-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E5h9jgcCbjiMhhJdkvCKCjyZzdDEOpIl68Tzp5dBoUXO5TP1KpIDMz+DzavR1z7T wDzLLwrz9CeUom7la/SIzQ== 0000927384-97-000017.txt : 19970912 0000927384-97-000017.hdr.sgml : 19970912 ACCESSION NUMBER: 0000927384-97-000017 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19970829 EFFECTIVENESS DATE: 19970829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A CENTRAL INDEX KEY: 0000878467 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 061326202 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-42376 FILM NUMBER: 97673027 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-06388 FILM NUMBER: 97673028 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6175637000 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET CITY: BOSTON STATE: MA ZIP: 02109 485BPOS 1 As filed with the SEC on August 29, 1997 Registration No. 33-42376 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 6 [ X ] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ] Amendment No. 7 [ X ] EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A (Exact name of registrant) EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (name of depositor) One World Financial Center New York, New York 10281 (Address of depositor's principal executive offices) Depositor's telephone number: 1-800-544-8888 ____________________________________________ RODNEY R. ROHDA Chairman Empire Fidelity Investments Life Insurance Company One World Financial Center New York, New York 10281 (Name and address of agent for service) _________________________________________ Copy to: MICHAEL BERENSON Jorden Burt Berenson & Johnson LLP 1025 Thomas Jefferson Street, Suite 400 East Washington, D.C. 20007 Individual Variable Annuity Contracts -- Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant has registered an indefinite number of securities. Registrant's Rule 24f-2 Notice for the fiscal year ending December 31, 1994 was filed February 26, 1997. It is proposed that this filing will become effective (check appropriate space): immediately upon filing pursuant to paragraph (b) of rule 485 x on August 29, 1997, pursuant to paragraph (b) (1) (v) of rule 485 60 days after filing pursuant to paragraph (a) (1) of rule 485 on , pursuant to paragraph (a) (1) of rule 485 75 days after filing pursuant to paragraph (a) (2) of rule 485 on , pursuant to paragraph (a) (2) of rule 485 Page _ of _ Exhibit Index Appears on Page __ CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4 Part A Item N-4 Item Heading in Prospectus.
Item 1. Cover Page Cover Page Item 2. Definitions Glossary Item 3. Synopsis or Highlights Summary of the Contract Item 4. Condensed Financial Information Not Applicable Item 5. General Description of Registrant, Facts About Empire Fidelity Investments Depositor, and The Portfolio Companies Life, The Variable Account, and the Funds (a) Depositor Empire Fidelity Investments Life (b) Registrant The Variable Account; The Guaranteed Account (c) Portfolio Company The Funds (d) The Funds The Funds (e) Voting Voting Rights (f) Administrator Charges Item 6. Deductions and Expenses Charges a) Deductions Charges; Premium Taxes b) Sales Load Withdrawal charge c) Special purchase plans Dollar Cost Averaging d) Commissions Selling the Contracts e) Portfolio company deductions and Charges expenses f) Registrant's expenses Charges g) Organizational expenses Not applicable Item 7. General Description of Variable Annuity Contracts a) Rights Summary of the Contract; Investments Allocation of Your Purchase Payments; Withdrawals; Death Benefit; Selection of Annuity Income Options; Reports to Owners; Voting Rights; Other Contract Provisions b) Provisions and limitations Investment Allocation of Your Purchase Payments c) Changes in contracts or operations Changes in Investment Options d) Contract owner inquiries Cover Page Item 8. Annuity Period a) Level of benefits Fixed, Variable or Combination Annuity Income Options; Types of Annuity Income Options b) Annuity commencement date Annuity Date c) Annuity payments Types of Annuity Income Options d) Assumed investment return Fixed, Variable or Combination Annuity Income Options e) Minimums Types of Annuity Income Options f) Rights to change options or transfer Investment Allocation of Your Purchase contract value Payments Item 9. Death Benefit a) Death benefit Calculation Death Benefit b) Forms of benefits Death Benefit; Types of Annuity Options Item 10. Purchases and Contract Values a) Procedures for purchases Purchase of a Contract b) Accumulation unit value Accumulation Units c) Calculation of accumulation unit Accumulation Units value d) Principal underwriter Selling the Contracts
Item 11. Redemptions a) Redemptions procedures Withdrawals b) Texas Optional Retirement Program Not Applicable c) Delay Postponement of Payment d) Lapse Not Applicable e) Revocation rights Free Look Privilege Item 12. Taxes a) Tax Consequences Tax Considerations; Contract Values and Proceeds; Distributions on Death of Owner b) Qualified plans Purchase of a Contract; Tax Considerations c) Impact of taxes Tax Considerations Item 13. Legal Proceedings Litigation Item 14. Table of Contents for Statement of Table of Contents for Statement of Additional Information Additional Information
Part B Item N-4 Item Heading in Statement of Additional Information.
Item 15. Cover Page Cover Page Item 16. Table of Contents Table of Contents Item 17. General Information and History a) Name Change Not Applicable b) Attributions of Assets Not Applicable c) Control of Depositor Empire Fidelity Investments Life (Prospectus) Item 18. Services a) Fees, expenses and costs Service Agreements; Charges(Prospectus) b) Management - related services Service Agreements c) Custodian and independent Independent Accountants public accountant d) Other custodianship Safekeeping of Account Assets e) Administrative servicing agent Service Agreements; Empire Fidelity Investments Life (Prospectus); The Variable Account (Prospectus) f) Depositor as principal Not Applicable Underwriter Item 19. Purchase of Securities Being Offered a) Manner of Offering Distribution of the Contracts; Selling the Contracts; (Prospectus) b) Sales Load Withdrawal Charge (Prospectus) Item 20. Underwriters a) Depositor or affiliate as Selling the Contracts (Prospectus) principal underwriter b) Continuous Offering Distributions of Contracts c) Underwriting commissions Not Applicable d) Payments to underwriter Not Applicable Item 21. Not applicable Not applicable Item 22. Annuity Payments Fixed Annuity Income Payments; Variable Annuity Income Payments; Unavailability of Annuity Income Payments in Certain Circumstances Item 23. Financial Statements a) Registrant Financial Statements b) Depositor Financial Statements
PROSPECTUS 1.RETIREMENT RESERVES This prospectus describes a variable annuity contract (the "Contract") offered by Empire Fidelity Investments Life Insurance Company ("Empire Fidelity Investments Life", "We" or "Us"), a life insurance company that is part of the group of financial service companies known as Fidelity Investments. The Contract is designed for individual investors who desire to accumulate capital on a tax-deferred basis for retirement or other long-term purposes. It may be purchased on a non-qualified basis. It may also be purchased on a qualified basis as an individual retirement annuity ("IRA") under Section 408(b) of the Internal Revenue Code of 1986, as amended, in connection with a "rollover" of contributions from other qualified plans, tax sheltered annuities or IRAs. You may choose to have amounts paid out in a single payment or as a series of annuity income payments, including income payments guaranteed for your lifetime. You may purchase a Non-qualified Contract by making a payment of at least $2,500. You may make additional payments to a Non-qualified Contract as long as each payment is at least $250. You may purchase a Qualified Contract by making a payment of at least $10,000. You may make additional payments to a Qualified Contract as long as each payment is at least $2,500. Your payments will be invested as you direct in one or more of the twenty-eight Subaccounts of the Empire Fidelity Investments Variable Annuity Account A (the "Variable Account") and/or allocated to a fixed-rate investment option funded through and guaranteed by Empire Fidelity Investments Life's general account (the "Guaranteed Account"). The Guaranteed Account may also be referred to as the "Fixed Account". Your initial net purchase payment will be allocated to the Variable and Guaranteed Accounts according to the instructions on your application. The variable Subaccounts invest in the mutual fund portfolios of the Variable Insurance Products Fund, the Variable Insurance Products Fund II, and the Variable Insurance Products Fund III (the "Fidelity Funds"). The Fidelity Funds are each managed by Fidelity Management & Research Company. Also The variable Subaccounts invest in the mutual fund portfolios of corresponding portfolios of other eligible funds (the "Other Funds") All mutual fund portfolios available in this prospectus are collectively known as ("The Funds"). Additional Subaccounts and portfolios may be added in the future. Fidelity Investments Life credits interest on amounts allocated to the Fixed Account at specified interest rates that vary from time to time. You may select a date on which annuity income payments may commence. Prior to that Annuity Date, you may withdraw all or part of the Cash Surrender Value of your Contract. The value allocated to the Variable Account will vary with the investment performance of the Subaccounts you select, and the value allocated to the Guaranteed Account will increase as interest is credited. In certain circumstances, withdrawals are subject to a contingent deferred sales charge and a tax penalty. Annuity income payments may be fixed, variable, or a combination of both. If you elect to receive fixed income, the value of your Contract on the Annuity Date will be applied to provide fixed annuity income payments. If you elect variable income, the amount of your annuity income payments will increase or decrease according to the investment performance of the Subaccounts you select. If you elect a combination of fixed and variable income, a portion of your income payment will be fixed and a portion will vary according to investment performance. This prospectus provides information that a prospective investor should know before investing. Additional information about the Contract and the Variable Account has been filed with the Securities and Exchange Commission in a Statement of Additional Information dated August 29 , 199 7 . The Statement of Additional Information is incorporated by reference in this prospectus and is available without charge by calling Empire Fidelity Investments Life at 800-544-2442. The table of contents of the Statement of Additional Information appears on page . THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS NOT VALID UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUS FOR THE MONEY MARKET OR OTHER FUNDS AVAILABLE IN THE CONTRACT. FOR FURTHER INFORMATION CALL FIDELITY INVESTMENTS Nation ally 1-800-544-2442 Date: August 29 , 199 7 PROSPECTUS CONTENTS GLOSSARY Summary of the Contract FACTS ABOUT EMPIRE FIDELITY INVESTMENTS LIFE, THE VARIABLE ACCOUNT AND THE FUNDS Empire Fidelity Investments Life The Variable Account The Funds FACTS ABOUT THE CONTRACT Purchase of a Contract Free Look Privilege Investment Allocation of Your Purchase Payments Accumulation Units Withdrawals Signature Guarantee Charges Death Benefit Required Distributions Upon Death Annuity Date Selection of Annuity Income Options Fixed, Variable, or Combination Annuity Income Options Types of Annuity Income Options Reports to Owners THE GUARANTEED ACCOUNT MORE ABOUT THE CONTRACT Tax Considerations Other Contract Provisions Selling the Contracts Availability of Unisex Dollar Cost Averaging Postponement of Payment MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS Changes in Investment Options Net Rate of Return for a Subaccount Voting Rights Resolving Material Conflicts Performance Litigation Appendix I: Accumulation Units Table of Contents of the Statement of Additional Information THE CONTRACT IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. 2.GLOSSARY ACCUMULATION UNIT - A unit of measure used prior to the Annuity Date to calculate the value of your Contract in the Subaccounts. ANNUITANT - The person designated by the Contract Owner, upon whose life annuity income payments are based. ANNUITANT'S BENEFICIARY - The person who receives the proceeds in the event of the death of the last surviving Annuitant. ANNUITY CONTRACT OR CONTRACT - A Contract designed to provide an Annuitant with an income, which may be a lifetime income, beginning on the Annuity Date. ANNUITY DATE - The date when annuity income payments begin. ANNUITY UNIT - A unit of measure used after the Annuity Date to calculate the amount of variable annuity income payments. CASH SURRENDER VALUE - The amount payable to you upon surrender of the Contract prior to the Annuity Date during the Annuitant's lifetime. CODE - The Internal Revenue Code of 1986, as amended. CONTINGENT ANNUITANT - The person who becomes the Annuitant upon the death or removal of the Annuitant prior to the Annuity Date. CONTRACT ANNIVERSARY - The same day and month as the Contract Date in each later year. CONTRACT DATE - The date your Contract becomes effective. It will be stated in your Contract. CONTRACT OWNER OR YOU - The person or persons who may exercise the rights and privileges under the Contract. CONTRACT VALUE - The total amount attributable to your Contract at any time prior to the Annuity Date, representing amounts in the Subaccounts and the Guaranteed Account. CONTRACT YEAR - A year that starts on the Contract Date or on a Contract Anniversary. DEATH BENEFIT - Amount payable to the Annuitant's Beneficiary upon the death of the last surviving Annuitant before the Annuity Date. GUARANTEED ACCOUNT - A fixed-rate investment option funded through Empire Fidelity Investments Life's general account. Empire Fidelity Investments Life credits interest to the amount allocated to the Guaranteed Account at a rate declared periodically in advance. The Guaranteed Account may also be referred to as the "Fixed Account". INVESTMENT OPTIONS - The Subaccounts and the Guaranteed Account. IRA - Refers generally to both an individual retirement account and an individual retirement annuity as defined in Sections 408(a) and (b), respectively, of the Code. When used to refer to a Qualified Contract described herein, it means a Contract that qualifies as an individual retirement annuity as defined in Section 408(b) of the Code. NET RATE OF RETURN - An index used to measure the investment performance of a Subaccount from one Valuation Period to the next. NON-QUALIFIED CONTRACT - A Contract other than a Qualified Contract. QUALIFIED CONTRACT - A Contract that qualifies as an individual retirement annuity under Section 408(b) of the Code. OWNER'S BENEFICIARY - The person who receives the proceeds in the event of the death of the Owner (if no joint Owner survives) prior to the Annuity Date. SUBACCOUNT - A division of the Variable Account, the assets of which are invested in the shares of the corresponding portfolio of the Funds available in this prospectus. VALUATION PERIOD - The period of time from one determination of Accumulation Unit Values and Annuity Unit Values to the next determination of such values. Such determinations are made as of the close of business (normally 4:00 p.m. Eastern Time) each day the New York Stock Exchange is open for trading. VARIABLE ACCOUNT - Empire Fidelity Investments Variable Annuity Account A. 3.SUMMARY OF THE CONTRACT The purpose of this variable annuity contract is to allow you, the Owner, to accumulate funds on a tax-deferred basis by investing in one or more investment portfolios managed by Fidelity Management & Research Company ("FMR") , Morgan Stanley Asset Management Inc., ("Morgan Stanley"), Pilgrim Baxter & Associates, Ltd. or Newbold's Asset Management, Inc., ("PBHG"), Strong Capital Management, Inc. ("Strong") and Warburg, Pincus Counsellors, Inc. ("Warburg Pincus") and to permit the Annuitant (who may or may not be the Owner) to receive annuity income payments commencing on the Annuity Date. There is no assurance that values invested in the Subaccounts will increase. As the Contract Owner, you bear the investment risk with respect to those values. The Contract also allows you to allocate funds to a fixed-rate investment option funded through Empire Fidelity Investments Life's general account (the "Guaranteed Account"). (The Guaranteed Account may also be referred to as the "Fixed Account ". ) We guarantee that amounts allocated to the Guaranteed Account will earn interest at declared rates. The Contract is designed to provide income for retirement or to meet other long-term investment goals. It may be purchased on a non-qualified basis or, if you so choose, it may be purchased on a qualified basis as an individual retirement annuity ("IRA") under Section 408(b) of the Code in connection with the "rollover" of contributions from other qualified plans, tax sheltered annuities or IRAs. The minimum initial payment required to purchase a Non-qualified Contract is generally $2,500. You may also make additional payments to a Non-qualified Contract prior to the Annuity Date as long as each payment is not less than $250 and the Annuitant is living. The minimum initial payment required to purchase a Qualified Contract is generally $10,000. You may make additional payments to a Qualified Contract as long as each payment is at least $2,500. Empire Fidelity Investments Life may consent to lower minimums. Your net purchase payments will be invested as you direct in the Guaranteed Account and in the Subaccounts of the Variable Account. A net purchase payment is a purchase payment less any premium tax assessed by the jurisdiction in which the Contract is delivered. In addition, Empire Fidelity Investments Life reserves the right to deduct a charge for the purpose of recovering a portion of Empire Fidelity Investments Life's Federal income tax expense that is determined solely from the amount of premiums received. See INVESTMENT ALLOCATION OF YOUR PURCHASE PAYMENTS on page . There are currently twenty-eight variable Subaccounts. Five Subaccounts invest in the shares of one of the mutual fund portfolios of Variable Insurance Products Fund. The Variable Insurance Products Fund currently offers a Money Market Portfolio, High Income Portfolio, Equity-Income Portfolio, Growth Portfolio and Overseas Portfolio. F ive Subaccounts invest exclusively in shares of one of the mutual fund portfolios of Variable Insurance Products Fund II. The Variable Insurance Products Fund II currently offers an Investment Grade Bond Portfolio, Asset Manager Portfolio, Index 500 Portfolio, Asset Man a ger: Growth Portfolio and Contrafund Portfolio. Three Subaccounts invest exclusively in shares of one of the mutual fund portfolios of Variable Insurance Products Fund III. The Variable Insurance Products Fund III currently offers a Growth & Income Portfolio, Balanced Portfolio, and Growth Opportunities Portfolio. The remaining subaccounts invest in shares of one of the mutual fund portfolios of Morgan Stanley, PBHG, Strong or Warburg Pincus . Empire Fidelity Investments Life credits interest on amounts allocated to the Guaranteed Account at interest rates that vary from time to time. Prior to the Annuity Date, you may withdraw all or part of the Cash Surrender Value of your Contract. During the first five Contract Years, the withdrawal may be subject to a contingent deferred sales charge. This charge is a maximum of 5% of the amount of purchase payments withdrawn in the first Contract Year and decreases 1% per year until it disappears after five Contract Years. However, in each of the first five Contract years you may withdraw up to 10% of your purchase payments without incurring such a charge. In certain circumstances, Empire Fidelity Investments Life may waive the contingent deferred sales charge. See WITHDRAWAL CHARGE on page . The maximum partial withdrawal is one that, along with any applicable withdrawal charge, would reduce your Contract Value to $2,500. Certain withdrawals may be subject to a Federal penalty tax as well as to Federal income tax. See TAX CONSIDERATIONS on page . You may select from a number of annuity income options, including annuity income payments for the life of the Annuitant, with or without a guaranteed number of payments. See TYPES OF ANNUITY INCOME OPTIONS on page . You may choose any of these annuity income options to be paid on a fixed basis, a variable basis, or a combination of both. See FIXED, VARIABLE, OR COMBINATION ANNUITY INCOME OPTIONS on page . If you elect a fixed income, your Contract's participation in the investment experience of the Variable Account will cease with the commencement of the annuity income payments. If you elect a variable income, annuity income payments will vary in accordance with the investment experience of the Subaccounts you select during the payout period. If you elect a combination of fixed and variable income, a portion of your income payment will be fixed, and a portion will vary according to investment performance of the selected Subaccounts. On the Annuity Date, the Annuitant becomes the Owner of the Contract. In the event that the last surviving Annuitant dies prior to the Annuity Date, we will pay a Death Benefit to the Annuitant's Beneficiary you select. See DEATH BENEFIT on page . In the event that any Owner dies before the entire value of the Contract is distributed, the remaining value of the Contract must be distributed according to certain specified rules in order for the Contract to qualify as an annuity for tax purposes. See REQUIRED DISTRIBUTIONS UPON DEATH on page . In addition to the contingent deferred sales charge applicable to withdrawals within the first five Contract Years (other than withdrawals in each year of up to 10% of your purchase payments), we assess an annual maintenance charge prior to the Annuity Date currently set at $30 per year and guaranteed not to exceed $50 per year. This charge is deducted from your Contract Value. We currently waive this annual charge if total purchase payments less any withdrawals equal at least $25,000. We also make a daily charge (equivalent to an effective annual rate of 0.05%) against the assets of each variable Subaccount for administrative expenses and a daily asset charge (equivalent to an effective annual rate of 0.75%) for mortality and expense risks. These daily asset charges are not assessed against amounts allocated to the Guaranteed Account. Our current practice is generally to deduct any applicable premium taxes from your Contract Value on the Annuity Date or upon payment of proceeds. We reserve the right to deduct premium taxes when we incur such taxes. See CHARGES on page . Further, the portfolios in the Funds pay monthly management fees and other expenses which are described in the accompanying prospectuses for the Funds. You may return your Contract for a refund within 30 days after you receive the Contract. We will refund your Contract Value plus any amount deducted from your payment prior to allocation to the variable Subaccounts or the Guaranteed Account. See FREE LOOK PRIVILEGE on page . This summary is intended to provide only an overview of the more significant aspects of the Contract. More detailed information is provided in the subsequent sections of this prospectus and in your Contract. The Contract together with its attached application constitutes the entire agreement between you and us and should be retained. Following are the various investment options available to you under the Contract. FIDELITY RETIREMENT RESERVES Guaranteed Account Company Variable Account Guaranteed Interest FIDELITY Asset Manager Portfolio Money Market Portfolio Investment Grade Bond Portfolio Equity-Income Portfolio Growth Portfolio High Income Portfolio Overseas Portfolio Index 500 Portfolio Asset Manager: Growth Portfolio Contrafund Portfolio Growth Opportunities Portfolio Balanced Portfolio Growth & Income Portfolio MORGAN STANLEY Emerging Markets Debt Portfolio Emerging Markets Equity Portfolio Global Equity Portfolio International Magnum Portfolio PBHG Select 20 Portfolio Growth II Portfolio Large Cap Value Portfolio Small Cap Value Portfolio Technology & Communications Portfolio STRONG Discovery Fund II Portfolio Growth Fund II Portfolio Opportunity Fund II Portfolio WARBURG PINCUS International Equity Portfolio Post-Venture Capital Portfolio Small Company Growth Portfolio 4.FEE TABLE This information is intended to assist you in understanding the various costs and expenses that a Contract Owner will bear directly or indirectly. It reflects expenses of the Separate Account as well as the Portfolios. The tables below do not reflect any deductions for premium taxes or Federal income tax expenses that are determined solely from the amount of premiums received. We currently deduct any applicable premium taxes from your Contract Value on the Annuity Date or when proceeds are paid. We do not currently deduct any Federal income tax expense. See CHARGES on page of the prospectus for additional information. CONTRACT OWNER EXPENSES (as a percentage of purchase payments) Sales Charge Imposed on Purchases 0.00% Maximum Contingent Deferred Sales Charge (1) 5.00% Surrender Charge 0.00% Exchange Fee 0.00% ANNUAL MAINTENANCE CHARGE (2) $30.00 SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average account value) Mortality and Expense Risk Fees 0.75% Account Fees and Expenses: Administrative Charge 0.05% Total Separate Account Annual Expenses 0.80% (1) The Maximum Contingent Deferred Sales Charge decreases 1% each year so there is no charge after 5 years. Each year up to 10% of total purchase payments may be withdrawn without a contingent deferred sales charge. The contingent deferred sales charge is based solely on the Contract Year - additional purchase payments do not cause the contingent deferred sales charge percentages to start over. (2) The annual maintenance charge is a single $30 charge on a Contract. It is deducted proportionally from the investment options in use at the time of the charge. The annual maintenance charge is currently waived for Contracts with at least $25,000 of accumulated purchase payments less any withdrawals. In the Examples, the annual maintenance charge is approximated as a 0.02% annual asset charge based on the experience of the contracts. PORTFOLIO ANNUAL EXPENSES (as a percentage of Portfolio average net assets) MANAGEMENT OTHER TOTAL ANNUAL FEES EXPENSES EXPENSES FIDELITY ASSET MANAGER 0 .64 % 0. 10 % 0.7 4 % 1 MONEY MARKET 0.21% 0.09% 0.30% INVESTMENT GRADE BOND 0.45% 0.13% 0.58% HIGH INCOME 0.59% 0.12% 0.71% EQUITY-INCOME 0.51% 0.07% 0.58%1 INDEX 500 0.13% 0.15% 0.28%2 GROWTH 0.61% 0.08% 0.69%1 OVERSEAS 0.76% 0.17% 0.93%1 ASSET MANAGER: GROWTH 0.65% 0.22% 0.87%1 CONTRAFUND 0.61% 0.13% 0.74%1 GROWTH OPPORTUNITIES 0.61% 0.16% 0.77%1 BALANCED 0.48% 0.24% 0.72%1 GROWTH & INCOME 0.64% 0.10% 0.74%1 MORGAN STANLEY EMERGING MARKETS DEBT 0.80% 0.50% 1.30%3 EMERGING MARKETS EQUITY 1.25% 0.50% 1.75%3 GLOBAL EQUITY 0.80% 0.35% 1.15%3 INTERNATIONAL MAGNUM 0.80% 0.35% 1.15%3 PBHG SELECT 20 0.61% 0.59% 1.20%4 GROWTH II 0.85% 0.30% 1.15%4 LARGE CAP VALUE 0.41% 0.59% 1.00%4 SMALL CAP VALUE 0.77% 0.43% 1.20%4 TECHNOLOGY & COMMUNICATIONS 0.61% 0.59% 1.20%4 STRONG DISCOVERY FUND II 1.00% 0.21% 1.21% GROWTH FUND II 1.00% 0.20% 1.20%5 OPPORTUNITY FUND II 1.00% 0.20% 1.20% WARBURG PINCUS INTERNATIONAL EQUITY 0.96% 0.40% 1.36%6 POST-VENTURE CAPITAL 0.62% 0.78% 1.40%7 SMALL COMPANY GROWTH 0.90% 0.26% 1.16%6 1) A portion of the brokerage commissions that certain Funds pay was used to reduce Funds expenses. In addition, certain Funds have entered into arrangements with their custodian and transfer agent whereby interest earned on uninvested cash balances was used to reduce custodian and transfer agent expenses. Including these reductions, the total operating expenses presented in the table would have been .56% for Equity-Income Portfolio, .67% for Growth Portfolio, .92% for Overseas Portfolio, .73% for Asset Manager Portfolio, .71% for Contrafund Portfolio, .85% for Asset Manager: Growth Portfolio, .76% for Growth Opportunities Portfolio, and .71% for Balanced Portfolio. 