PARTICIPATION AGREEMENT
THIS AGREEMENT, is made as of August 28September 2, 1997, by and among
Fidelity Investments Life Insurance Company ("Company"), on its own behalf
and on behalf of Fidelity Investments Variable Annuity Account I, a
segregated asset account of the Company ("Account"), Strong Variable
Insurance Funds, Inc. ("Strong Variable") on behalf of the Portfolios of
Strong Variable listed on the attached Exhibit A as such Exhibit may be
amended from time to time (the "Designated Portfolios"), Strong Opportunity
Fund II, Inc. ("Opportunity Fund II"), Strong Capital Management, Inc. (the
"Adviser"), the investment adviser and transfer agent for the Opportunity
Fund II and Strong Variable, and Strong Funds Distributors, Inc.
("Distributors"), the distributor for Strong Variable and the Opportunity
Fund II(each, a "Party" and collectively, the "Parties").
PRELIMINARY STATEMENTS
A. Beneficial interests in Strong Variable are divided into several series
of shares, each representing the interest in a particular managed portfolio
of securities and other assets (each, a "Portfolio").
B. To the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of Opportunity Fund II and the
Designated Portfolios ("Fund" or "Funds" shall be deemed to refer to each
Designated Portfolio and to the Opportunity Fund II to the extent the
context requires), on behalf of the Account to fund the variable annuity
contracts that use the Funds as an underlying investment medium (the
"Contracts").
C. The Company, Adviser and Distributors desire to facilitate the purchase
and redemption of shares of the Funds by the Company for the Account
through one account in each Fund (each an "Omnibus Account") to be
maintained of record by the Company, subject to the terms and conditions of
this Agreement.
D. The Company desires to provide administrative services and functions
(the "Services") for purchasers of Contracts ("Owners") who are beneficial
owners of shares of the Funds on the terms and conditions set forth in
this Agreement.
AGREEMENTS
The parties to this Agreement agree as follows:
1. Performance of Services. Company agrees to perform the administrative
functions and services specified in Exhibit B attached to this Agreement
with respect to the shares of the Funds beneficially owned by the Owners
and included in the Account.
2. The Omnibus Accounts.
2.1 Each Omnibus Account will be opened based upon the information
contained in Exhibit C to this Agreement. In connection with each Omnibus
Account, Company represents and warrants that it is authorized to act on
behalf of each Owner effecting transactions in the Omnibus Account and that
the information specified on Exhibit C to this Agreement is correct.
2.2 Each Fund shall designate each Omnibus Account with an account number.
These account numbers will be the means of identification when the Parties
are transacting in the Omnibus Accounts. The assets in the Accounts are
segregated from the Company's [other assets.] The Adviser agrees to cause
the Omnibus Accounts to be kept open on each Fund's books, as applicable,
regardless of a lack of activity or small position size except to the
extent the Company takes specific action to close an Omnibus Account or to
the extent a Fund's prospectus reserves the right to close accounts which
are inactive or of a small position size. In the latter two cases, the
Adviser will give prior notice to the Company before closing an Omnibus
Account.
2.3 The Company agrees to provide Adviser such information as Adviser or
Distributors may reasonably request concerning Owners as may be necessary
or advisable to enable Company and Distributors to comply with applicable
laws, including state "Blue Sky" laws relating to the sales of shares of
the Funds to the Accounts.
3. Fund Shares Transactions.
3.1 In General. Shares of the Funds shall be sold on behalf of the Funds
by Distributors and purchased by Company for the Account and, indirectly
for the appropriate subaccount thereof at the net asset value next computed
after receipt by Distributors of each order of the Company or its designee,
in accordance with the provisions of this Agreement, the then current
prospectuses of the Funds, and the Contracts. Company may purchase shares
of the Funds for its own account subject to (a) receipt of prior written
approval by Distributors; and (b) such purchases being in accordance with
the then current prospectuses of the Fund and the Contracts. The Board of
Directors of each Fund ("Directors") may refuse to sell shares of the
applicable Fund to any person, or suspend or terminate the offering of
shares of the Fund if such action is required by law or by regulatory
authorities having jurisdiction. Company agrees to purchase and redeem the
shares of the Funds in accordance with the provisions of this Agreement, of
the Contracts and of the then current prospectuses for the Contracts and
Funds. Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in its
Separate Accounts) except (i) as necessary to implement Contract Owner
initiated or approved transactions, (ii) as required by state or federal
laws or regulations or judicial or other legal precedent of general
application (a "Legally Required Redemption"), or (iii) as permitted by an
order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request,
Company will promptly furnish to the Fund and the Adviser the opinion of
counsel for Company (which counsel shall be reasonably satisfactory to the
Fund and the Adviser) to the effect that any redemption pursuant to clause
(ii) above is a Legally Required Redemption.
3.2 Purchase and Redemption Orders. On each day that a Fund is open for
business (a "Business Day"), the Company shall aggregate and calculate the
net purchase or redemption order it receives for the Account from the
Owners for shares of the Fund that it received prior to the close of
trading on the New York Stock Exchange (the "NYSE") (i.e. 4:00 p.m.,
Eastern time, unless the NYSE closes at an earlier time in which case such
earlier time shall apply) and communicate to Distributors, by telephone or
facsimile (or by such other means as the Parties to this Agreement may
agree to in writing), the net aggregate purchase or redemption order (if
any) for the Omnibus Account for such Business Day (such Business Day is
sometimes referred to herein as the "Trade Date"). The Company will
communicate such orders to Distributors prior to 10:00 a.m., Eastern time,
on the next Business Day following the Trade Date. In the event of a
natural or man-made disaster, armed conflict, act of terrorism, riot, labor
disruption or any other similar circumstance beyond its control (not caused
by its own negligence or which could have been adequately remedied if not
for the Adviser's or Distributors' negligence), the Company may transmit an
estimate of such order by 10:00 a.m. Eastern time on the next Business Day
following the Trade Date, with the final order to be transmitted by 12:00
noon Eastern time on such day. All trades communicated to Distributors by
the foregoing deadline shall be treated by Distributors as if they were
received by Distributors prior to the close of trading on the Trade Date.
3.3 Settlement of Transactions.
(a) Purchases. Company will wire, or arrange for the wire of, the
purchase price of each purchase order to the custodian for the Fund in
accordance with written instructions provided by Distributors to the
Company so that either (1) such funds are received by the custodian for the
Fund prior to 1:00 p.m., Eastern time, on the next Business Day following
the Trade Date, or (2) Distributors is provided with a Federal Funds wire
system reference number prior to such 1:00 p.m. Eastern time deadline
evidencing the entry of the wire transfer of the purchase price to the
applicable custodian into the Federal Funds wire system prior to such time.
