection and compensation of such principal
officers.
Section 3. Any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all
members of the Board or committee consent in writing to the adoption of a
resolution authorizing the action. The resolution and the written consents
thereto by the members of the Board or committee and all correspondence to
and from members of the Board or committee regarding the action taken shall
be filed with the minutes of the proceedings of the Board or committee
which shall be maintained at the Corporation's principal office.
ARTICLE VIII
Any action required by statute to be taken at any annual or special
meeting of the stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of the stockholders, may be taken
without a meeting, without the unanimous consent of the shareholders, if a
consent in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted.
ARTICLE IX
The names and post-office addresses of the Directors who shall serve until
the next annual meeting of Stockholders and until their successors are duly
elected are:
NAME ADDRESS
Edward C. Johnson 3d 1 Charles River Square
Boston, Massachusetts 02114
J. Gary Burkhead 101 Chestnut Street
Boston, Massachusetts 02108
John J. Cook 46 Windsor Road
Wellesley, Massachusetts 02181
James C. Curvey 41 Highgate Road
Wellesley, Massachusetts 02181
John J. Remondi 20 Adams Street, Box 780
Westwood, Massachusetts
Rodney R. Rohda 5 Goulding Street
Sherborn, Massachusetts 01770
Robert C. Pozen 61 Montvale Crescent
Newton, Massachusetts 02159
David C. Weinstein 158 Cotton Street
Newton, Massachusetts 02158
John H. Stimpson 42 West Clinton Avenue
Irvington, New York 10533
Roy Ballentine 11 Depot Street
Wolfboro, New Hampshire 03894
Peter Johansen 37 Glen Road
Wellesley, Massachusetts 02181
Joshua Berman 900 Park Avenue
New York, New York 10021
Malcolm MacKay 166 Columbia Heights
Brooklyn, New York 11220
ARTICLE X
Section 1. The officers of the Corporation shall be a President and a
Secretary, and any other officer or officers as may be chosen by the Board
of Directors, as prescribed by by-laws not inconsistent with this Charter
or the laws of the State of New York. Each officer shall be elected
annually by the Board of Directors at its first regular meeting following
the annual meeting of stockholders and shall hold office for a period of
one year or until his or her successor shall be elected and qualified.
Section 2. In the event a vacancy occurs in the office of President or
Secretary, the Board of Directors shall, at the earliest practicable date,
elect a successor who shall hold office for the unexpired term of his or
her predecessor. Any vacancy in any other office may be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 3. Any officer may be removed at any time by the affirmative vote
of not less than a majority of the entire Board of Directors.
Section 4. Except for the offices of President and Secretary, any number
of offices may be held by the same person.
Section 5. The duties of the officers shall be those customarily
pertaining to their respective offices or positions, elective or
appointive, together with such other duties as may be prescribed by law or
assigned by the Board of Directors.
ARTICLE XI
Alterations, amendments or restatements of this Charter may be made upon
the approval of a majority of the entire Board of Directors and upon the
consent of the holders of two-thirds of the outstanding shares of the
Corporation. No such alteration, amendment or restatement shall be
effective, however, unless its adoption and consent has been made in
compliance with applicable provisions of the New York Insurance Law.
ARTICLE XII
The duration of the corporate existence of the Corporation shall be
perpetual.
EXHIBIT 6(u)
BY-LAWS
of
EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. Place of Meetings. All meetings of the shareholders of the
Corporation shall be held at the registered office of the Corporation or at
such places, within or without the State of New York, as may be fixed from
time to time by the Board of Directors.
SECTION 2. Annual Meeting. Commencing in the year 1991, the annual
meeting of shareholders shall be held on the first Tuesday in March of
every year at 3:00 p.m., if not a legal holiday, and if a legal holiday,
then on the next following business day not a legal holiday, at 3:00 p.m.,
or at such other date and time as may be fixed by the Board of Directors.
At each annual meeting of stockholders the stockholders shall elect
directors and transact such other business as may properly be brought
before the meeting.
SECTION 3. Notice of Annual Meeting. Written notice of each annual
meeting of stockholders, stating the place, date and hour of the meeting,
shall be given in the manner set forth in Article IV of these By-Laws not
less than ten nor more than fifty days before the date of the meeting to
each stockholder entitled to vote at the meeting.
SECTION 4. Special Meetings. Special meetings of shareholders may be
called at any time for any purpose or purposes, by the Board of Directors,
or by the President, and shall be called by the President or the Secretary
upon the written request of a majority of the Board of Directors, or upon
the written request of a shareholder or shareholders holding of record at
least 10% of the outstanding shares of stock of the Corporation entitled to
vote at such meeting. Such request shall state the purpose or purposes of
the proposed meeting.
SECTION 5. Notice of Special Meeting. Notice of each special meeting of
shareholders shall be given in the manner set forth in Article IV of these
By-Laws not less than ten nor more than fifty days before the date of the
meeting to each shareholder entitled to vote at such meeting. Each such
notice shall state the place, date and hour of the meeting, and the purpose
or purposes for which the meeting is called and indicate by whom it is
being called.
SECTION 6. Quorum. Except as otherwise required by law or the Charter,
the presence in person or by proxy of the holders of record of a majority
of the shares entitled to vote at a meeting of shareholders shall be
necessary, and shall constitute a quorum, for the transaction of business
at such meeting. If a quorum is not present or represented by proxy at any
meeting of stockholders, the holders of a majority of the shares entitled
to vote at the meeting who are present in person or represented by proxy
may adjourn the meeting from time to time until a quorum is present. An
adjourned meeting may be held later without notice other than announcement
at the meeting, except that if after the adjournment a new record date is
fixed for the adjourned meeting, notice of the adjourned meeting shall be
given in the manner set forth in Article IV to each stockholder entitled to
vote at the adjourned meeting. At any such adjourned meeting at which a
quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
SECTION 7. Qualification of Voters. The only persons entitled to notice
of or to vote at any meeting of shareholders shall be the persons shown as
shareholders of the Corporation on the stock records of the Corporation on
the record date fixed by the Board of Directors, or, in the absence
thereof, at the close of business on the date the notice of the meeting is
given.
SECTION 8. Voting. At any meeting of stockholders each shareholder having
the right to vote shall be entitled to vote in person or by proxy. Except
as otherwise provided by law or the Charter, each shareholder shall be
entitled to one vote for each share of stock entitled to vote standing in
his name on the books of the Corporation. All elections of directors shall
be determined by plurality votes. Except as otherwise provided by law or
in the Charter or these By-Laws, any other matter shall be determined by
the vote of the holders of a majority of the shares voting on it.
SECTION 9. Action Without a Meeting. Except as otherwise provided by the
Charter, whenever the vote of shareholders is required or permitted in
connection with any corporate action, such action may be taken without a
meeting on written consent setting forth the action so taken, signed by the
holders of all outstanding shares entitled to vote thereon.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Function. The Board of Directors shall manage the business of
the Corporation, except as otherwise provided by law, the Charter or these
By-Laws.
SECTION 2. Number and Term of Office. The number of directors
constituting the entire Board of Directors shall be such number, not less
than thirteen, as shall be determined by resolution of the Board of
Directors from time to time. At all times a majority of the entire Board
of Directors shall be citizens and residents of the United States and not
less than three thereof shall be residents of the State of New York, and
none shall be less than eighteen years of age. Not less than one-third of
the directors shall be neither officers nor salaried employees of the
Corporation or any entity controlling, controlled by, or under common
control with the Corporation and shall not be beneficial owners of a
controlling interest in the voting stock of the Corporation or any such
entity. Directors need not be stockholders. Except as otherwise provided
by law, the Charter or these By-Laws, the term of office of each director
shall be from the time of the director's election and qualification until
the annual meeting of shareholders next succeeding the director's election
and until the successor shall have been duly elected and qualified. No
director shall receive a fee for serving in such capacity if such director
is a salaried employee of the Corporation.
SECTION 3. Removal of Directors. Except as otherwise provided by law, any
of the directors may be removed for cause by the vote of a majority of the
entire Board. Except as otherwise provided by law, any director may be
removed with or without cause, at any time, by the vote of the holders of
record of a majority of the shares entitled to vote for the election of
directors.
SECTION 4. Vacancies. Newly created directorships resulting from an
increase in the number of directors and vacancies occurring in the Board
for any reason may be filled by the vote of a majority of the directors
then in office, even if less than a quorum exists, or by the shareholders
of the Corporation at the next annual meeting or any special meeting called
for the purpose, and each director so elected shall hold office until the
next annual election of directors, and until his/her successor shall be
duly elected and qualified.