2) FMR agreed to reimburse a portion of Index 500 Portfolio's expenses during the period. Without this reimbursement, the Fund's management fee, other expenses and total expenses would have been .28%, .15% and .43%, respectively. 3) Morgan Stanley Asset Management, Inc. with respect to the Portfolios, has voluntarily waived receipt of its management fees and agreed to reimburse the Portfolio, if necessary, if such fees would cause the total annual operating expenses of the Portfolio to exceed the respective percentage of average daily net assets. 4) Pilgrim Baxter & Associates, Ltd. (the "Adviser") has voluntarily agreed to waive or limit its Advisory Fees or assume Other Expenses in an amount that operates to limit Total Operating Expenses of the Portfolios to not more than of the 1.20% of the average daily net assets of the Growth II, Small Cap Value, Technology & Communications and Select 20 Portfolios and to not more than 1.00% of the average daily net assets of the Large Cap Value Portfolio, through December 31, 1997. Total Operating Expenses include, but are not limited to, expenses such as investment advisory fees, transfer agent fees and legal fees. Such waivers of Advisory fees and possible assumptions of Other Expenses by the Adviser is subject to a possible reimbursement by the Portfolios in future years if such reimbursement can be achieved within foregoing annual expense limits. Such fee waiver/expense reimbursement arrangements may be modified or terminated at any time after December 31, 1997. Absent such fee waivers/expense reimbursements. the Advisory Fees and estimated Total Operating Expenses for the Small Cap Value, Large Cap Value, Technology & Communications and Select 20 Portfolios would be 1.00% and 1.43%;.65% and 1.24%; .85% and 1.44%; and .85% and 1.44%, respectively. Given the projected asset size of the Growth II Portfolio, it is not anticipated that a fee waiver or expense reimbursement will be necessary with respect to that Portfolio. 5 Strong Capital Management, Inc., the investment adviser, has voluntarily agreed to cap the Fund's total operating expenses at 1.20%. The Adviser has no current intention to, but may in the future, discontinue or modify any waiver of fees or absorption of expenses at its discretion with appropriate notification to its shareholders. 6) Management Fees, Other Expenses and Total Annual Expenses for the International Equity and Small Company Growth Portfolios are based on actual expenses for the fiscal year ended December 31, 1996, net any fee waivers or expense reimbursements. Without such waivers or reimbursements, Management Fees would have equaled 1.00% and 0.90%, Other Expenses would have equalled 0.40% and 0.27% and Total Annual Expenses would have equalled 1.40% and 1.17% for the International Equity and Small Company Growth Portfolios, respectively. The Portfolios' investment adviser and co-administrator have undertaken to limit each Portfolio's Total Annual Expenses to the limits shown in the table above through December 31, 1997. 7) Absent the waiver of fees by the Post-Venture Capital Portfolio's investment adviser and co-administrator, Management Fees for the Post-Venture Capital Portfolio would equal 1.25%; Other Expenses would equal 0.82%; and Total Annual Expenses would equal 2.07%. Other Expenses for the Post-Venture Capital Portfolio are based on annualized estimates of expenses for the fiscal year ending December 31, 1997, net of any fee waivers or expense reimbursements. The Portfolio's investment adviser and co-administrator have undertaken to limit the Portfolio's Expenses to the limits shown in the table above through December 31, 1997. EXAMPLES If you assume that Contract Owner expenses are as shown above, and that each Portfolio's annual return is 5% annually and its operating expenses are just as described above, then for every $1,000 of purchase payments, here's how much you would have paid in total expenses if you surrendered your Contract after the number of years indicated, or if you annuitize your contract during the first year. ONE THREE FIVE TEN YEAR YEARS YEARS YEARS FIDELITY ASSET MANAGER $63 $79 $95 $186 MONEY MARKET 58 66 72 136 INVESTMENT GRADE BOND 61 74 87 168 HIGH INCOME 62 78 93 182 EQUITY-INCOME 61 74 87 168 GROWTH 62 78 92 180 OVERSEAS 64 85 105 206 INDEX 500 58 65 71 134 ASSET MANAGER: GROWTH 64 83 102 200 CONTRAFUND 63 79 95 186 GROWTH OPPORTUNITIES 63 80 97 189 BALANCED 62 79 94 183 GROWTH & INCOME 62 78 93 181 MORGAN STANLEY EMERGING MARKETS DEBT 68 96 124 245 EMERGING MARKETS EQUITY 72 109 147 290 GLOBAL EQUITY 67 92 116 230 INTERNATIONAL MAGNUM 67 92 116 230 PBHG SELECT 20 67 93 119 235 GROWTH II 67 92 116 230 LARGE CAP VALUE 65 87 109 214 SMALL CAP VALUE 67 93 119 235 TECHNOLOGY & COMMUNICATIONS 67 93 119 235 STRONG DISCOVERY FUND II 67 93 119 236 GROWTH FUND II 67 93 110 235 OPPORTUNITY FUND II 67 93 119 235 WARBURG PINCUS INTERNATIONAL EQUITY 69 98 127 251 POST-VENTURE CAPITAL 69 99 129 255 SMALL COMPANY GROWTH 67 92 117 231 If you do not surrender your Contract or if you annuitize after the first contract year, here is what your total expenses would be on a $1,000 investment, assuming a 5% annual return on your assets: ONE THREE FIVE TEN YEAR YEARS YEARS YEARS FIDELITY ASSET MANAGER $16 $49 $85 $186 MONEY MARKET 11 36 62 136 INVESTMENT GRADE BOND 14 44 77 168 HIGH INCOME 16 48 83 182 EQUITY-INCOME 14 44 77 168 GROWTH 15 48 82 180 OVERSEAS 18 55 95 206 INDEX 500 11 35 61 134 ASSET MANAGER: GROWTH 17 53 92 200 CONTRAFUND 16 49 85 186 GROWTH OPPORTUNITIES 16 50 87 189 BALANCED 16 49 84 183 GROWTH & INCOME 15 48 83 181 MORGAN STANLEY EMERGING MARKETS DEBT 22 66 114 245 EMERGING MARKETS EQUITY 26 80 137 290 GLOBAL EQUITY 20 62 106 260 INTERNATIONAL MAGNUM 20 62 106 260 PBHG GROWTH II 20 62 106 260 LARGE CAP VALUE 18 57 99 214 SELECT 20 21 63 109 235 SMALL CAP VALUE 21 63 109 235 TECHNOLOGY & COMMUNICATIONS 21 63 109 235 STRONG DISCOVERY FUND II 21 64 109 236 GROWTH FUND II 21 63 109 235 OPPORTUNITY FUND II 21 63 109 235 WARBURG PINCUS INTERNATIONAL EQUITY 22 68 117 251 POST-VENTURE CAPITAL 23 69 119 255 SMALL COMPANY GROWTH 20 62 107 231 THESE FIGURES ILLUSTRATE THE COMBINED EFFECT OF ALL CURRENT CHARGES. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE OTHER FUNDS ANNUAL EXPENSES AND THESE EXAMPLES ARE BASED ON DATA PROVIDED BY THE OTHER FUNDS. THE COMPANY HAS NO REASON TO DOUBT THE ACCURACY OR COMPLETENESS OF THAT DATA, BUT THE COMPANY HAS NOT VERIFIED THE OTHER FUNDS' FIGURES. IN PREPARING THE OTHER FUNDS' EXPENSE TABLE AND EXAMPLES ABOVE, THE COMPANY HAS RELIED ON THE FIGURES PROVIDED BY THE OTHER FUNDS. 5.FACTS ABOUT EMPIRE FIDELITY INVESTMENTS LIFE, THE VARIABLE ACCOUNT AND THE FUNDS EMPIRE FIDELITY INVESTMENTS LIFE Empire Fidelity Investments Life Insurance Company is a stock life insurance company that was organized under the laws of the State of New York on May 1, 1991, and commenced operations on June 1, 1992. Empire Fidelity Investments Life is part of Fidelity Investments, a group of companies that provides investment management and other financial services. Empire Fidelity Investments Life is a wholly-owned subsidiary of Fidelity Investments Life Insurance Company. Fidelity Investments Life Insurance Company is a wholly-owned subsidiary of FMR Corp., the parent company of the Fidelity companies. Edward C. Johnson 3d, together with the various trusts for the benefit of Johnson family members, through their ownership of voting common stock form a controlling group with respect to FMR Corp. THE VARIABLE ACCOUNT The Empire Fidelity Investments Variable Annuity Account A is a separate investment account of Empire Fidelity Investments Life established pursuant to New York law on July 15, 1991. The Variable Account commenced operations on June 3, 1992. It is used to support the variable annuity contracts described herein, and for other purposes permitted by law. The Variable Account is registered with the Securities and Exchange Commission ("SEC") as a unit investment trust under the Investment Company Act of 1940 ("1940 Act"). We own the assets in the Variable Account. As required by law, however, the assets of the Variable Account are kept separate from our general account assets and from any other separate accounts we may have and may not be charged with liabilities from any other business we conduct. The assets in the Variable Account will always be at least equal to the reserves and other liabilities of the Variable Account. If the assets exceed the required reserves and other liabilities, we may transfer the excess to our general account. We are obligated to pay all benefits provided under the Contracts. There are currently twenty-eight Subaccounts in the Variable Account. Five Subaccounts invest exclusively in shares of a specific portfolio of the Variable Insurance Products Fund. F ive Subaccounts invest exclusively in shares of a specific portfolio of the Variable Insurance Products Fund II. Three portfolios invest exclusively in shares of a specific portfolio of the Variable Insurance Products Fund III. There are currently 15 other investment options offered by four different mutual fund investment advisers. THE FUNDS FIDELITY The Variable Insurance Products Fund , the Variable Insurance Products Fund II , and the Variable Insurance Products Fund III, each is an open-end, diversified management investment company organized by Fidelity Management & Research Company. Each is the type of investment company commonly known as a series mutual fund. The investment objectives of the Funds are described below. There is, of course, no assurance that any portfolio will meet its investment objective. VARIABLE INSURANCE PRODUCTS FUND MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as is consistent with preserving capital and providing liquidity. It invests only in high-quality money market instruments. The fund may be appropriate for investors who would like to earn income at current money market rates while preserving the value of their investment. The Fund is managed to keep its share price stable at $1.00. The rate of income will vary from day to day, generally reflecting short-term interest rates. HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by investing primarily in high-yielding, lower-rated, fixed-income securities. In choosing these securities growth of capital will also be considered. A Fund's level of risk and potential reward depend on the quality and maturity of its investments. The Fund is for long-term, aggressive investors who understand the potential risks and rewards of investing in lower-quality debt, including defaulted securities. Investors must be willing to accept the Fund's greater price movements and credit risks. EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in income-producing equity securities. In choosing these securities the portfolio will also consider the potential for capital appreciation. The portfolio's goal is to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor's 500 Composite Stock Price Index. The Fund may be appropriate for investors who are willing to ride out stock market fluctuations in pursuit of potentially high long-term returns. The Fund is designed for those who want some income from equity and bond investments, but also want to be invested in the stock market for its long-term growth potential. GROWTH PORTFOLIO seeks to achieve capital appreciation normally through the purchase of common stocks (although the portfolio's investments are not restricted to any one type of security). Capital appreciation may also be found in other types of securities, including bonds and preferred stocks. The Fund may be appropriate for investors who are willing to ride out stock market fluctuations in pursuit of potentially high long-term returns. The Fund is designed for those who want to pursue growth wherever it may arise, and who understand that this strategy often leads to investments in smaller, less well-known companies. The Fund invests for growth and does not pursue an income strategy. OVERSEAS PORTFOLIO seeks long-term growth of capital primarily through investments in foreign securities. Overseas Portfolio provides a means for investors to diversify their own portfolios by participating in companies and economies outside of the United States. The Fund may be appropriate for investors who want to pursue their investment goals in markets outside of the United States. By including international investments in your portfolio, you can achieve additional diversification and participate in growth opportunities around the world. However, it is important to note that investments in foreign securities involve risks in addition to those of U.S. investments.In addition to general risks, international investing involves different or increased risks. The performance of international funds depends upon currency values, the political and regulatory environment, and overall economic factors in the countries in which the Fund invests. VARIABLE INSURANCE PRODUCTS FUND II ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the long-term by allocating its assets among domestic and foreign stocks, bonds and short-term, fixed income instruments. The Fund may be appropriate for investors who want to diversify among domestic and foreign stocks, bonds, short-term instruments and other types of securities, the Fund spreads its assets among all three asset classes moderating both its risk and return potential. Because the Fund owns different types of investments, the performance is affected by a variety of factors. The value of each Fund's investments and the income generated will vary from day to day, and generally reflect interest rates, market conditions, and other company, political and economic news. Performance also depends on FMR's skills in allocating assets. INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current income as is consistent with the preservation of capital by investing in a broad range of investment-grade fixed-income securities. The Fund may be appropriate for investors who want high current income from a portfolio of investment-grade debt securities. A Fund's level of risk and potential reward depend on the quality and maturity of its investments. With its focus on medium- to high-quality investments, the Fund has a moderate risk level and yield potential. INDEX 500 PORTFOLIO seeks to provide investment results that correspond to the total return (i.e. the combination of capital changes and income) of common stocks publicly traded in the United States. In seeking this objective, the portfolio attempts to duplicate the composition and total return of the Standard & Poor's 500 Composite Stock Price Index. The Fund may be appropriate for investors who are willing to ride out stock market fluctuations in pursuit of potentially high long-term returns. The Fund is designed for those who want to pursue growth of capital and current income through a portfolio of securities that broadly represents the U.S. stock market, as measured by the S&P 500. The Fund seeks to keep expenses low as it attempts to match the return of the S&P 500. Because the Fund seeks to track, rather than beat, the performance of the S&P 500, it is not managed in the same manner as other funds. ASSET MANAGER: GROWTH PORTFOLIO seeks maximum total return over the long-term by allocating its assets among an aggressive mix of domestic and foreign stocks, bonds and short-term fixed income instruments. The Fund may be appropriate for investors who want to diversify among domestic and foreign stocks, bonds, short-term instruments and other types of securities, in one fund. The Fund, while spreading its assets among all three asset classes, uses a more aggressive approach by focusing on stocks for a higher potential return. Because the Fund owns different types of investments, their performance is affected by a variety of factors. The value of each Fund's investments and the income they generate will vary from day to day, and generally reflect interest rates, market conditions, and other company, political and economic news. Performance also depends on FMR's skills in allocating assets. CONTRAFUND PORTFOLIO seeks long-term capital appreciation by investing in equity securities of companies considered undervalued or out-of-favor by the Fund's Adviser. The Fund may be appropriate for investors who are willing to ride out stock market fluctuations in pursuit of potentially high long-term returns. The Fund is designed for those who are looking for an investment approach that follows a contrarian philosophy. VARIABLE INSURANCE PRODUCTS FUND III GROWTH & INCOME PORTFOLIO seeks high total return through a combination of current income and capital appreciation by investing mainly in equity securities. The Fund may also invest in equity securities that are not paying dividends, but offer the potential for capital appreciation of future income. The Fund may be appropriate for investors who are willing to ride out stock market fluctuations in pursuit of potentially high long-term returns. The Fund is designed for those who seek a combination of growth and income from equity and some bond investment. GROWTH OPPORTUNITIES PORTFOLIO seeks capital growth by investing in a wide range of common domestic and foreign stocks, and securities convertible into common stocks. Although the Fund invests primarily in common stock, it has the ability to purchase securities, such as preferred stock and bonds that may produce capital growth. The value of the Fund's investments and, as applicable, the income they generate will vary from day to day, and generally reflect changes in market conditions, interest rates, and other company, political, or economic news. In the short-term, stock prices can fluctuate dramatically in response to these factors. BALANCED PORTFOLIO seeks both income and growth of capital by investing in a broad selection of stocks, bonds, and convertible securities. When FMR's outlook is neutral, it will invest approximately 60% of the Fund's assets in equity securities and will always invest at least 25% of the Fund's assets in fixed income securities. The value of the Fund's investments and, as applicable, the income they generate will vary from day to day, and generally reflect changes in market conditions, interest rates, and other company, political, or economic news. In the short-term, stock prices can fluctuate dramatically in response to these factors. MORGAN STANLEY ASSET MANAGEMENT INC. EMERGING MARKETS DEBT PORTFOLIO seeks high total return by investing primarily in Fixed Income Securities of government and government-related issuers located in emerging market countries, which securities provide a high level of current income, while at the same time holding the potential for capital appreciation if the perceived credit worthiness of the issuer improves due to improving economic, financial, political, social or other conditions in the country in which the issuer is located. Under normal market conditions, the Portfolio will invest a large portion of its total assets in Government Fixed Income Securities, including Loan Participations and Assignments between governments and financial institutions, securities issued by government owned, controlled or sponsored entities and securities of entities organized to restructure outstanding debt of such issuers. In selecting Emerging Market Country Fixed Income Securities for the Portfolio, Morgan Stanley Asset Management Inc. ("MSAM") will apply a market risk analysis contemplating assessment of factors such as liquidity, volatility, tax implications, interest rate sensitivity, counterparty risks and technical market considerations. As opportunities to invest in debt securities in other countries develop, the Portfolio expects to expand and further diversify the universe of emerging market countries in which it invests. The Portfolio maybe appropriate for those who seek a high level of current income from Emerging Market Country Securities that are Fixed Income Securities, while holding the potential for capital appreciation. EMERGING MARKETS EQUITY PORTFOLIO seeks long-term capital appreciation by investing primarily in Equity Securities of emerging market country issuers with a focus on those in which MSAM believes the economies are developing strongly and in which the markets are becoming more sophisticated. The Portfolio may be appropriate for those who seek to achieve long-term capital appreciation by investing in Emerging Market Country Securities. By including emerging market country investments in their portfolio, investors can achieve additional diversification and participate in growth opportunities in emerging market countries. Under normal market conditions, a large percentage of the total assets of the Portfolio will be invested in Emerging Market Country Equity Securities. There are currently over 130 countries which, in the opinion of MSAM, are generally considered to be emerging or developing countries by the international financial community, approximately 40 of which currently have stock markets. As markeys in other countries develop, the Portfolio expects to expand and further diversify the emerging market countries in which it invests. In selecting industries and particular issuers, MSAM will evaluate costs of labor and raw materials, access to technology, export of products and government regulation. Although the Portfolio seeks to invest in larger companies, it may invest in small-and medium size companies that, in MSAM's view, have potential for growth. GLOBAL EQUITY PORTFOLIO seeks long-term capital appreciation by investing primarily in Equity Securities of issuers throughout the world, including U.S. issuers and issuers in emerging market countries, using an approach that is oriented to the selection of individual stocks that MSAM believes are undervalued. The Portfolio may be appropriate for investors who seek to pursue their investment goals in markets throughout the world, including the United States. By including international investments in their portfolio, investors can achieve additional diversification and participate in growth opportunities around the world. Under normal circumstances, a substantial amount of the total assets of the Portfolio will be invested in Equity Securities, and a lesser percentage of the Portfolio's assets will be invested in Common Stocks of U.S. issuers and the remaining equity position will be invested in at least three countries other than the United States. MSAM's approach is oriented to individual stock selection and is value driven. In selecting stocks for the Portfolio, MSAM initially identifies those stocks that it believes to be undervalued in relation to the issuers assets, cash flow, earnings and revenues, and then evaluates the future value of such stocks by running the results of an in-depth study of the issuer through a dividend discount model. In selecting investments, MSAM utilizes the research of a number of sources, including Morgan Stanley Capital International, an affiliate of MSAM located in Geneva, Switzerland. INTERNATIONAL MAGNUM PORTFOLIO seeks long-term capital appreciation by investing primarily in Equity Securities of non U.S. issuers domiciled in EAFE countries, pursuant to weightings determined by MSAM. The Portfolio may be appropriate for investors who seek to pursue their investment goals in markets outside of the United States. By including international investments in their portfolio, investors can achieve additional diversification and participate in growth opportunities around the world. The countries in which the Portfolio will invest are those comprising the Morgan Stanley Capital International EAFE Index, which includes Australia, Japan, New Zealand, most nations located in Western Europe and certain developed countries in Asia, such as Hong Kong and Singapore (each an "EAFE country", and collectively the "EAFE countries"). Under normal market conditions, a large percentage of the total assets of the Portfolio will be invested in Equity Securities of issuers in at least three different EAFE countries. PBHG SELECT 20 PORTFOLIO seeks long-term growth of capital and income. The Portfolio will normally be substantially invested in equity securities (including ADRs and foreign equity securities). The equity securities in which the Portfolio will invest are common stocks, warrants and rights to purchase common stocks, and debt securities and preferred stocks that are convertible into common stocks. Under normal market conditions, the Portfolio will invest at least 65%of its total assets in equity securities of a limited number (i.e., no more than 20 stocks) of large capitalization companies that, in Pilgrim Baxter & Associates, Ltd.'s (the "Adviser") opinion, have a strong earnings growth outlook and potential for capital appreciation. Such large companies have market capitalization in excess of $1 billion. Because the Portfolio focuses on equity securities of a small number of companies, the impact of a change in value of a single stock holding may be magnified. GROWTH II PORTFOLIO seeks capital appreciation and will normally be as fully invested as practicable in common stocks and securities convertible into common stocks. Under normal market conditions, the Portfolio will invest at least 65%of its total assets in common stocks and convertible securities of small and medium sized growth companies (market capitalization or annual revenues up to $4 billion). The Portfolio will seek to achieve its objective by investing in companies believed by the Adviser to have an outlook for strong earnings growth and the potential for significant capital appreciation. The Securities will be sold when the Adviser believes that anticipated appreciation is no longer probable, alternative investments offer superior appreciation prospects, or the risk of a decline in market price is too great. The Portfolio will likely have somewhat greater volatility than the stock market in general. Because the investment techniques employed by the Adviser are responsive to near-term earnings trends of the companies whose securities are owned by the Portfolio, the Portfolio turnover can be expected to be fairly high. LARGE CAP VALUE PORTFOLIO seeks long-term growth of capital and income. Current income is a secondary objective. Under normal market conditions, the Portfolio will invest a majority percentage of its total assets in a diversified Portfolio of equity securities of large capitalization companies which, in the opinion of the Adviser and Newbold's Asset Management, Inc. ("the Sub-Adviser"), are undervalued or overlooked by the market. In selecting investments for the Portfolio, the Adviser and Sub-Adviser emphasize fundamental investment value and consider the following factors, among others, in identifying and analyzing a security's fundamental value: the relationship of a company's potential earnings power to its current stock price; current dividend income and potential for current dividends, strong balance sheet with with low financial leverage; low price/earnings ratio relative to other similar companies; and potential for favorable business developments. SMALL CAP VALUE PORTFOLIO seeks to achieve above-average total return over a market cycle of three to five years, consistent with reasonable risk, by investing primarily in a diversified Portfolio of common stocks of small companies with market capitalizations in the range of companies represented in the Russell 2000 Index which are considered to be relatively undervalued based on certain proprietary measures of value. In selecting investments for the Portfolio, the Adviser and Sub-Adviser emphasize fundamental investment value and consider the following factors, among others, in identifying and analyzing a security's fundamental value: the relationship of a company's potential earnings power to its current stock price; current dividend income and potential for current dividends; low price/earnings ratio relative to other similar companies; strong competitive advantages, including a recognized brand or trade name or niche market position; sufficient resources for expansion; capability of management; and favorable overall business prospects. TECHNOLOGY & COMMUNICATIONS PORTFOLIO seeks long-term growth of capital. Current income is incidental to the Portfolio's objective. Under normal market conditions, the Portfolio will invest at least 65% of