Company agrees that if it fails to provide funds to the Fund's custodian by
the close of business on the next Business Day following the Trade Date,
then, at the option of Distributors, (i) the transaction may be canceled,
or (ii) the transaction may be processed at the next-determined net asset
value for the applicable Fund after purchase order funds are received. In
such event, the Company shall indemnify and hold harmless Distributors,
Adviser and the Funds from any liabilities, costs and damages either may
suffer as a result of such failure.
(b) Redemptions. The Adviser will use its best efforts to cause to be
transmitted to such custodial account as Company shall direct in writing,
the proceeds of all redemption orders placed by Company 10:00 a.m., Eastern
time, on the Business Day immediately following the Trade Date, by wire
transfer on that Business Day. Should Company need to extend the
settlement on a trade, it will contact Adviser to discuss the extension.
For purposes of determining the length of settlement, Adviser agrees to
treat the Account no less favorably than other shareholders of the Funds.
Each wire transfer of redemption proceeds shall indicate, on the Federal
Funds wire system, the amount thereof attributable to each Fund; provided,
however, that if the number of entries would be too great to be transmitted
through the Federal Funds wire system, the Adviser shall, on the day the
wire is sent, fax such entries to Company or if possible, send via direct
or indirect systems access until otherwise directed by the Company in
writing.
(c) Authorized Persons. The following persons are each duly authorized
to act on behalf of the Company under this Agreement. The Funds, Adviser
and Distributors are entitled to conclusively rely on verbal or written
instructions that Adviser or Distributors reasonably believes were
originated by any one of the said persons listed in section 3 of Exhibit C
to this Agreement or. in any subsequent letter received by Adviser or
Distributors that amends such list.
The Company shall inform Adviser and Distributors of additions to or
subtractions from this list of authorized persons pursuant to Section 13,
hereof:
_________________________________
_________________________________
_________________________________
(d) Distributors or Adviser will provide Company (i) confirmations of
Omnibus Accounts (dollar amount, number of shares, net asset value, and
ending share balances in the Omnibus Account) within five Business Days
after each day on which a purchase or redemption of shares is effected for
an Omnibus Account, (ii) statements detailing activity in each Omnibus
Account no less frequently than monthly, and (iii) other information as may
be reasonably requested by Company. Distributors or the Adviser will
provide Company telephonic or indirect systems access to Omnibus Account
activity for each Business Day on the Business Day following the Trade
Date. On each Business Day following a Trade Date via telephone, facsimile
or direct or indirect systems access and by 9:35 a.m., Eastern time,
Distributors or AdviserAdvisor will acknowledge receipt of or notify lack
of receipt of, orders under Sections 3.3(a) and 3.3(b).
3.4 Book Entry Only. Issuance and transfer of shares of a Fund will be by
book entry only. Stock certificates will not be issued to the Company or
the Account. Shares of the Funds ordered from Distributors will be
recorded in the appropriate book entry title for the Account.
3.5 Distribution Information. The Adviser or Distributors shall provide
the Company with all distribution announcement information as soon as it is
announced by the Funds. The distribution information shall set forth, as
applicable, ex-dates, record date, payable date, distribution rate per
share, record date share balances, cash and reinvested payment amounts and
all other information reasonably requested by the Company. Where possible,
the Adviser or Distributors shall provide the Company with direct or
indirect systems access to the Adviser's systems for obtaining such
distribution information.
3.6 Reinvestment. All dividends and capital gains distributions will be
automatically reinvested on the payable date in additional shares of the
applicable Fund at net asset value in accordance with each Fund's then
current prospectus.
3.7 Pricing Information. Distributors shall use its reasonable efforts to
furnish to the Company prior to 6:30 p.m., Eastern time and use its best
efforts to furnish to the Company by 7:00 p.m., Eastern time, on each
Business Day, each Fund's closing net asset value for that day, and for
those Funds for which such information is calculated, the daily accrual for
interest rate factor (mil rate). If the Distributors is unable to provide
such information by 7:00 p.m., Eastern time, it shall provide an estimate
of such information to the Company by no later than 7:00 p.m. Eastern time.
Such information shall be communicated via fax, or indirect or direct
systems access acceptable to the Company.
3.8 Price Errors.
(a) Notification. If an adjustment is required in accordance with a
Fund's then current policies on reimbursement ("Fund Reimbursement
Policies") to correct any error in the computation of the net asset value
of Fund shares ("Price Error"), Adviser or Distributors shall notify
Company as soon as practicable after discovering the Price Error. Notice
may be made via facsimile or via direct or indirect systems access and
shall state the incorrect price, the correct price and, to the extent
communicated to the Fund's shareholders, the reason for the price change.
(b) Underpayments. If a Price Error causes an Account to receive less
than the amount to which it otherwise would have been entitled, Adviser
shall make all necessary adjustments (subject to the Fund Reimbursement
Policies) so that the Account receives the amount to which it would have
been entitled
(c) Overpayments. If a Price Error causes an Account to receive more than
the amount to which it otherwise would have been entitled, Company, when
requested by Adviser (in accordance with the Fund Reimbursement Policies),
will use its best efforts to collect such excess amounts from the
applicable Owners.
(d) Fund Reimbursement Policies. Adviser agrees to treat Company's
customers no less favorably than Adviser treats its retail shareholders in
applying the provisions of paragraphs 3.8(b) and 3.8(c).
(e) Expenses. Adviser shall reimburse Company for all reasonable and
necessary out-of-pocket expenses incurred by Company for payroll overtime,
stationery and postage in adjusting Owner accounts affected by a Price
Error described in paragraphs 3.8(b) and 3.8(c). Company shall use its
best efforts to mitigate all expenses which may be reimbursable under this
section 3.8(e) and agrees that payroll overtime shall not include any time
spent programming computers or otherwise customizing Company's
recordkeeping system. Upon requesting reimbursement, Company shall present
an itemized xxxx to Adviser detailing the costs for which it seeks
reimbursement.
3.9 Agency. Distributors hereby appoints the Company as its agent for the
limited purpose of accepting purchase and redemption instructions from the
Owners for the purchase and redemption of shares of the Funds by the
Company on behalf of Account.
3.10 Quarterly Reports. Adviser agrees to provide Company a statement of
Fund assets as soon as practicable and in any event within 30 days after
the end of each fiscal quarter, and a statement certifying the compliance
by the Funds during that fiscal quarter with the diversification
requirements and qualification as a regulated investment company. In the
event of a breach of Section 6.4(a), Adviser will take all reasonable steps
(a) to notify Company of such breach and (b) to adequately diversify the
Fund so as to achieve compliance within the grace period afforded by
Treasury Regulation 1.817-5.