SECTION 5. Resignation. Any director of the Corporation may resign at any
time by giving written notice of his/her resignation to the Board of
Directors, the President or the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein or, if no time
is specified therein, at the time of receipt thereof, and the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 6 Executive Committee. By the affirmative vote of a majority of
the entire Board, the Board of Directors may designate from among its
members an Executive Committee and other committees, each consisting of at
least five members. At least one-third of the members must be neither
officers nor salaried employees of the Corporation or any entity
controlling, controlled by, or under common control with the Corporation or
beneficial owners of a controlling interest in the voting stock of the
Corporation or any such entity ("disinterested directors"). The Executive
Committee shall have all the authority of the Board of Directors except as
otherwise provided by Section 712 of the New York Business Corporation Law
or other applicable statute. Any other committees shall have such
authority as the Board of Directors shall provide. The Board of Directors
may designate one or more directors as alternate members of the Executive
Committee or any other committee to replace absent members. Members of all
committees shall service at the pleasure of the Board of Directors.
SECTION 7. Committee of Independent Directors. The Board of Directors
shall establish one committee, consisting of at least five members,
comprised solely of disinterested directors. Such committee shall have
responsibility for recommending the selection of independent certified
public accountants, reviewing the Corporation's financial condition, the
scope and results of the independent audit and any internal audit,
nominating candidates for director for election by shareholders or
policyholders, and evaluating the performance of officers deemed to be
principal officers of the Corporation and recommending to the Board of
Directors the selection and compensation of such principal officers.
SECTION 8. Action by Unanimous Written Consent. Any action required or
permitted to be taken by the Board of Directors or any committee thereof
may be taken without a meeting if all members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action.
The resolution and the written consents thereto by the members of the Board
or committee shall be filed with the minutes of the proceedings of the
Board or committee.
SECTION 9. Quorum; Action by the Board or any Committee. A majority of
the entire Board or any committee thereof, as the case may be, shall
constitute a quorum for the transaction of business. Except as otherwise
provided by these By-Laws, or required by law, the affirmative vote of a
majority of the directors present at any meeting at which a quorum is
present shall be required for the taking of any action by the Board of
Directors or any committee thereof, as the case may be. At least one
disinterested director must be included in any quorum for the transaction
of business at any meeting of the Board or any committee thereof. If a
quorum is not present at any meeting of directors, a majority of the
directors present at the meeting may adjourn the meeting from time to time
until a quorum is present, without notice of the adjourned meeting other
than announcement at the meeting.
ARTICLE III
MEETINGS OF DIRECTORS
SECTION 1. First Meeting. The first meeting of each newly elected Board
of Directors shall be held immediately following each annual meeting of
shareholders. If the meeting is held at the place of the meeting of
shareholders, no notice of the meting need be given to the newly elected
directors. If the first meeting is not so held, it shall be held at a time
and place specified in a notice given in the manner provided for notice of
special meetings of the Board of Directors.
SECTION 2. Regular Meetings. Regular meetings of the Board of Directors
may be held upon such notice, or without notice, at such places and at such
times as shall from time to time be determined by the Board. If any day
fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting will be held at that place at the
same hour on the next business day which is not a legal holiday.
SECTION 3. Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the President, or by the
Secretary, at the written request of any two directors. Notice of each
such meeting, stating the time and place of the meeting, shall be given in
the manner set forth in Article IV of these By-Laws not less than
forty-eight hours before the time such meeting is to be held. Notice of a
meeting need not be given to any director who submits a signed waiver of
notice whether before or after the meeting, or who attends the meeting
without protesting, prior thereto or at its commencement, the lack of
notice to the director. A notice, or waiver of notice, need not specify
the purpose of any meeting of the Board of Directors, unless otherwise
provided by these By-Laws.
SECTION 4. Place of Meeting. The Board of Directors may hold its meetings
and keep the books and records of its proceedings at such place or places
within the State of New York as the Board may from time to time determine.
ARTICLE IV
NOTICES
SECTION 1. Notice to a Stockholder. Any notice to a stockholder shall be
in writing and either given personally or by mail. If mailed, a notice
will be deemed given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his/her address as it appears on
the records of stockholders or, if the stockholder shall have filed with
the Secretary of the Corporation a written request that notices to him/her
be mailed to some other address, then addressed to him/her at that other
address.
SECTION 2. Notice to a Director. Any notice to a director may be given
personally, by telephone or by mail, telegram, cable or similar
instrumentality. A notice will be deemed given when actually given in
person or by telephone, or seventy-two hours after having been deposited in
the United States mails or with the communications company through which it
is given, directed to the director at his/her business address or at such
other address as the director may have designated to the Secretary in
writing as the address to which notices should be sent.
SECTION 3. Waiver of Notice. Any person may waive notice of any meeting
by signing a written waiver, whether before or after the meeting. In
addition, attendance by a stockholder at a meeting in person or by proxy
will be deemed a waiver of notice unless the stockholder protests prior to
the conclusion of the meeting the lack of notice thereof. Attendance by a
director at a meeting will be deemed a waiver of notice unless the director
protests, prior to the meeting or at its commencement, the lack of notice
thereof.
ARTICLE V
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a President,
a Secretary, and a Treasurer, and the Board of Directors may also elect one
or more Vice Presidents, such Assistant Secretaries, Assistant Treasurers
and such other officers as it may from time to time deem advisable. Any
two or more offices, except the offices of President and Secretary, may be
held by the same person. No officer need be a director of the Corporation.
SECTION 2. Election and Term of Office. Each officer shall be elected by
the Board of Directors and shall hold office for such term, if any, as the
Board of Directors shall determine. Any officer may be removed at any
time, either with or without cause, by the vote of a majority of the entire
Board of Directors.
SECTION 3. Resignation. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President. Such
resignation shall take effect at the time specified therein or, if no time
is specified therein, at the time of receipt thereof, and the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 4. President. The President shall be the Chief Executive Officer
of the Corporation and, subject to the Board of Directors, shall have
charge of the affairs of the Corporation. The President shall keep the
Board of Directors fully informed and shall freely consult them concerning
the business of the Corporation in the President's charge. The President
may sign, execute and deliver in the name of the Corporation all deeds,
mortgages, bonds, contracts or other instruments authorized by the Board of
Directors, except in cases where the signing, execution or delivery thereof
shall be expressly delegated by the Board of Directors or by these By-Laws
to some other officer or agent of the Corporation or where any of them
shall be required by law otherwise to be signed, executed or delivered and
he/she may affix the seal of the Corporation to any instrument which shall
require it. Except as otherwise provided by these By-Laws, the President
shall appoint and remove, employ and discharge and fix the compensation of
all servants, agents, employees and clerks of the Corporation. The
President shall, if present, preside at all meetings of the Board of
Directors and of the shareholders and shall have the power to call special
meetings of the shareholders and of the Board of Directors and in addition
to the powers usually incident to the office of President as herein
provided, shall have such other powers and shall perform such other duties
as may be assigned to the President by the Board of Directors.
SECTION 5. Vice Presidents. The Vice Presidents, if any, shall perform
such duties as shall from time to time be assigned to them by the Board of
Directors, or the President. In the absence or in the event of the
disability of the President, the Vice Presidents shall, in the order
designated by the Board, perform the duties of the President.
SECTION 6. Secretary. The Secretary shall keep the minutes of all
meetings of the shareholders and of the Board of Directors in books
provided for that purpose. The Secretary shall attend to the giving and
serving of all notices of the Corporation. The Secretary shall affix the
seal of the Corporation to all contracts and instruments requiring the
same. The Secretary shall have charge of the seal of the Corporation and
of such books and papers as the Board of Directors may direct, all of which
shall at all reasonable times be open to the examination by any director
upon application at the office of the Corporation during business hours,
and shall in general perform all the duties incident to the office of the
Secretary, or which may from time to time be assigned to him by the Board
of Directors.
SECTION 7. Assistant Secretaries. The Assistant Secretaries, if any,
shall assist the Secretary in the performance of the Secretary's duties and
perform such duties as shall from time to time be assigned to them by the
Board of Directors or the President. In the absence of or in the event of
the disability of the Secretary, the Assistant Secretaries shall, in the
order designated by the Board, perform the duties of the Secretary.