its total assets in common stocks of companies which rely extensively on technology or communications in their product development or operations, or which are expected to benefit from technological advances and improvements, and that may be experiencing exceptional growth in sales and earnings driven by technology- or communication-related products and services. Such technology and communications companies may be in different industries or fields, including computer software and hardware, electronic components and systems, network and cable broadcasting, telecommunications, mobile communications, satellite communications, defense and aerospace, transportation systems, data storage and retrieval, biotechnology and medical, and environmental. As a result of this focus, the Portfolio offers investors the significant growth potential of companies that may be responsible for breakthrough products or technologies or that are positioned to take advantage of cutting-edge developments. The Portfolios stock holdings can range from small companies developing new technologies or pursuing scientific breakthroughs to large, blue chip firms with established track records in developing and marketing such scientific advances. STRONG DISCOVERY FUND II PORTFOLIO seeks capital growth. The Fund invests in securities that the Adviser believes represent attractive growth opportunities. The Fund normally emphasizes equity securities, although it has the flexibility to invest in any type of security that the Adviser believes has the potential for capital appreciation. The Fund may invest up to 100% of its total assets in equity securities, including common stocks, preferred stocks, and securities that are convertible into common or preferred stocks, such as warrants and convertible bonds. The Fund may also invest up to 100% of its assets in debt obligations, including intermediate-to-long term corporate or U.S. government debt securities. When the Adviser determines that market conditions warrant a temporary defensive position, the Fund may invest without limitation in cash and short-term fixed-income securities. Although the debt obligations in which it invests will be primarily investment-grade, the Fund may invest up to 5% of its net assets in non-investment grade debt obligations. The Fund may also invest up to 25% of its net assets in foreign securities, including both direct investments and investments made through depository receipts. The Adviser attempts to identify companies that are poised for accelerated earnings growth due to innovative products or services, new management, or favorable economic or market cycles. These companies may be small, unseasoned firms in early stages of development, or they may be mature organizations. GROWTH FUND II PORTFOLIO seeks capital growth. The Fund invests primarily in equity securities that the Adviser believes have above-average growth prospects. Under normal market conditions, the Fund will invest at least 65% of its total assets in equity securities, including common stocks, preferred stocks, and securities that are convertible into common or preferred stocks, such as warrants and convertible bonds. While the emphasis of the Fund is clearly on equity securities, the Fund may invest a limited portion of its assets in debt obligations when the Adviser perceives that they are more attractive than stocks on a long-term basis. The Fund may invest up to 35% of its total assets in debt obligations, including intermediate-to-long term corporate or U.S. government debt securities. When the Adviser determines that market conditions warrant a temporary defensive position, the Fund may invest without limitation in cash and short-term fixed-income securities. Although the debt obligations in which it invests will be primarily investment grade, the Fund may invest up to 5% of its net assets in non-investment grade debt obligations. The Fund may invest up to 25% of its assets in foreign securities, including both direct investments and investments made through depository receipts. The Fund generally will invest in companies whose earnings are believed to be in a relatively strong growth trend, and, to a lesser extent, in companies in which significant further growth is not anticipated but whose market value is thought to be undervalued. In identifying companies with favorable growth prospects, the Adviser ordinarily looks to certain other characteristics, such as prospects for above-average sales and earnings growth; high return on invested capital; overall financial strength, including sound financial and accounting policies and a strong balance sheet; competitive advantages, including innovative products and service; effective research, product development and marketing; and stable, capable management. OPPORTUNITY FUND II PORTFOLIO seeks capital growth. The Fund invests primarily in equity securities and currently emphasizes investments in medium-sized companies the Adviser believes are under researched and attractively valued. The Fund will invest at least 70% of its total assets in equity securities, including common stocks, preferred stocks, and securities that are convertible into common or preferred stocks, such as warrants and convertible bonds. Under normal market conditions, the Fund expects to be fully invested in equities. The Fund may, however, invest up to 30% of its net assets in debt obligations, including intermediate-to long-term corporate or U.S. government debt securities, and when the Adviser determines that market conditions warrant a temporary defensive position, it may use that allowance to invest up to 30% of its net assets in cash and short-term fixed-income securities. Although the debt obligations in which it invests will be primarily investment grade, the Fund may invest up to 5% of its net assets in non-investment grade debt obligations. The Fund may also invest up to 25% of its assets in foreign securities, including both direct investments and investments made through depository receipts. In selecting its equity investments, the Adviser seeks to identify attractive investment opportunities that have not become widely recognized by other stock analysts or the financial press. Through first-hand research that often includes on-site visits with the leaders of companies, the Advisers looks for companies with fundamental value or growth potential that is not yet reflected in their current market prices. In many cases, companies in the small- and medium-capitalization markets are under-followed and, as a result, less efficiently priced than their larger, better-known counterparts. The Fund's investments are therefore likely to consist, in part, of securities in small- and medium-sized companies. Many of these companies may have successfully emerged from the start-up phase and have potential for future growth. Because of their longer track records and more seasoned management, they generally pose less investment uncertainty than do the smallest companies. In general, smaller-capitalization companies often involve greater risks than investments in established companies. WARBURG PINCUS INTERNATIONAL EQUITY PORTFOLIO seeks long-term capital appreciation by investing in equity securities of non-U.S. issuers. The Portfolio pursues its investment objective by investing primarily in a broadly diversified portfolio of equity securities of companies, wherever organized, that in the judgement of the Adviser, have their principal business activities and interests outside of the United States. The Portfolio will ordinarily invest substantially all of its assets in common stocks, warrants and securities convertible into or exchangeable for common stocks, and will generally invest in at least three countries other than the United States. The Portfolio intends to be widely diversified across securities of many corporations located in a number of foreign countries. The Adviser anticipates, however, that the Portfolio from time to time invest a significant portion of its assets in a single country such as Japan, which may involve special risks. In appropriate circumstances, such as when a direct investment by the Portfolio in the securities of a particular country cannot be made or when the securities of an investment company are more liquid than the underlying portfolio securities, the Portfolio may invest in the securities of closed-end investment companies that invest in foreign securities. The Portfolio intends to invest principally in the securities of financially strong companies with opportunities for growth within growing international economies and markets through increased earning power and improved utilization or recognition of assets. International investment entails special risk considerations, including currency fluctuations, lower liquidity, economic instability, political uncertainty and differences in accounting methods. POST-VENTURE CAPITAL PORTFOLIO seeks long-term growth of capital. The Portfolio pursues an aggressive investment strategy by investing primarily in equity securities of companies considered by the Adviser to be in their post-venture capital stage of development. Although the Portfolio may invest up to 10% of its assets in venture capital and other investment Funds, the Portfolio is not designed primarily to provide venture capital financing. Rather, under normal market conditions, the Portfolio will invest up to at least 65% of its total assets in equity securities of "post-venture capital companies." A post-venture capital company is a company that has received venture capital financing either (a) during the early stages of the company's existence or the early stages of the development of a new product or service or (b) as part of a restructuring or recapitalization of the company. The investment of venture capital financing, distribution of such company's securities to venture capital investors, or initial public offering ("IPO"), whichever is later, will have been made within ten years prior to the Portfolio's purchase of the company's securities. The Adviser believes that venture capital participation in a company's capital structure can lead to revenue/earnings growth rates above those of older, public companies such as those in the Dow Jones Industrial Average or the Fortune 500. Up to 10% of the Portfolio's assets may be invested in United States or foreign private limited partnerships or other investment Funds ("Private Funds") that themselves invest in equity or debt securities of (a) companies in the venture capital or post-venture capital stages of development or (b) companies engaged in special situations or changes in corporate control, including buyouts. Because of the nature of the Portfolio's investments and certain strategies it may use, such as investing in Private Funds, an investment in the Portfolio should be considered only for the aggressive portion of an investor's portfolio and may not be appropriate for all investors. SMALL COMPANY GROWTH PORTFOLIO seeks capital growth by investing primarily in equity securities of small sized domestic companies (i.e., companies having stock market capitalizations of between $25 million and $1 billion at the time of purchase) that represent attractive opportunities for capital growth. It is anticipated that the Portfolio will invest primarily in companies whose securities are traded on domestic stock exchanges or in the over-the -counter market. Small companies may still be in the development stage, may be older companies that appear to be entering a new stage of growth progress owing to factors such as management changes or development of new technology, products or markets or may be companies providing products or services with a high unit volume growth rate. The Portfolio's investments will be made on the basis of their equity characteristics and securities ratings generally will not be a factor in the selection process. The Portfolio may also invest in securities of emerging growth companies, which can be either small- or medium-sized companies that have passed their start up phase and that show positive earnings and prospects of achieving significant profit and gain in a relatively short period of time. Emerging growth companies generally stand to benefit from new products or services, technological developments or changes in management and other factors and include smaller companies experiencing unusual developments affecting their market value. Shares of the Funds may also be sold to a variable life separate account of Empire Fidelity Investments Life and to variable annuity and variable life separate accounts of other affiliated and unaffiliated insurance companies. For a discussion of the possible consequences associated with having the Fidelity Funds available to such other separate accounts, see RESOLVING MATERIAL CONFLICTS on page . The investment adviser for the Fidelity Funds is Fidelity Management & Research Company, a registered adviser under the Investment Advisers Act of 1940. Fidelity Management & Research Company is the original Fidelity company and was founded in 1946. It provides a number of mutual funds and other clients with investment research and portfolio management services. It maintains a large staff of experienced investment personnel and a full complement of related support facilities. As of December 31, 199 6 , it advised funds having more than 29 million shareholder accounts with a total value of more than $ 432 billion. The portfolios of the Fidelity Funds , as part of their operating expenses, pay an investment management fee to Fidelity Management & Research Company. These fees are part of the Funds' expenses. See the prospectuses for the Funds for discussions of the Funds' expenses. The investment adviser for the Morgan Stanley Universal Funds is Morgan Stanley Asset ManagementInc., a wholly-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"), which is a publicly owned financial services corporation listed on the New York stock exchange. MSAM, a registered Investment Adviser under the Investment Advisers Act of 1940, as amended, serves as investment adviser to numerous open-end and closed-end investment companies, as well as many institutions, pension plans and individuals. MSAM's principal business office is located at 1221 Avenue of the Americas, New York, New York 10020. The investment adviser for the PBHG Insurance Series Fund, Inc.is Pilgrim Baxter & Associates, Ltd. (the "Adviser"), a professional investment management firm and registered investment adviser that, along with its predecessors, has been in business since 1982. The controlling shareholder of the Adviser is United Asset Management Corporation ("UAM"), a New York stock exchange listed holding company principally engaged through affiliated firms, in providing institutional investments management services and acquiring institutional investment management firms. UAM's headquarters are located at One International Place, Boston, Massachusetts 02110. The principal business address of the Adviser is 1255 Drummers Lane, Suite 300, Wayne, Pennsylvania 19087. Newbold's Asset Management, Inc., the Sub-Adviser, 950 Haverford Road, Bryn Mawr, Pennsylvania 19010, is a registered investment Adviser that was formed in 1940. As with the Adviser, the controlling shareholder of the Sub-Adviser is UAM. The investment adviser for the Strong Funds is Strong Capital Management, Inc. The Adviser began conducting business in 1974. Since then, its principal business has been providing continuous investment supervision for individuals and institutional accounts, such as pension funds and profit-sharing plans, as well as mutual funds, several of which are funding vehicles for variable insurance products. The Adviser's principal mailing address is P.O. Box 2936, Milwaukee, Wisconsin 53201. Mr. Richard S. Strong, the Chairman of the Board of the Fund, is the controlling shareholder of the Adviser. The investment adviser for the Warburg Pincus Funds is Warburg Pincus. Incorporated in 1970, Warburg Pincus is indirectly controlled by Warburg, Pincus & Co.("WP&Co."), Warburg G.P has no business other than being a holding company of Warburg Pincus and its affiliates. Lionel I. Pincus, the managing partner of WP&Co., may be deemed to control both WP&Co. and Warburg Pincus. Warburg Pincus' address is 466 Lexington Avenue, New York, New York 10017-3147. You will find more complete information about the Funds , including the risks associated with each portfolio, in the ir respective prospectuses. You should read them in conjunction with this prospectus. 6.FACTS ABOUT THE CONTRACT PURCHASE OF A CONTRACT We offer the Contracts only in states in which we have obtained the necessary approval. The Contracts are available on a non-qualified basis ("Non-qualified Contracts") and as individual retirement annuities ("IRAs") that qualify for special Federal income tax treatment ("Qualified Contracts"). Generally, Qualified Contracts may be purchased only in connection with a "rollover" of funds from another qualified plan, tax sheltered annuity or IRA and contain certain other restrictive provisions limiting the timing and amount of payments to and distributions from the Qualified Contract. See TAX CONSIDERATIONS on page . To purchase a Non-qualified Contract you must generally make a purchase payment of at least $2,500 and complete an application form. To purchase a Qualified Contract you must generally make a purchase payment of at least $10,000 (unless we consent to a lower minimum) and complete an application form. The proposed Annuitant must be no older than 80 years old. If your application and initial purchase payment can be accepted in the form received, the payment will be applied to the purchase of a Contract within two business days after receipt at the Annuity Service Center. The date that the payment is credited and your Contract issued is called the Contract Date. If an incomplete application is received, we will request the information necessary to complete the application. Once the completed application is received, the initial payment will be applied to the purchase of a Contract within two business days. If the application remains incomplete for five business days, we will return your payment unless we obtain your specific permission to retain the payment pending completion of the application. You may make additional payments to a Non-qualified Contract during the life of the Annuitant and before the Annuity Date. The smallest such payment we will accept is generally $250. You may make additional payments to a Qualified Contract of additional rollover contributions from another qualified plan, tax sheltered annuity or IRA. See TAX CONSIDERATIONS on page . The smallest such payment we will accept is generally $2,500. Net purchase payments allocated to the variable Subaccounts will be credited to your Contract based on the next computed value of an Accumulation Unit following receipt of your payment at the Annuity Service Center. See ACCUMULATION UNITS on page . Net purchase payments allocated to the Guaranteed Account will be credited under your Contract as of the date the payment is received at our Annuity Service Center. See THE GUARANTEED ACCOUNT on page . We may limit the maximum amount of initial or subsequent payments that we will accept from an individual Contract Owner. FREE LOOK PRIVILEGE You may return your Contract for a refund within 30 days after you receive it (the "free look period"). If you choose not to retain your Contract, return it to our Annuity Service Center or any authorized representative of Empire Fidelity Investments Life within the free look period. The Contract will be canceled and we will refund promptly your Contract Value plus any amount deducted from your payment prior to allocation to the variable Subaccounts or the Guaranteed Account. If you are replacing an existing insurance product with the Contract and if you choose not to retain your Contract, it is considered a surrender and any gain since you first purchased your old Contract is taxable. INVESTMENT ALLOCATION OF YOUR PURCHASE PAYMENTS The portion of your net purchase payment allocated to the Variable Account will be invested in the variable Subaccounts according to the instructions on your application, based on the next computed respective Accumulation Unit Values of the Subaccounts following receipt of your payment at the Annuity Service Center. The portion of your net purchase payments allocated to the Guaranteed Account will be credited to the Guaranteed Account on the date your payment is received at the Annuity Service Center. If you elect to invest in a particular investment option, at least 10% of your purchase payment must be allocated to that option. All percentage allocations must be in whole numbers. Prior to the Annuity Date, you generally may not allocate more than $100,000 (including transfers) to the Guaranteed Account during any one Contract Year. Empire Fidelity Investments Life reserves the right to limit amounts allocated (including transfers) to the Guaranteed Account to $50,000 per Contract Year. You may currently transfer amounts among variable Subaccounts before the Annuity Date as often as you wish without charge. However, excessive trading activity can disrupt portfolio management strategy and increase portfolio expenses, which are borne by all Contract Owners participating in the portfolio regardless of their transfer activity. Therefore, we reserve the right to limit the number of transfers permitted, but not to fewer than six per Contract Year. Empire Fidelity Investments Life also reserves the right to charge no more than $15 for each transfer in excess of six per Contract Year. Currently there is no such charge. The request may be in terms of dollars, such as a request to transfer $5,000 from one Subaccount to another, or may be in terms of a percentage reallocation among Subaccounts. In the latter case, the percentages must be in whole numbers. The minimum amount you may transfer is $250 or, if less, the entire portion of your Contract Value allocated to a particular Subaccount. You may transfer amounts or change your investment allocation with respect to future payments by providing the Annuity Service Center with instructions either in writing or by telephone. Empire Fidelity Investments Life and the Fund reserve the right to revise or terminate the telephone exchange provisions, limit the amount of or reject any exchange, as deemed necessary, at any time. Telephone exchange authorizations will be limited to eighteen per calendar year. Empire Fidelity Invesments Life will not accept exchange requests via fax. Empire Fidelity Investments Life will not be responsible for any losses resulting from unauthorized telephone reallocations if it follows reasonable procedures designed to verify the identity of the caller. Empire Fidelity Investments Life will request your Personal Identification Number and may also record calls. You should verify the accuracy of your confirmation statements immediately after you receive them. In some cases, contracts may be sold to individuals who independently utilize the services of a firm or individual engaged in market timing. Generally, market timing services obtain authorization from Contract Owner(s) to make transfers and exchanges among the sub-accounts on the basis of perceived market trends. Because the large transfers of assets associated with market timing services may disrupt the management of the portfolios of the Funds, such transactions may become a detriment to Contract Owners not utilizing the market timing service. The right to exchange contract values among sub-accounts may be subject to modification if such rights are executed by a market timing firm or similar third party authorized to initiate transfers or exchange transactions on behalf of a Contract Owner(s). In modifying such rights, the Company may, among other things, decline to accept (1) the transfer or exchange instructions of any agent acting under a power of attorney on behalf of more than one Contract Owner, or (2) the transfer or exchange instructions of individual Contract Owners who have executed pre-authorized transfer or exchange forms which are submitted by market timing firms or other third parties on behalf of more than one Contract Owner at the same time. The Company will impose such restrictions only if it believes that doing so will prevent harm to other Contract Owners. When a transfer between variable Subaccounts is requested, the redemption of the requested amount from the Subaccount will always be effected as of the end of the Valuation Period in which the request is received at our Annuity Service Center. That amount will generally be credited to the new Subaccount at the same time. However, when (1) you are making a transfer to a Subaccount which invests in a portfolio that accrues dividends on a daily basis and requires Federal funds before accepting a purchase order and (2) the Subaccount from which the transfer is being made is investing in an equity portfolio in an illiquid position due to substantial redemptions or transfers that require it to sell portfolio securities in order to make funds available, then the crediting of the amount transferred to the new Subaccount may be delayed until the Subaccount from which the transfer is being made obtains liquidity through the earliest of the portfolio's receipt of proceeds from sales of portfolio securities, new contributions by Contract Owners, or otherwise, but no longer than seven days. During this period, the amount transferred will be uninvested. You may currently transfer amounts from the variable Subaccounts to the Guaranteed Account before the Annuity Date as often as you wish (with one exception described below) without charge. The minimum dollar amount you may transfer is $250 from any Subaccount or, if less, the entire portion of your Contract Value allocated to a particular Subaccount. If you request a percentage reallocation among the investment options, the percentages must be in whole numbers. Transfers from the Guaranteed Account before the Annuity Date are currently subject to the following limitations. The maximum amount that currently may be transferred out of the Guaranteed Account is 25% of the amount invested in the Guaranteed Account or, if larger, the amount that you transferred from the Guaranteed Account in the prior Contract Year. The 25% limitation will be reviewed monthly and may be updated. When this maximum amount is less than $1,000 we permit a transfer of up to $1,000. You may make one transfer or withdrawal out of the Guaranteed Account during each Contract Year. A transfer or allocation of a purchase payment into the Guaranteed Account is not permitted during the 12 months following a transfer out of or withdrawal from the Guaranteed Account. When amounts are withdrawn from or transferred out of the Guaranteed Account, the amounts that have been credited to the Guaranteed Account for the shortest time are withdrawn first. These limits are subject to change in the future; however, you will always be permitted to make one transfer from the Guaranteed Account per Contract Year in an amount equal to 15% of the portion of your Contract Value invested in the Guaranteed Account. See THE GUARANTEED ACCOUNT on page . The portion of your Contract Value allocated to the variable Subaccounts will change with the investment performance of the selected Subaccounts. You should periodically review your allocation of Contract Value in light of market conditions and your financial objectives. Transfers after the Annuity Date are subject to different limitations. See FIXED, VARIABLE, OR COMBINATION ANNUITY INCOME OPTIONS on page . ACCUMULATION UNITS When your net purchase payments are allocated to a selected variable Subaccount, they result in a particular number of Accumulation Units being credited to your Contract. The number of Accumulation Units credited is determined by dividing the dollar amount allocated to each Subaccount by the value of an Accumulation Unit for that Subaccount as of the end of the Valuation Period in which the payment is received at the Annuity Service Center. The value of each Subaccount's Accumulation Units varies each Valuation Period (i.e., each day that there is trading on the New York Stock Exchange) with the Net Rate of Return of the Subaccount. The Net Rate of Return reflects the investment performance of the Subaccount for the Valuation Period and is net of the asset charges to the Subaccount. See NET RATE OF RETURN FOR A SUBACCOUNT on page . WITHDRAWALS You may at any time prior to the Annuity Date surrender your Contract for its Cash Surrender Value. You may also make partial withdrawals of $500 or more. Certain withdrawals, however, are subject to a penalty tax. See TAX CONSIDERATIONS on page . You may not make a partial withdrawal that, including the appropriate withdrawal charge, would reduce your Contract Value to less than $2,500. Partial withdrawals (plus any applicable withdrawal charge) will be taken from your Contract Value invested in the Variable Account. If the total amount exceeds your Contract Value invested in the Variable Account, the excess will be deducted from the Guaranteed Account. Unless you request otherwise, the amount deducted from the Variable Account will be allocated in the variable Subaccounts in the same proportion as the value in each bears to the Variable Account Contract Value on the date of the partial withdrawal. We will pay you the amount of any surrender or partial withdrawal, less any required tax withholding, within seven days after we receive a properly completed withdrawal request. We may defer payment from the Variable Account under certain limited circumstances for a longer period, and we reserve the right to defer payment from the Guaranteed Account under any circumstances for not more than six months. See POSTPONEMENT OF PAYMENT on page . SIGNATURE GUARANTEE A signature guarantee is designed to protect you and Empire Fidelity Investments Life from fraud. Disbursement requests must include a signature guarantee if any of the following situations apply: 1. Your account registration has changed within the last 30 days. 2. You wish to withdraw more than $25,000. 