4. Proxy Solicitations and Voting. The Company shall, at its expense,
distribute or arrange for the distribution of all proxy materials furnished
by the Funds to the Account and shall: (i) solicit voting instructions from
Owners; (ii) vote the Fund shares in accordance with instructions received
from Owners; and (iii) vote the Fund shares for which no instructions have
been received, as well as shares attributable to it, in the same proportion
as Fund shares for which instructions have been received from Owners, so
long as and to the extent that the Securities and Exchange Commission (the
"SEC") continues to interpret the Investment Company Act of 1940, as
amended (the "1940 Act"), to require pass-through voting privileges for
various contract owners. The Company and its agents will not recommend
action in connection with, or oppose or interfere with, the solicitation of
proxies for the Fund shares held for Owners.
5. Customer Communications.
5.1 Prospectuses. The Adviser or Distributors, at its expense, will
provide the Company with as many copies of the current prospectus for the
Funds as the Company may reasonably request for distribution, at the
Adviser's or Distributors' expense, to existing or prospective Owners.
5.2 Shareholder Materials. The Adviser and Distributors shall, as
applicable, provide in camera ready or other form mutually agreed to by the
parties, the following shareholder communications materials prepared for
circulation to Owners: proxy or information statements, annual reports,
semi-annual reports, and all initial and updated prospectuses, supplements
and amendments thereof. . Adviser or Distributors shall pay any reasonable
and necessary costs for tabulating and archiving (to the extent archiving
is required by applicable law, rule or regulation) proxy materials of
proxies requested by Adviser, the Funds or Distributors, provided Company
uses a proxy tabulation service designated by Adviser or Distributors
The Adviser or Distributors shall be responsible for a pro-rata share of
the reasonable and necessary costs of printing such materials (to the
extent the materials relate to the Funds) determined by applying the
following formula:
A
_________________ times C
B
where A is the number of pages dedicated to information about the Fund; B
is the total number of pages in the document; and C is the total costs for
printing the document.
Adviser or Distributors shall pay the Fund's pro-rata share of the postage
and handling expenses with respect to such materials that are delivered to
Contract Owners, the calculation of which shall be determined by applying
the following formula:
A
______________ times C
A+B+C+D+E
where A is the aggregate number of annuity Contract Owners who own shares
of the Fund; B is the aggregate number of Contract Owners who own shares of
mutual funds advised by FMR Co. and included in the AccountCompany; 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; and , C is the total cost of postage and handling to all Contract
Owners.
The Company shall bear the expenses of distributing the Fund's
prospectuses, annual reports and semi-annual reports to prospective
Contract Owners.
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 are calculated in accordance with this section 5.2.
6. Representations and Warranties.
6.1 The Company represents and warrants that:
(a) It is an insurance company duly organized and in good standing under
the laws of the State of Utah_________________ and that it has legally and
validly established the Account prior to any issuance or sale thereof as a
segregated asset account and that the Company has and will maintain the
capacity to issue all Contracts that may be sold; and that it is and will
remain duly registered, licensed, qualified and in good standing to sell
the Contracts in all the jurisdictions in which such Contracts are to be
offered or sold;
(b) It is and will remain duly registered and licensed in all material
respects under all applicable federal and state securities and insurance
laws and shall perform its obligations under this Agreement in compliance
in all material respects with any applicable state and federal laws;
(c) The Contracts are and will be registered under the Securities Act of
1933, as amended (the "1933 Act"), and are and will be registered and
qualified for sale in the states where so required; and the Account is and
will be registered as a unit investment trust in accordance with the 1940
Act and shall be a segregated investment account for the Contracts;
(d) The Contracts are currently treated as annuity contracts, under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Company will maintain such treatment and will notify
Adviser, Distributors and Funds promptly 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;
(e) It is registered as a transfer agent pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or is not
required to be registered as such;
(f) To the extent required by applicable law, rule or regulation, the
arrangements provided for in this Agreement will be disclosed to the
Owners; and
(g) It is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws, including as a result of entering into
and performing the Services set forth in this Agreement, or is not required
to be registered as such.
6.2 The Funds each represent and warrant that Fund shares sold pursuant to
this Agreement are and will be registered under the 1933 Act and the Fund
is and will be registered as a registered investment company under the
Investment Company Act of 1940, in each case, except to the extent the
Company is so notified in writing;
6.3 Distributors represents and warrants that:
(a) It is and will be a member in good standing of the NASD and is and
will be registered as a broker-dealer with the SEC; and
(b) It will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations.
6.4 Adviser represents and warrants that:
(a) Each Portfolio invested in by the Company will elect to be treated as
a "regulated investment company" under Subchapter M of the Code, and will
qualify for such treatment for each taxable year and will notify Company
immediately upon having a reasonable basis for believing it has ceased to
so qualify or might not so qualify in the future. 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 Section 851 and will notify 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.
(b) It is and will remain duly registered and licensed in all material
respects under all applicable federal and state securities and insurance
laws and shall perform its obligations under this Agreement in compliance
in all material respects with any applicable state and federal laws; and
6.5 Each of the Parties to this Agreement represents and warrants to the
others that:
(a) It has full power and authority under applicable law, and has taken
all action necessary, to enter into and perform this Agreement and the
person executing this Agreement on its behalf is duly authorized and
empowered to execute and deliver this Agreement;
(b) This Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms and it shall comply in
all material respects with all laws, rules and regulations applicable to it
by virtue of entering into this Agreement;
(c) No consent or authorization of, filing with, or other act by or in
respect of any governmental authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement;
(d) The execution, performance and delivery of this Agreement will not
result in it violating any applicable law or breaching or otherwise
impairing any of its contractual obligations;
(e) Each Party to this Agreement is entitled to rely on any written
records or instructions provided to it by another Party; and
(f) Its directors, officers, employees, and investment advisers, and
other individuals/entities dealing with the money or securities of a 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 amount required by the applicable rules of the National
Association of Securities Dealers, Inc. ("NASD") and the federal securities
laws, which bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company. Its directors are and at
all times will be covered by an errors and omissions policy in an amount of
not less than $50,000,000.
7. Sales Material and Information
7.1 NASD Filings. The Company shall promptly inform Distributors as to the
status of all sales literature filings pertaining to the Funds and shall
promptly notify Distributors of all approvals or disapprovals of sales
literature filings with the NASD. For purposes of this Section 7, the
phrase "sales literature or other promotional material" shall be construed
in accordance with all applicable securities laws and regulations.
