THIS AGREEMENT, made and entered into as of the 1st day of September,
1997 by and among FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(hereinafter the "Company"), a Utah corporation, on its own behalf and
on behalf of each separate 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 XXXXXX XXXXXXX
UNIVERSAL FUNDS, INC. (hereinafter the "Fund"), a Maryland
corporation, and XXXXXX XXXXXXX ASSET MANAGEMENT INC. and XXXXXX
XXXXXXXX & XXXXXXXX, LLP (hereinafter collectively the "Advisers" and
individually the "Adviser"), a Delaware corporation and a Pennsylvania
limited liability partnership, respectively.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as (i) the investment
vehicle for separate accounts established by insurance companies for
individual and group life insurance policies and annuity contracts
with variable accumulation and/or pay-out provisions (hereinafter
referred to individually and/or collectively as "Variable Insurance
Products") and (ii) the investment vehicle for certain qualified
pension and retirement plans (hereinafter "Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Contracts enter into
participation agreements with the Fund and the Advisers (the
"Participating Insurance Companies");
WHEREAS, shares of the Fund are divided into several series of
shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may
be made available under this Agreement, as may be amended from time to
time by mutual agreement of the parties hereto (each such series
hereinafter referred to as a "Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 19, 1996 (File No. 812-10118),
granting Participating Insurance Companies and Variable Insurance
Product 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 Product separate
accounts of both affiliated and unaffiliated life insurance companies
and Qualified Plans (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, each Adviser is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and any
applicable state securities laws; and
WHEREAS, each Adviser manages certain Portfolios of the Fund; and
WHEREAS, Xxxxxx Xxxxxxx & Co. Incorporated (the "Underwriter") is
registered as a broker/dealer under the Securities Exchange Act of
1934, as amended (hereinafter the "1934 Act"), is a member in good
standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD") and serves as principal underwriter of the shares
of the Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution or under authority
of the Board of Directors of the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets
attributable to the aforesaid Variable Insurance Product; and
WHEREAS, the Company has registered or will register each Account as
a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase, on behalf of each
Account, shares in the Portfolios set forth in Schedule B attached to
this Agreement to fund certain of the aforesaid Variable Insurance
Products and the Underwriter is authorized to sell such shares to each
such 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. PURCHASE OF FUND SHARES
1.1. The Fund agrees to make available for purchase by the Company
shares of the Fund and shall execute orders placed for each Account on
a daily basis at the net asset value next computed after receipt by
the Fund or its designee of such order. 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 of an order by
the close of the New York Stock Exchange or any Business Day shall
constitute receipt by the Fund on such Business Day; provided that the
Fund receives notice of such order by 10:00 a.m. Eastern time on the
next following Business Day. In the event of a natural or man-made
disaster, armed conflict, act of terrorism, riot, labor disruption or
any other circumstance beyond its control (not caused by its own
negligence or which could have been adequately remedied if not for
the Company's negligence), the Company may transmit an estimate of
such order by 10:00 a.m. Eastern time on the next following Business
Day, with the final order to be transmitted by 12:00 p.m. on such 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.
Promptly upon receipt of any purchase or redemption order placed by
the Company, 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. The Fund shall use its best
efforts to wire the redemption proceeds to the Company by the close of
business on the Business Day on which the order is transmitted to the
Fund or its designee. the Fund will send an acknowledgment to the
Company of receipt of such order, by facsimile, e-mail, or other
medium agreed to by the Fund and the Company.
1.2. The Fund, so long as this Agreement is in effect, 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 Directors of the Fund (hereinafter the
"Board") may refuse to permit the Fund 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 agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts and to
certain Qualified Plans. No shares of any Portfolio will be sold to
the general public.
1.4. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and
Section 2.5 of Article II of this Agreement is in effect to govern
such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the request for
redemption. For purposes of this Section 1.5, the Company shall be
the designee of the Fund for receipt of requests for redemption from
each Account and
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The
Variable Insurance Products issued by the Company, under which amounts
may be invested in the Fund (hereinafter the "Contracts"), are listed
on Schedule A attached hereto and incorporated herein by reference, as
such Schedule A may be amended from time to time by mutual written
agreement of all of the parties hereto. The Company will give the
Fund and the Adviser 45 days written notice of its intention to make
available in the future, as a funding vehicle under the Contracts, any
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 purposes 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 6:30 p.m., Eastern time, but no later than 7:00 p.m.
Eastern time.