3. The check is being mailed to a different address than the one on your account (record address). 4. The check is made payable to someone other than the Owner. 5. In other circumstances where we deem it necessary for the protection of you, the customer ( e.g. the signature does not resemble the signature we have on file). You should be able to obtain a signature guarantee from a bank, broker dealer ( including Fidelity Investor Centers), credit union (if authorized under state law), securities exchange or association, clearing agency, or savings association. A notary public cannot provide a signature guarantee. CHARGES The following are all the charges we make under your Contract. 1. PREMIUM TAXES. In general, we do not currently deduct any amount from your payments for premium taxes. Several states assess a premium tax upon the commencement of annuity income payments. If you live in a jurisdiction which imposes such a tax and if annuity income payments commence under your Contract, we will deduct a charge from your Contract Value for the tax we incur at the Annuity Date. A few states may require us to pay premium taxes upon receipt of your payments and we reserve the right to make the deduction in any jurisdiction when we incur these taxes. As of the date of this prospectus, the current range of state premium taxes is from 0% to 3.5%. 2. FEDERAL INCOME TAXES. We reserve the right to deduct a charge for the purpose of recovering a portion of our Federal income tax expense that is determined solely from the amount of premiums received. No such charge is currently being deducted. Therefore, the entire amount of your purchase payments are currently being allocated to the investment options you select. 3. ADMINISTRATIVE CHARGES. Administrative charges compensate us for the expenses we incur in administering the Contracts. These expenses include the cost of issuing the Contract, maintaining necessary systems and records, and providing reports. We seek to cover these expenses by two types of administrative charges: an annual maintenance charge and a daily administrative charge. Currently, on each Contract Anniversary before the Annuity Date an annual maintenance charge of $30 is deducted from your Contract Value. We currently waive this annual charge prior to the Annuity Date if your total purchase payments, less any withdrawals, equal at least $25,000. However, we also reserve the right to assess this charge against all Contracts. Although we do not now intend to charge more than $30 per year, we reserve the right to increase this annual charge to up to $50 if warranted by the expenses we incur. Prior to the Annuity Date, the annual maintenance charge will be deducted from each investment option in proportion to the amount of your total Contract Value invested in that option on the date of deduction. We will deduct a pro rata portion of the charge when the Contract is surrendered. Each day, we also deduct from the assets of the Subaccounts a percentage of those assets equivalent to an effective annual rate of 0.05%. As a charge against the Subaccounts, this administrative charge is not assessed against your Contract Value allocated to the Guaranteed Account. This charge is guaranteed never to be increased above an effective annual rate of 0.25%. 4. MORTALITY AND EXPENSE RISK CHARGE. We deduct a daily asset charge for our assumption of mortality and expense risks. This charge is made by deducting daily from the assets of each Subaccount a percentage of those assets equal to an effective annual rate of 0.75%. As with the daily administrative charge, this charge is not assessed against your Contract Value allocated to the Guaranteed Account. We guarantee never to increase this charge above an effective annual rate of 0.75%. For Contract Owners effecting a life annuity, the mortality risk we bear is that of making the annuity income payments for the life of the Annuitant (or the life of the Annuitant and the life of a second person in the case of a joint and survivor annuity) no matter how long that might be. We also bear a mortality risk under the Contracts, regardless of whether an annuity income payment option is actually effected, in that we make guaranteed purchase rates available. In addition, we bear a mortality risk by guaranteeing a Death Benefit if the last surviving Annuitant dies prior to the Annuity Date and prior to age 70. This Death Benefit may be greater than the Contract Value. See DEATH BENEFIT on page . The expense risk we assume is the risk that the costs of issuing and administering the Contracts will be greater than we expected when setting the administrative charges. Of this 0.75% charge, it is estimated that 0.66% is for assuming mortality risks and it is estimated that 0.10% is for assuming expense risks. We will realize a gain from the charge for these risks to the extent that it is not needed to provide for benefits and expenses under the Contracts. 7.5. WITHDRAWAL CHARGE. We do not assess any sales charge if you keep your Contract in force for more than five years. If you surrender your Contract within the first five Contract Years, we will reduce the amount payable to you by a withdrawal charge (i.e., a contingent deferred sales charge) to compensate us for the expenses of selling and distributing the Contracts. In addition, we will impose a withdrawal charge for sales expenses on certain partial withdrawals during the first five Contract Years. We do not assess any withdrawal charge on the death of the Owner or Annuitant. We currently assess a withdrawal charge upon annuitization if the Contract has been in existence for less than one year. Bearing this in mind, the Contract should be viewed as a long-term investment and insurance product. You may surrender the Contract without any withdrawal charges for thirty days after notification is mailed to you of any of the following events: (1) the renewal interest rate on any portion of your Contract Value allocated to the Guaranteed Account decreased by more than 1% from the expiring interest rate; (2) the maintenance charge is increased above the amount shown in the Contract at issue; or (3) the maintenance charge is imposed on your Contract as a result of a change in practice. There is no withdrawal charge if you withdraw the value of your Contract in whole or in part after five Contract Years. In addition, during the first five Contract Years, no withdrawal charge is assessed against total withdrawals in each Contract Year of an amount up to 10% of your total purchase payments as of the date of withdrawal. For this purpose, "total purchase payments" refers to all purchase payments made less any amounts previously withdrawn that were subject to a withdrawal charge. When a partial or full withdrawal is made within the first five Contract Years, the amount of purchase payments withdrawn from your Contract Value (less any amount entitled to the 10% exception) will be subject to a withdrawal charge for sales expenses as follows: Withdrawal Charge As Percentage of Amount of Contract Year Purchase Payments Withdrawn 1 5% 2 4% 3 3% 4 2% 5 1% 6 and later 0% For purposes of determining this withdrawal charge, any amount you withdraw in excess of amounts entitled to the 10% exception will be considered as a withdrawal of purchase payments until you have withdrawn an amount equal to all your payments. Amounts withdrawn after an amount equal to your aggregate purchase payments has been withdrawn are considered to be withdrawals of investment earnings and are not subject to any withdrawal charge. Additional purchase payments during the first five Contract Years will increase the dollar amount of the potential withdrawal charge by increasing the amount of payments that may be withdrawn while the withdrawal charge is in effect. Additional payments do not, however, cause the schedule of possible withdrawal charges to start over again. For example, if an additional payment is made during the fifth Contract Year and withdrawn later during that same year, it and all payments withdrawn that year will be subject to a 1% withdrawal charge. Additional payments after the fifth Contract Year will not be subject to any possible withdrawal charge. Free withdrawals are not cumulative. For example, let us assume that you (1) make an initial purchase payment of $10,000; (2) make no withdrawals during the first Contract Year; (3) make no additional purchase payments; and (4) make a withdrawal of $1,500 in the second Contract Year. Given this example, $1,000 would be free from a withdrawal charge, but $500 would be subject to a withdrawal charge. We will waive the withdrawal charge during the free look period if (a) you purchased your contract (1) by exchanging another annuity contract or life insurance policy, or (2) by trustee to trustee transfer or direct rollover from an IRA or other qualified plan, and (b) (1) you are exchanging the Contract for another annuity contract, or (2) you are making a trustee to trustee transfer or direct rollover of the money in a Qualified Contract to another IRA or a qualified plan. Since the Contract is intended to be long-term, we expect that the withdrawal charge will not be sufficient to cover our expenses in selling the Contracts. To the extent that the withdrawal charges are not sufficient, we will pay these expenses from our general assets. These assets may include proceeds from the mortality and expense risk charge described above. 6. TRANSFER CHARGE. We reserve the right to charge no more than $15.00 for each transfer in excess of 6 per Contract Year. 7. FUNDS' EXPENSES. The expenses and charges incurred by the Funds are described in the ir respective prospectuses . 8. OTHER TAXES. We reserve the right to charge for certain taxes (other than premium taxes) that we may have to pay. See EMPIRE FIDELITY INVESTMENTS LIFE'S TAXES on page . DEATH BENEFIT If the Owner is not the Annuitant and dies before the Annuity Date, we will upon receipt of proof of death at the Annuity Service Center, pay the Contract Value to the Owner's Beneficiary. If no Owner's Beneficiary survives, the Contract Value will be paid to the Owner's estate. If the Owner is the Annuitant and dies prior to the Annuity Date, the entire interest will be paid as if the last surviving Annuitant had died. If the last surviving Annuitant dies prior to the Annuity Date, we will, upon receipt of proof of death at the Annuity Service Center, pay a Death Benefit to the Annuitant's Beneficiary you have designated. If the death of the last surviving Annuitant occurs on or before his or her 70th birthday, the Death Benefit will equal the greater of: (1) the purchase payments paid, less any partial withdrawals and charges thereon; and (2) the Contract Value as of the end of the Valuation Period in which proof of death is received at our Annuity Service Center. If the death of the last surviving Annuitant occurs after his or her 70th birthday, the Death Benefit will equal the Contract Value as of the end of the Valuation Period in which proof of death is received at our Annuity Service Center. No withdrawal charge is made in connection with the payment of a Death Benefit. The Death Benefit may be paid in a single sum or applied under a fixed, variable or combination annuity. During the lifetime of the Annuitant, you may elect that the Death Benefit be applied under any one of the annuity income options available under the Contract or under any other annuity income option acceptable to us. If you have not selected an annuity income option and the death of the last surviving Annuitant occurs prior to the Annuity Date, the Annuitant's Beneficiary may choose an available annuity income option for the Death Benefit. REQUIRED DISTRIBUTIONS UPON DEATH Federal tax law requires that if any Owner dies before the Annuity Date, the entire interest in the Contract must be distributed within 5 years after the death of the Owner (including any Owner who is also the Annuitant), unless: the entire interest is payable over the lifetime (or over a period not extending beyond the life expectancy) of the recipient with distributions beginning within one year of the date of death; or, the Owner's spouse is the recipient, in which case the spouse may elect to continue the Contract and become the Owner. If the Owner is a trust or other "non-natural person" and the Annuitant dies before the Annuity Date, the Beneficiary's entire interest in the Contract must be distributed in the same manner as if the Owner was a living person who died prior to the Annuity Date. If the Contract is owned jointly and either Owner dies before the Annuity Date, we will upon receipt of proof of death at the Annuity Service Center, pay the Contract Value to the surviving Owner. If prior to the Annuity Date either Owner dies and the deceased Owner is also the last surviving Annuitant, the entire interest will be paid to the Annuitant's Beneficiary. The rules regarding required distributions after the Owner's death are described in the Statement of Additional Information. We intend to administer the Contracts to comply with Federal tax law. ANNUITY DATE When your Contract is issued, it will generally provide for the latest permissible Annuity Date. The latest permissible date is the first day of the calendar month following the Annuitant's 85th birthday or, if later, the first day of the calendar month following the Contract's fifth Contract Anniversary. When a Contingent Annuitant becomes the Annuitant, Empire Fidelity Investments Life will change the Annuity Date to the later of the first day of the month immediately following the latest of the three following dates: (a) the Annuitant's 85th birthday ( b) the fifth Contract Anniversary, and (c) the date the Contingent Annuitant becomes the Annuitant. You may change the Annuity Date by written notice to the Annuity Service Center at least 30 days prior to the current Annuity Date. The Annuity Date must be the first day of a month. For both Qualified and Non-qualified Contracts, the earliest permissible Annuity Date is the first day of the calendar month following the expiration of the free look period. SELECTION OF ANNUITY INCOME OPTIONS While the Annuitant is living and at least 30 days prior to the Annuity Date, you may elect any one of the annuity income options described in the Contract. You may also change your election to a different annuity income option by notifying us in writing at least 30 days prior to the Annuity Date. If you have not elected an annuity income option at least 30 days prior to the Annuity Date, the automatic annuity income option will be a combination annuity for life, with 120 monthly payments guaranteed. The Contract Value allocated to the Guaranteed Account, less any applicable taxes, will be applied to the purchase of the fixed portion of the annuity and the Contract Value allocated to the Variable Account, less any applicable taxes, will be applied to the purchase of the variable portion of the annuity. See Annuity Option No. 3 under TYPES OF ANNUITY INCOME OPTIONS on page . FIXED, VARIABLE, OR COMBINATION ANNUITY INCOME OPTIONS You may elect to have annuity income payments made on a fixed basis, a variable basis, or a combination of both. If you choose a fixed annuity, the amount of each payment will be set and will not change. Upon selection of a fixed annuity, your Contract Value will be transferred to the Guaranteed Account. The annuity income payments will be fixed in amount and duration by the fixed annuity provisions selected, the sex (except Contracts utilizing unisex purchase rates) and adjusted age of the Annuitant, and the then current guaranteed interest rate used to determine fixed annuity income payments. In no event will the guaranteed interest rate be less than 3.5%. If you select a variable annuity, your Contract Value will be transferred to the Variable Account. The dollar amount of the first variable annuity income payment will be determined in accordance with the applicable annuity payment rates, the sex (except Contracts utilizing unisex purchase rates), the adjusted age of the Annuitant and an assumed annual interest rate of 3.5% (unless we also offer an alternative assumed interest rate on the Annuity Date and you select that alternative). All subsequent variable annuity income payments are calculated based on the Subaccount Annuity Units credited to the Contract. Annuity Units are similar to Accumulation Units except that built into the calculation of Annuity Unit Values is the assumption that the Net Rate of Return of a Subaccount will equal the assumed interest rate. Thus, with a 3.5% assumed interest rate, the Subaccount Annuity Unit Value will not change if the daily Net Rate of Return of the Subaccount is equivalent to an annual rate of return of 3.5%. If the Net Rate of Return is greater than the assumed interest rate, the Subaccount Annuity Unit Value will increase; if the Net Rate of Return is less than the assumed interest rate, the Subaccount Annuity Unit Value will decrease. When variable annuity income payments commence, the number of Annuity Units credited to the Contract in a particular Subaccount is determined by dividing that portion of the first variable annuity income payment attributable to that Subaccount by the Annuity Unit Value of that Subaccount for the Valuation Period in which the Annuity Date occurs. The number of Annuity Units of each Subaccount credited to the Contract then remains fixed unless there is a subsequent transfer involving the Subaccount. The dollar amount of each variable annuity income payment after the first may increase, decrease or remain constant. The income payment is equal to the sum of the amounts determined by multiplying the number of Annuity Units of each Subaccount credited to the Contract by the Annuity Unit Value for the particular Subaccount for the Valuation Period in which each subsequent annuity income payment is due. If you select a combination annuity, your Contract Value will be split between the Guaranteed Account and the Variable Account in accordance with your instructions. Your annuity income payments will be the sum of the income payment attributable to your fixed portion and the income payment attributable to your variable portion. After the Annuity Date, transfers between the Variable Account and the Guaranteed Account are not permitted. Transfers among the variable Subaccounts, however, are permitted subject to some limitations. See TRANSFERS AMONG SUBACCOUNTS AFTER THE ANNUITY DATE in the Statement of Additional Information. TYPES OF ANNUITY INCOME OPTIONS The Contract provides for three types of annuity income options. All are available on a fixed, variable or combination basis. You may not select more than one option. If your Contract Value would provide less than $20 of monthly income, we may pay the proceeds in a single sum rather than pursuant to the selected option. In addition, we may require that annuity income payments be made entirely on a fixed basis, if the amount to be applied on a variable basis would provide an initial monthly income of less than $50. 1. LIFE ANNUITY. Annuity income payments will be made monthly during the Annuitant's lifetime ceasing with the last income payment due prior to the Annuitant's death. No income payments are payable after the death of the Annuitant. Thus, it is quite possible that income payments will be made that are less than the value of the Contract. Indeed, if the Annuitant were to die within one month after the Annuity Date, only one monthly income payment would have been made. Because of this risk, this option offers the highest level of monthly income payments. 2. JOINT AND SURVIVOR ANNUITY. This option provides monthly annuity income payments during the joint lifetimes of the Annuitant and a designated second person and during the lifetime of the survivor. There are some limitations on the use of this option for Qualified Contracts. As in the case of the life annuity described above, there is no guaranteed number of income payments and no income payments are payable after the death of the Annuitant and the designated second person. 3. LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED. This option provides monthly annuity income payments during the lifetime of the Annuitant, and in any event for one hundred twenty (120) or two hundred forty (240) months certain as elected. In the case of a Qualified Contract, the guarantee period may not exceed the life expectancy of the Annuitant. In the event of the death of the Annuitant under this option, the Contract provides that any guaranteed monthly income payments will be paid to the Annuitant's Beneficiary during the remaining months of the term selected. However, the Annuitant's Beneficiary may, at any time, elect to receive the discounted value of his or her remaining income payments in a single sum. In such event, the discounted value for fixed or variable annuity income payments will be based on interest compounded annually at the applicable interest rate used in determining the first annuity income payment. Upon the death of the Annuitant's Beneficiary receiving annuity benefits under this option, the present value of the guaranteed benefits remaining after we receive notice of the death of the Annuitant's Beneficiary, computed at the applicable interest rate, shall be paid in a single sum to the estate of the Annuitant's Beneficiary. The present value is computed as of the Valuation Period during which notice of the death of the Annuitant's Beneficiary is received at the Annuity Service Center. You may choose to have annuity income payments made on a monthly basis or at another frequency such as quarterly, semi-annually or annually. In addition to the annuity income options provided for in the Contracts, other annuity income options may be made available by the Company. REPORTS TO OWNERS During the Accumulation period, four times each Contract Year you will receive a statement of your Contract Value and any other information required by state law, including a summary of all transactions since the preceding quarterly statement. In addition, you will receive semiannual reports containing financial statements for the Variable Account and a list of portfolio securities of the Funds, as required by the Investment Company Act of 1940. 8.THE GUARANTEED ACCOUNT BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE GUARANTEED ACCOUNT OPTION UNDER THE CONTRACT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940. ACCORDINGLY, INTERESTS IN THE GUARANTEED ACCOUNT OPTION ARE NOT SUBJECT TO THE PROVISIONS OF THOSE ACTS, AND EMPIRE FIDELITY INVESTMENTS LIFE HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE GUARANTEED ACCOUNT OPTION. DISCLOSURES REGARDING THE GUARANTEED ACCOUNT OPTION MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES. As noted earlier, you may allocate net purchase payments or transfer all or a part of your Contract Value to a fixed-rate investment option funded through and guaranteed by Empire Fidelity Investments Life's general account (the "Guaranteed Account"). The Guaranteed Account may also be referred to as the "Fixed Account ". Funds allocated or transferred to the Guaranteed Account do not fluctuate with the investment experience of Empire Fidelity Investments Life's general account. We guarantee that the portion of your Contract Value that is held in the Guaranteed Account will accrue interest daily at an annual rate that will never be less than 3.5%. When a purchase payment is received or an amount is transferred into the Guaranteed Account, an interest rate will be assigned to that amount. That rate will be guaranteed for a certain period of time depending on when the amount was allocated to the Guaranteed Account. When this initial period expires, a new interest rate will be assigned to that amount which will be guaranteed for a period of at least a year. Thereafter, interest rates credited to that amount will be similarly guaranteed for successive periods of at least one year. Therefore, different interest rates may apply to different amounts in the Guaranteed Account depending on when the amount was initially allocated. Furthermore, the interest rate applicable to any particular amount may vary from time to time. 9.MORE ABOUT THE CONTRACT 10.TAX CONSIDERATIONS The following discussion is not intended as tax advice. For tax advice you should consult a tax adviser. Although the following discussion is based on our understanding of Federal income tax laws as currently interpreted, there is no guarantee that those laws or interpretations will not change. The following discussion does not take into account state or local income tax or other considerations which may be involved in the purchase of a Contract or the exercise of options under the Contract. In addition, the following discussion assumes that the Contract is owned by an individual, and we do not intend to offer the Contracts to "non natural" persons such as corporations, unless the Contract is held by such person as a nominee for an individual. (If the Contract is not owned by or held for a natural person, the contract will generally not be treated as an annuity for tax purposes.) The following discussion assumes that the Contract will be treated as an annuity for Federal income tax purposes. Section 817(h) of the Code provides that the investments of a separate account underlying a variable annuity contract (or the investments of a mutual fund, the shares of which are owned by the variable annuity separate account) must be "adequately diversified" in order for the Contract to be treated as an annuity for tax purposes. The Treasury Department has issued regulations prescribing such diversification requirements. The Variable Account, through each of the portfolios of the Funds, intends to comply with these requirements. We have entered into agreements with the Funds that require the Funds to operate in compliance with the Treasury Department's requirements. In connection with the issuance of prior regulations relating to diversification requirements, the Treasury Department announced that such regulations do not provide guidance concerning the extent to which owners may direct their investments to particular divisions of a separate account. Additional guidance relating to this subject is expected in the near future. It is not clear what this guidance will provide or whether it will be prospective only. It is possible that when this guidance is issued the Contract may need to be modified to comply with it. In addition, to qualify as an annuity for Federal tax purposes, the Contract must satisfy certain requirements for distributions in the event of the death of any Owner of the