7.2 Company Representations. The Company shall not make any material
representations concerning the Adviser, the Distributors, or a Fund other
than the information or representations contained in: (a) a registration
statement of the Fund or prospectus of a Fund, as amended or supplemented
from time to time; (b) published reports or statements of the Funds which
are in the public domain or are approved by Distributors or the Funds; or
(c) sales literature or other promotional material of the Funds.
7.3 Adviser, Distributors and Fund Representations. None of Adviser,
Distributors or any Fund shall make any material representations concerning
the Company other than the information or representations contained in: (a)
a registration statement or prospectus for the Contracts, as amended or
supplemented from time to time; (b) published reports or statements of the
Contracts or the Account which are in the public domain or are approved by
the Company; or (c) sales literature or other promotional material of the
Company.
7.4 Trademarks, etc. Except to the extent required by applicable law, no
Party shall use any other Party's names, logos, trademarks or service
marks, whether registered or unregistered, without the prior consent of
such Party.
7.5 Information From Distributors and Adviser. Upon request, Distributors
or Adviser will provide to Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, solicitations for voting
instructions, applications for exemptions, requests for no action letters,
and all amendments to any of the above, that relate to the Funds, in final
form as filed with the SEC, NASD and other regulatory authorities.
7.6 Information From Company. Company will provide to Distributors 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 a Fund and the Contracts, in
final form as filed with the SEC, NASD and other regulatory authorities.
7.7 Review of Marketing Materials. If so requested by Company, the Adviser
or Distributors will use its best efforts to review sales literature and
other marketing materials prepared by Company which relate to the Funds,
the Adviser or Distributors for factual accuracy as to such entities,
provided that the Adviser or Distributors is provided at least five (5)
Business Days to review such materials. Neither the Adviser nor
Distributors will review such materials for compliance with applicable
laws. Company shall provide the Adviser with copies of all sales
literature and other marketing materials which refer to the Funds, the
Company or Distributors within five (5) Business Days after their first
use, regardless of whether the Adviser or Distributors has previously
reviewed such materials. If so requested by the Adviser or Distributors,
Company shall cease to use any sales literature or marketing materials
which refer to the Funds, the Adviser or Distributors that the Adviser or
Distributors determines to be inaccurate, misleading or otherwise
unacceptable.
8. Fees and Expenses.
8.1 Fund Registration Expenses. Fund or Distributors shall bear the cost
of registration and qualification of Fund shares; preparation and filing of
Fund prospectuses and registration statements, proxy materials and reports;
preparation of all other statements and notices relating to the Fund or
Distributors required by any federal or state law; payment of all
applicable fees, including, without limitation, any fees due under Rule
24f-2 of the 1940 Act, relating to a Fund; and all taxes on the issuance or
transfer of Fund shares on the Fund's records.
8.2 Contract Registration Expenses. Except as specifically provided for
in Section 5 of this Agreement, the Company shall bear the expenses for the
costs of preparation and filing of the Company's prospectus and
registration statement with respect to the Contracts; preparation of all
other statements and notices relating to the Account or the Contracts
required by any federal or state law; expenses for the solicitation and
sale of the Contracts including all costs of printing and distributing all
copies of advertisements, prospectuses, Statements of Additional
Information, proxy materials, and reports to Owners or potential purchasers
of the Contracts as required by applicable state and federal law; payment
of all applicable fees relating to the Contracts; all costs of drafting,
filing and obtaining approvals of the Contracts in the various states under
applicable insurance laws; filing of annual reports on form N-SAR, and all
other costs associated with ongoing compliance with all such laws and its
obligations under this Agreement.
9. Indemnification.
9.1 Indemnification By Company.
(a) Company agrees to indemnify and hold harmless the Funds, Adviser and
Distributors and each of their directors, officers, employees and agents,
and each person, if any, who controls any of them within the meaning of
Section 15 of the 1933 Act (each, an "Indemnified Party" and collectively,
the "Indemnified Parties" for purposes of this Section 9.1) from and
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of Company), and expenses
(including reasonable legal fees and expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise (collectively, hereinafter "Losses"), insofar as such Losses:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement, prospectus or sales literature for the Contracts or contained in
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 paragraph
9.1(a) 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 written information furnished to Company by or on
behalf of a Fund, Distributors or Adviser for use in the registration
statement or prospectus for the Contracts or in the Contracts (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 or
wrongful conduct of Company or its agents, 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 a 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
written information furnished to a Fund, Adviser or Distributors by or on
behalf of Company; or
(iv) arise out of, or as a result of, any failure by Company or persons
under its control to provide the Services and furnish the materials
contemplated under the terms of this Agreement; or
(v) arise out of, or result from, any material breach of any
representation or warranty made by Company or persons under its control in
this Agreement or arise out of or result from any other material breach of
this Agreement by Company or persons under its control; as limited by and
in accordance with the provisions of Sections 9.1(b) and 9.1(c) hereof; or
(vi) arise out of, or as a result of, adherence by Adviser or
Distributors to instructions that it reasonably believes were originated by
persons specified in Section 3.2(c), hereof.
This indemnification provision is in addition to any liability which the
Company may otherwise have.
(b) Company shall not be liable under this indemnification provision with
respect to any Losses to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement.
(c) 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 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
Company of any such claim shall not relieve Company from any liability
which it may have to the Indemnified Party otherwise than on account of
this indemnification provision. In case any such action is brought against
any Indemnified Party, and it notified the indemnifying Party of the
commencement thereof, the indemnifying Party will be entitled to
participate therein and, to the extent that it may wish, assume the defense
thereof, with counsel satisfactory to such Indemnified Party. After notice
from the indemnifying Party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional
counsel obtained by it, and the indemnifying Party shall not be liable to
such Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation. The
Indemnified Party may not settle any action without the written consent of
the indemnifying Party. The indemnifying Party may not settle any action
without the written consent of the Indemnified Party unless such settlement
completely and finally releases the Indemnified Party from any and all
liability. In either event, consent shall not be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Company of the
commencement of any litigation or proceedings against the Indemnified
Parties in connection with the issuance or sale of Fund shares or the
Contracts or the operation of a Fund.