SECTION 8. Treasurer. The Treasurer shall have custody of all funds,
securities and other property of the Corporation, and shall keep or cause
to be kept full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and shall deposit all moneys and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board
of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, when the President or
the Board of Directors so requires, an account of all transactions as
Treasurer and of the financial condition of the Corporation. In general
the Treasurer shall perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to the
Treasurer by the Board of Directors.
SECTION 9. Assistant Treasurers. The Assistant Treasurers, if any, shall
assist the Treasurer in the performance of the Treasurer's duties and
perform such duties as shall from time to time be assigned to them by the
Board of Directors or the President. In the absence of or in the event of
the disability of the Treasurer, the Assistant Treasurers shall, in the
order designated by the Board, perform the duties of the Treasurer.
SECTION 10. Compensation. The compensation of the officers shall be fixed
from time to time by the Board of Directors or in such manner as it may
provide.
SECTION 11. Security. The Board of Directors may require any officer,
agent or employee to give security for the faithful performance of his/her
duties.
ARTICLE VI
INDEMNIFICATION
SECTION 5. Indemnification of Directors, Officers, Employees and Agents.
Any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action or suit by
or in the right of the Corporation to procure a judgment in its favor) by
reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall be indemnified
to the extent permitted by the laws of the State of New York, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
defense or settlement of such action, suit or proceeding. The
indemnification expressly provided by statute in a specific case shall not
be deemed exclusive or any other rights to which any person indemnified may
be entitled under any lawful agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
The Board of Directors may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture or trust or other enterprise
against any liability incurred by him in any such capacity or arising out
of his status as such, whether or not the Corporation would have the power
to indemnify him against such liability.
ARTICLE VII
SHARES AND THEIR TRANSFER
SECTION 1. Certificates. The shares of stock of the Corporation shall be
represented by certificates, in such form as the Board of Directors may
from time to time prescribe, signed by the President or a Vice President
and by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary; however, unless otherwise provided by the Certificate
of Incorporation, the Board of Directors may provide by resolution that
some or all of any or all classes and series of shares in the Corporation
shall be uncertified shares, provided that any such resolution shall not
apply to shares represented by a certificate until such certificate has
been surrendered to the Corporation.
SECTION 2. Signatures on Certificates. Each certificate shall be signed
by the President or a Vice President and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation and
shall be sealed with the seal of the Corporation; or, where such
certificates are countersigned by a transfer agent and registered by a
registrar, the signatures of such officers and the seal of the Corporation
may be in facsimile. If any officer who has signed or whose facsimile
signature has been placed upon a certificate shall cease to be such officer
before such certificate is issued, it may be issued by the Corporation with
the same effect as if he/she were such officer at the date of issue.
SECTION 3. Lost or Destroyed Certificates. The Board of Directors may
direct that a new certificate be issued in place of any certificate issued
by the Corporation which is alleged to have been lost or destroyed. When
doing so, the Board of Directors may prescribe such terms and conditions
precedent to the issuance of the new certificate as it deems expedient, and
may require a bond sufficient to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss or
destruction of the certificate or the issuance of the new certificate.
SECTION 4. Record Date. The Board of Directors may fix in advance a date
as the record date for determination of the stockholders entitled to notice
of or to vote at any meeting of stockholders, or to express consent to, or
dissent from, any proposal without a meeting, or to receive payment of any
dividend or allotment of any rights, or to take or be the subject of any
other action. Such date shall be not less than ten nor more than fifty
days before the date of such meeting, nor more than fifty days prior to any
other action. If no record date is so fixed, the record date shall be as
provided by law. A determination of stockholders entitled to notice of or
to vote at any meeting of stockholders which has been made as provided in
this Section shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date for the adjourned meeting.
SECTION 5. Ownership. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares
to receive dividends, to vote, or to exercise any of the other rights or
privileges of an owner with regard to those shares.
SECTION 6. Rules and Regulations. The Board of Directors shall have power
and authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares
of stock of the Corporation.
ARTICLE VIII
CORPORATE SEAL
The Board of Directors shall provide a suitable seal containing the name
of the Corporation, which seal shall be in the charge of the Secretary. A
duplicate seal may be kept and used.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall end at the close of business on
the 31st day of December in each year.
ARTICLE X
AMENDMENTS
Any and all By-Laws of the Corporation shall be subject to amendment or
repeal, in whole or in part, and new By-Laws not inconsistent with the laws
of the State of New York or any provision of the Charter may be adopted, by
the affirmative vote of the holders of record of a majority of the
outstanding stock of the Corporation present in person, or represented by
proxy and entitled to vote in respect thereof, given at an annual meeting
or at any special meeting at which a quorum shall be present, or by the
affirmative vote of majority of the entire Board of Directors given at any
meeting if, in each case, notice of the proposed amendment, repeal, or
adoption of new By-Laws has been included in the notice of such meeting.
Any By-Laws adopted by the Board of Directors may be altered or repealed by
the stockholders. If any By-Law regulating an impending election of
directors is adopted, amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of shareholders for
the election of directors the By-Law so adopted, amended or repealed and a
concise statement of the changes made.
EXHIBIT 8(b)
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (this "Agreement") is made
effective as of 12:01 a.m., Eastern Standard Time, on the 10th day of
March, 1992, ("Effective Date"), between Fidelity Investments Life
Insurance Company, a Pennsylvania corporation ("Provider") and Empire
Fidelity Investments Life Insurance Company, a New York corporation
("Company").
WHEREAS, Provider has experience in the operation of life insurance
business and in performing administrative services; and
WHEREAS, Company desires for Provider to perform certain administrative
services (collectively "services") for Company in its insurance operations
and desires further to make use in its day-to-day operations of certain
property, equipment, space and facilities (collectively "facilities") of
Provider as Company may request; and
WHEREAS, Company has executed a Commitment Agreement to the New York
Insurance Department dated December 26, 1991 ("Commitment Agreement"),
regarding the operations of Company, which contemplates agreements for
services; and
WHEREAS, Provider and Company wish to assure that all charges for services
incurred hereunder are reasonable and in accordance with the requirements
of New York Insurance Department Regulation No. 33 and to the extent
practicable reflect actual costs and are arrived at in a fair and equitable
manner, and that estimated costs, whenever used, are adjusted periodically,
to bring them into alignment with actual costs; and
WHEREAS, Provider and Company wish to identify the services to be rendered
to Company by Provider and the facilities to be used by Company and to
provide a method of fixing bases for determining the charges to be made to
Company;
NOW THEREFORE, in consideration of premises and of the mutual promises set
forth herein, and intending to be legally bound hereby, Provider and
Company agree as follows:
1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. Subject to the terms,
conditions, and limitations of this Agreement, Provider agrees to the
extent requested by Company to perform diligently and in a professional
manner the services listed in Section 2 of this Agreement.
Subject to the terms, conditions and limitations of this Agreement,
Provider agrees to the extent requested by Company to make available to
Company such data processing equipment, business property and space and
communications equipment, whether owned or leased, as Company may determine
to be reasonably necessary in the conduct of its insurance operations.
Provider agrees at all time to maintain sufficient facilities and capacity
of the kind necessary to perform this Agreement.
(a) CAPACITY OF PERSONNEL AND STATUS OF FACILITIES. Whenever Provider
utilizes its personnel to perform services for Company pursuant to this
Agreement, such personnel shall at all times remain subject to the
direction and control of Provider, and Company shall have no liability to
such personnel for their welfare, salaries, fringe benefits, legally
required employer contributions and tax obligations.
No facility of Provider used in performing services for or subject to use
by Company shall be deemed to be transferred, assigned, conveyed or eased
by performance or use pursuant to this Agreement.
(b) EXERCISE OF JUDGMENT IN RENDERING SERVICES. In providing any services
hereunder which require the exercise of judgment by Provider, Provider
shall perform any such service in accordance with any standards and
guidelines Company develops and communicates to Provider. In performing
any services hereunder, Provider shall at all times act in a manner
reasonably calculated to be in or not opposed to the best interests of
Company.
(c) CONTROL. The performance of services by Provider for Company pursuant
to this Agreement shall in no way impair the absolute control of the
business and operations of Provider or Company by their respective Boards
of Directors. Provider shall act hereunder so as to assure the separate
operating identity of Company.
2. SERVICES. It is understood that Company has certain obligations under
the Commitment Agreement, and it is agreed that Provider shall not act or
refrain from acting in any manner to cause Company to breach said
obligations.