Contract. The Contract contains such required distribution provisions. For further information on these requirements see the Statement of Additional Information. The individual situation of each Owner or Beneficiary will determine the Federal estate taxes and the state and local estate, inheritance and other taxes due if the Owner or the Annuitant dies. QUALIFIED CONTRACTS The Contract may be used as a qualified individual retirement annuity. Under Section 408(b) of the Code, eligible individuals may contribute to an individual retirement annuity ("IRA"). The Code permits certain "rollover" contributions to be made to an IRA. In particular, certain qualifying distributions from another qualified plan, tax sheltered annuity or IRA may be received tax-free if rolled over to an IRA within 60 days of receipt. Because the Contract's minimum initial payment is greater than the maximum annual contribution permitted to an IRA, a Qualified Contract may be purchased only in connection with a "rollover" of the proceeds from another qualified plan, tax sheltered annuity or IRA. IN ADDITION, QUALIFIED CONTRACTS WILL NOT ACCEPT ANY SUBSEQUENT CONTRIBUTIONS OTHER THAN ADDITIONAL ROLLOVER CONTRIBUTIONS FROM ANOTHER QUALIFIED PLAN, TAX SHELTERED ANNUITY OR IRA. In order to qualify as an IRA under Section 408(b) of the Code, a Contract must contain certain provisions: (1) the Owner of the Contract must be the Annuitant and, except for certain transfers incident to a divorce decree, the Owner cannot be changed and the Contract cannot be transferable; (2) the Owner's interest in the Contract cannot be forfeitable; and (3) annuity and death benefit payments must satisfy certain minimum distribution requirements. Contracts issued on a qualified basis will conform to the requirements for an IRA and will be amended to conform to any future changes in the requirements for an IRA. CONTRACT VALUES AND PROCEEDS Under current law, you will not be taxed on increases in the value of your Contract until a distribution occurs. A distribution may occur in the form of a withdrawal, death benefit payment, or payments under an annuity income option. An amount received as a loan under, or the assignment or pledge of any portion of the value of, a Contract may also be treated as a distribution. In the case of a Qualified Contract, you may not receive or make any such loan or pledge. Any such loan or pledge will result in disqualification of the Contract and inclusion of the value of the entire Contract in income. Additionally, a transfer of a Non-qualified Contract for less than full and adequate consideration will result in a deemed distribution, unless the transfer is to your spouse (or to a former spouse pursuant to a divorce decree). The taxable portion of a distribution is generally taxed as ordinary income. If you fully surrender your Contract before annuity income payments commence, you will be taxed on the portion of the distribution that exceeds your cost basis in your Contract. For Non-qualified Contracts, the cost basis is generally the amount of your payments, and the taxable portion of the proceeds is taxed as ordinary income. For Qualified Contracts, the cost basis is generally zero, and the entire amount of the surrender payment is generally taxed as ordinary income. In addition, for both Qualified and Non-qualified Contracts, amounts received as the result of the death of the Owner or Annuitant that are in excess of your cost basis will also be taxed. Partial withdrawals under a Non-qualified Contract are treated for tax purposes as first being taxable withdrawals of investment income, rather than as return of purchase payments, until all investment income earned by your Contract has been withdrawn. You will be taxed on the amount withdrawn to the extent that your Contract Value at that time, unreduced by the withdrawal charge, exceeds your payments. Partial withdrawals under a Qualified Contract are prorated between taxable income and non-taxable return of investment. Generally, the cost basis of a qualified Contract is zero, and the partial withdrawal will be fully taxed. All annuity contracts issued by the same company (or an affiliated company) to the same contract owner during any calendar year are treated as one annuity contract for purposes of determining the amount includible in income of any distribution that is not received as an annuity payment. In the case of a qualified contract, the tax law requires for all post-1986 contributions and distributions that all individual retirement accounts and annuities be treated as one contract. Although the tax consequences may vary depending on the form of annuity selected under the Contract, the recipient of an annuity income payment under the Contract generally is taxed on the portion of such income payment that exceeds the cost basis in the Contract. For variable annuity income payments, the taxable portion is determined by a formula that establishes a specific dollar amount that is not taxed. This dollar amount is determined by dividing the Contract's cost basis by the total number of expected periodic income payments. However, the entire distribution will be fully taxable once the recipient is deemed to have recovered the dollar amount of the investment in the Contract. For Qualified Contracts, the cost basis is generally zero and each annuity income payment is fully taxed. A penalty tax equal to 10% of the amount treated as taxable income may be imposed on distributions. The penalty tax applies to early withdrawals or distributions. The penalty tax is not imposed on: (1) distributions made to persons on or after age 59 1/2; (2) distributions made after death of the Owner; (3) distributions to a recipient who has become disabled; (4) distributions in substantially equal installments made for the life of the taxpayer or the lives of the taxpayer and a designated second person; and (5) in the case of Qualified Contracts, distributions received from the rollover of the Contract into another qualified contract or IRA. In the case of a Contract held in custody for a minor under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, a distribution under the Contract ordinarily is taxable to the minor. Whether the penalty tax applies to such a distribution ordinarily is determined by the circumstance or characteristics of the minor, not the custodian. Thus, for example, a distribution taxable to a minor will not qualify for the exception to the penalty tax for distributions made on or after age 59 1/2, even if the custodian is 59 1/2 or older. In addition, in the case of a Qualified Contract, a 50% excise tax is imposed on the amount by which minimum required annuity or death benefit distributions exceed actual distributions. Penalty taxes also are imposed on aggregate distributions from specified retirement programs (including IRAs) in excess of a specified amount annually and in certain other circumstances. We will withhold and remit to the U.S. Government a part of the taxable portion of each distribution made under the Contract, unless the Owner, Annuitant or Beneficiary files a written election prior to the distribution stating that he or she chooses not to have any amounts withheld. EMPIRE FIDELITY INVESTMENTS LIFE'S TAXES The earnings of the Variable Account are taxed as part of the operations of Empire Fidelity Investments Life. Under the current provisions of the Code, we do not expect to incur Federal income taxes on earnings of the Variable Account to the extent the earnings are credited under the Contracts. Based on this, no charge is being made currently to the Variable Account for our Federal income taxes. We will periodically review the need for a charge to the Variable Account for company Federal income taxes. Such a charge may be made in future years for any Federal income taxes that would be attributable to the Contracts. Under current laws we may incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant and are not charged against the Contracts or the Variable Account. If the amount of these taxes changes substantially, we may make charges for such taxes against the Variable Account. 11.12.OTHER CONTRACT PROVISIONS You should also be aware of the following important provisions of your Contract. 1. OWNER. As the Owner named in the application, you have the rights and privileges specified in the Contract. Prior to the Annuity Date and during the lifetime of the Annuitant, you may change the Owner, Annuitant or any beneficiary by notifying us in writing. The Annuitant may only be changed once. You may not, however, change the Owner or Annuitant of a Qualified Contract. A change in the Owner of a Non-qualified Contract will take effect on the date the request was signed, but it will not apply to any payments made by us before the request was received and recorded at the Annuity Service Center. On the Annuity Date, all of the Owner's rights pass to the Annuitant. 2. ANNUITANT'S BENEFICIARY. The Annuitant's Beneficiary is named on the application unless later changed. The Death Benefit will be paid to the Annuitant's Beneficiary upon the death of the last surviving Annuitant prior to the Annuity Date. If no Annuitant's Beneficiary survives, the Death Benefit will be paid to the Owner or the Owner's estate. 3. OWNER'S BENEFICIARY. The Owner's Beneficiary is named on the application unless later changed. The Contract Value will be paid to the joint Owner, if any, otherwise to the Owner's Beneficiary upon the death of any Owner (unless such Owner is also the last surviving Annuitant) prior to the Annuity Date. If no Owner's Beneficiary survives, the Contract Value will be paid to the Owner's estate. If at the time of the death of any Owner prior to the Annuity Date, that Owner is also the last surviving Annuitant, proceeds will be paid to the Annuitant's Beneficiary. A Beneficiary may be a "Primary Beneficiary" or a "Contingent Beneficiary". No Contingent Beneficiary has the right to proceeds unless all of the Primary Beneficiaries die before proceeds are determined. 4. CONTINGENT ANNUITANT. Once prior to the Annuity Date, the Owner may name a Contingent Annuitant. If a Contingent Annuitant has been named, the Owner may remove either the Annuitant or the Contingent Annuitant. If the Contingent Annuitant dies or is removed, another Contingent Annuitant cannot be named. Upon the death (if the Annuitant is not an Owner) or removal of the Annuitant prior to the Annuity Date, the Contingent Annuitant, if any, becomes the Annuitant. When a Contingent Annuitant becomes the Annuitant, we will change the Annuity Date to the later of the first day of the month immediately following the latest of the three following dates: (a) the Annuitant's 85th birthday ( b) the Contract's fifth anniversary; and (c) the date the Contingent Annuitant becomes the Annuitant. A Contingent Annuitant cannot be named for Qualified Contracts or if a Non-Qualified Contract is owned by a non-natural person. 5. MISSTATEMENT OF AGE OR SEX. If the age or sex of the Annuitant has been misstated, we will change the benefits to those which the proceeds would have purchased had the correct age and sex been stated. If the misstatement is not discovered until after annuity income payments have started, we will take the following action: (1) if we made any overpayments, we may add interest at the rate of 6% per year compounded annually and charge them against income payments to be made in the future; (2) if we made any underpayments, the balance plus interest at the rate of 6% per year compounded annually will be paid in a single sum. 6. ASSIGNMENT. You may assign a Non-qualified Contract at any time during the lifetime of the Annuitant and before the Annuity Date. See TAX CONSIDERATIONS on page . No assignment will be binding on us unless it is written in a form acceptable to us and received at our Annuity Service Center. Your rights and the rights of any Beneficiary will be affected by an assignment. We will not be responsible for the validity of any assignment. No assignment may be made of a Qualified Contract. 7. DIVIDENDS. Our variable annuity Contracts are "non-participating ". This means that they do not provide for dividends. Investment results under the Contracts are reflected in benefits. SELLING THE CONTRACTS The Contracts will be distributed through Fidelity Brokerage Services, Inc. and Fidelity Insurance Agency, Inc., both of which are affiliated with FMR Corp., the ultimate parent company of Empire Fidelity Investments Life. Fidelity Brokerage Services, Inc. is the principal underwriter (distributor) of the Contracts. Fidelity Distributors Corporation is the distributor of the Fidelity family of funds, including the Funds. The principal business address of Fidelity Brokerage Services, Inc. and Fidelity Distributors Corporation is 82 Devonshire Street, Boston, Massachusetts 02109. We pay Fidelity Insurance Agency, Inc. sales compensation of no more than 3% of payments received. AVAILABILITY OF UNISEX Annuity income payments are based, in part, on the sex of the Annuitant. For certain situations where the Contracts are to be used in connection with an employer sponsored benefit plan or arrangement, Federal law may require that annuity income payments be determined without regard to sex. A special endorsement to the Contract is available for this purpose. For questions regarding unisex requirements, you should consult with qualified counsel. DOLLAR COST AVERAGING Dollar cost averaging allows you to make automatic monthly dollar amount transfers from the Money Market Subaccount to any of the other variable Subaccounts. Dollar cost averaging transfers are not permitted to the Guaranteed Account. These monthly transfers will take effect on the same day each month. You may select any date between the 1st and 28th as the date of your dollar cost averaging transfers (the "Transfer Date"). If the Transfer Date occurs on a day the New York Stock Exchange is closed ( i.e., weekend or holiday), the dollar cost averaging transfer will take effect as of the next business day that the New York Stock Exchange is open. Your transfers will continue until the balance in the Money Market Subaccount is exhausted or you notify us of cancellation of dollar cost averaging for your Contract. The minimum monthly transfer allowed to any variable Subaccount is $250. Dollar cost averaging is currently available at no charge to the Contract Owner. Empire Fidelity Investments Life reserves the right to modify or terminate the dollar cost averaging feature. POSTPONEMENT OF PAYMENT In general, we will ordinarily pay any partial or full cash withdrawal within seven days after we receive your written request at our Annuity Service Center. We will usually pay any Death Benefit within seven days after we receive proof of the Annuitant's death. However, we may delay payment if (1) the disposal or valuation of the Variable Account's assets is not reasonably practicable because the New York Stock Exchange is closed for other than a regular holiday or weekend, trading is restricted by the SEC, or the SEC declares that an emergency exists; or (2) the SEC by order permits postponement of payment to protect our Contract Owners. In addition, we reserve the right to delay payment of any partial or full cash withdrawal from the Guaranteed Account for not more than six months. If payment from the Guaranteed Account is delayed for more than 30 days or if less, the period required by law, it will be credited with interest from the date of withdrawal at a rate not less than 3.5% per year compounded annually or, if greater, the rate required by law. 13.MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS CHANGES IN INVESTMENT OPTIONS We may from time to time make additional Subaccounts available to you. These Subaccounts will invest in investment portfolios that we find suitable for the Contracts. We also have the right to eliminate Subaccounts from the Variable Account, to combine two or more Subaccounts, or to substitute a new portfolio or fund for the portfolio in which a Subaccount invests. A substitution may become necessary if, in our judgment, a portfolio or fund no longer suits the purposes of the Contracts. This may happen due to a change in laws or regulations, or a change in a portfolio's investment objectives or restrictions, or because the portfolio is no longer available for investment, or for some other reason. We would obtain prior approval from the SEC and any other required approvals before making such a substitution. We also reserve the right to operate the Variable Account as a management investment company under the 1940 Act or any other form permitted by law or to deregister the Variable Account under such Act in the event such registration is no longer required. NET RATE OF RETURN FOR A SUBACCOUNT A Subaccount's Net Rate of Return depends on how the investments of the Subaccount perform. We determine the Net Rate of Return of a Subaccount at the end of each Valuation Period. Such determinations are made as of the close of business each day the New York Stock Exchange is open for business. The Net Rate of Return reflects the investment performance of the Subaccount for the Valuation Period and is net of the asset charges to the Subaccounts. Shares of the Funds are valued at net asset value. Any dividends or capital gains distributions of a portfolio of the Funds are reinvested in shares of that portfolio. VOTING RIGHTS We will vote shares of the Funds owned by the Variable Account according to your instructions. However, if the Investment Company Act of 1940 or any related regulations or interpretations should change, and we decide that we are permitted to vote the shares of the Funds in our own right, we may decide to do so. Before the Annuity Date, we calculate the number of shares that you may instruct us to vote by dividing your Contract Value in a Subaccount by the net asset value of one share of the corresponding portfolio. If variable annuity income payments have commenced, we calculate the number of shares that the payee may instruct us to vote by dividing the reserve maintained in each Subaccount to meet the obligations under the Contract by the net asset value of one share of the corresponding portfolio. Fractional votes will be counted. We reserve the right to modify the manner in which we calculate the weight to be given to your voting instructions where such a change is necessary to comply with then current Federal regulations or interpretations of those regulations. We will determine the number of shares you can instruct us to vote 90 days or less before the applicable Fund shareholder meeting. At least 14 days before the meeting, we will send you material by mail for providing us with your voting instructions. If your voting instructions are not received in time, we will vote the shares in the same proportion as the instructions received from other Contract Owners. We will also vote shares we hold in the Variable Account that are not attributable to Contract Owners in the same proportionate manner. Under certain circumstances, we may be required by state regulatory authorities to disregard voting instructions. This may happen if following such instructions would change the sub-classification or investment objectives of the portfolios, or result in the approval or disapproval of an investment advisory contract. Under Federal regulations, we may also disregard instructions to vote for Contract Owner-initiated changes in investment policies or the investment adviser if we disapprove of the proposed changes. We would disapprove a proposed change only if it were contrary to state law, prohibited by state regulatory authorities, or if we decided that the change would result in overly speculative or unsound investments. If we ever disregard voting instructions, we will include a summary of our actions in the next semiannual report. RESOLVING MATERIAL CONFLICTS The investment portfolios of the Funds are available to registered separate accounts offering variable annuity and variable life products of other participating insurance companies, as well as to the Variable Account and other separate accounts we establish. Although we do not anticipate any disadvantages to this, there is a possibility that a material conflict may arise between the interest of the Variable Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of our Contract Owners and those of other companies, or some other reason. In the event of a conflict, we will take any steps necessary to protect our Contract Owners and variable annuity payees. PERFORMANCE Performance information for the variable Subaccounts may appear in reports and advertising to current and prospective Contract Owners. The performance information is based on historical investment experience of the Funds and does not indicate or represent future performance. Total returns are based on the overall dollar or percentage change in value of a hypothetical investment. Total return quotations reflect changes in fund share price, the automatic reinvestment by the separate account of all distributions and the deduction of applicable annuity charges (including any contingent deferred sales charges that would apply if a Contract Owner surrendered the Contract at the end of the period indicated). Quotations of total return may also be shown that do not take into account certain contractual charges such as a maintenance charge or a contingent deferred sales load. The total return percentage will be higher under this method than under the standard method described above. A cumulative total return reflects a Subaccount's performance over a stated period of time. An average annual total return reflects the hypothetical annually compounded return that would have produced the same cumulative total return if the Subaccount's performance had been constant over the entire period. Because average annual total returns tend to smooth out variations in a Subaccount's returns, you should recognize that they are not the same as actual year-by-year results. Some Subaccounts may also advertise yield. These measures reflect the income generated by an investment in the Subaccount over a specified period of time. This income is annualized and shown as a percentage. Yields do not take into account capital gains or losses or the contingent deferred sales load. The standard quotations of yield reflect the maintenance charge. Quotations of yield may also be shown that do not reflect the maintenance charge. The yield calculation will be higher under this method than under the standard method. The Money Market Subaccount may advertise its current and effective yield. Current yield reflects the income generated by an investment in the Subaccount over a 7 day period. Effective yield is calculated in a similar manner except that income earned is assumed to be reinvested. The Investment Grade Bond and the High Income and Emerging Markets Debt Subaccounts s may advertise a 30 day yield which reflects the income generated by an investment in the Subaccount over a 30 day period. LITIGATION No litigation is pending that would have a material effect on us or the Variable Account. APPENDIX A Accumulation Unit Values Empire Fidelity Investments Variable Annuity Account A Condensed Financial Information Money Market Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 14.66 15.30 3,144,313 1995 13.99 14.66 2,086,339 1994 13.55 13.99 1,840,618 1993 13.26 13.55 644,024 1992* 13.07 13.26 458,774 * June 3, 1992 to December 31, 1992 High Income Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 22.05 24.89 820,013 1995 18.47 22.05 605,822 1994 18.94 18.47 413,916 1993 15.88 18.94 315,623 1992* 14.95 15.88 66,583 * June 3, 1992 to December 31, 1992 Equity-Income Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 27.44 31.05 4,755,212 1995 20.52 27.44 4,481,146 1994 19.36 20.52 3,148,692 1993 16.54 19.36 2,020,649 1992* 15.33 16.54 516,594 * June 3, 1992 to December 31, 1992 Growth Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 30.80 34.97 2,503,391 1995 22.98 30.80 2,004,576 1994 23.22 22.98 1,448,467 1993 19.64 23.22 938,534 1992* 17.67 19.64 300,602 * June 3, 1992 to December 31, 1992 Overseas Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 19.00 21.30 1,151,640 1995 17.50 19.00 930,291 1994 17.37 17.50 1,472,775 1993 12.79 17.37 863,085 1992* 15.42 12.79 57,728 * June 3, 1992 to December 31, 1992 Investment Grade Bond Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 16.99 17.36 382,801 1995 14.63 16.99 358,773 1994 15.35 14.63 270,642 1993 13.98 15.35 346,042 1992* 13.40 13.98 184,492 * June 3, 1992 to December 31, 1992 Asset Manager Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 18.29 20.76 3,900,514 1995 15.80 18.29 4,435,615 1994 16.99 15.80 6,284,783 1993 14.18 16.99 5,376,522 1992* 13.47 14.18 1,765,922 * June 3, 1992 to December 31, 1992 Index 500 Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 15.54 18.90 1,887,371 1995 11.44 15.54 802,405 1994 11.44 11.44 210,179 1993 10.53 11.44 166,568 1992* 10.17 10.53 57,596 * November 2, 1992 to December 31, 1992 Asset Manager: Growth Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 12.20 14.50 1,163,007 1995* 10.00 12.2 0 396,158 * Period from 1/3/95 (commencement of operations) to 12/31/95 Contrafund Subaccount Accumulation Accumulation Number of Unit Value at Unit Value at Accumulation Units Beginning of Period End of Period at End of Period 1996 13.87 16.66 5,882,023 1995* 10.00 13.87 3,685,097 * Period from 1/3/95 (commencement of operations) to 12/31/95 14.TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Accumulation Units Fixed Annuity Income Payments Variable Annuity Income Payments Hypothetical Illustrations of Annuity Income Payouts General Information Performance Transfers Among Subaccounts After the Annuity Date Unavailability of Annuity Income Options in Certain Circumstances IRS Required Distributions Safekeeping of Variable Account Assets Distribution of the Contracts State Regulation Legal Matters Registration Statement Independent Accountants Financial Statements INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT 1. Internal Revenue Service Regulations require you be given this Disclosure Statement to make certain that you fully understand the nature of an Individual Retirement Account (IRA). For this reason, it is important that you read this statement carefully. REVOCATION 2. You are allowed to revoke or cancel your IRA within thirty (30) days of the date you receive the IRA contract. A revocation treats an IRA as if it never existed, and entitles you to a full refund of your contract value at the time of revocation plus any amount deducted from your contribution prior to such time. If you revoke within the first seven (7) days you will receive the entire amount you paid if it is greater than the contract value. You may revoke your IRA by mailing or delivering a notice of revocation to: Empire Fidelity Investments Life Insurance Company Annuity Service Center P.O. Box 3767 New York, NY 10277-0433 Any question regarding this procedure may be directed to a Fidelity Insurance Specialist at 1-800-544-2442. CONTRIBUTIONS 3. You may establish an IRA for the purpose of rolling over all or a portion of your distribution from a qualified plan, tax sheltered annuity or other IRA. If you retire, terminate your employment prior to retirement age, or become disabled, and you are entitled to a single sum distribution, all or a portion of the distribution may be transferred to a qualifying IRA tax-free if done within 60 days of receipt of the single sum distribution. The amount of your rollover IRA contribution will not be included in your taxable income for the year in which you receive the qualified plan distribution. 4. Subsequent contributions, other than additional rollover contributions from another qualified plan, tax sheltered annuity or IRA, will not be accepted. 5. No deduction is allowed for a rollover contribution which is not treated as income to the individual. INVESTMENTS 6 The assets in your IRA are nonforfeitable, subject to the surrender charges specified in the IRA contract. 