9.2 Indemnification by Adviser and Distributors.
(a) Adviser and Distributors agrees to indemnify and hold harmless
Company and each of its directors, officers, employees and agents and each
person, if any, who controls Company within the meaning of Section 15 of
the 1933 Act (each, and "Indemnified Party" and collectively, the
"Indemnified Parties" for purposes of this Section 9.2) against any and all
Losses to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such Losses:
(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 a 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 Section 9.2(a) 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 written
information furnished to a Fund, Adviser or Distributors by or on behalf of
Company for use in the registration statement or prospectus for a 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 or
wrongful conduct of Adviser or Distributors or persons under its control,
with respect to the sale or distribution of Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature 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 statements
therein not misleading, if such statement or omission was made in reliance
upon written information furnished to Company by or on behalf of Adviser or
Distributors; or
(iv) arise out of, or as a result of, any failure by Adviser or
Distributors or persons under its control to provide the services and
furnish the materials contemplated under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation or warranty made by Adviser or Distributors or persons under
its control in this Agreement or arise out of or result from any other
material breach of this Agreement by Adviser or Distributors or persons
under its control; as limited by and in accordance with the provisions of
Sections 9.2(b) and 9.2(c) hereof.
This indemnification provision is in addition to any liability which
Adviser and Distributors may otherwise have.
(b) Adviser and Distributors shall not be liable under this
indemnification provision with respect to any Losses to which an
Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to Company.
(c) Adviser and Distributors 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 Adviser
and Distributors 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 Adviser and Distributors of any
such claim shall not relieve Adviser and Distributors from any liability
which it may have to the Indemnified Party otherwise than on account of
this indemnification provision. In case any such action is brought against
any Indemnified Party, and it notified the indemnifying Party of the
commencement thereof, the indemnifying Party will be entitled to
participate therein and, to the extent that it may wish, assume the defense
thereof, with counsel satisfactory to such Indemnified Party. After notice
from the indemnifying Party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional
counsel obtained by it, and the indemnifying Party shall not be liable to
such Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation. The
Indemnified Party may not settle any action without the written consent of
the indemnifying Party. The indemnifying Party may not settle any action
without the written consent of the Indemnified Party unless such settlement
completely and finally releases the Indemnified Party from any and all
liability. In either event, consent shall not be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Adviser and Distributors
of the commencement of any litigation or proceedings against the
Indemnified Parties in connection with the issuance or sale of the
Contracts or the operation of the Account.
10. Potential Conflicts.
10.1 Monitoring by Directors for Conflicts of Interest. The Directors of
each Fund will monitor the Fund for any potential or existing material
irreconcilable conflict of interest between the interests of the contract
owners of all separate accounts investing in the Fund, including such
conflict of interest with any other separate account of any other insurance
company 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 interpretive 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 the Fund are being managed; (e) a
difference in voting instructions given by variable annuity contract owners
and variable life insurance contract owners or by contract owners of
different life insurance companies utilizing the Fund; or (f) a decision by
Company to disregard the voting instructions of Owners. The Directors
shall promptly inform the Company, in writing, if they determine that an
irreconcilable material conflict exists and the implications thereof.
10.2 Monitoring by the Company for Conflicts of Interest. The Company
will promptly notify the Directors, in writing, of any potential or
existing material irreconcilable conflicts of interest, as described in
Section 10.1 above, of which it is aware. The Company will assist the
Directors in carrying out their responsibilities under any applicable
provisions of the federal securities laws and any exemptive orders granted
by the SEC ("Exemptive Order"), by providing the Directors, in a timely
manner, with all information reasonably necessary for the Directors to
consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Directors whenever Owner voting
instructions are disregarded.
10.3 Remedies. If it is determined by a majority of the Directors, or a
majority of disinterested Directors, that a material irreconcilable
conflict exists, as described in Section 10.1 above, the Company shall, at
its own expense take whatever steps are necessary to remedy or eliminate
the irreconcilable material conflict, up to and including, but not limited
to: (a), withdrawing the assets allocable to some or all of the separate
accounts from the applicable Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another fund
managed by the Adviser, or submitting the question whether such segregation
should be implemented to a vote of all affected Owners and, as appropriate,
segregating the assets of any particular group that votes in favor of such
segregation, or offering to the affected owners the option of making such a
change; and (b), establishing a new registered management investment
company or managed separate account.
10.4 Causes of Conflicts of Interest.
(a) State Insurance Regulators. 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
applicable Fund and terminate this Agreement with respect to such Account
within the period of time permitted by such decision, but in no event later
than six months after the Directors inform the Company in writing that it
has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Directors. Until
the end of the foregoing period, the Distributors and Funds shall continue
to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund to the extent such actions do not violate
applicable law.
(b) Disregard of Owner Voting. If a material irreconcilable conflict
arises because of Company's decision to disregard Owner voting instructions
and that decision represents a minority position or would preclude a
majority vote, Company may be required, at the applicable Fund's election,
to withdraw the Account's investment in said Fund. No charge or penalty
will be imposed against the Account as a result of such withdrawal.
10.5 Limitations on Consequences. For purposes of Sections 10.3 through
10.5 of this Agreement, a majority of the disinterested Directors shall
determine whether any proposed action adequately remedies any
irreconcilable material conflict. In no event will a Fund, the Adviser or
the Distributors be required to establish a new funding medium for any of
the Contracts. The Company shall not be required by Section 10.3 to
establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of Owners affected by the
irreconcilable material conflict. In the event that the Directors
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the
Account's investment in the applicable Fund and terminate this Agreement as
quickly as may be required to comply with applicable law, but in no event
later than six (6) months after the Directors inform the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict.
10.6 Changes in Laws. 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 Funds' Exemptive Order) on terms
and conditions materially different from those contained in the Funds'
Exemptive Order, then (a) the Funds and/or the Company, 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 10.1, 10.2, 10.3 and 10.4 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.
10.7 Terminations. Notwithstanding any other provision in this Agreement,
terminations described in Section 10 of this Agreement shall be governed by
Section 10.
11. Maintenance of Records.
(a) Recordkeeping and other administrative services to Owners shall be
the responsibility of the Company and shall not be the responsibility of
the Funds, Adviser or Distributors. None of the Funds, the Adviser or
Distributors shall maintain separate accounts or records for Owners.
Company shall maintain and preserve all records as required by law to be
maintained and preserved in connection with providing the Services and in
making shares of the Funds available to the Account.
(b) Upon the request of the Adviser or Distributors, the Company shall
provide copies of all the historical records relating to transactions
between the Funds and the Account, written communications regarding the
Funds to or from the Account and other materials, in each case (1) as are
maintained by the Company in the ordinary course of its business and in
compliance with applicable law, and (2) as may reasonably be requested to
enable the Adviser and Distributors, or its representatives, including
without limitation its auditors or legal counsel, to (A) monitor and review
the Services, (B) comply with any request of a governmental body or
self-regulatory organization or the Owners, (C) verify compliance by the
Company with the terms of this Agreement, (D) make required regulatory
reports, or (E) perform general customer supervision. The Company agrees
that it will permit the Adviser and Distributors or such representatives of
either to have reasonable access to its personnel and records in order to
facilitate the monitoring of the quality of the Services.