The performance of Provider under this Agreement with respect to the
business and operations of Company shall at all times be subject to the
direction and control of the Board of Directors of Company. No services
will be provided under this Agreement in violation of the Commitment
Agreement.
To the extent that Provider would on occasion utilize outside consultants
to aid in the performance of a portion of its own functions and services,
Provider shall perform similar functions and services requested by the
Company utilizing the same outside consultants; provided, that the Company
shall approve the use and cost of any such consultant. These functions
would include:
Accounting: Regulatory accounting and reporting expertise, tax planning
and audit
Actuarial Services: Product development and pricing, regulatory
compliance, reserve evaluations, asset-liability matching and financial
projections
Computer and Dataprocessing Services:
Evaluating/adapting technology to insurance administration processes
Subject to the foregoing and to the terms, conditions and limitations of
this Agreement, Provider shall provide to Company, at Company's request,
the services set forth below.
(a) ACCOUNTING, DATA PROCESSING, TAX AND AUDITING. Provider shall prepare
accounting records and process accounting transactions (including financial
statements, reports, annual statutory statements and statements on a GAAP
basis provided that (i) the instruction for such records and/or
transactions are given by and the final product verified by Company and
(ii) that Provider shall cause Company's Chief Administrative Officer, or
his designee to be familiar with all the details of the services provided,
including but not limited to, accounting and adjusting entries.
Provider shall also provide such assistance as may be required with
respect to tax, auditing services and EDP processing of the related
financial records and transactions of the Company.
(b) UNDERWRITING. Company shall establish and reduce to writing all
underwriting standards, for the acceptance of new business, make all final
underwriting decisions and maintain at its home office in New York all
original papers which are basic to the insurance contract. Until March 10,
1997, Provider shall provide underwriting and related services, including
review of policy applications, MIB review, medical review and other
investigations.
(c) CLAIMS. The Company will establish and reduce to writing, claims
settlement procedures, exercise final approval authority for all claims
settlement procedures, exercise final approval authority for all claims
settlements, and maintain at its home office in New York, all original
claims investigation papers and worksheets. Until March 10, 1997, Provider
shall provide claim and related services including verification that the
policy was in force and review and investigation of claims.
(d) ACTUARIAL SERVICES. Provider shall provide actuarial and related
services, including product development and implementation, experience
monitoring, counseling on reserve requirements and asset-liability
matching, and financial reporting.
(e) COMPUTER AND DATA PROCESSING SERVICES. Provider shall provide
computer and data processing services for policies issued by the Company,
including such services to the extent necessary to support those described
at 2.(a), (b), (c) and (d), model office testing of all computer and data
processing systems used by Company, and user-oriented systems training
programs for Company personnel.
3. CHARGES. Company agrees to reimburse Provider for the actual cost of
services and facilities provided by Provider to Company pursuant to this
Agreement. If Provider in the future provides such services to third
parties, then the charge shall be at market.
Cost analyses will be made from time to time by Provider to determine, as
closely as possible, the actual cost of services rendered and facilities
made available to Company hereunder. Provider shall forward to Company the
information developed by these analyses, and such information shall be used
to develop bases for the distribution of expenses which more currently
reflect the actual incidence of cost incurred by Provider on behalf of
Company.
Subject to New York Insurance Department Regulation 33, the bases for
determining such charges to Company shall be those used by Provider for
internal cost allocation including, where appropriate, time records
prepared at least annually for this purpose. Such bases shall be modified
and adjusted by mutual agreement where necessary or appropriate to reflect
fairly and equitably the actual incidence of cost incurred by Provider on
behalf of Company.
4. PAYMENT. Provider shall submit to Company within thirty (30) days of
the end of each calendar quarter a written statement of the amount
estimated to be owed by Company for services and the
use of facilities pursuant to this Agreement in that calendar quarter, and
Company shall pay to Provider within fifteen (15) days following receipt of
such written statement the amount set forth in the statement.
As soon as reasonably practical, after the end of each calendar year,
Provider will submit to Company a detailed written statement of the charges
due from Company to Provider in the immediately preceding year, including
charges not included in any previous statements, and any balance payable or
to be refunded as shown in such statement shall be paid or refunded within
fifteen (15) days following receipt of such written statement by Company.
5. ACCOUNTING RECORDS AND DOCUMENTS. Provider shall be responsible for
maintaining full and accurate accounts and records of all services rendered
and facilities used pursuant to this Agreement and such additional
information as Company may reasonably request for purposes of its internal
bookkeeping and accounting operations. Provider shall keep such accounts
and records insofar as they pertain to the computation of charges hereunder
available at its principal offices for audit, inspection and copying by
Company and persons authorized by it or any governmental agency having
jurisdiction over Company during all reasonable business hours.
With respect to accounting records prepared by Provider by reason of its
performance under this Agreement, summaries of such records shall be
delivered to Company within thirty (30) days from the end of the month to
which the records pertain.
6. OTHER RECORDS AND DOCUMENTS. Any other books, records, and files (for
example, actuarial work papers or administrative summaries) established and
maintained by Provider by reason of its performance under this Agreement
which, absent this Agreement, would have been held by Company, shall be
deemed the property of Company, and shall be subject to examination at all
times by Company and persons authorized by it or any governmental agency
having jurisdiction over Company, and shall be delivered to Company at
least quarterly. All such books, records, and files shall be promptly
transferred to Company by Provider upon termination of this Agreement, and
Company shall pay to Provider therefor an amount equal to the costs
incurred by Provider in making such transfer.
With respect to original documents other than those provided for under
Section 5 hereof which would otherwise be held by Company and which may be
obtained by Provider in performing under this Agreement, Provider shall
deliver such documents to Company within thirty (30) days of their receipt
by Provider except where continued custody of such original documents is
necessary to perform hereunder.
7. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed
to grant Provider an exclusive right to provide services to Company, and
Company retains the right to contract with any third party, affiliated or
unaffiliated, for the performance of services or for the use of facilities
as are available to or have been requested by Company pursuant to this
Agreement.
8. CONTACT PERSON(S). Company and Provider each shall appoint one or more
individuals who shall serve as contact person(s) for the purpose of
carrying out this Agreement. Such contact person(s) shall be authorized to
act on behalf of their respective parties as to the matters pertaining to
this Agreement. Each party shall notify the other, in writing, as to the
name, address and telephone number for any such designated contact person,
and of any replacement thereof.
9. TERMINATION AND AMENDMENT. This Agreement shall remain in effect until
terminated by either Provider or Company upon giving ninety (90) days or
more advance written notice, as to services other than electronic data
processing, and upon giving one hundred eighty (180) days or more advance
written notice as to electronic data processing services. In no event may
Provider terminate electronic data processing services if by doing so
Company would be left without data processing capabilities adequate to
services its policies. Upon termination, Provider shall promptly deliver
to Company all books and records that are, or are deemed by this Agreement
to be, the property of Company. No provision of this Agreement may be
waived or amended except by a statement in writing signed by all parties.
If Provider utilizes any computer software in connection with this
Agreement, then upon termination by either party Provider shall ensure that
Company is not left without working copies of such software. On
termination Provider shall arrange for a third party to provide copies of
such software to Company or, if such software is not readily available from
a third party, shall transfer to Company without any additional
consideration Provider's software.
10. SETTLEMENT ON COMPLETE TERMINATION. No later than ninety (90) days
after the effective date of Complete Termination of this Agreement,
Provider shall deliver to Company a detailed written statement for all
charges incurred and not included in any previous statement to the
effective date of termination. The amount owed or to be refunded hereunder
shall be due and payable within fifteen (15) days of receipt of such
statement.
11. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not
be assignable by either party hereto, except by operation of law. Except
as and to the extent specifically provided in this Agreement, nothing in
this Agreement expressed or implied, is intended to confer on any person
other than the parties hereto, or their respective legal successors, any
rights, remedies, obligations or liabilities that would otherwise be
applicable. The representations, warranties, covenants and agreements
contained in this Agreement shall be binding upon, extend to and inure to
the benefit of the parties hereto and each of their successors and assigns
respectively.
12. GOVERNING LAW; SERVICES OF SUIT; FORUM SELECTION. This Agreement
shall be governed by and construed and enforced in accordance with the laws
of the State of New York.
Provider shall submit to the jurisdiction of any court of competent
jurisdiction within the Southern and Eastern Districts of New York and will
comply with all requirements necessary to give such Court jurisdiction.