7. The assets in your IRA cannot be commingled with other property except in a common trust fund or common investment fund. 8. No part of the IRA may be invested in life insurance or endowment contracts. DISTRIBUTIONS 9. Distributions from your IRA will be included in your gross income for federal income tax purposes for the year in which you receive them. 10. To the extent they are included in taxable income, distribution from your IRA made before age 59 1/2 will be subject to a 10% non-deductible penalty tax (in addition to being taxable as ordinary income) unless the distribution is rolled over to another qualified plan, tax sheltered annuity or IRA, or the distribution is made on account of your death or disability, or the distribution is one of a scheduled series of payments over your life or life expectancy or the joint life expectancies of yourself and the second person designated by you. 11. You must begin receiving distributions of the assets in your IRAs by April 1 of the calendar year following the calendar year in which you reach 70 1/2. Subsequent distributions must be made by December 31 of each year. 12. You may select one of the following methods of distribution for the assets of this IRA: (a) Distribution over your life or your life and the life of a second person designated by you; (b) Distribution over a period certain not to exceed your life expectancy or your life expectancy and that of a second person designated by you; (c) Single sum payment; or (d) Partial withdrawals that, together with withdrawals from your other IRAs, satisfy the minimum distribution requirements discussed below. (See Contract and Endorsement for a full description of these distribution methods.) 13. Once distributions are required to begin, they must not be less than the amount each year (determined by actuarial tables) which would exhaust the value of all your IRAs over the required distribution period, which is generally your life expectancy or the joint life and last survivor expectancy of you and your spouse. You will be subject to a 50% excise tax on the amount by which the distribution you actually received in any year falls short of the minimum distribution required for the year. 14. If you die after distribution of the IRA has commenced, the remaining balance must continue to be distributed under the same or a more rapid method of distribution. 15. If you die before distribution of the IRA commences, the entire balance must be distributed to the beneficiary within five (5) years unless: (a) The beneficiary is your surviving spouse and the beneficiary either treats the IRA as his or her own IRA or elects within a five (5) year period to receive payments over his or her own life expectancy commencing at any date prior to the date you would have reached age 70 1/2; or (b) The beneficiary is not your surviving spouse and the beneficiary elects to have the IRA distributed over his or her life expectancy commencing within one (1) year of your death. 16. There is a 15% excise tax assessed against annual distribution from tax-favored retirement plans, including IRAs, which exceed the greater of (a) $150,000; and (b) $112,500 adjusted after 1988 to reflect cost-of-living increases. To determine whether you have distributions in excess of this limit you must aggregate the amounts of all distributions received by you during the calendar year from all retirement plans, including IRAs. Please consult with your tax advisor for more complete information including favorable elections. 17. You may rollover all or a portion of your IRA into another IRA or individual retirement annuity and maintain the tax-deferred status of these assets. Tax-free rollovers between IRAs may be made no more than once every twelve months. OTHER TAX CONSIDERATIONS 18. Distributions are taxed as ordinary income under federal income tax laws. 19. The tax treatment of single sum distributions under Section 402(e) of the Code is not applicable to distributions from IRAs. 20. Reporting to the IRS will be required by you in the event that special taxes or penalties described herein are due. You must file Treasury Form 5329 with the IRS for each taxable year in which a premature distribution takes place or less than the required minimum amount is distributed from your IRA. The Tax Reform Act of 1986 also requires you to report the amount of all distributions you received from your IRA and the aggregate balance of all IRAs as of the end of the calendar year. PROHIBITED TRANSACTIONS 21. If any of the events prohibited by Section 4975 of the Code (such as any sale, exchange or leasing of any property between you and your IRA) occurs during the existence of your IRA, your account will be disqualified and the entire balance in your account will be treated as if distributed to you, as of the first day of the year in which the prohibited event occurs. This "distribution" would be subject to ordinary income tax and, if you were under age 59 1/2 at the time, to the 10% penalty tax on premature distributions. 22. If you or your beneficiary borrow any money under, or by use of, all or a portion of your IRA, then the portion pledged will be treated as if distributed to you, and will be taxable to you as ordinary income and subject to the 10% penalty during the year in which you make such a pledge. FINANCIAL INFORMATION 25. The value of your investment will depend on how you allocate funds between the Guaranteed Account and the subaccounts of the Variable Account. The Company guarantees that the portion of your contract value that is held in the Guaranteed Account will accrue interest daily at specified interest rates that vary from time to time. With respect to funds allocated to the Variable Account, the value will depend upon the actual investment performance of the subaccounts that you choose; no minimum value is guaranteed. See your prospectus for a more detailed description. 26. As further described in the prospectus, the following are all the charges that the Company currently makes: (a) ADMINISTRATIVE CHARGE The Company currently deducts an annual maintenance charge of $30 on each contract anniversary. This charge is currently waived if total payments, less any withdrawals, equal at least $25,000. The Company also deducts a daily charge from the assets of the subaccounts equivalent to an effective annual rate of 0.25%. This charge is not made against the Guaranteed Account. (b) MORTALITY AND EXPENSE RISK CHARGE The Company deducts a daily charge from the assets of the subaccounts equivalent to an effective annual rate of 0.75%. This charge is not made against the Guaranteed Account. (c) WITHDRAWAL CHARGE During the first five contract years the Company assesses a charge upon the surrender of the contract or the withdrawal of more than the Exempt Withdrawal Amount. This charge in the first year is 5% of the purchase payments withdrawn. The factor decreases by 1% per year so that no withdrawal charge is made after the fifth contract year. (d) PORTFOLIO EXPENSES The portfolios associated with the Variable Account incur operating expenses and pay monthly management fees to Fidelity Management & Research Company. The level of expenses vary by portfolio. This charge is not made against the Guaranteed Account. PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION EXHIBIT INDEX Exhibit (9) Opinion and consent of David J. Pearlman, as to the legality of securities being issued. (10) (a) Written consent of Coopers & Lybrand. (b) Written consent of Jorden Burt Berenson & Johnson LLP RETIREMENT RESERVES STATEMENT OF ADDITIONAL INFORMATION AUGUAT 29, 1997 This Statement of Additional Information supplements the information found in the current Prospectus for the variable annuity contracts ("Contracts") offered by Empire Fidelity Investments Life Insurance Company through its Empire Fidelity Investments Variable Annuity Account A (the "Variable Account"). You may obtain a copy of the Prospectus dated August 29, 1997, without charge by calling 800-544-2442. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ TOGETHER WITH THE PROSPECTUS FOR THE CONTRACT. TABLE OF CONTENTS PAGE Service Agreements 2 Accumulation Units 2 Fixed Annuity Income Payments 2 Variable Annuity Income Payments 3 Hypothetical Illustrations of Annuity Income Payouts 6 General Information 11 Performance 11 Transfers Among Subaccounts After the Annuity Date 11 Unavailability of Annuity Income Options in Certain Circumstances 16 IRS Required Distributions 16 Safekeeping of Variable Account Assets 16 Distribution of the Contracts 16 State Regulation 17 Legal Matters 17 Registration Statement 17 Independent Accountants 17 Financial Statements 17 SERVICE AGREEMENTS We have entered into a service agreement with Fidelity Investments Life Insurance Company ("FILI"), our parent. FILI may provide accounting, underwriting, claims, actuarial and data processing services. A participation agreement has been entered into between Empire Fidelity Investments Life Insurance Company and the following companies for their management services: Strong Variable Insurance Funds, Inc., ("Funds"), Strong Opportunity Fund II, Inc., and Strong Capital Management, Inc. (the "Adviser"). PBHG Insurance Series Fund, Inc. ("Fund"), and Pilgrim Baxter & Associates, LTD. ("Adviser"). Morgan Stanley Universal Funds, Inc. (the "Fund"), and Morgan Stanley Asset Management Inc. and Miller Anderson & Sherrerd, LLP (the "Advisers"). Warburg, Pincus Trust, (the "Fund"); Warburg, Pincus Counsellors, Inc. (the "Adviser"); and Counsellors Securities Inc. ACCUMULATION UNITS We credit your payments allocated to the variable Subaccounts in the form of Accumulation Units. The number of Accumulation Units credited to each Subaccount is determined by dividing the net payment allocated to that Subaccount by the Accumulation Unit Value for that Subaccount for the Valuation Period during which the payment is received. In the case of the initial payment, we credit Accumulation Units as explained in the Prospectus. Accumulation Units are adjusted for any transfers into or out of a Subaccount. For each variable Subaccount, the Accumulation Unit Value for the first Valuation Period of the Subaccount was set at the Accumulation Unit Value of the comparable subaccount of similar contracts offered by an affiliated company. The Accumulation Unit Value for each subsequent Valuation Period is the Net Investment Factor for that period, multiplied by the Accumulation Unit Value for the immediately preceding Valuation Period. The Accumulation Unit Value may increase or decrease from one Valuation Period to the next. Each variable Subaccount has a Net Investment Factor (also referred to as the "Net Rate of Return"). The Net Investment Factor is an index that measures the investment performance of a Subaccount from one Valuation Period to the next. The Net Investment Factor for each Subaccount for a Valuation Period is determined by adding (a) and (b), subtracting (c) and then dividing the result by (a) where: (a) Is the value of the assets at the end of the preceding Valuation Period; (b) Is the investment income and capital gains, realized or unrealized, credited during the current valuation period; (c) Is the sum of: (1) The capital losses, realized or unrealized, charged during the current valuation period plus any amount charged or set aside for taxes during the current Valuation Period; plus (2) The deduction from the Subaccount during the current Valuation Period representing a daily charge equivalent to an effective annual rate of 1%. Effective November 1, 1997 this charge is 0.80%).. The Net Investment Factor may be greater than or less than one. If it is greater than one, the Accumulation Unit Value will increase; if less than one, the Accumulation Unit Value will decrease. FIXED ANNUITY INCOME PAYMENTS The amount of monthly annuity income payments for a selected fixed annuity income option or the fixed portion of a selected combination annuity income option is calculated by applying the proceeds payable to the income payment rates for the option selected. Annuity income payments will be the larger of: (a) The income based on the rates shown in the Contract's Annuity Tables for the option chosen; and (b) The income calculated by applying the proceeds as a single premium to our single premium annuity rates in effect on the date of the first income payment for the same option. Annuity income payments under a fixed annuity or fixed portion of a combination annuity will not vary in dollar amount and will not be affected by the investment performance of the Variable Account. Amounts used to purchase a fixed annuity may not be later transferred to a variable annuity. VARIABLE ANNUITY INCOME PAYMENTS If a variable annuity is selected, annuity income payments will vary in amount in accordance with the investment performance of the elected Subaccounts of the Variable Account. If a combination annuity is selected, annuity income payments attributable to the variable portion of the annuity will likewise vary. On the Annuity Date, the amount of the first annuity income payment is calculated by applying the proceeds payable to the annuity table shown in the Contract (or any more favorable annuity rates we may offer on the Annuity Date) for the option chosen. The dollar amount of the first annuity income payment attributable to each variable Subaccount is then divided by each Subaccount's then current Annuity Unit Value (Annuity Units are explained in the Prospectus) to establish the total number of Annuity Units that will be the basis for determining later annuity income payments. Annuity income payments after the first will be equal to the sum of the number of Annuity Units determined in this manner for each Subaccount multiplied by the then current Annuity Unit Value for each Subaccount, which (as explained in the Prospectus) depends upon the Net Investment Factor for the Subaccount adjusted by a factor to neutralize the assumed rate of return used in the calculation of annuity income payments. The number of Annuity Units remains fixed for all annuity income payments, unless a transfer is made. The dollar amount of the annuity income payments may change from payment to payment. We guarantee that the dollar amount of each annuity income payment after the first will not be affected by variations in mortality experience from the mortality assumptions used to determine the first annuity income payment. To illustrate the above description of how annuity income payments are determined, consider the following example. A male age 65 applies $50,000 to purchase a lifetime income for himself with payments to be made for at least 10 years (even if the Annuitant dies shortly after payments have begun). Annuity income payments are to be made on a monthly basis with the first annuity income payment to be made immediately. The variable pay-out option is chosen with the amount of each income payment dependent on the actual investment performance of the Subaccounts that are selected. Using an Assumed Investment Rate of 3.5%, the initial monthly income amount is $283.77 The investment selection is 50% in Portfolio A and 50% in Portfolio B. At Annuitization Portfolio A Portfolio B (a) Initial Monthly Annuity Income Payment $141.89 $141.89 (b) Annuity Unit Value 1.23456 1.32465 (c) Income in Units 114.928 107.111 The monthly annuity income payment allocated to each Subaccount is translated into Annuity Units using the Annuity Unit Value at the time of annuitization. Since each Subaccount is likely to have a different Annuity Unit Value, the total number of Annuity Units is not informative -- rather you need to look at: X = Annuity # Annuity Annuity Income Units Unit Value Payment Portfolio A 114.928 1.23456 141.89 Portfolio B 107.111 1.32465 141.89 $283.77 Assume that during the next month, the investment results for each subaccount are: Portfolio A Portfolio B (d) Actual Net Investment Results .4074% .1652% (e) Assumed Investment Results .2871% .2871% (f) Relative Performance Factor 1.00120 .99878 Line (d) shows the net investment result after the charge for assuming mortality and expense risks and the administrative charge (1% on an annual basis) and the charge for investment advisory fees and fund expenses. Line (e) shows the investment results that were assumed in the calculation of the initial monthly annuity income payment, 3.5% on an annual basis. Line (f) represents how much $1 invested at the start of the month in each of the subaccounts would have grown relative to $1 earning 3.5%. (The formula for calculating the Relative Performance Factor is 1+ (d) divided by 1 + (e)). Note that since line (f) is more than 1 for Portfolio A and less than 1 for Portfolio B, the Portfolio A subaccount has earned more than 3.5% on an annual basis while the Portfolio B subaccount has earned less than 3.5% on an annual basis. The Annuity Unit Value grows with the actual investment performance relative to the assumption of 3.5%. If a Subaccount earns more than 3.5% on an annual basis, then the Annuity Unit Value will increase. Conversely, if less than 3.5% is earned, the Annuity Unit Value will decrease. The Annuity Unit Value at the time of the second monthly income payment is the Annuity Unit Value for the prior month (line b) multiplied by the Relative Performance Factor (line f). Portfolio A Portfolio B (b) Annuity Unit Value (prior) 1.23456 1.32465 (f) Relative Performance Factor 1.00120 .99878 (g) Annuity Unit Value (current) 1.23604 1.32303 Except for exchanges between Subaccounts, the number of Annuity Units remains fixed throughout the lifetime of the Annuitant. The value of each annuity income payment, however, varies because the Annuity Unit Value is usually changing as a result of investment experience. The second monthly payment is calculated by multiplying the number of payment units by the current Annuity Unit Value. Portfolio A Portfolio B (c) Monthly Income in Units 114.928 107.111 (g) Annuity Unit Value (current) 1.23604 1.32303 (h) Monthly Income (in Dollars) $142.06 $147.71 Note that the Annuity Unit Value and the Monthly Income for the Portfolio A portion of the payment has increased whereas the opposite is true for the Portfolio B portion. The second monthly annuity income payment would be the sum for each Subaccount, or $283.77. To illustrate the possible volatility of the annuity income payments, assume that during the following month, the investment results for each Subaccount are: Portfolio A Portfolio B i) Actual Net Investment Results 15.50% -13.00% e) Assumed Investment Results .2871% .2871% j) Relative Performance Factor 1.15169 .86751 The Annuity Unit Value at the time of the third monthly annuity income payment is the Annuity Unit Value for the prior month (line g) multiplied by the Relative Performance Factor (line j): Portfolio A Portfolio B (g) Annuity Unit Value (prior) 1.23604 1.32303 (j) Relative Performance Factor 1.15169 .86751 (k) Annuity Unit Value (current) 1.42353 1.14774 The third monthly annuity income amount is calculated by multiplying the number of payment units by the current Annuity Unit Value: Portfolio A Portfolio B (c) Income in Units 114.928 107.111 (k) Annuity Unit Value (current) 1.42353 1.14774 (l) Monthly Income (in dollars) $163.60 $122.94 Note that the Annuity Unit Value and the Monthly Income for Portfolio A portion of the income amount have again increased but to a much greater extent than before whereas the opposite is true for the Portfolio B portion. The third monthly annuity income payment would be the sum for each subaccount, or $286.54. An illustration of annuity income payments under various rates appears in the tables on pages 6 and 7. The monthly equivalents of the annual net returns of -1.65%, 3.50%, 4.25%, 6.21, 8.40% and 10.15% shown in the tables are -0.14%, 0.29%, 0.35%, 0.50%, 0.66% and 0.81%. HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS The following tables have been prepared to show how variable annuity income payments under the Contract change with investment performance over an extended period of time. The tables illustrate how monthly annuity income payments would vary over time if the return on the assets in the selected portfolios were a uniform gross annual rate of 0%, 5.03%, 6%, 8%, 10% and 12%. The values would be different from those shown if the returns averaged 0%, 5.24%5.03%, 6%, 8%, 10% or 12% but fluctuated over and under those averages throughout the years. The tables reflect the fact that the Net Investment Return on the assets held in the Subaccounts is lower than the gross return of the selected portfolios. The tables reflect the daily charge to the Subaccounts for assuming mortality and expense risks, which is equivalent to an effective annual charge of 0.75% and the daily administrative charge which is equivalent to an effective annual charge of 0.05%. The amounts shown in the tables also take into account the portfolios' management fees and operating expenses which are assumed to be at an annual rate of 0.66% of the average daily net assets of the selected portfolios. This 0.66% figure consists of assumed management fees of 0.52% and assumed operating expenses of 0.17%, figures based on the average of current management fees and operating expenses. Actual fees and expenses of the portfolios associated with your Contract may be more or less than 0.66%, will vary from year to year, and will depend on how you allocate your investment base. See the current prospectuses for the Funds for more complete information. The monthly annuity income payments illustrated are on a pre-tax basis. The federal income tax treatment of annuity income payments is generally described in the section of your current prospectus entitled "Tax Considerations." The tables show both the gross rate and the net rate. The difference between gross and net rates represent the 1% risk and administrative charges and the assumed 0.66% for investment management and operating expenses. Since these charges are deducted daily from assets, the difference between the gross and net rate is not exactly 1.46%. Two tables follow. The first table assumes 100% of the Contract Value is allocated to a variable annuity income option; the second table assumes 50% of the Contract Value is placed under a fixed annuity income option, using the fixed crediting rate Empire Fidelity Investments Life offered on the fixed annuity income option at the date of the illustration. Both illustrations assume that the final value of the accumulation account is $50,000 and is applied at age 65 to purchase a life annuity for a guaranteed period of 10 years certain and life thereafter. When part of the Contract Value has been allocated to the fixed annuity income option, the guaranteed minimum annuity income payment resulting from this allocation is also shown. The illustrated variable annuity income payments are determined through the use of standard mortality tables and the assumption that the net investment return will be 3.5% per year. Thus, actual performance greater than a net return of 3.5% will result in increasing annuity income payments and performance less than 3.5% per year will result in decreasing annuity income payments. We may offer alternative Assumed Investment Returns from which you may select. Fixed annuity income payments remain constant. Initial monthly annuity income payments under a fixed annuity income payout are generally higher than initial payments under a variable income payout option. These tables show the monthly income payments for several hypothetical constant rates of return. Of course, actual investment performance will not be constant and may be volatile. Actual monthly income amounts would differ from those shown if the actual rate of return averaged the rate shown over a period of years, but also fluctuated above or below those averages for individual contract years. Upon request and when you are considering an annuity income option, we will furnish a comparable illustration based on your individual circumstances. ANNUITY PAY-OUT ILLUSTRATION (100% VARIABLE PAYOUT) ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE APPLIED: $50,000 DATE OF BIRTH: 3/1/32 STATE PREMIUM TAX: 0% SEX: Male DATE OF ILLUSTRATION: 3/1/97 ANNUITY OPTION SELECTED: Lifetime Income with annuity income payments guaranteed for 10 years(1) FREQUENCY OF ANNUITY INCOME PAYMENTS: Monthly payments with first payment the first of the month after annuitization FIXED MONTHLY ANNUITY INCOME PAYMENT AVAILABLE ON THE DATE OF THE ILLUSTRATION IF 100% FIXED ANNUITY OPTION SELECTED: $312.73 ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED TO THE VARIABLE PAYOUT NET RETURN AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.50% MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, NO MINIMUM DOLLAR AMOUNT IS GUARANTEED AMOUNT OF FIRST MONTHLY ANNUITY INCOME PAYMENT IN YEAR SHOWN ASSUMING A CONSTANT ANNUAL INVESTMENT RETURN OF: Gross 0% 5.03% 6% 8% 10% 12% : PAYMENT CALEND AG Net(2) -1.45 3.50% 4.46 6.43 8.40 10.37 YEAR AR E : % % % % % YEAR 1 1997 65 285 285 285 285 285 285 2 1998 66 271 285 288 293 298 304 3 1999 67 258 285 290 301 313 324 4 2000 68 246 285 293 310 327 346 5 2001 69 234 285 296 319 343 369 10 2006 74 183 285 310 366 432 508 15 2011 79 144 285 324 421 545 701 20 2016 84 112 285 340 484 686 966 IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED. THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE RATES SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. SINCE IT IS HIGHLY LIKELY THAT INVESTMENT RETURNS WILL FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (TO THE EXTENT THAT IS BASED ON THE VARIABLE ACCOUNT) WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY EMPIRE FIDELITY INVESTMENTS LIFE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. (1) Monthly annuity income payments cease upon the death of the Annuitant if the Annuitant dies after the 10 year Guarantee Period. If the Annuitant dies during the Guarantee period, annuity income payments will continue until the end of the Period. The cumulative amount of annuity income payments received under the annuity depends on how long the Annuitant lives after the Guarantee Period. An annuity pools the mortality experience of annuitants. Annuitants who die earlier, in effect, subsidize the payments for those who live longer. (2) The illustrated net return reflects the deduction of average fund expenses and the 0.08% risk/administrative charge from the gross return. ANNUITY PAY-OUT ILLUSTRATION (50% VARIABLE - 50% FIXED PAYOUT) ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE APPLIED: $50,000 DATE OF BIRTH: 3/1/32 STATE PREMIUM TAX: 0% SEX: Male DATE OF ILLUSTRATION: 3/1/97 ANNUITY OPTION SELECTED: Lifetime Income with annuity income payments guaranteed for 10 years(1) FREQUENCY OF ANNUITY INCOME PAYMENTS: Monthly payments with first payment the first of the month after annuitization FIXED MONTHLY ANNUITY INCOME PAYMENT AVAILABLE ON THE DATE OF THE ILLUSTRATION IF 100% FIXED ANNUITY OPTION SELECTED: $312.73 ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS ALLOCATED TO THE VARIABLE PAYOUT AND 50% TO THE FIXED PAYOUT NET RETURN AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.50% MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, BUT WILL NEVER BE LESS THAN $156.37. THE MONTHLY GUARANTEED PAYMENT OF $312.73 IS BEING PROVIDED BY THE $25,000 APPLIED UNDER THE FXED ANNUITY OPTION. AMOUNT OF FIRST MONTHLY ANNUITY INCOME PAYMENT IN YEAR SHOWN ASSUMING A CONSTANT ANNUAL INVESTMENT RETURN OF: Gross 0% 5.03% 6% 8% 10% 12% : PAYMENT CALEND AG Net(2) -1.45 3.50% 4.46 6.43 8.40 10.37 YEAR AR E : % % % % % YEAR 1 1997 65 299 299 299 299 299 299 2 1998 66 292 299 300 303 306 308 3 1999 67 286 299 302 307 313 318 4 2000 68 279 299 303 311 320 329 5 2001 69 274 299 304 316 328 341 10 2006 74 248 299 311 340 372 410 15 2011 79 228 299 319 367 429 507 20 2016 84 213 299 326 399 500 640 IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED. THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED THE RATES SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. SINCE IT IS HIGHLY LIKELY THAT INVESTMENT RETURNS WILL FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (TO THE EXTENT THAT IS BASED ON THE VARIABLE ACCOUNT) WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY EMPIRE FIDELITY INVESTMENTS LIFE OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. (1) Monthly annuity income payments cease upon the death of the Annuitant if the Annuitant dies after the 10 year Guarantee Period. If the Annuitant dies during the Guarantee period, annuity income payments will continue until the end of the Period. The cumulative amount of annuity income payments received under the annuity depends on how long the Annuitant lives after the Guarantee Period. An annuity