(c) Upon the request of the Company, the Adviser and Distributors shall
provide copies of all the historical records relating to transactions
between the Funds and the Account, written communications regarding the
Funds to or from the Account and other materials, in each case (1) as are
maintained by the Adviser and Distributors, as the case may be, in the
ordinary course of its business and in compliance with applicable law, and
(2) as may reasonably be requested to enable the Company, or its
representatives, including without limitation its auditors or legal
counsel, to (A) comply with any request of a governmental body or
self-regulatory organization or the Owners, (B) verify compliance by the
Adviser and Distributors with the terms of this Agreement, (C) make
required regulatory reports, or (D) perform general customer supervision.
(d) The Parties agree to cooperate in good faith in providing records to
one another pursuant to this Section 11.
12. Term and Termination.
12.1 Term and Termination Without Cause. The initial term of this
Agreement shall be for a period of one year from the date hereof. Unless
terminated as to any Fund upon not less than one hundred and twenty (120)
days prior written notice to the other Parties, this Agreement shall
thereafter automatically renew for the remaining Funds from year to year,
subject to termination at the next applicable renewal date upon not less
than 120 days prior written notice. Any Party may terminate this Agreement
as to any Fund following the initial term upon four (4) months advance
written notice to the other Parties.
12.2 Termination by Fund, Distributors or Adviser for Cause. Adviser, Fund
or Distributors may terminate this Agreement by written notice to the
Company, if any of them shall determine, in its sole judgment exercised in
good faith, that (a) the Company has suffered a material adverse change in
its business, operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse publicity; or (b)
any of the Contracts are not registered, issued or sold in accordance with
applicable state and federal law or such law precludes the use of Fund
shares as the underlying investment media of the Contracts issued or to be
issued by the Company.
12.3 Termination by Company for Cause. Company may terminate this
Agreement by written notice to the Adviser, Funds and Distributors in the
event that (a) any of the Fund shares are not registered, issued or sold in
accordance with applicable state or federal law or such law precludes the
use of such shares as the underlying investment media of the Contracts
issued or to be issued by the Company; (b) the Funds cease to qualify as
Regulated Investment Companies under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably believes that
the Funds may fail to so qualify; or (c) a Fund fails to meet the
diversification requirements of Section 817 of the Code or Regulation
1.817-5 under that Section.
12.4 Termination by any Party. This Agreement may be terminated as to any
Fund by any Party at any time (A) by giving 30 days' written notice to the
other Parties in the event of a material breach of this Agreement by the
other Party or Parties that is not cured during such 30-day period, and (B)
(i) upon institution of formal proceedings relating to the legality of the
terms and conditions of this Agreement against the Account, Company, Funds,
Adviser or Distributors by the NASD, the SEC or any other regulatory body
provided that the terminating Party has a reasonable belief that the
institution of formal proceedings is not without foundation and will have a
material adverse impact on the terminating Party, (ii) by the non-assigning
Party upon the assignment of this Agreement in contravention of the terms
hereof, or (iii) as is required by law, order or instruction by a court of
competent jurisdiction or a regulatory body or self-regulatory organization
with jurisdiction over the terminating Party.
12.5 Limit on Termination. Notwithstanding the termination of this
Agreement with respect to any or all Funds, for so long as any Contracts
remain outstanding and invested in a Fund, each Party to this Agreement
shall continue to perform such of its duties under this Agreement as are
necessary to ensure the continued tax deferred status thereof and the
payment of benefits thereunder and all Contracts invested in a Fund on the
effective date of termination of this Agreement (an "Existing Contract")
shall be permitted to reallocate investments, redeem investments or make
additional purchase payments in that Fund under their Existing Contract,
except to the extent proscribed by law, the SEC or other regulatory body.
Notwithstanding the foregoing, nothing in this Section 12.5 obligates a
Fund to continue in existence. In the event that any Fund elects to
terminate its operations, the Company shall, as soon as practicable, obtain
an exemptive order or order of substitution from the SEC to remove all
Owners from the applicable Fund.
13. Notices.
All notices under this Agreement shall be given in writing (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile, by registered or certified mail or by overnight delivery
(postage prepaid, return receipt requested) to the respective Parties as
follows:
If to Strong Variable:
Strong Variable Insurance Funds, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Opportunity Fund II:
Strong Opportunity Fund II, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Adviser:
Strong Capital Management, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Distributors:
Strong Funds Distributors, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Company:
Fidelity Investments Life Insurance Company
00 Xxxxxxxxxx Xxxxxx, Xxxx Xxxx X00X
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: 617/476-9014
14. Miscellaneous.
14.1. Captions. The captions in this Agreement are included for
convenience of reference only and in no way affect the construction or
effect of any provisions hereof.
14.2. Enforceability. If any portion 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.
14.3. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and
the same instrument.
14.4. Remedies not Exclusive. 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 to this Agreement are entitled to under state and federal laws.
14.5. Confidentiality. Subject to the requirements of legal process and
regulatory authority, the Funds and Distributors shall treat as
confidential the names and addresses of the owners of the Contracts and all
information reasonably identified as confidential in writing by the Company
to this Agreement and, except as permitted by this Agreement, shall not
disclose, disseminate or utilize such names and addresses and other
confidential information without the express written consent of the Company
until such time as it may come into the public domain.
14.6. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Wisconsin applicable
to agreements fully executed and to be performed therein; exclusive of
conflicts of laws.
14.7. Survivability. Sections 6, 7.2, 7.3, 7.4, 9, 11 and 12.5 hereof
shall survive termination of this Agreement. In addition, all provisions
of this Agreement shall survive termination of this Agreement in the event
that any Contracts are invested in a Fund at the time the termination
becomes effective and shall survive for so long as such Contracts remain so
invested.
14.8. Amendment and Waiver. No modification of any provision of this
Agreement will be binding unless in writing and executed by the Party to be
bound thereby. No waiver of any provision of this Agreement will be
binding unless in writing and executed by the Party granting such waiver.
Notwithstanding anything in this Agreement to the contrary, the Company may
unilaterally amend Exhibit A to this Agreement to add additional series of
Strong Variable Funds ("New Funds") as Funds by sending to the Company a
written notice of the New Funds Any valid waiver of a provision set forth
herein shall not constitute a waiver of any other provision of this
Agreement. In addition, any such waiver shall constitute a present waiver
of such provision and shall not constitute a permanent future waiver of
such provision.