Service of process in any suit instituted against Provider upon this
Agreement may be made upon Secretary for Provider, and the Secretary for
Provider is authorized and directed to accept service of process on behalf
of Provider in any such suit and/or upon the request of Company to give a
written undertaking to Company that they will enter a general appearance on
behalf of Provider in the event such a suit shall be instituted.
Each party agrees that any suit against any other upon this Agreement
shall be instituted and prosecuted only in a Court of competent
jurisdiction within the Southern and Eastern Districts of New York, and
each party agrees that it shall not seek to remove or transfer any such
suit against it by any other party to any Court outside the Southern and
Eastern Districts of New York.
13. ARBITRATION. Any unresolved dispute or difference between the parties
arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association and the Expedited Procedures
thereof. The award rendered by the Arbitrator shall be final and binding
upon the parties, and judgment upon the award rendered by the Arbitrator
may be entered in any Court having jurisdiction thereof. The arbitration
shall take place in New York, New York.
14. INDEMNIFICATION. The parties agree to hold each other harmless and to
indemnify each other against any and all extra-contractual liability and
any related loss, damage, expense, cost, cause of action, demand, penalty,
fine or claim (including cost of litigation or administrative proceeding
and counsel fees) arising out of or related to any of the services provided
hereunder to the extent the same are caused by the act or failure to act of
the indemnifying party.
15. NOTICE. All notices, statements or requests provided for hereunder
shall be deemed to have been duly given when delivered by hand to an
officer of the other party, or when deposited with the U.S. Postal
Services, as first class certified or registered mail, postage prepaid,
overnight courier services, telex or telecopier, addressed
(a) if to Provider to:
Fidelity Investments Life Insurance Company
82 Devonshire Street
Boston, MA 02109
Attention: Rodney Rohda
(b) if to Company to:
Empire Fidelity Investments Life Insurance Company
200 Liberty Street, Tower A
One World Financial Center
New York, New York 10281
Attention: Allan Brandon
or to such other persons or places as each party may from time to time
designate by written notice sent as aforesaid.
16. REPRESENTATIONS AND WARRANTIES OF PROVIDER. As a material inducement
to Company to enter into and perform this Agreement, Provider represents
and warrants to Company that : (i) Provider is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, with full power and authority to execute,
deliver and perform this Agreement; (ii) this Agreement is valid and
binding upon Provider and enforceable against Provider in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or similar laws and subject to general principles of equity; and
(iii) Provider has and shall maintain sufficient capacity and adequate
facilities to perform this Agreement.
17. ENTIRE AGREEMENT. This Agreement, together with such amendments as
may from time to time be executed in writing by the parties, constitutes
the entire agreement and understanding between the parties in respect of
the transactions contemplated hereby.
18. SECTION HEADINGS. Section headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
19. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their respective officers duly authorized to do so, and
their respect corporate seals to be affixed hereto, as of the date and year
first above written.
Empire Fidelity Investments Life Insurance Company
By: ________________________
Rodney R. Rohda
President
Fidelity Investments Life Insurance Company
By: ________________________
John O'Sullivan
Vice President and Chief Actuary
EXHIBIT 8(c)
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (this "Agreement") is made
effective as of 12:01 a.m., Eastern Standard Time, on the 10th day of
March, 1992, ("Effective Date"), between Fidelity Investments Corporate
Services, a Massachusetts corporation ("Provider") Empire Fidelity
Investments Life Insurance Company, a New York corporation ("Company").
WHEREAS, Provider has experience helpful to the operation of life
insurance business and in performing administrative services; and
WHEREAS, Company desires for Provider to perform certain administrative
services (collectively "services") for Company in its insurance operations
and desires further to make use in its day-to-day operations of certain
property, equipment, space and facilities (collectively "facilities") of
Provider as Company may request; and
WHEREAS, Company has executed a Commitment Agreement to the New York
Insurance Department dated December 26, 1991 ("Commitment Agreement"),
regarding the operations of Company, which contemplates agreements for
services; and
WHEREAS, Provider and Company wish to assure that all charges for services
incurred hereunder are reasonable and in accordance with the requirements
of New York Insurance Department Regulation No. 33 and to the extent
practicable reflect actual costs and are arrived at in a fair and equitable
manner, and that estimated costs, whenever used, are adjusted periodically,
to bring them into alignment with actual costs; and
WHEREAS, Provider and Company wish to identify the services to be rendered
to Company by Provider and the facilities to be used by Company and to
provide a method of fixing bases for determining the charges to be made to
Company;
NOW THEREFORE, in consideration of premises and of the mutual promises set
forth herein, and intending to be legally bound hereby, Provider and
Company agree as follows:
1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. Subject to the terms,
conditions, and limitations of this Agreement, Provider agrees to the
extent requested by Company to perform diligently and in a professional
manner the services listed in Section 2 of this Agreement.
Subject to the terms, conditions and limitations of this Agreement,
Provider agrees to the extent requested by Company to make available to
Company such data processing equipment, business property and space and
communications equipment, whether owned or leased, as Company may determine
to be reasonably necessary in the conduct of its insurance operations.
Provider agrees at all time to maintain sufficient facilities and capacity
of the kind necessary to perform this Agreement.
(a) CAPACITY OF PERSONNEL AND STATUS OF FACILITIES. Whenever Provider
utilizes its personnel to perform services for Company pursuant to this
Agreement, such personnel shall at all times remain subject to the
direction and control of Provider, and Company shall have no liability to
such personnel for their welfare, salaries, fringe benefits, legally
required employer contributions and tax obligations.
No facility of Provider used in performing services for or subject to use
by Company shall be deemed to be transferred, assigned, conveyed or eased
by performance or use pursuant to this Agreement.
(b) EXERCISE OF JUDGMENT IN RENDERING SERVICES. In providing any services
hereunder which require the exercise of judgment by Provider, Provider
shall perform any such service in accordance with any standards and
guidelines Company develops and communicates to Provider. In performing
any services hereunder, Provider shall at all times act in a manner
reasonably calculated to be in or not opposed to the best interests of
Company.
(c) CONTROL. The performance of services by Provider for Company pursuant
to this Agreement shall in no way impair the absolute control of the
business and operations of Provider or Company by their respective Boards
of Directors. Provider shall act hereunder so as to assure the separate
operating identity of Company.
2. SERVICES. It is understood that Company has certain obligations under
the Commitment Agreement, and it is agreed that Provider shall not act or
refrain from acting in any manner to cause Company to breach said
obligations.
The performance of Provider under this Agreement with respect to the
business and operations of Company shall at all times be subject to the
direction and control of the Board of Directors of Company. No services
will be provided under this Agreement in violation of the Commitment
Agreement.
To the extent that Provider would on occasion utilize outside consultants
to aid in the performance of a portion of its own functions and services,
Provider shall perform similar functions and services requested by the
Company utilizing the same outside consultants; provided, that the Company
shall approve the use and cost of any such consultant. These functions
would include:
Legal Services, as outlined in paragraph 2(a) below; and
Employee Relations Services, as outlined in paragraph 2(b) below.
Subject to the foregoing and to the terms, conditions and limitations of
this Agreement, Provider shall provide to Company, at Company's request,
the services set forth below.
(a) LEGAL SERVICES. Provider shall provide legal and related services,
including representation of Company in the prosecution or defense of
actions and in the negotiation and preparation of contracts, agreements and
agency documents, product development and drafting and filing of policies
and forms, governmental relations and advising on regulatory compliance and
rendering opinions on various legal matters.
(b) EMPLOYEE RELATIONS SERVICES. Provider shall provide employee
relations and related services, including staffing and recruiting,
developing and administering compensation and benefit programs, maintaining
employee records and managing employee relations issues, personnel policies
and procedures. All such services shall be provided under the direction
and control of Company, pursuant to Company's established standards and
guidelines.
3. CHARGES. Company agrees to reimburse Provider for the actual cost of
services and facilities provided by Provider to Company pursuant to this
Agreement. If Provider in the future provides such services to third
parties, then the charge shall be at market.
Cost analyses will be made from time to time by Provider to determine, as
closely as possible, the actual cost of services rendered and facilities
made available to Company hereunder. Provider shall forward to Company the
information developed by these analyses, and such information shall be used
to develop bases for the distribution of expenses which more currently
reflect the actual incidence of cost incurred by Provider on behalf of
Company.
Subject to New York Insurance Department Regulation 33, the bases for
determining such charges to Company shall be those used by Provider for
internal cost allocation including, where appropriate, time records
prepared at least annually for this purpose. Such bases shall be modified
and adjusted by mutual agreement where necessary or appropriate to reflect
fairly and equitably the actual incidence of cost incurred by Provider on
behalf of Company.