1.11. If the Fund provides materially incorrect share net asset
value information receipt through no fault of the Company, the Company
shall be entitled to an adjustment with respect to the Fund shares
purchased or redeemed to reflect the correct net asset value per
share. The determination of the materiality of any net asset value
pricing error shall be based on the SEC's recommended guidelines
regarding such errors. The correction of any such errors shall be
made at the Company level and shall be made pursuant to the SEC's
recommended guidelines. Any material error in the calculation or
reporting of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery to the Company.
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 31A-5-217.5 of the Utah 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
State of Maryland and all applicable federal and state securities laws
and that the Fund is and shall remain registered under the 0000 Xxx.
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.
2.3 The Fund represents and warrants that each Portfolio invested in
by the Company will elect to be treated as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and will qualify for such treatment for each
taxable year and will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future.
2.4. The Company represents that the Contracts are currently treated
as life insurance policies or annuity contracts, under applicable
provisions of the Code and that it will make every effort to maintain
such treatment and that it will notify the Fund 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 represents that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act, the Fund undertakes to have a board of directors, a majority of
whom are not interested persons of the Fund, formulate and approve any
plan under Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations
of the various states except that the Fund represents that the Fund's
investment policies, fees and expenses are and shall at all times
remain in compliance with the laws of the State of Maryland and the
Fund represents that their respective operations are and shall at all
times remain in material compliance with the laws of the State of
Maryland to the extent required to perform this Agreement.
2.7. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and
will comply in all material respects with the 1940 Act.
2.8. Each Adviser represents and warrants that it is and shall
remain duly registered in all material respects under all applicable
federal and state securities laws and that it will perform its
obligations for the Fund in compliance in all material respects with
the laws of its state of domicile and any applicable state and federal
securities laws.
2.9. The Fund represents and warrants that its directors, officers,
employees, 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
blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company. The
Fund and each Adviser further represent and warrant that the Fund and
its directors are and at all times will be covered by an errors and
omissions policy in an amount of not less than $5,000,000. Such
policy may be a joint liability policy covering the Fund as well as
other Funds advised by the Advisers or their affiliates, having an
aggregate limit of liability of not less than $10,000,000.
2.10. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the
Fund are covered by a blanket fidelity bond or similar coverage, in an
amount not less $5 million. The aforesaid includes coverage for
larceny and embezzlement is issued by a reputable bonding company.
The Company agrees to make all reasonable efforts to see that this
bond or another bond containing these provisions is always in effect,
and agrees to notify the Fund and the Underwriter in the event that
such coverage no longer applies.
ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY
STATEMENTS; VOTING
3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus and statement of
additional information as the Company may reasonably request. If
requested by the Company, in lieu of providing printed copies the Fund
shall provide camera-ready film or computer diskettes containing the
Fund's prospectus and statement of additional information, and such
other assistance as is reasonably necessary in order for the Company
once each year (or more frequently if the prospectus and/or statement
of additional information for the Fund is amended during the year) to
have the prospectus for the Contracts and the Fund's prospectus
printed together in one document, and to have the statement of
additional information for the Fund and the statement of additional
information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its
statement of additional information in combination with other fund
companies' prospectuses and statements of additional information.
3.2. Except as provided in this Section 3.2., all expenses of
printing and distributing Fund prospectuses, statements of additional
information, annual reports and semi-annual reports shall be the
expense of the Company. For prospectuses, statements of additional
information , annual reports and semi-annual reports provided by the
Company to its existing owners of Contracts in order to update
disclosure as required by the 1933 Act and/or the 1940 Act, the cost
of printing shall be borne by the Fund. If the Company chooses to
receive camera-ready film or computer diskettes in lieu of receiving
printed copies of the Fund's prospectus, annual reports and
semi-annual reports the Fund or its designee will reimburse the
Company in the manner described below. The Fund's share of printing
and production costs for such materials shall be determined by
assigning the Fund a prorata share of such expenses, the calculation
of which shall be determined by applying the following formula:
A X C
B
A equals the number of pages relating to the Fund contained in the
document; B represents the total number of pages in the document; and
C represents the total costs for printing and producing the document.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that
the Fund's expenses do not include the cost of printing any
prospectuses, statements of additional information, annual reports or
semi-annual reports other than those actually distributed to existing
owners of the Contracts.