14.9. Assignment. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and assigns;
provided that, and except as set forth below in this section 14.9, neither
this Agreement nor any rights, privileges, duties or obligations of the
Parties may be assigned by any Party without the written consent of the
other Parties or as expressly contemplated by this Agreement. Company may
assign (a "Permitted Assignee") this Agreement to an affiliate with the
prior written consent of Adviser and Distributors, which consent shall not
be unreasonably withheld; provided, however, the Permitted Assignee is able
to and does make the representations and warranties in sections 6.1 and 6.5
of this Agreement. Any such permitted assignment shall not relieve Company
of its obligations under this Agreement.
14.10. Entire Agreement. This Agreement contains the full and complete
understanding between the Parties with respect to the transactions covered
and contemplated under this Agreement, and supersedes all prior agreements
and understandings between the Parties relating to the subject matter
hereof, whether oral or written, express or implied.
14.11. Relationship of Parties; No Joint Venture, Etc. Except for the
limited purpose provided in Section 3.8, it is understood and agreed that
the Company shall be acting as an independent contractor and not as an
employee or agent of the Adviser, Distributors or the Funds, and none of
the Parties shall hold itself out as an agent of any other Party with the
authority to bind such Party. Neither the execution nor performance of
this Agreement shall be deemed to create a partnership or joint venture by
and among any of the Company, Funds, Adviser, or Distributors.
14.12. Expenses. All expenses incident to the performance by each Party
of its respective duties under this Agreement shall be paid by that Party.
14.13. Time of Essence. Time shall be of the essence in this Agreement.
14.14. Non-Exclusivity. Each of the Parties acknowledges and agrees that
this Agreement and the arrangements described herein are intended to be
non-exclusive and that each of the Parties is free to enter into similar
agreements and arrangements with other entities.
14.15. Operations of Funds. In no way shall the provisions of this
Agreement limit the authority of the Funds, the Company or Distributors to
take such action as it may deem appropriate or advisable in connection with
all matters relating to the operation of such Fund and the sale of its
shares. In no way shall the provisions of this Agreement limit the
authority of the Company to take such action as it may deem appropriate or
advisable in connection with all matters relating to the provision of
Services or the shares of funds other than the Funds offered to the
Account.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
________________________________________
Name:
Title:
STRONG CAPITAL MANAGEMENT, INC.
Xxxxxxxx Xxxx Xxxxxxx, President of Strong Advisory Services, a division of
Strong Capital Management, Inc.
STRONG FUNDS DISTRIBUTORS, INC.
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG VARIABLE INSURANCE FUNDS, INC. on behalf of the Designated
Portfolios
________________________________________
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG OPPORTUNITY FUND II, INC.
_______________________________________
Xxxxxxx X. Xxxxxxxxxxx, Vice President
EXHIBIT A
The following is a list of Designated Portfolios under this Agreement:
Strong Discovery Fund II
Strong Growth Fund II
EXHIBIT B
THE SERVICES
Company shall perform the following services. Such services shall be the
responsibility of the Company and shall not be the responsibility of the
Funds, Adviser or Distributors.
1. Maintain separate records for each Account, which records shall reflect
Fund shares ("Shares") purchased and redeemed, including the date and price
for all transactions, Share balances, and the name and address of each
Owner, and tax identification numbers.
2. Credit contributions to individual Owner accounts and invest such
contributions in shares of the Funds to the extent so designated by the
Owner.
3. Disburse or credit to the Owners, and maintain records of, all proceeds
of redemptions of Fund shares and all other distributions not reinvested in
shares.
4. Prepare and transmit to the Owners, periodic account statements
showing, among other things, the total number of units owned as of the
statement closing date, purchases and redemptions during the period covered
by the statement, the net asset value of the units as of a recent date, and
other distributions paid during the statement period, if any.
5. Transmit to the Owners, as required by applicable law, prospectuses,
proxy materials, shareholder reports, and other information provided by the
Adviser, Distributors or Funds and required to be sent to shareholders
under the Federal securities laws.
6. Transmit to Distributors purchase orders and redemption requests placed
by the Account and arrange for the transmission of funds to and from the
Funds.
7. Transmit to Distributors such periodic reports as Distributors shall
reasonably conclude is necessary to enable the Funds to comply with
applicable Federal securities and state Blue Sky requirements.
8. Transmit to each Account confirmations of purchase orders and
redemption requests placed by each Account.
9. Maintain all account balance information for the Account and daily and
monthly purchase summaries expressed in shares and dollar amounts.
10. Prepare, transmit and file any Federal, state and local government
reports and returns as required by law with respect to each account
maintained on behalf of the Account.
11. Respond to Owners' inquiries regarding, among other things, prices and
account balances.
EXHIBIT C
ACCOUNT INFORMATION
1. Entity in whose name each Account will be opened:
Mailing address:
2. Employer ID number (FOR INTERNAL USAGE ONLY):
3. Authorized contact persons: The following persons are authorized on
behalf of the Company to effect transactions in each Account:
Name: ____________________________ Name: ______________________________
Phone:____________________________ Phone: ______________________________
4. Will the Accounts have telephone exchange? ____ Yes
____ No
(THIS OPTION LETS COMPANY REDEEM SHARES BY TELEPHONE AND APPLY THE
PROCEEDS FOR PURCHASE IN ANOTHER IDENTICALLY REGISTERED STRONG FUNDS
ACCOUNT.)
5. Will the Accounts have telephone redemption? ____ Yes
____ No
(THIS OPTION LETS COMPANY SELL SHARES BY TELEPHONE. THE PROCEEDS WILL BE
WIRED TO THE BANK ACCOUNT SPECIFIED BELOW.)
6. All dividends and capital gains will be reinvested automatically.
7. Instructions for all outgoing wire transfers:
8. If this Account Information Form contains changed information, the
undersigned authorized officer has executed this amended Account
Information Form as of the date set forth below and acknowledges the
agreements and representations set forth in the Participation Agreement
between the Company, the Funds, Adviser and Distributors:
9. Company represents under penalty of perjury that:
(i) The employer ID number on this form is correct; and
(ii) Company is not subject to backup withholding because (a) Company is
exempt from backup withholding, (b) Company has not been notified by the
IRS that it is subject to backup withholding as a result of failure to
report all interest or dividends, or (c) the IRS has notified the Company
that it is no longer subject to backup withholding. (Cross out (ii) if
Company has been notified by the IRS that it is subject to backup
withholding because of underreporting interest or dividends on its tax
return.)