4. PAYMENT. Provider shall submit to Company within thirty (30) days of
the end of each calendar quarter a written statement of the amount
estimated to be owed by Company for services and the use of facilities
pursuant to this Agreement in that calendar quarter, and Company shall pay
to Provider within fifteen (15) days following receipt of such written
statement the amount set forth in the statement.
As soon as reasonably practical, after the end of each calendar year,
Provider will submit to Company a detailed written statement of the charges
due from Company to Provider in the immediately preceding year, including
charges not included in any previous statements, and any balance payable or
to be refunded as shown in such statement shall be paid or refunded within
fifteen (15) days following receipt of such written statement by Company.
5. ACCOUNTING RECORDS AND DOCUMENTS. Provider shall be responsible for
maintaining full and accurate accounts and records of all services rendered
and facilities used pursuant to this Agreement and such additional
information as Company may reasonably request for purposes of its internal
bookkeeping and accounting operations. Provider shall keep such accounts
and records insofar as they pertain to the computation of charges hereunder
available at its principal offices for audit, inspection and copying by
Company and persons authorized by it or any governmental agency having
jurisdiction over Company during all reasonable business hours.
With respect to accounting records prepared by Provider by reason of its
performance under this Agreement, summaries of such records shall be
delivered to Company within thirty (30) days from the end of the month to
which the records pertain.
6. OTHER RECORDS AND DOCUMENTS. Any other books, records, and files (for
example, actuarial work papers or administrative summaries) established and
maintained by Provider by reason of its performance under this Agreement
which, absent this Agreement, would have been held by Company, shall be
deemed the property of Company, and shall be subject to examination at all
times by Company and persons authorized by it or any governmental agency
having jurisdiction over Company, and shall be delivered to Company at
least quarterly. All such books, records, and files shall be promptly
transferred to Company by Provider upon termination of this Agreement, and
Company shall pay to Provider therefor an amount equal to the costs
incurred by Provider in making such transfer.
With respect to original documents other than those provided for under
Section 5 hereof which would otherwise be held by Company and which may be
obtained by Provider in performing under this Agreement, Provider shall
deliver such documents to Company within thirty (30) days of their receipt
by Provider except where continued custody of such original documents is
necessary to perform hereunder.
7. RIGHT TO CONTRACT WITH THIRD PARTIES. Nothing herein shall be deemed
to grant Provider an exclusive right to provide services to Company, and
Company retains the right to contract with any third party, affiliated or
unaffiliated, for the performance of services or for the use of facilities
as are available to or have been requested by Company pursuant to this
Agreement.
8. CONTACT PERSON(S). Company and Provider each shall appoint one or more
individuals who shall serve as contact person(s) for the purpose of
carrying out this Agreement. Such contact person(s) shall be authorized to
act on behalf of their respective parties as to the matters pertaining to
this Agreement. Each party shall notify the other, in writing, as to the
name, address and telephone number for any such designated contact person,
and of any replacement thereof.
9. TERMINATION AND AMENDMENT. This Agreement shall remain in effect until
terminated by either Provider or Company upon giving ninety (90) days or
more advance written notice, as to services other than electronic data
processing, and upon giving one hundred eighty (180) days or more advance
written notice as to electronic data processing services. In no event may
Provider terminate electronic data processing services if by doing so
Company would be left without data processing capabilities adequate to
services its policies. Upon termination, Provider shall promptly deliver
to Company all books and records that are, or are deemed by this Agreement
to be, the property of Company. No provision of this Agreement may be
waived or amended except by a statement in writing signed by all parties.
10. SETTLEMENT ON COMPLETE TERMINATION. No later than ninety (90) days
after the effective date of Complete Termination of this Agreement,
Provider shall deliver to Company a detailed written statement for all
charges incurred and not included in any previous statement to the
effective date of termination. The amount owed or to be refunded hereunder
shall be due and payable within fifteen (15) days of receipt of such
statement.
11. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not
be assignable by either party hereto, except by operation of law. Except
as and to the extent specifically provided in this Agreement, nothing in
this Agreement expressed or implied, is intended to confer on any person
other than the parties hereto, or their respective legal successors, any
rights, remedies, obligations or liabilities that would otherwise be
applicable. The representations, warranties, covenants and agreements
contained in this Agreement shall be binding upon, extend to and inure to
the benefit of the parties hereto and each of their successors and assigns
respectively.
12. GOVERNING LAW; SERVICES OF SUIT; FORUM SELECTION. This Agreement
shall be governed by and construed and enforced in accordance with the laws
of the State of New York.
Provider shall submit to the jurisdiction of any court of competent
jurisdiction within the Southern and Eastern Districts of New York and will
comply with all requirements necessary to give such Court jurisdiction.
Service of process in any suit instituted against Provider upon this
Agreement may be made upon Secretary for Provider, and the Secretary for
Provider is authorized and directed to accept service of process on behalf
of Provider in any such suit and/or upon the request of Company to give a
written undertaking to Company that they will enter a general appearance on
behalf of Provider in the event such a suit shall be instituted.
Each party agrees that any suit against any other upon this Agreement
shall be instituted and prosecuted only in a Court of competent
jurisdiction within the Southern and Eastern Districts of New York, and
each party agrees that it shall not seek to remove or transfer any such
suit against it by any other party to any Court outside the Southern and
Eastern Districts of New York.
13. ARBITRATION. Any unresolved dispute or difference between the parties
arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association and the Expedited Procedures
thereof. The award rendered by the Arbitrator shall be final and binding
upon the parties, and judgment upon the award rendered by the Arbitrator
may be entered in any Court having jurisdiction thereof. The arbitration
shall take place in New York, New York.
14. INDEMNIFICATION. The parties agree to hold each other harmless and to
indemnify each other against any and all extra-contractual liability and
any related loss, damage, expense, cost, cause of action, demand, penalty,
fine or claim (including cost of litigation or administrative proceeding
and counsel fees) arising out of or related to any of the services provided
hereunder to the extent the same are caused by the act or failure to act of
the indemnifying party.
15. NOTICE. All notices, statements or requests provided for hereunder
shall be deemed to have been duly given when delivered by hand to an
officer of the other party, or when deposited with the U.S. Postal
Services, as first class certified or registered mail, postage prepaid,
overnight courier services, telex or telecopier, addressed
(a) if to Provider to:
Fidelity Investments Corporate Services
82 Devonshire Street
Boston, MA 02109
Attention: David Weinstein
(b) if to Company to:
Empire Fidelity Investments Life Insurance Company
200 Liberty Street, Tower A
One World Financial Center
New York, New York 10281
Attention: Allan Brandon
or to such other persons or places as each party may from time to time
designate by written notice sent as aforesaid.
16. REPRESENTATIONS AND WARRANTIES OF PROVIDER. As a material inducement
to Company to enter into and perform this Agreement, Provider represents
and warrants to Company that : (i) Provider is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full power and authority to execute,
deliver and perform this Agreement; (ii) this Agreement is valid and
binding upon Provider and enforceable against Provider in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or similar laws and subject to general principles of equity; and
(iii) Provider has and shall maintain sufficient capacity and adequate
facilities to perform this Agreement.
17. ENTIRE AGREEMENT. This Agreement, together with such amendments as
may from time to time be executed in writing by the parties, constitutes
the entire agreement and understanding between the parties in respect of
the transactions contemplated hereby.
18. SECTION HEADINGS. Section headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
19. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their respective officers duly authorized to do so, and
their respect corporate seals to be affixed hereto, as of the date and year
first above written.
Empire Fidelity Investments Life Insurance Company
By: \s\ Rodney R. Rohda
Rodney R. Rohda
President
Fidelity Investments Corporate Services
By: \s\ David C. Weinstein
David C. Weinstein
Vice President, Corporate Counsel and Clerk
April 24, 1997
Board of Directors
Empire Fidelity Investments Life Insurance Company
200 Liberty Street
One World Financial Center
New York, N.Y. 10281
Ladies and Gentlemen:
In my capacity as Associate General Counsel of FMR Corp., I have provided
legal advice to Empire Fidelity Investments Life Insurance Company ("Empire
Fidelity Life") with respect to the establishment of Empire Fidelity
Investments Variable Annuity Account A (the "Account") pursuant to section
4240 of the New York Insurance Law. The Account was established by Empire
Fidelity Life on July 15, 1991 for the investment of assets held under
certain variable annuity contracts (the "Contracts"). I have participated
in the preparation and review of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-4 for the registration of the Contracts
with the Securities and Exchange Commission under the Securities Act of
1933, Reg. No. 33-42376 and the registration of the Account under the
Investment Company Act of 1940.