pools the mortality experience of annuitants. Annuitants who die earlier, in effect, subsidize the payments for those who live longer. (2) The illustrated net return reflects the deduction of average fund expenses and the 1% risk/administrative charge from the gross return, (Effective November 1997, this charge will be 0.80%) GENERAL INFORMATION We may advertise quotes of Contract Owners discussing ways to use Retirement Reserves in retirement planning, its efficiency and ease of use, and the level of service provided by Empire Fidelity Investments Life. Any such advertisements will not include testimonials concerning the Funds or the Funds' investment adviser. We may also advertise examples of the effects of periodic investment plans, including the principle of dollar cost averaging. In such a plan, a policyowner invests a fixed dollar amount in a Subaccount thereby purchasing fewer units when prices are high and more units when prices are low. While such a strategy does not assure a profit nor guard against a loss in a declining market, the Contract Owner's average cost per unit can be lower than if fixed numbers of units had been purchased at those intervals. In evaluating such a plan, Contract Owners should consider their ability to continue purchasing units through periods of low price levels. In addition, we may from time to time use statistics in advertising to support the growth of annuity sales. Information to support these statistics may be obtained from the Life Insurance Marketing Research Association, A.M. Best, American Council of Life Insurance or the Variable Annuity Research and Data Service. From time to time, we may reprint and use as advertising and sales literature, articles or quotes from financial or business publications and periodicals. In addition, we may reference or discuss the products and services of other affiliated companies, which may include: Fidelity funds; retirement investing; brokerage products and services; saving for college; charitable giving; and the Fidelity credit card. We may also provide information to help individuals understand their investment goals and explore various financial strategies. In communicating these strategies, we may: compare the differences between tax deferred and taxable investments; discuss factors to consider when purchasing the contract; discuss the effects of probate when transferring the contract to heirs; discuss traditional sources of retirement income and products which may be used to supplement that income; discuss effects of inflation on fixed-income sources and how the variable investment options may be used as a potential hedge against inflation during the deferral and income periods; illustrate and compare the effects additional payments have on a contract; discuss strategies of reducing risk through diversification of purchase payments and providing hypothetical investment mixes; discuss past returns of different classes of investments based on data supplied through various sources such as Ibbotson Associates of Chicago, Illinois; and assist policyholders with inquiries regarding their annuity. This information may be obtained from various sources such as The U.S. Department of the Treasury, U.S. Department of Labor, Statistical Abstract of the U.S. and Individual Annuitant Mortality Table. We may present this information through various methods such as charts, graphs, illustrations, and tables. You may purchase the contract with proceeds from various sources such as transactions qualifying for a tax-free exchange under Section 1035 of the Internal Revenue Code. PERFORMANCE Performance information for any Subaccount may be compared, in reports and advertising to: (1) the Standard & Poor's 500 Composite Stock Price Index ("S & P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue's Money Market Institutional Averages; (2) other variable annuity separate accounts or other investment products tracked by Lipper Analytical Services, Morningstar, or the Variable Annuity Research and Data Service, widely used independent research firms which rank mutual funds and other investment companies by overall performance, investment objectives, and assets; and (3) the Consumer Price Index (measure for inflation) to assess the real rate of return from an investment in a contract Unmanaged indices may assume the reinvestment of dividends but generally do not reflect deductions for annuity charges and investment management costs. Total returns, yields and other performance information may be quoted numerically or in a table, graph, or similar illustration. Reports and advertising may also contain other information including (i) the ranking of any subaccount derived from rankings of variable annuity separate accounts or other investment products tracked by Lipper Analytical Series or by rating services, companies, publications or other persons who rank separate accounts or other investment products on overall performance or other criteria, and (ii) the effect of tax deferred compounding on a subaccount's investment returns, or returns in general, which may be illustrated by graphs, charts, or otherwise, and which may include a comparison, at various points in time, of the return from an investment in a Contract (or returns in general) on a tax-deferred basis (assuming one or more tax rates) with the return on a taxable basis. The tables below provide performance results for each Subaccount through 12/31/96. The performance information is based on the historical investment experience of the Subaccounts and of the Portfolios. It does not indicate or represent future performance. Total Return Total returns quoted in advertising reflect all aspects of a Subaccount's return, including the automatic reinvestment by the separate account of all distributions and any change in the Subaccount's value over the period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical historical investment in the Subaccount over a stated period, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. For example, a cumulative return of 100% over ten years would produce an average annual return of 7.18%, which is the steady rate that would equal 100% growth on a compounded basis in ten years. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that the subaccount's performance is not constant over time, but changes from year to year, and that average annual returns represent averaged figures as opposed to the actual year-to-year performance of a subaccount. Table 1 shows the average annual total return on a hypothetical investment in the Subaccounts for the last year, from the date that the Portfolios began operations, and, for Portfolios in existence for five years or more, for five years, assuming that the Contract was surrendered December 31, 1996 For any Portfolio in existence ten years or more, figures are shown for a ten year period rather than for the life of the Portfolio. The average annual total returns shown in Table 1 are computed by finding the average annual compounded rates of return over the periods shown that would equate the initial amount invested to the withdrawal value, in accordance with the following formula: P(1 +T)n = ERV where P is a hypothetical investment payment of $1,000, T is the average annual total return, n is the number of years, and ERV is the withdrawal value at the end of the periods shown. The returns reflect the risk and administrative charge (1% on an annual basis, Effective November 1, 1997, this charge will be 0.80%) and the maintenance charge. Since the Contract is intended as a long-term product, the table also shows the average annual total return assuming that no money was withdrawn from the Contract. The average annual total return is also shown for Contracts with at least $25,000 of premium and assuming no money is withdrawn from the Contract. The average annual total return would be larger for these Contracts because there is currently no maintenance charge on these larger Contracts. The first column shows the average annual total return if you surrender the contract at the end of the period, the second column shows the average annual total return if you do not surrender the Contract and the third column shows the average annual total return if you do not surrender the Contract and no maintenance charge is applied to the Contract. Table 1: Average Annual Total Return for Period Ending on 12/31/96 (a) One Year Average Annual Total Return For Contracts Issued on December 31, 1995 Return Return Return If Contract If Contract If Contract Surrendered Continued Continued and and Maintenance Maintenance Charge Charge Not Applied Applicable Fidelity Asset Manager 8.43% 13.43% 13.45% Money Market (0.39)% 4.32% 4.34% Investment Grade Bond (2.48)% 2.13% 2.15% Equity-Income 8.11% 13.11% 13.13% Growth 8.53% 13.53% 13.55% High Income 7.86% 12.86% 12.88% Overseas 7.06% 12.06% 12.08% Index 500 16.57% 21.57% 21.59% Asset Manager: Growth 13.71% 18.71% 18.73% Contrafund 15.07% 20.07% 20.09% Strong Discovery Fund II 1.38% 6.19% 6.22% Opportunity Fund II 15.90% 20.90% 20.93% Warburg Pincus International Equity 8.83% 13.83% 13.86% Small Company Growth (3.22)% 1.34% 1.36% (b) Average Annual Total Return If Contract Issued at Commencement of Portfolio
Subaccount Portfolio's Return Return Return Start If Contract If Contract If Contract Date Surrendere Continued Continued d and and Maintenance Maintenance Charge Charge Not Applied Applicable Fidelity Asset Manager 9/6/89 10.54% 10.54% 10.58% Investment Grade Bond 12/5/88 7.07% 7.07% 7.12% Overseas 1/28/87 6.74% 6.74% 6.81% Index 500 8/27/92 15.76% 15.76% 15.93% Asset Manager: Growth 1/3/95 18.68% 20.36% 20.38% Contrafund 1/3/95 27.35% 28.92% 28.95% Strong Discovery II 5/8/92 10.72% 10.72% 10.75% Opportunity II 5/8/92 18.09% 18.09% 18.12% Warburg Pincus International l Equity 6/30/95 13.52% 15.27% 15.29% Small Company Growth 6/30/95 17.97% 19.65% 19.68% (c) Five Year Average Annual Total Return If Contract Issued on December 31, 1991 If Contract Return Return Surrendered If Contract If Contract Continued Continued and and Maintenance Maintenance Charge Charge Not Applied Applicable Fidelity Asset Manager 9.98% 10.11% 10.13% Money Market 3.28% 3.45% 3.48% Investment Grade Bond 5.38% 5.54% 5.56% Equity-Income 16.66% 16.75% 16.78% Growth 13.87% 13.97% 14.00% High Income 13.66% 13.77% 13.79% Overseas 7.86% 8.00% 8.03% Strong Discovery Fund II 11.90% 12.03% 12.06% Opportunity Fund II 19.90% 19.99% 20.03% (d) Ten Year Average Annual Total For Contracts Issued on December 31, 1986 If Contract Return Return Surrendered If Contract If Contract Continued Continued and and Maintenance Maintenance Charge Charge Not Applied Applicable Money Market 4.83% 4.83% 4.89% High Income 9.93% 9.93% 10.01% Equity-Income 12.52% 12.52% 12.59% Growth 13.92% 13.92% 13.99%
In addition to average annual returns, the Subaccounts may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Table 2 shows the cumulative total return on a hypothetical investment in the Subaccounts for from the date the Portfolios began operations, and assuming that the Contract was surrendered December 31, 1996 (or June 30, 1997 where indicated). For any Portfolio in existence five years or more, five year figures are also shown. For any Portfolio in existence ten years or more, figures are shown for a ten year period rather than for the life of the Portfolio. The returns reflect the risk and administrative charge (1% on an annual basis, Effective November 1, 1997, this charge will be 0.80%) and the maintenance charge. Since the Contract is intended as a long-term product, the table also shows the cumulative total return assuming that no money was withdrawn from the Contract. The cumulative total return is also shown for Contracts with at least $25,000 of premium and assuming no money is withdrawn from the Contract. The cumulative total return for these Contracts would be larger because there is currently no maintenance charge on these larger Contracts. The first column shows the cumulative total return if you surrender the Contract at the end of the period, the second column shows the cumulative total return if you do not surrender the Contract and the third column shows the cumulative total return if you do not surrender the Contract and no maintenance charge is applied to the Contract. Table 2: (a) Cumulative Total Return For Periods Beginning at Commencement of Portfolios and Ending on 12/31/96 Subaccount Portfolio' Return Return Return s If Contract If Contract If Contract Start Surrendere Continued Continued Date d and and Maintenance Maintenance Charge Charge Not Applied Applicable Fidelity Asset Manager 9/6/89 108.26% 108.26% 108.83% Investment Grade Bond 12/5/88 73.65% 73.65% 74.25% High Income 9/19/85 218.33% 218.33% 220.97% Overseas 1/28/87 91.07% 91.07% 92.32% Index 500 8/27/92 88.94% 89.94% 90.14% Fidelity (Cont) Growth Opportunities 1/3/95 49.60% 53.60% 53.64% Balanced 1/3/95 18.78% 22.78% 22.82% Table 2: (b) Cumulative Total Return For Periods Beginning at Commencement of Portfolios and Ending on 6/30/97 Morgan Stanley Emerging Markets Debt 6/16/97 (4.58%) (0.08%) (0.08%) Emerging Markets Equity 10/1/96 14.49% 19.49% 19.51% Global Equity 1/2/97 9.33% 14.33% 14.34% Intenational Magnum 1/2/97 11.12% 16.12% 16.13% PBHG Growth II 5/1/97 (0.39%) 4.32% 4.33% Technology & Communications 5/1/97 (1.63%) 3.02% 3.02% Strong Discovery Fund II 5/8/92 68.96% 68.96% 69.21% Growth Fund II 12/31/9 8.13% 13.13% 13.14% 6 Opportunity Fund II 5/8/92 135.47% 135.47% 135.81% Warburg Pincus International Equity 6/30/95 28.92% 32.92% 32.98% Post-Venture Capital 9/30/96 (4.37%) 0.13% 0.15% Small Company Growth 6/30/95 39.23% 43.23% 43.30% (c) Cumulative Total Return For Five Year Period From 12/31/91 Through 12/31/96 Subaccount Return Return Return If Contract If Contract If Contract Surrendered Continued Continued and and Maintenance Maintenance Charge Charge Not Applied Applicable Asset Manager 60.91% 61.91% 62.12% Money Market 17.50% 18.50% 18.66% Investment Grade Bond 29.96% 30.96% 31.13% Equity-Income 116.11% 117.11% 117.36% Growth 91.42% 92.42% 92.65% High Income 89.72% 90.72% 90.95% Overseas 46.00% 47.00% 47.19% Asset Manager 60.91% 61.91% 62.12% Money Market 17.50% 18.50% 18.66% Investment Grade Bond 29.96% 30.96% 31.13% Equity-Income 116.11% 117.11% 117.36% Growth 91.42% 92.42% 92.65% High Income 89.72% 90.72% 90.95% Overseas 46.00% 47.00% 47.19% (d) Cumulative Total Return For Five Year Period ending 6/30/97 Strong Discovery Fund II 11.90% 12.03% 12.06% Opportunity Fund II 19.90% 19.99% 20.03% (e) Cumulative Total Return For Ten Year Period From 12/31/86 Through 12/31/96 Return Return Return If Contract If Contract If Contract Surrendered Continued Continued and and Maintenance Maintenance Charge Charge Not Applied Applicable Money Market 60.28% 60.28% 61.33% High Income 158.02% 158.02% 159.71% Equity-Income 225.65% 225.65% 227.72% Growth 268.54% 268.54% 270.84% Yields Some Subaccounts may also advertise yields. Yields quoted in advertising reflect the change in value of a hypothetical investment in the Subaccount over a stated period of time, not taking into account capital gains or losses. Yields are annualized and stated as a percentage. Yields do not reflect the impact of any contingent deferred sales load. Yields quoted in advertising may be based on historical seven day periods. Current yield for Money Market Subaccount reflects the income generated by a Subaccount over a 7 day period. Current yield is calculated by determining the net change, exclusive of capital changes, in the value of a hypothetical account having one Accumulation Unit at the beginning of the period adjusting for the maintenance charge, and dividing the difference by the value of the account at the beginning of the base period to obtain the base period return, and multiplying the base period return by (365/7). The resulting yield figure is carried to the nearest hundredth of a percent. Effective yield for the Money Market Subaccount is calculated in a similar manner to current yield except that investment income is assumed to be reinvested throughout the year at the 7 day rate. Effective yield is obtained by taking the base period returns as computed above, and then compounding the base period return by adding 1, raising the sum to a power equal to (365/7) and subtracting one from the result, according the formula Effective Yield = [(Base Period Return + 1) 365/7] - 1. Since the reinvestment of income is assumed in the calculation of effective yield, it will generally be higher than current yield. For the 7 day period ending on 12/31/96, the Money Market Subaccount had a current yield of 4.22% and an effective yield of 4.31%. For Contracts on which there is currently no maintenance charge, the current yield would be 4.24% and the effective yield would be 4.33%. A 30 day yield for bond subaccounts reflects the income generated by a Subaccount over a 30 day period. Yield will be computed by dividing the net investment income per Accumulation Unit earned during the period by the maximum offering price per Accumulation Unit on the last day of the period, according to the following formula: Yield = 2[(a-b/cd + 1)6 - 1] where a= net investment income earned by the applicable portfolio, b = expenses for the period including expenses charged to the contract owner accounts, c = the average daily number of Accumulation Units outstanding during the period, and d = the maximum offering price per Accumulation Unit on the last day of the period. The 30 day yield for the period ending on 12/31/96 was 4.98% for the Investment Grade Bond Subaccount and 6.25% for the High Income Subaccount. For Contracts on which there is no maintenance charge, the 30 day yield would be 5.00% for the Investment Grade Bond Subaccount and 6.27% for the High Income Subaccount. The 30 day yield for the period ending on 6/30/97 was 6.14% for the Emerging Markets Debt Subaccount.and for Contracts on which there is no maintenance charge, the 30 day yield would be 6.16% for the Emerging Markets Debt Subaccount. TRANSFERS AMONG SUBACCOUNTS AFTER THE ANNUITY DATE After the Annuity Date, you may instruct us to reallocate the value of some or all of the Annuity Units of a variable Subaccount then credited to your Contract into an equal value of Annuity Units of one or more other Subaccounts. The transfer shall be based on the relative value of the Subaccount Annuity Units at the end of the Valuation Period in which the request is received and will affect income payments determined after that Valuation Period. To make such a transfer, you must contact the Annuity Service Center. The value of the Annuity Units exchanged must provide at least a $50 annuity income payment at the time of the exchange, unless all of the Annuity Units of a Subaccount are being exchanged. We reserve the right to limit transfers after the Annuity Date to six per Contract Year. UNAVAILABILITY OF ANNUITY INCOME OPTIONS IN CERTAIN CIRCUMSTANCES We do not offer annuity income options to any corporate beneficiary, partnership or trustee; any assignee, unless that assignee is a beneficiary; or the executors or administrators of the Annuitant's estate. IRS REQUIRED DISTRIBUTIONS If the Owner of the Contract dies (or either Joint Owner if the Contract is owned jointly) before the entire interest in the Contract is distributed, the value of the Contract must be distributed to the designated beneficiary as described in this section so that the Contract qualifies as an annuity under the Internal Revenue Code. If the death occurs on or after the Annuity Date, the remaining portion of the interest in the Contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. If the death occurs before the Annuity Date, the entire interest in the Contract must be distributed within five years after the date of death, unless the following conditions are met. If an annuity income option is selected by the designated beneficiary and if annuity income payments begin within one year of the Owner's death, the value of the Contract may be distributed over the beneficiary's life or a period not exceeding the beneficiary's life expectancy. However, for Qualified Contracts where the owner's spouse is the beneficiary, annuity income payments need not begin within one year after the Owner's death, rather they need only begin on or before April 1 of the calendar year following the calendar year in which the Owner would have attained age 70 1/2. The Owner's designated beneficiary is the person to whom proceeds of the Contract pass by reason of the death of the Owner. If the Contract Owner is a trust or other "non-natural person", and the Annuitant dies before the Annuity Date, the required distribution upon death rules will apply. SAFEKEEPING OF VARIABLE ACCOUNT ASSETS The assets of the Variable Account are held by Empire Fidelity Investments Life. The assets of the Variable Account are held apart from our general account assets and any other separate accounts we may establish. We maintain records of all purchases and redemptions of the shares of the Funds held by the variable Subaccounts. We maintain fidelity bond coverage for the acts of our officers and employees. DISTRIBUTION OF THE CONTRACTS As explained in the Prospectus, the Contracts are distributed through Fidelity Brokerage Services, Inc. and Fidelity Insurance Agency, Inc., which are affiliated with FMR Corp. and Empire Fidelity Investments Life. The offering of the contracts is continuous, and we do not anticipate discontinuing offering the Contracts. However, we reserve the right to discontinue offering the Contracts. STATE REGULATION Empire Fidelity Investments Life is subject to regulation by the Department of Insurance of the State of New York, which periodically examines our financial condition and operations. We are also subject to the insurance laws and regulations of all jurisdictions where we do business. The Contract described in the Prospectus and Statement of Additional Information has been filed with and, where required, approved by, insurance officials in those jurisdictions where it is sold. We are required to submit annual statements of our operations, including financial statements, to the insurance departments of the various jurisdictions where we do business to determine solvency and compliance with applicable insurance laws and regulations. LEGAL MATTERS The legal validity of the Contracts described in the Prospectus and Statement of Additional Information has been passed on by David J. Pearlman, Senior Legal Counsel of FMR Corp. Jorden Burt Berenson & Johnson LLP of Washington, D.C. has passed on matters relating to federal securities laws. REGISTRATION STATEMENT We have filed a Registration Statement under the Securities Act of 1933 with the SEC relating to the Contracts. The Prospectus and Statement of Additional Information do not include all the information in the Registration Statement. We have omitted certain portions pursuant to SEC rules. You may obtain the omitted information from the SEC's main office in Washington, D.C. by paying the SEC's prescribed fees. INDEPENDENT ACCOUNTANTS The consolidated statements of financial condition of Empire Fidelity Investments Life Insurance Company as of December 31, 1996 and 1995 and the related statements of income, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 1996, and the statement of assets and liabilities of the Empire Fidelity Investments variable Annuity Account A as of December 31, 1996, and the related statements of operations and changes in net assets for the years ended December 31, 1996 and 1995, included in this registration statement have been included herein in reliance on the reports of Coopers & Lybrand L.L.P., independent accountants, on the authority of that firm as experts in accounting and auditing. FINANCIAL STATEMENTS The financial statements of Empire Fidelity Investments Life included herein should be distinguished from the financial statements of the Variable Account and should be considered only as bearing upon our ability to meet our obligations under the Contracts. EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (A Wholly-Owned Ultimate Subsidiary of FMR Corp.) FINANCIAL STATEMENTS for the years ended December 31, 1996, 1995 and 1994 Page(s) Report of Independent Accountants 1 Statements of Financial Condition 2 Statements of Income 3 Statements of Stockholder's Equity 4 Statements of Cash Flows 5 Notes to Financial Statements 6-12 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholder of Empire Fidelity Investments Life Insurance Company: We have audited the accompanying statements of financial condition of Empire Fidelity Investments Life Insurance Company (a wholly-owned ultimate subsidiary of FMR Corp.) as of December 31, 1996 and 1995, and the related statements of income, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial condition of Empire Fidelity Investments Life Insurance Company as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts January 29, 1997 EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (A Wholly-Owned Ultimate Subsidiary of FMR Corp.) STATEMENTS OF FINANCIAL CONDITION December 31, 1996 and 1995 ASSETS 1996 1995 Debt securities available for sale $16,377,959 $16,049,538 Cash 940,264 238,986 Accrued investment income 265,264 261,132 Deferred policy acquisition costs 12,588,658 9,639,824 Other assets 121,736 50,855 Separate account assets 578,323,382 408,308,869 Total assets $608,617,263 $434,549,204 LIABILITIES Future contract benefits 7,057,409 7,631,476 Payable to affiliates 544,059 513,137 Other liabilities and accrued expenses 338,406 379,886 Deferred tax liability 2,778,525 2,316,120 Separate account liabilities 578,073,237 407,806,191 Total liabilities 588,791,636 418,646,810 Commitments and contingencies (Note 7) STOCKHOLDER'S EQUITY Common stock, par value $10 per share - 200,000 shares authorized, issued and outstanding 2,000,000 2,000,000 Additional paid-in capital 11,500,000 10,000,000 Unrealized gain on available for sale securities, net of tax 183,909 421,830 Retained earnings 6,141,718 3,480,564 Total stockholder's equity 19,825,627 15,902,394 Total liabilities and stockholder's equity $608,617,263 $434,549,204 EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (A Wholly-Owned Ultimate Subsidiary of FMR Corp.) STATEMENTS OF INCOME for the years ended December 31, 1996, 1995 and 1994 1996 1995 1994 Revenues: Fees charged to contractholders $5,324,274 $3,499,018 $2,519,300 Net investment income 947,831 1,060,440 453,029 Realized gains (losses), net (600) 919 (556) 6,271,505 4,560,377 2,971,773 Benefits and expenses: Return credited to contractholders and other benefits 336,079 442,617 155,126 Underwriting, acquisition and insurance expenses (1) 1,900,291 1,345,682 1,061,561 2,236,370 1,788,299 1,216,687 Income before provision for income taxes 4,035,135 2,772,078 1,755,086 Provision for income taxes 1,373,981 986,816 614,280 Net income $2,661,154 $1,785,262 $1,140,806 (1) Includes affiliated party transactions (Note 5) EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (A Wholly-Owned Ultimate Subsidiary of FMR Corp.) STATEMENTS OF STOCKHOLDER'S EQUITY for the years ended December 31, 1996, 1995 and 1994 Unrealized Gain (Loss) Additional on Available Total Common Paid-in for Sale Retained Stockholder's Stock Capital Securities Earnings Equity Balance at January 1, 1994 $2,000,000 $8,000,000 $554,496 $10,554,496 Adjustment to beginning balance for change in accounting principle, net of tax of $66,176 $122,897 122,897 Capital contribution from parent 2,000,000 2,000,000 Net income 1,140,806 1,140,806 Change in unrealized gain (loss), net of tax benefit of $154,940 (287,745) (287,745) Balance at December 31, 1994 2,000,000 10,000,000 (164,848) 1,695,302 13,530,454 Net income 1,785,262 1,785,262 Change in unrealized gain (loss), net of tax of $315,904 586,678 586,678 Balance at December 31, 1995 2,000,000 10,000,000 421,830 3,480,564 15,902,394 Capital contribution from parent 1,500,000 1,500,000 Net income 2,661,154 2,661,154 Change in unrealized gain (loss), net of tax benefit of $128,112 (237,921) (237,921) Balance at December 31, 1996 $2,000,000 $11,500,000 $183,909 $6,141,718 $19,825,627 EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (A Wholly-Owned Ultimate Subsidiary of FMR Corp.) STATEMENTS OF CASH FLOWS for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994 Cash flows from operating activities: Net income $2,661,154 $1,785,262 $1,140,806 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Amortization of bond discount and premium 100,738 61,980 148,820 Realized (gain) loss on investments 600 (919) 556 Depreciation and amortization 592,524 432,840 290,982 Deferred tax on earnings 590,517 484,464 570,118 Increase in future contract benefits 284,757 324,703 147,414 Addition to deferred policy acquisition costs (3,531,030) (2,613,570) (2,687,700) Change in assets and liabilities: Accrued investment income (4,132) (55,244) (78,466) Amounts due to (from) separate account 252,533 (95,735) (15,940) Payable to parent and affiliates, net 30,922 331,828 86,802 Other assets and liabilities (122,689) 231,875 275,934 Net cash provided by (used in) operating activities 855,894 887,484 (120,674) Cash flows from investing activities: Purchase of debt securities (5,060,540) (5,352,430) (15,183,971) Proceeds from disposal of debt securities 4,264,748 2,078,307 9,597,665 Additions to fixed assets - (7,501) (5,660) Additions to separate account (105,762,522) (76,952,370) (81,541,668) Net cash used in investing activities (106,558,314) (80,233,994) (87,133,634) Cash flows from financing activities: Considerations and deposits on variable annuity products 117,681,324 87,118,309 89,591,046 Payments to contractholders (12,777,626) (8,229,336) (4,357,091) Capital contribution from parent 1,500,000 - 2,000,000 Net cash provided by financing activities 106,403,698 78,888,973 87,233,955 Net increase (decrease) in cash 701,278 (457,537) (20,353) Cash: Beginning of year 238,986 696,523 716,876 End of year $940,264 $238,986 $696,523