3.3 The Fund or its designee shall bear a portion of the postage and
mailing expenses with respect to such materials that are delivered to
Contract owners. The Funds or its designee shall bear such expenses
in an amount equal to the following formula:
a times C
a+b+c+d+e
a is the aggregate number of annuity Contract owners who own shares of
the Fund; b is the aggregate number of Contract owner who own shares
of the funds advised by Fidelity Management & Research Company or any
of its affiliates or sub-advised by Fidelity Management & Research
Company or any of its affiliates; c, d, and e are the aggregate number
of Contract owners who own shares in funds advised by each of the
other individual fund companies participating in the Contract: C is
the total cost of mailing to all Contract owners.
3.4 The Fund's statement of additional information shall be
obtainable from the Fund, the Company or such other person as the Fund
may designate, as agreed upon by the parties.
3.5 The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other
communications (except for prospectuses, statements of additional
information and reports to Shareholders, which are covered in section
3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners. The Fund shall not be
responsible for any costs associated with any proxy statement or other
proxy materials which are not created due to an event caused by the
Fund or at the request of the Fund.
3.6 The Fund or the Adviser will bear all expenses incurred by the
Company in connection with the tabulation and any necessary archiving
of any Fund proxy materials, provided the Company uses a tabulation
service designated by the Adviser and any archiving expenses is
reasonable.
3.7 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. The Fund and the
Company shall follow the procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule C attached hereto and
incorporated herein by reference. Participating Insurance Companies
shall be responsible for ensuring 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, which standards
will also be provided to the other Participating Insurance Companies.
3.8 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
directors and with whatever rules the Commission may promulgate with
respect thereto.
3.9 The Fund shall use reasonable efforts to provide Fund
prospectuses, reports to shareholders, proxy materials and other Fund
communications (or camera-ready equivalents) to the Company
sufficiently in advance of the Company's mailing dates to enable the
Company to complete, at reasonable cost, the printing, assembling
and/or distribution of the communications in accordance with
applicable laws and regulations.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.0 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 the Adviser(s) is named, at
least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within
ten Business Days after receipt of such material. The Fund and the
Adviser shall use their best efforts to review any such material
within five Business Days of receipt from the Company.
4.1 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,
except with the permission of the Fund.
4.2 The Fund 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 ten Business Days prior to
its use. No such material shall be used if the Company or its
designee reasonably objects to such use within ten Business Days after
receipt of such material. The Company shall use its best efforts to
review any such material within five Business Days of receipt from the
Fund or the Adviser.
4.3. The Fund and the Advisers 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.
4.4. 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, which are relevant to the Company or the
Contracts.
4.5. 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 investment in the Fund under the
Contracts.
4.6. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of
the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone
or tape recording, videotape display, signs or billboards, motion
pictures, or other public media), sales literature (i.e., any written
communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, reprints or excerpts of any
other advertisement, sales literature, or published article),
educational or training materials or other communications distributed
or made generally available to some or all agents or employees, and
registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund 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.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that
all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent
deemed advisable by the Fund, in accordance with applicable state laws
prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy
materials and reports, setting the prospectus in type, setting in type
and printing the proxy materials and reports to shareholders
(including the costs of printing a prospectus that constitutes an
annual report), the preparation of all statements and notices required
by any federal or state law, and all taxes on the issuance or transfer
of the Fund's shares.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund represents and warrants that each Portfolio will
comply with the diversification requirements set forth in Section
817(h) of the Code, and the rules and regulations thereunder,
including without limitation Regulation 1.817-5, and will notify the
Company immediately upon having a reasonable basis for believing any
Portfolio has ceased to comply or might not so comply and will
immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance. The Advisers represent that they, or
their agent, have written compliance procedures in place concerning
Section 817 and Regulation 1.817-5. Each Adviser agrees to provide
the Company a statement of the assets of each Portfolio managed by
such Adviser in which the Company invests within 20 days after the end
of each calendar quarter, together with a statement indicating whether
each such Portfolio has complied with the requirements of Section 817
and Rule 1.817-5 for the quarter, and whether each such Portfolio has
for the calendar quarter complied with all diversification and other
requirements for qualification as a regulated investment company under
Section 851.
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
Insurance Product owners; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines
that an irreconcilable material conflict exists and the implications
thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in
carrying out its responsibilities under the Shared Funding Exemptive
Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes,
but is not limited to, an obligation by the Company to inform the
Board whenever contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority
of its disinterested members, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall,
at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), 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 policy 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 (at the
Company's expense); 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.
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.
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 1940 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Shared Funding Exemptive Order, then (a) the
Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 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 member of the Board and officers, and each Adviser and each
director and officer of each Adviser, and each person, if any, who
controls the Fund or the Adviser within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" and
individually, "Indemnified Party," 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 and other than
statements or representations authorized by the Fund or an Adviser) or
unlawful 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 or as a result 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 and in
conformity with 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.