I am of the following opinion:
(1) Empire Fidelity Life is duly organized and validly existing under the
laws of the State of New York.
(2) The Account is duly created and validly existing as a separate account
of Empire Fidelity Life under the laws of New York.
(3) The portion of the assets to be held in the Account equal to the
reserve and other liabilities for variable benefits under the Contracts is
not chargeable with liabilities arising out of any other business Empire
Fidelity Life may conduct.
(4) The Contracts, when issued as set forth in the Registration Statement,
will be legal and binding obligations of Empire Fidelity Life in accordance
with their terms.
In arriving at the foregoing opinion, I have made such examination of law
and examined such records and other documents as I judged to be necessary
or appropriate.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement, and to the reference to my name under the heading
"Legal Matters" in the Statement of Additional Information.
Very truly yours,
/s/David J. Pearlman
David J. Pearlman
April 22, 1997
Empire Fidelity Investments Life Insurance Company
Empire Fidelity Investments Variable Annuity Account A
82 Devonshire Street
Boston, Massachusetts 02109
Re: Registration No. 33-42376
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statement of Additional Information contained in
Post-Effective Amendment No. 5 to the Registration Statement on Form N-4
(File No. 33-42376) for Empire Fidelity Investments Variable Annuity
Account A filed by the Account with the Securities and Exchange Commission
pursuant to the Securities Act of 1933.
Very truly yours,
JORDEN BURT BERENSON & JOHNSON LLP
By: /s/Michael Berenson
Michael Berenson
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form N-4
(File No. 33-42376) of our reports dated January 29, 1997, on our audits of
the financial statements of Empire Fidelity Investments Life Insurance
Company and Empire Fidelity Investments Variable Annuity Account A. We
also consent to the reference of our Firm under the caption "Independent
Accountants" in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 21, 1997
EXHIBIT 14(a)
[FIDELITY STANDARD LIFE AND ANNUITY FORM: 12/13/90]
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
[Name of Insurance Company]
THIS AGREEMENT, made and entered into this ___ day of ______, 1991 by and
among EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY,(hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to
as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an
unincorporated business trust organized under the laws of the Commonwealth
of Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS
CORPORATION (hereinafter the "Underwriter'), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation
agreements with the Fund and the Underwriter (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each 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, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3 (T)
(b) (15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance
companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
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 life
and variable annuity contracts 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 one or more variable life and
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 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 life and
variable annuity contracts and the Underwriter is authorized to sell such
shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee
of the order for the shares of the Fund. For purposes of this Section 1.1,
the Company shall be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee shall constitute receipt by
the Fund; provided that the Fund receives notice of such order by 9:30 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 Sections
2.5 and 2.12 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 to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable life and variable annuity
contracts with the form number(s) which are listed on Schedule B attached
hereto and incorporated herein by this reference, as such Schedule B 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; 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 (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends
or capital gain distributions payable on the Fund's shares. The Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in
cash. The Fund shall notify the Company of the number of shares so issued
as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by 7 p.m. Boston
time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold
in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account prior to any issuance or sale thereof
as a segregated asset account under Section ______ of the _______________
Insurance Code and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the _______ of
_____________ 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
endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment
and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes
to have a board of trustees, a majority of whom are not interested persons
of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the
laws of the _______ of _______________ 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 _______ of _____________
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 ________ of _______________
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 _______ of ____________ 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 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 entities subject to the requirements of
Rule17g-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.
2.12. The Company represents and warrants that it will not purchase Fund
shares with Account assets derived from the sale of Contracts to deferred
compensation plans with respect to service for state and local governments
which qualify under Section 457 of the federal Internal Revenue Code, as
may be amended. The Company may purchase Fund shares with Account assets
derived from any sale of a Contract to any other type of tax-advantaged
employee benefit plan; provided however that such plan has no more than 500
employees who are eligible to participate at the time of the first such
purchase hereunder by the Company of Fund shares derived from the sale of
such Contract.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company (at the Company's expense)
with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus as set in type at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund 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).
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund), and the Underwriter (or the Fund), at its
expense, shall print and provide such Statement free of charge to the
Company and to any owner of a Contract or prospective owner who requests
such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners; and
(iii) vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such portfolio for which instructions
have been received:
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves the right to
vote Fund shares held in any segregated asset account in its own right, to
the extent permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts participating
in the Fund calculates voting privileges in a manner consistent with the
standards set forth on Schedule C attached hereto and incorporated herein
by this reference, which standards will also be provided to the other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as
well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material
shall be used if the Fund or its designee object to such use within fifteen
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Fund shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee or by the Underwriter, except
with the permission of the Fund or the Underwriter or the designee of
either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its
use. No such material shall be used if the Company or its designee object
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account
which are in the public domain or approved by the Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature 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 Securities and Exchange Commission.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, 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. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares
are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required
by any federal or state law, all taxes on the issuance or transfer of the
Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing the
Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract
owners.
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 (sub-section)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.
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 contracts owners of one
or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to 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 laws 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 terminate:
(a) at the option of any party upon one year advance written notice to the
other parties; provided, however such notice shall not be given earlier
than one year following the date of this Agreement; or
(b) at the option of the Company to the extent that shares of Portfolios
are not reasonably available to meet the requirements of the Contracts as
determined by the Company, provided however, that such termination shall
apply only to the Portfolio(s) not reasonably available. Prompt notice of
the election to terminate for such cause shall be furnished by the Company;
or
(c) at the option of the Fund in the event that formal administrative
proceedings are instituted against the Company by the National Association
of Securities Dealers, Inc. ("NASD"), the Securities and Exchange
Commission, the Insurance Commissioner or any other regulatory body
regarding the Company's duties under this Agreement or related to the sale
of the Contracts, with respect to the operation of any Account, or the
purchase of the Fund shares, provided, however, that the Fund 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
(d) at the option of the Company in the event that formal administrative
proceedings are instituted against the Fund or Underwriter by the NASD, the
Securities and Exchange Commission, 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
(e) with respect to any Account, upon requisite vote of the Contract
owners having an interest in such Account (or any subaccount) to substitute
the shares of another investment company for the corresponding Portfolio
shares of the Fund in accordance with the terms of the Contracts for which
those Portfolio shares had been selected to serve as the underlying
investment media. The Company will give 30 days' prior written notice to
the Fund of the date of any proposed vote to replace the Fund's shares; or
(f) at the option of the Company, in the event any of the Fund'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
(g) at the option of the Company, if the Fund 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
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Fund or the Underwriter, if (1) the Fund
or the Underwriter, respectively, shall determine, in their sole judgment
reasonably exercised in good faith, that the Company has suffered a
material adverse change in its business or financial condition or is the
subject of material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact upon the
business and operations of either the Fund or the Underwriter, (2) the Fund
or the Underwriter shall notify the Company in writing of such
determination and its intent to terminate this Agreement, and (3) after
considering the actions taken by the Company and any other changes in
circumstances since the giving of such notice, such determination of the
Fund or the Underwriter shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Company, if (1) the Company shall determine, in
its sole judgment reasonably exercised in good faith, that either the Fund
or the Underwriter has suffered a material adverse change in its business
or financial condition or is the subject of material adverse publicity and
such material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of the Company,
(2) the Company shall notify the Fund and the Underwriter in writing of
such determination and its intent to terminate the Agreement, and (3) after
considering the actions taken by the Fund and/or the Underwriter and any
other changes in circumstances since the giving of such notice, such
determination shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the effective date
of termination; or
(k) at the option of either the Fund or the Underwriter, 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(k) shall be
effective forty five (45) days after the notice specified in Section 1.6(b)
was given.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for
any reason or for no reason.
10.3. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate which notice shall set forth the basis for such termination.
Furthermore,
(a) In the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.1(a), 10.1(i), 10.1(j) or
10.1(k) of this Agreement, such prior written notice shall be given in
advance of the effective date of termination as required by such
provisions; and
(b) in the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice
shall be given at least ninety (90) days before the effective date of
termination.
10.4. 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 10.4 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.
10.5. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract Owner
initiated 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"). Upon
request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
__________________________
__________________________
Attention: _______________
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither
the Board, officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, 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.