______________________________________
(SIGNATURE OF AUTHORIZED OFFICER) (DATE)
PLEASE NOTE: DISTRIBUTORS EMPLOYS REASONABLE PROCEDURES TO CONFIRM THAT
INSTRUCTIONS COMMUNICATED BY TELEPHONE ARE GENUINE AND MAY NOT BE LIABLE
FOR LOSSES DUE TO UNAUTHORIZED OR FRAUDULENT INSTRUCTIONS. PLEASE SEE THE
PROSPECTUS FOR THE APPLICABLE FUND FOR MORE INFORMATION ON THE TELEPHONE
EXCHANGE AND REDEMPTION PRIVILEGES.
FOR STRONG INTERNAL USE: THIS ACCOUNT INFORMATION FORM MAY BE A COPY. THE
ORIGINAL ACCOUNT INFORMATION FORM IS ATTACHED TO THE PARTICIPATION
AGREEMENT WITH THE ADVISER AND RETAINED IN THE LEGAL DEPARTMENT.
Re: Fee Letter Relating to the Fidelity Investments Life Insurance Company
Participation Agreement
Dear Sir or Madame:
Pursuant to the Participation Agreement by and among Strong Capital
Management, Inc. ("Strong"), Fidelity Investments Life Insurance Company
(the "Company"), Strong Variable Insurance Funds, Inc., Strong Opportunity
Fund II, Inc. and Strong Funds Distributors, Inc. ("Distributors") dated as
of August 28,_________ __, 1997 (the "Participation Agreement"), the
Company will provide the administrative services (the "Services") on behalf
of the registered investment companies or series of investment companies
specified in Exhibit A (each a "Fund" and collectively the "Funds").
In recognition of the reduction in administrative expenses derived from
the performance of the Services, Strong agrees to pay the Company the fee
specified below for each Fund.
(a) For average aggregate amounts (as calculated in paragraph (b), below)
invested through variable insurance products issued by the Company with the
Funds, the monthly fee shall equal the percentage (calculated in paragraph
(b), below) of the applicable annual fee for each Fund specified in Exhibit
A, provided, however, thesuch annual fee specified in Exhibit A (the "Fee")
for alleach Funds listed on Exhibit A shall increase if (i) Strong enters
into a comparable relationship with any other administrative service
provider ("Third Party Service Provider") pursuant to which the Third Party
Service Provider provides to shareholders of a variable insurance mutual
fund advised by Strong (the "Strong Variable Funds")such Fund, services
which are substantially similar to the Services provided by Company to
thethat Funds, (ii) Strong pays such Third Party Service Provider for such
Services to such Strong Variablesuch Fund at a fee rate which is greater
than that provided in Exhibit A and, (iii) the aggregate assets held by the
Company, its affiliates and its parent in any and all mutual funds for
which Strong acts as the transfer agent or distributor ("Strong Family of
Funds") are equal to or greater than the aggregate assets held by the Third
Party Service Provider in the Strong Family of Funds. In such event,
Strong shall promptly notify Company and Strong shall automatically
increase the Fee for thesuch Funds equal to such greater fee rate as of the
date the greater fee is effective for such Third Party Service Provider.
(b) Strong shall calculate and pay to the Company an amount with respect
to each Fund equal to the product of: (1) the product of (a) the number of
calendar days in the applicable month divided by the number of calendar
days in that year (365 or 366 as applicable) and (b) the Fee, multiplied by
(2) the average daily market value of the investments held in such Fund
pursuant to the Participation Agreement computed by totaling the aggregate
investment (share net asset value multiplied by the total number of shares
held) on each day during the calendar month and dividing by the total
number of days during such month.
(c) Strong shall calculate the amount of the payment to be made pursuant to
this Letter Agreement at the end of each calendar month and will make such
payment to the Company within 30 days after receiving the report referenced
in paragraph (e), below. Fees will be paid, at Strong's election, by wire
transfer or by check. All payments under this Agreement shall be
considered final unless disputed by the Company in writing within 60 days
of receipt.
(d) The parties agree that the fees contemplated herein are solely for
shareholder servicing and other administrative services provided by the
Company and do not constitute payment in any manner for investment
advisory, distribution, trustee, or custodial services.
(e) The Company agrees to provide Strong by the 30th day of each month with
a report which indicates the number of Owners that hold through a Contract
interests in each Account as of the last day of the prior month.
(f) If requested in writing by Strong, and at Strong's expense, the Company
shall provide to Strong, by March 15th of each year, a "Special Report"
from a nationally recognized accounting firm reasonably acceptable to
Strong which substantiates for each month of the prior calendar year: (1)
the number of Owners that hold, through an Account, interests in each
Account maintained by the Company on the last day of each month which held
shares for which the fee provided for in this Letter Agreement was received
by the Company, (2) that any fees billed to Strong for such month were
accurately determined in accordance with this Letter Agreement, and (3)
such other information in connection with this Agreement and the
Participation Agreement as may be reasonably requested by Strong.
(g) If requested in writing by Company, and at the Company's expense, the
AdviserAdvisor or Distributors shall provide to the Company, by March 15th
of each year, a report from a nationally recognized accounting firm
reasonably acceptable to the Company which substantiates that as of the
last day of each month of the prior year: (1) fees paid to the Company
under this Agreement were made in compliance with paragraph (a) of this
Agreement and (2) such other information as may be reasonably requested by
the Company in connection with this Agreement and the Participation
Agreement. Information provided by either party to the other party's
agents pursuant to this paragraph (g) shall be limited solely to
information necessary to verify compliance with this paragraph (g) and
shall be made available only after the party receiving the information (or
its agents, as applicable) and the party providing the information sign a
mutually agreed upon confidentiality agreement.
(h) This Letter Agreement shall terminate upon termination of the
Participation Agreement. Accordingly, all payments pursuant to this Letter
Agreement shall cease upon termination of the Participation Agreement.
(i) Capitalized terms not otherwise defined herein shall have the meaning
assigned to them in the Participation Agreement.
If you are in agreement with the foregoing, please sign and date below
where indicated and return one copy of this signed letter agreement to me.
Very truly yours,
Xxxxxxxx Xxxx Xxxxxxx
President, Strong Advisory Services, a division
of Strong Capital Management, Inc.
Accepted and agreed to this _____ day of
_____________, 1997.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
By: ________________________________________
Name:
Title:
EXHIBIT A TO FEE LETTER
Subject to the terms of the Agreement and the Fee Letter, the Funds subject
to this Agreement and applicable annual fees are as follows:
Fund Annual Fee
Strong Opportunity Fund II, Inc. .25%
Strong Variable Insurance Funds, Inc.
Strong Discovery Fund II .25%
Strong Growth Fund II .25%