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 Advisers
8.2(a). Each Adviser agrees, with respect to each Portfolio that it
manages, 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" and individually,
"Indemnified Party," 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 Adviser) 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 shares of the Portfolio that it manages 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
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 Portfolio 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 Fund or persons under its control and
other than statements or representations authorized by the Company) or
unlawful conduct of the Fund, Adviser(s) or Underwriter or persons
under their control, with respect to the sale or distribution of the
Contracts or Portfolio shares; or
(iii) arise out of or as a result 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;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Adviser; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). An Adviser 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.
8.2(c). An Adviser 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 Adviser in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated
agent), but failure to notify the Adviser of any such claim shall not
relieve the Adviser from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action
is brought against the Indemnified Parties, the Adviser will be
entitled to participate, at its own expense, in the defense thereof.
The Adviser also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice
from the Adviser to such party of the Adviser's election to assume the
defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser
will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Adviser 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
(hereinafter collectively, the "Indemnified Parties" and individually,
"Indemnified Party," 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;
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;
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 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.
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 agrees 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 State of New
York.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Securities and Exchange Commission may grant
(including, but not limited to, the Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by one hundred and twenty
(120) days advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio is not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M
of the Code or under any successor or similar provision, or if the
Company reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event that such Portfolio
falls to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund by written notice to the Company
if the Fund shall determine, in its sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity, or
(g) termination by the Company by written notice to the Fund and the
Adviser, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Adviser has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) termination by the Fund or the Adviser by written notice to the
Company, if the Company gives the Fund and the Adviser the written
notice specified in Section 1.6 hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under
this Section 10.1(h) shall be effective one hundred and twenty (120)
days after the notice specified in Section 1.6 was given.
10.2. Notwithstanding any termination of this Agreement, the Fund
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 direct reallocation of
investments in the Fund, redemption of investments in the Fund and/or
investment in the Fund upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section
10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's
assets held in the Account) except (i) as necessary to implement
Contract Owner initiated or approved transactions, or (ii) as required
by state and/or federal laws or regulations or judicial or other legal
precedent of general application (hereinafter referred to as a
"Legally Required Redemption") or (iii) as permitted by an order of
the Securities and Exchange Commission pursuant to Section 26(b) of
the 1940 Act. Upon request, the Company will promptly furnish to the
Fund the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund) 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 90 days prior written
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:
Xxxxxx Xxxxxxx Universal Funds, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
If to Adviser:
Xxxxxx Xxxxxxx Asset Management Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
If to Adviser:
Xxxxxx Xxxxxxxx & Xxxxxxxx, LLP
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx
If to the Company:
Fidelity Investments Life
Insurance Company
00 Xxxxxxxxxx Xxxxxx
Mail Zone R25B
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
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 National Association of
Securities Dealers and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby. Notwithstanding
the generality of the foregoing, each party hereto further agrees to
furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the
insurance operations of the Company are being conducted in a manner
consistent with the California Insurance Regulations and any other
applicable law or regulations.
12.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations at law or in equity, which the parties hereto
are entitled to under state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that an Adviser may assign this
Agreement or any rights or obligations hereunder to any affiliate of
or company under common control with the Adviser, if such assignee is
duly licensed and registered to perform the obligations of the Adviser
under this Agreement and provided that the Company may assign this
Agreement to an affiliated insurance company, if such assignee is duly
licensed and registered to perform the obligations of the Company
under this Agreement.
12. 9 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles), as soon as practical and in any event within
90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) as soon as
practical and in any event within 45 days after the end of each
quarterly period:
(c) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
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 above.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
By: ______________________________
NAME:
TITLE:
XXXXXX XXXXXXX UNIVERSAL FUNDS, INC.
By: ______________________________
NAME:
TITLE:
XXXXXX XXXXXXX ASSET MANAGEMENT INC.
By: ______________________________
NAME:
TITLE:
XXXXXX XXXXXXXX & XXXXXXXX, LLP
By: ______________________________
NAME:
TITLE:
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
NAME OF SEPARATE ACCOUNT AND FORM NUMBER* AND NAME OF CONTRACT
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
Fidelity Investments Variable Annuity Account FVA-88200
I, established July 22, 0000 XXX-00000
XXXX-00000
NRR-96100
NRR-96101
VA-1/87
*Refers to the basic contract. While there are state specific
contracts having different contract numbers, they are variations of
these basic contracts.