12.7 The Fund and Underwriter agree that to the extent any advisory or
other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in legal or administrative proceedings under the
1973 NAIC model variable life insurance regulation in the states of
California, Colorado, Maryland or Michigan, the Underwriter shall indemnify
and reimburse the Company for any out of pocket expenses and actual damages
the Company has incurred as a result of any such proceeding; provided
however that the provisions of Section 8.2(b) of this and 8.2(c) shall
apply to such indemnification and reimbursement obligation. Such
indemnification and reimbursement obligation shall be in addition to any
other indemnification and reimbursement obligations of the Fund and/or the
Underwriter under this Agreement.
12.8 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
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:
EMPIRE FIDELITY INVESTMENTS LIFE
INSURANCE COMPANY
By its authorized officer,
SEAL By: ___________________________
Title: ___________________________
Date: ___________________________
Fund:
VARIABLE INSURANCE PRODUCTS FUND
By its authorized officer,
SEAL By: ___________________________
Title: ___________________________
Date: ___________________________
Underwriter:
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
SEAL By: ___________________________
Title: ___________________________
Date: ___________________________
Schedule A
Accounts
Name of Account Date of Resolution of Company's Board
which Established the Account
Schedule B
Contracts
1. Contract Form ___________________
EXHIBIT 14(b)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
[Name of Insurance Company]
THIS AGREEMENT, made and entered into this __ day of _________,1991 by and
among EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a New York 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 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, 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 laws; and
WHEREAS, the Company has registered or will register certain variable life
and variable annuity contracts 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 one or more variable life and
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 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 life and
variable annuity contracts and the Underwriter is authorized to sell such
shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee
of the order for the shares of the Fund. For purposes of this Section 1.1,
the Company shall be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee shall constitute receipt by
the Fund; provided that the Fund receives notice of such order by 9:30 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 Sections
2.5 and 2.12 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 to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable life and variable annuity
contracts with the form number(s) which are listed on Schedule B attached
hereto and incorporated herein by this reference, as such Schedule B 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; 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 (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends
or capital gain distributions payable on the Fund's shares. The Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in
cash. The Fund shall notify the Company of the number of shares so issued
as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by 7 p.m. Boston
time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold
in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account prior to any issuance or sale thereof
as a segregated asset account under Section ________ of the ___________
Insurance Code and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the ______ of ____________
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
endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment
and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes
to have a board of trustees, a majority of whom are not interested persons
of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the
laws of the _______ of ____________ 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 _________ of
_______________ 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 ________ of __________ 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 ______ of _____________ 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 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 entities subject to the requirements of
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.
2.12. The Company represents and warrants that it will not purchase Fund
shares with Account assets derived from the sale of Contracts to deferred
compensation plans with respect to service for state and local governments
which qualify under Section 457 of the federal Internal Revenue Code, as
may be amended. The Company may purchase Fund shares with Account assets
derived from any sale of a Contract to any other type of tax-advantaged
employee benefit plan; provided however that such plan has no more than 500
employees who are eligible to participate at the time of the first such
purchase hereunder by the Company of Fund shares derived from the sale of
such Contract.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company (at the Company's expense)
with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus as set in type at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund 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).
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund), and the Underwriter (or the Fund), at its
expense, shall print and provide such Statement free of charge to the
Company and to any owner of a Contract or prospective owner who requests
such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received
in the same proportion as Fund shares of such portfolio for which
instructions have been received:
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves the right to
vote Fund shares held in any segregated asset account in its own right, to
the extent permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts participating
in the Fund calculates voting privileges in a manner consistent with the
standards set forth on Schedule C attached hereto and incorporated herein
by this reference, which standards will also be provided to the other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as
well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material
shall be used if the Fund or its designee object to such use within fifteen
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Fund shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee or by the Underwriter, except
with the permission of the Fund or the Underwriter or the designee of
either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its
use. No such material shall be used if the Company or its designee object
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account
which are in the public domain or approved by the Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature 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 Securities and Exchange Commission.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, 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. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares
are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required
by any federal or state law, all taxes on the issuance or transfer of the
Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing the
Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract
owners.
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 (sub-section)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.
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: 9(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 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 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 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 Section 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 statements or alleged untrue
statements 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 terminate:
(a) at the option of any party upon one year advance written notice to the
other parties; provided, however such notice shall not be given earlier
than one year following the date of this Agreement; or
(b) at the option of the Company to the extent that shares of Portfolios
are not reasonably available to meet the requirements of the Contracts as
determined by the Company, provided however, that such termination shall
apply only to the Portfolio(s) not reasonably available. Prompt notice of
the election to terminate for such cause shall be furnished by the Company;
or
(c) at the option of the Fund in the event that formal administrative
proceedings are instituted against the Company by the NASD, the Securities
and Exchange Commission, the Insurance Commissioner or any other regulatory
body regarding the Company's duties under this Agreement or related to the
sale of the Contracts, with respect to the operation of any Account, or the
purchase of the Fund shares, provided, however, that the Fund 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
(d) at the option of the Company in the event that formal administrative
proceedings are instituted against the Fund or Underwriter by the NASD, the
Securities and Exchange Commission, 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
(e) with respect to any Account, upon requisite vote of the Contract
owners having an interest in such Account (or any subaccount) to substitute
the shares of another investment company for the corresponding Portfolio
shares of the Fund in accordance with the terms of the Contracts for which
those Portfolio shares had been selected to serve as the underlying
investment media. The Company will give 30 days' prior written notice to
the Fund of the date of any proposed vote to replace the Fund's shares; or
(f) at the option of the Company, in the event any of the Fund'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
(g) at the option of the Company, if the Fund 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
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Fund or the Underwriter, if (1) the Fund
or the Underwriter, respectively, shall determine, in their sole judgment
reasonably exercised in good faith, that the Company has suffered a
material adverse change in its business or financial condition or is the
subject of material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact upon the
business and operations of either the Fund or the Underwriter, (2) the Fund
or the Underwriter shall notify the Company in writing of such
determination and its intent to terminate this Agreement, and (3) after
considering the actions taken by the Company and any other changes in
circumstances since the giving of such notice, such determination of the
Fund or the Underwriter shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Company, if (1) the Company shall determine, in
its sole judgment reasonably exercised in good faith, that either the Fund
or the Underwriter has suffered a material adverse change in its business
or financial condition or is the subject of material adverse publicity and
such material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of the Company,
(2) the Company shall notify the Fund and the Underwriter in writing of
such determination and its intent to terminate the Agreement, and (3) after
considering the actions taken by the Fund and/or the Underwriter and any
other changes in circumstances since the giving of such notice, such
determination shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the effective date
of termination; or
(k) at the option of either the Fund or the Underwriter, 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(k) shall be
effective forty five (45) days after the notice specified in Section 1.6(b)
was given.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for
any reason or for no reason.
10.3. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate which notice shall set forth the basis for such termination.
Furthermore,
(a) In the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.1(a), 10.1(i), 10.1(j) or
10.1(k) of this Agreement, such prior written notice shall be given in
advance of the effective date of termination as required by such
provisions; and
(b) in the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice
shall be given at least ninety (90) days before the effective date of
termination.
10.4. 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 10.4 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.
10.5. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract Owner
initiated 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"). Upon
request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
________________________
________________________
Attention: _____________
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, 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.
12.7 The Fund and Underwriter agree that to the extent any advisory or
other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in legal or administrative proceedings under the
1973 NAIC model variable life insurance regulation in the states of
California, Colorado, Maryland or Michigan, the Underwriter shall indemnify
and reimburse the Company for any out of pocket expenses and actual damages
the Company has incurred as a result of any such proceeding; provided
however that the provisions of Section 8.2(b) of this and 8.2(c) shall
apply to such indemnification and reimbursement obligation. Such
indemnification and reimbursement obligation shall be in addition to any
other indemnification and reimbursement obligations of the Fund and/or the
Underwriter under this Agreement.
12.8 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
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:
EMPIRE FIDELITY INVESTMENTS LIFE
INSURANCE COMPANY
By its authorized officer,
SEAL By: ___________________________
Title: _____________________________
Date: ___________________________
Fund:
VARIABLE INSURANCE PRODUCTS FUND II
By its authorized officer,
SEAL By: ___________________________
Title: _____________________________
Date: ___________________________
Underwriter:
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
SEAL By: ___________________________
Title: _____________________________
Date: ___________________________
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<NAME> Empire Fidelity Investments Variable Annuity Account A
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