A-1
SCHEDULE B
PORTFOLIOS OF XXXXXX XXXXXXX
UNIVERSAL FUNDS,
INC.
Global Equity Portfolio
International Magnum Portfolio
Emerging Markets Debt Portfolio
Emerging Markets Equity Portfolio
B-1
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding
responsibilities for the handling of proxies and voting instructions
relating to the Fund. The defined terms herein shall have the
meanings assigned in the Participation Agreement except that the term
"Company" shall also include the department or third party assigned by
the Company to perform the steps delineated below.
. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting
to enable the Company to consider and prepare for the solicitation of
voting instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will
inform the Company of the Record, Mailing and Meeting dates. This
will be done verbally approximately two months before meeting.
. Promptly after the Record Date, the Company will perform a "tape
run", or other activity, which will generate the names, addresses and
number of units which are attributed to each contract
owner/policyholder (the "Customer") as of the Record Date. Allowance
should be made for account adjustments made after this date that could
affect the status of the Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to
call in the number of Customers to the Fund , as soon as possible, but
no later than two weeks after the Record Date.
. The Fund's Annual Report must be sent to each Customer by the
Company either before or together with the Customers' receipt of
voting, instruction solicitation material. The Fund will provide the
last Annual Report to the Company pursuant to the terms of Section 3.3
of the Agreement to which this Schedule relates.
. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is agreed to by the Company and the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:
C-1
. name (legal name as found on account registration)
. address
. fund or account number
. coding to state number of units
. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
. During this time, the Fund will develop, produce and pay for the
Notice of Proxy and the Proxy Statement (one document). Printed and
folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid
for by the Company). Contents of envelope sent to Customers by the
Company will include:
. Voting Instruction Card(s)
. One proxy notice and statement (one document)
. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly as
possible and that their vote is important. One copy will be supplied
by the Fund.)
. cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund.
. The above contents should be received by the Company approximately
3-5 business days before mail date. Individual in charge at Company
reviews and approves the contents of the mailing package to ensure
correctness and completeness. Copy of this approval sent to the Fund.
. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including,) the meeting, counting backwards.
. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
C-2
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
. Signatures on Card checked against legal name on account
registration which was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X.
Xxxxx, Trustee," then that is the exact legal name to be printed on
the Card and is the signature needed on the Card.
. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be not received for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g.
mutilated, illegible) of the procedure are "hand verified," i.e.,
examined as to why they did not complete the system. Any questions on
those Cards are usually remedied individually.
. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into categories
depending upon their vote; an estimate of how the vote is progressing
may then be calculated. If the initial estimates and the actual vote
do not coincide, then an internal audit of that vote should occur.
This may entail a recount.
. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Fund receives the
tabulations stated in terms of a percentage and the number of shares.)
The Fund must review and approve tabulation format.
. Final tabulation in shares is verbally given by the Company to the
Fund on the morning of the meeting not later than 10:00 a.m. Eastern
time. The Fund may request an earlier deadline if reasonable and if
required to calculate the vote in time for the meeting.
. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
C-3
. The Company or the tabulating agency will be required to box and
archive the Cards received from the Customers. In the event that any
vote is challenged or if otherwise necessary for legal, regulatory, or
accounting purposes, the Fund will be permitted reasonable access to
such Cards.
. All approvals and "signing-off' may be done orally, but must always
be followed up in writing.
C-4
PARTICIPATION AGREEMENT
AMONG
XXXXXX XXXXXXX UNIVERSAL FUNDS, INC.,
XXXXXX XXXXXXX ASSET MANAGEMENT INC.
XXXXXX XXXXXXXX & XXXXXXXX, LLP
AND
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
DATED AS OF
SEPTEMBER 1, 1997
TABLE OF CONTENTS
Page
ARTICLE I. Purchase of Fund Shares 2
ARTICLE II Representations and Warranties 5
ARTICLE III. Prospectuses, Reports to Shareholders 7
and Proxy Statements, Voting
ARTICLE IV. Sales Material and Information 9
ARTICLE V Fees and Expenses 11
ARTICLE VI. Diversification 12
ARTICLE VII. Potential Conflicts 12
ARTICLE VIII. Indemnification 14
ARTICLE IX. Applicable Law 20
ARTICLE X. Termination 20
ARTICLE XI. Notices 22
ARTICLE XII. Miscellaneous 23
SCHEDULE A Separate Accounts and Contracts A-1
SCHEDULE B Portfolios of Xxxxxx Xxxxxxx Universal
Funds, Inc. B-1
SCHEDULE C Proxy Voting Procedures C-1