The accompanying notes are an integral part of the financial statements. EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (A Wholly-Owned Ultimate Subsidiary of FMR Corp.) NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: Organization Empire Fidelity Investments Life Insurance Company (the "Company") is a wholly-owned subsidiary of Fidelity Investment Life Insurance Company ("FILI"), which is a wholly-owned subsidiary of FMR Corp. The Company operates exclusively in the State of New York. The Company issues variable deferred and immediate annuity contracts. Amounts invested in the fixed option of the contracts are allocated to the General Account of the Company. Amounts invested in the variable option of the contract are allocated to the Variable Annuity Account A, a separate account of the Company. The assets of the Variable Annuity Account A are invested in the portfolios of the Variable Insurance Products Fund and the Variable Insurance Products Fund II, which are reported at the net asset value of such portfolios. Basis of Presentation The accompanying financial statements of the Company have been prepared on the basis of generally accepted accounting principles (GAAP), which vary in certain respects from reporting practices prescribed by state insurance regulatory authorities (Note 4). Investments Investments in debt securities available for sale are reported at fair value. Fair values are derived from external market quotations. Unrealized gains or losses on debt securities are excluded from earnings and reported as a separate component of stockholder's equity, net of taxes, until realized. The discount or premium on debt securities is amortized using the interest method. Loan-backed and structured securities are amortized including anticipated prepayments at the date of purchase. Investment income is recognized on the accrual basis. Realized gains or losses on investments sold are determined on the basis of specific identification method. Unrealized and realized gains or losses on the Company's funds retained in the separate account are reflected in income. Separate Account Separate account assets represent funds held for the exclusive benefit of variable annuity contractholders and are reported at fair value. Since the contractholders receive the full benefit and bear the full risk of the separate account investments, the income and realized and unrealized gains and losses from such investments are offset by an increase in the amount of liabilities related to the separate account. The excess of separate account assets over separate account liabilities represents funds of the Company retained in the separate account. Future Contract Benefits and Fees Charged to Contractholders Future contract benefits represent the reserve liability which approximates the contractholder's account balance. Fees charged to contractholders include mortality and expense risk charges, surrender charges and an annual administrative charge. Deferred Policy Acquisition Costs The costs of acquiring new business, principally first-year commissions and certain expenses of policy issue and underwriting, all of which vary with and are related to the production of new business, have been deferred. These acquisition costs are being amortized in proportion to the present value of expected future gross profits from interest margins, mortality and other elements of performance under the contracts. Income Taxes The Company is included in the consolidated life insurance tax return filed by FILI. Under a tax-sharing agreement, each company is charged or credited its share of taxes as determined on a separate-company basis. The liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted rates and laws that will be in effect when the differences are expected to reverse. Use of Estimates The preparation of the statement of financial condition in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Reclassifications Certain prior year balances have been reclassified to conform with the current year presentation. 2.Investments: The sources of net investment income are as follows: Years ended December 31, 1996 1995 1994 Debt securities $1,029,347 $1,050,500 $492,970 Short-term investments and cash 23,821 22,150 27,824 Investment in separate account 16,036 94,136 2,934 Total investment income 1,069,204 1,166,786 523,728 Investment expenses 121,373 106,346 70,699 Net investment income $947,831 $1,060,440 $453,029 Gross realized gains and losses from the sale of debt securities were as follows: Years Ended December 31, 1996 1995 1994 Gross realized gains $92 $2,873 Gross realized losses 692 1,954 $556 Gross unrealized appreciation (depreciation) for debt securities by type of issuer was as follows: December 31, 1996 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $8,878,712 $218,868 $(18,523) $9,079,057 Corporate securities 5,853,124 66,855 (314) 5,919,665 Asset-backed securities 1,363,186 16,051 1,379,237 Totals $16,095,022 $301,774 $(18,837) $16,377,959 December 31, 1995 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $4,811,518 $411,444 $5,222,962 Corporate securities 8,094,646 178,930 $(193) 8,273,383 Asset-backed securities 2,494,404 58,832 (43) 2,553,193 Totals $15,400,568 $649,206 $(236) $16,049,538 The amortized cost and fair value of debt securities at December 31, 1996, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair Cost Value Due in 1 year or less $3,484,549 $3,501,412 Due after 1 year through 5 years 6,710,901 6,854,776 Due after 5 years through 10 years 4,346,842 4,449,610 Due after 10 years 189,544 192,924 Subtotal 14,731,836 14,998,722 Asset-backed securities 1,363,186 1,379,237 $16,095,022 $16,377,959 All debt securities are investment grade and there are no significant concentrations by issuer or by industry other than U.S. government securities. 3. Income Taxes: Significant components of the provision for income taxes attributable to operations were as follows: Years Ended December 31, 1996 1995 1994 Current $783,464 $502,352 $44,162 Deferred 590,517 484,464 570,118 Provision for income taxes $1,373,981 $986,816 $614,280 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liability were as follows: Years Ended December 31, 1996 1995 Deferred policy acquisition costs $2,854,442 $2,161,421 Unrealized gain (loss) on available-for-sale securities 99,028 227,140 Reserves (186,765) (88,631) Other, net 11,820 16,190 Total net deferred tax liabilities $2,778,525 $2,316,120 The Company paid FILI federal income taxes of $816,323, $355,974 and $71,681 in 1996, 1995 and 1994, respectively, related to the Company's separate-company basis net operating results for the year. Payables of $86,000 and $118,859 have been recorded to reflect an underpayment of taxes to FILI in 1996 and 1995, respectively. Intercompany tax balances are settled within 30 days of the actual tax payments. The effective tax rates approximate the statutory federal income tax rates for the years ended 1996, 1995 and 1994. 4. Stockholder's Equity and Dividend Restrictions: Generally, the net assets of the Company available for transfer to FILI are limited to the excess of the Company's net assets, as determined in accordance with statutory accounting practices, over minimum statutory capital requirements; however, payments of such amounts as dividends may be subject to approval by regulatory authorities. Net income (loss) and capital stock and surplus as determined in accordance with statutory accounting practices were as follows: Years Ended December 31, 1996 1995 1994 Net income (loss) $305,357 $100,694 $(717,766) Capital stock and surplus $9,640,629 $7,834,233 $7,749,185 5. Affiliated Company Transactions: The Company's insurance contracts are distributed through Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Insurance Agency, Inc. (FIA), both of which are affiliated with FMR Corp. The Company has entered into an agreement with FIA under which the Company pays FIA sales compensation of 3% of payments received. The Company compensated FIA in the amount of $3,521,413, $2,618,195 and $2,689,382 in 1996, 1995 and 1994, respectively. The Company has entered into an administrative services agreement with FMR Corp. and its subsidiaries whereby they provide certain administrative and special services for the Company. The Company paid FMR Corp. and its subsidiaries $404,779, $337,760 and $359,343 in 1996, 1995 and 1994, respectively, for such services. FMR Corp. maintains a noncontributory trusteed defined benefit pension plan covering substantially all eligible Company employees. The benefits earned are based on years of service and the employees' compensation during the last five years of employment. FMR Corp.'s policy for the plan is to fund the maximum amount deductible for income tax purposes, and to charge each subsidiary for its share of such contributions. Pension costs of $8,628, $9,989 and $11,628 were charged to the Company in 1996, 1995 and 1994, respectively. FMR Corp. sponsors a trusteed Profit-Sharing Plan and a contributory 401(k) Thrift Plan covering substantially all eligible Company employees. Payments are made to the trustee by FMR Corp. annually for the Profit-Sharing Plan and monthly for the 401(k) Thrift Plan. FMR Corp.'s policy is to fund all costs accrued and to charge each subsidiary for its share of the cost. The cost charged to the Company for these plans amounted to $46,836, $44,598 and $47,662 in 1996, 1995 and 1994, respectively. 6. Underwriting, Acquisition, and Insurance Expenses: Underwriting, acquisition and insurance expenses were as follows: Years Ended December 31, 1996 1995 1994 Amortization of deferred policy acquisition costs $582,196 $419,934 $277,975 Taxes, licenses and fees 388,542 122,918 77,249 General insurance expenses 929,553 802,830 706,337 $1,900,291 $1,345,682 $1,061,561 7. Commitment and Contingencies: Reinsurance The Company has entered into agreements to reinsure certain guarantee provisions and mortality losses on its annuity contracts. The Company is contingently liable for claims reinsured that the assuming company is unable to pay. Premiums and deposits ceded under these reinsurance contracts were not material to the financial statements. EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A OF EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
ASSETS DECEMBER 31, 1996 Investments at Current Market Value: Variable Insurance Products Fund (VIP) Money Market Portfolio - 48,675,092 shares (cost $48,675,092) $ 48,675,092 High Income Portfolio - 1,673,528 shares (cost $19,657,604) 20,952,574 Equity-Income Portfolio - 7,203,986 shares (cost $119,283,610) 151,499,819 Growth Portfolio - 2,856,346 shares (cost $74,838,138) 88,946,602 Overseas Portfolio - 1,309,265 shares (cost $21,866,193) 24,666,557 Variable Insurance Products Fund II (VIP II) Investment Grade Bond Portfolio - 567,868 shares (cost $6,863,356) 6,950,703 Asset Manager Portfolio - 4,882,698 shares (cost $71,794,963) 82,664,084 Index 500 Portfolio - 413,235 shares (cost $31,573,421) 36,831,595 Asset Manager: Growth Portfolio - 1,312,416 shares (cost $16,229,806) 17,192,654 Contrafund Portfolio - 6,035,248 shares (cost $80,549,919) 99,943,702 Total Assets $ 578,323,382 LIABILITIES Total Liabilities 0 NET ASSETS Variable Annuity Contracts $ 566,276,569 Annuity Reserves 11,796,668 Retained in Variable Account by Empire Fidelity Investments Life Insurance Company 250,145 Total Net Assets $ 578,323,382
EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A OF EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
SUBACCOUNTS INVESTING IN: VIP - VIP - VIP - MONEY MARKET HIGH INCOME EQUITY-INCOME 12/31/96 12/31/95 12/31/96 12/31/95 12/31/96 12/31/95 INCOME: Dividends $ 1,786,77 $ 1,580,34 $ 1,344,29 $ 573,316 $ 5,937,08 $ 5,704,765 0 0 3 3 EXPENSES: Mortality, expense risk and administrative charges 369,246 276,570 173,493 108,556 1,445,756 935,882 Net investment income (loss) 1,417,524 1,303,770 1,170,800 464,760 4,491,327 4,768,883 Realized gain 0 0 234,379 311,021 4,329,089 980,837 Unrealized appreciation (depreciation) during the year 0 0 650,495 1,066,452 8,576,967 21,037,305 Net increase in net assets 1,417,524 1,303,770 2,055,674 1,842,233 17,397,38 26,787,025 from operations 3 Payments received from contract owners 27,250,68 20,298,08 4,106,021 3,421,140 21,584,75 18,539,810 1 8 9 Transfers between subaccounts and the (9,795,25 (15,358,1 1,458,992 881,407 (9,221,15 15,778,134 fixed account, net 3) 81) 7) Transfers for contract benefits and terminations (1,159,04 (980,351) (381,564) (145,903) (3,177,33 (1,432,870 7) 3) ) Other transfers (to) from Empire Fidelity Investments Life Insurance Co., net 6,590 (277,715) (4,989) 27,410 (35,670) 75,515 Net increase (decrease) in net assets from contract transactions 16,302,97 3,681,841 5,178,460 4,184,054 9,150,599 32,960,589 1 Retained in (returned from) Variable Annuity Account A, net (6,995) 793 (6,253) 4,568 (78,836) 45,421 Total increase 17,713,50 4,986,404 7,227,881 6,030,855 26,469,14 59,793,035 (decrease) 0 6 in net assets Net assets at beginning of period 30,961,59 25,975,18 13,724,69 7,693,838 125,030,6 65,237,638 2 8 3 73 Net assets at end of period $48,675,0 $ 30,961,5 $ 20,952,5 $ 13,724,6 $ 151,499, $ 125,030,6 92 92 74 93 819 73
EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A OF EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
SUBACCOUNTS INVESTING IN: VIP - GROWTH VIP - OVERSEAS 12/31/96 12/31/95 12/31/96 12/31/95 INCOME: Dividends $ 4,634,81 $ 181,456 $ 525,818 $ 186,371 9 EXPENSES: Mortality, expense risk and administrative charges 811,476 476,876 231,350 199,920 Net investment income (loss) 3,823,343 (295,420) 294,468 (13,549) Realized gain 3,059,832 1,347,836 484,088 948,661 Unrealized appreciation (depreciation) during the year 2,520,593 10,737,43 1,781,995 483,715 0 Net increase in net assets 9,403,768 11,789,84 2,560,551 1,418,827 from operations 6 Payments received from contract owners 16,074,27 11,525,14 3,046,601 1,796,064 9 4 Transfers between subaccounts and the 2,515,925 6,180,796 1,632,798 (10,927,72 fixed account, net 3) Transfers for contract benefits and terminations (1,354,75 (701,855) (312,776) (412,022) 0) Other transfers (to) from Empire Fidelity Investments Life Insurance Co., net (30,252) (23,291) (20,485) 5,414 Net increase (decrease) in net assets from contract transactions 17,205,20 16,980,79 4,346,138 (9,538,267 2 4 ) Retained in (returned from) Variable Annuity Account A, net (40,650) 24,882 (7,308) (10,255) Total increase 26,568,32 28,795,52 6,899,381 (8,129,695 (decrease) 0 2 ) in net assets Net assets at beginning of period 62,378,28 33,582,76 17,767,17 25,896,871 2 0 6 Net assets at end of period $ 88,946,6 $6 2,378,2 $ 24,666,5 $ 17,767,17 02 82 57 6
VIP II - VIP II - VIP II - INVESTMENT ASSET MANAGER INDEX 500 GRADE BOND 12/31/96 12/31/95 12/31/96 12/31/95 12/31/96 12/31/95 INCOME: Dividends $ 337,043 $ 143,740 $ 5,293,83 $ 2,010,35 $ 620,782 $ 48,377 5 7 EXPENSES: Mortality, expense risk and administrative charges 68,068 48,624 815,364 875,116 242,314 65,235 Net investment income (loss) 268,975 95,116 4,478,471 1,135,241 378,468 (16,858) Realized gain 75,367 57,874 1,663,095 2,777,299 702,643 399,595 Unrealized appreciation (depreciation) during the year (227,009) 563,142 4,022,895 8,678,445 3,762,268 1,451,439 Net increase in net assets 117,333 716,132 10,164,46 12,590,98 4,843,379 1,834,176 from operations 1 5 Payments received from contract owners 1,204,243 663,948 3,467,114 2,478,825 9,153,239 3,472,817 Transfers between subaccounts and the 976,244 (11,063,5 (30,622,5 10,692,00 6,054,548 fixed account, net (177,798) 77) 61) 5 Transfers for contract benefits and terminations (443,215) (148,176) (2,267,35 (2,796,51 (760,330) (919,227) 7) 9) Other transfers (to) from Empire Fidelity Investments Life Insurance Co., net 1,167 (1,477) (18,904) 75,768 (4,432) (3,338) Net increase (decrease) in net assets from contract transactions 584,397 1,490,539 (9,882,72 (30,864,4 19,080,48 8,604,800 4) 87) 2 Retained in (returned from) Variable Annuity Account A, net (4,101) (4,949) (59,436) (21,367) (8,563) 5,281 Total increase 2,201,722 222,301 (18,294,8 23,915,29 10,444,25 (decrease) 697,629 69) 8 7 in net assets Net assets at beginning of period 6,253,074 4,051,352 82,441,78 100,736,6 12,916,29 2,472,040 3 52 7 Net assets at end of period $ 6,950,70 $ 6,253,07 $82,664,0 $ 82,441,7 $ 36,831,5 $ 12,916,2 3 4 84 83 95 97
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1995.
VIP II - VIP II - TOTAL ASSET MANAGER: CONTRAFUND GROWTH 12/31/96 12/31/95* 12/31/96 12/31/95* 12/31/96 12/31/95 INCOME: Dividends $ 862,945 $ 209,986 $ 526,257 $ 666,687 $ 21,869,6 $ 11,305,39 45 5 EXPENSES: Mortality, expense risk and administrative charges 98,994 29,423 786,431 277,494 5,042,492 3,293,696 Net investment income (loss) 763,951 180,563 (260,174) 389,193 16,827,15 8,011,699 3 Realized gain 239,532 178,391 1,823,791 369,981 12,611,81 7,371,495 6 Unrealized appreciation (depreciation) during the year 801,887 160,962 13,273,28 6,120,498 35,163,37 50,299,388 6 7 Net increase in net assets 1,805,370 519,916 14,836,90 6,879,672 64,602,34 65,682,582 from operations 3 6 Payments received from contract owners 5,577,602 2,910,699 25,690,73 20,852,56 117,155,2 85,959,095 5 0 74 Transfers between subaccounts and the 5,074,653 1,484,390 9,364,673 24,300,25 481,261 (1,252,696 fixed account, net 0 ) Transfers for contract benefits and terminations (154,535) (9,486) (1,779,16 (150,792) (11,790,0 (7,697,201 1) 68) ) Other transfers (to) from Empire Fidelity Investments Life Insurance Co., net (3,396) (694) (71,396) (2,577) (181,767) (124,985) Net increase (decrease) in net assets from contract transactions 10,494,32 4,384,909 33,204,85 44,999,44 105,664,7 76,884,213 4 1 1 00 Retained in (returned from) Variable Annuity Account A, net (16,199) 4,334 (24,192) 47,027 (252,533) 95,735 Total increase 12,283,49 4,909,159 48,017,56 51,926,14 170,014,5 142,662,53 (decrease) 5 2 0 13 0 in net assets Net assets at beginning of period 4,909,159 0 51,926,14 0 408,308,8 265,646,33 0 69 9 Net assets at end of period $ 17,192,6 $ 4,909,15 $ 99,943,7 $ 51,926,1 $ 578,323, $ 408,308,8 54 9 02 40 382 69
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1995. * FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1995. NOTES TO FINANCIAL STATEMENTS For the years ended December 31, 1996 and 1995 EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A OF EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY ORGANIZATION. Empire Fidelity Investments Variable Annuity Account A (the Account), a unit investment trust registered under the Investment Company Act of 1940 as amended, was established by Empire Fidelity Investments Life Insurance Company (EFILI) on July 15, 1991 and exists in accordance with the regulations of the New York Insurance Department. The Account is a funding vehicle for individual Retirement Reserves and Income Advantage variable annuity contracts. EFILI is a wholly-owned subsidiary of Fidelity Investments Life Insurance Company which is a wholly-owned subsidiary of FMR Corp. Beginning in 1995, EFILI added two new subaccounts to the Account; Asset Manager: Growth and Contrafund. SIGNIFICANT ACCOUNTING POLICIES. Investments are made in the portfolios of the Variable Insurance Products Fund and the Variable Insurance Products Fund II and are valued at the reported net asset values of such portfolios. Transactions are recorded on the trade date. Income from dividends is recorded on the ex-dividend date. Realized gains and losses on the sales of investments are computed on the basis of the identified cost of the investment sold. In addition to the Account, a contractholder may also allocate funds to the Fixed Account, which is part of EFILI's general account. Because of exemptive and exclusionary provisions, interests in the Fixed Account have not been registered under the Securities Act of 1933 and EFILI's general account has not been registered as an investment company under the Investment Company Act of 1940. Annuity reserves are computed for contracts in the income stage according to the 1983 Individual Annuitant Mortality Table. The assumed investment return is 3.5% unless the annuitant elects otherwise, in which case the rate may vary from 3.5% to 7%, as regulated by the laws of New York. The mortality risk is fully borne by EFILI and may result in additional amounts being transferred into the Account by EFILI. The operations of the Account are included in the federal income tax return of EFILI, which is taxed as a Life Insurance Company under the provisions of the Internal Revenue Code (the Code). The preparation of the statement of assets and liabilities and the statements of operations and changes in net assets in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. Certain amounts in the financial statements for 1995 have been reclassified to correspond to the 1996 presentation. EXPENSES. EFILI deducts a daily charge from the net assets of the Account (equivalent to an effective annual rate of 1% of net assets) for administrative expenses and for the assumption of mortality and expense risks. EFILI also deducts an annual maintenance charge of $30 from the Fidelity Retirement Reserves contract value. The maintenance charge is waived on certain contracts. Under the current provisions of the Code, EFILI does not expect to incur federal income taxes on the earnings of the Account to the extent the earnings are credited under the contracts. EFILI incurs federal income taxes on the difference between the financial statement carrying value of reserves for contracts in the income stage and those reserves held for federal income tax purposes. The tax effect of this temporary difference is expected to be recovered by EFILI. As such, no charge is being made currently to the Account for federal income taxes. EFILI will review periodically the status of such decision based on changes in the tax law. Such a charge may be made in future years for any federal income taxes that would be attributable to the contracts. AFFILIATED COMPANY TRANSACTIONS. The contracts are distributed through Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Insurance Agency, Inc. (FIA), both of which are affiliated with FMR Corp. FBSI and FIA are the distributors and FBSI is the principal underwriter of the contracts. Fidelity Management & Research Company, an affiliate of FMR Corp., acts as investment advisor to each portfolio. Fidelity Investments Institutional Operations Co., an affiliate of FMR Corp., is the transfer and shareholder servicing agent for the portfolios. PURCHASES AND SALES OF INVESTMENTS. The following table shows aggregate cost of shares purchased and proceeds from sales of each subaccount for the year ended December 31, 1996: PURCHASES SALES Money Market $ $ 46,259,773 28,546,273 High Income 10,434,586 4,091,580 Equity-Income 28,080,139 14,517,049 Growth 30,543,657 9,555,762 Overseas 8,676,063 4,042,764 Investment Grade 4,085,263 3,235,991 Asset Manager 7,199,467 12,663,155 Index 500 21,687,531 2,237,145 Asset Manager: Growth 12,668,815 1,426,740 Contrafund 38,392,223 5,471,738 UNIT VALUES. A summary of changes in accumulation units and accumulation units outstanding for variable annuity contracts at December 31, 1996 and 1995 are as follows:
PAYMENTS BEGINNING RECEIVED TRANSFERS CONTRACT BALANCE FROM CONTRACT BETWEEN TERMINATION ENDING BALANCE OWNERS SUBACCOUNTS, S NET
UNITS UNITS UNIT VALUE DOLLARS JANUARY 1, 1996 TO DECEMBER 31, 1996 Money Market Subaccount 2,086,339 1,396,811 (671,222) 332,385 3,144,313 $15.30 $ 48,101,350 High Income Subaccount 605,822 175,020 61,177 (22,006) 820,013 $24.89 20,409,560 Equity-Income Subaccount 4,481,146 751,876 (315,456) (162,354) 4,755,212 $31.05 147,641,357 Growth Subaccount 2,004,576 487,213 73,706 (62,104) 2,503,391 $34.97 87,540,085 Overseas Subaccount 930,291 154,412 85,133 (18,195) 1,151,640 $21.29 24,519,804 Investment Grade Subaccount 358,773 71,690 (12,681) (34,981) 382,801 $17.36 6,644,585 Asset Manager Subaccount 4,435,615 181,581 (584,908) (131,774) 3,900,514 $20.75 80,953,438 Index 500 Subaccount 802,405 537,084 624,968 (77,086) 1,887,371 $18.89 35,655,373 Asset Manager: Growth 396,158 419,484 378,254 (30,890) 1,163,007 $14.49 16,853,490 Subaccount* Contrafund Subaccount* 3,685,097 1,742,216 631,751 (177,041) 5,882,023 $16.65 97,957,527 $ 566,276,569 JANUARY 1, 1995 TO DECEMBER 31, 1995 Money Market Subaccount 1,840,618 1,212,366 (887,953) (78,693) 2,086,339 $14.66 $ 30,587,979 High Income Subaccount 413,916 164,126 48,831 (21,052) 605,822 $22.05 13,357,546 Equity-Income Subaccount 3,148,692 755,226 681,199 (103,971) 4,481,146 $27.44 122,982,339 Growth Subaccount 1,448,467 395,023 194,334 (33,248) 2,004,576 $30.80 61,732,843 Overseas Subaccount 1,472,775 100,194 (621,187) (21,490) 930,291 $19.00 17,672,782 Investment Grade Subaccount 270,642 41,606 58,920 (12,394) 358,773 $16.99 6,096,643 Asset Manager Subaccount 6,284,783 146,335 (1,848,581) (146,921) 4,435,615 $18.29 81,145,514 Index 500 Subaccount 210,179 240,442 433,808 (82,024) 802,405 $15.54 12,467,512 Asset Manager: Growth 0 264,392 138,263 (6,497) 396,158 $12.21 4,835,356 Subaccount* Contrafund Subaccount* 0 1,655,600 2,096,508 (67,011) 3,685,097 $13.87 51,105,632 $ 401,984,146 * FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS To the Contract Owners of Empire Fidelity Investments Variable Annuity Account A: We have audited the accompanying statement of assets and liabilities of Empire Fidelity Investments Variable Annuity Account A (comprised of Money Market Subaccount, High Income Subaccount, Equity-Income Subaccount, Growth Subaccount, Overseas Subaccount, Investment Grade Bond Subaccount, Asset Manager Subaccount, Index 500 Subaccount, Asset Manager: Growth Subaccount and Contrafund Subaccount) of Empire Fidelity Investments Life Insurance Company as of December 31, 1996, and the related statements of operations and changes in net assets for each of the periods indicated therein. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the aforementioned subaccounts comprising Empire Fidelity Investments Variable Annuity Account A of Empire Fidelity Investments Life Insurance Company as of December 31, 1996, and the results of their operations and the changes in their net assets for each of the periods indicated therein, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Boston, Massachusetts January 29, 1997 PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits a) Financial Statements included in Part B The following financial statements of Empire Fidelity Investments Life Insurance Company are filed in Part B. There are no financial statements included in Part A, other than Accumulation Unit Values. Statement of Assets and Liabilities for Empire Fidelity Investments Variable Annuity Account A as of December 31, 1996. Statements of Operations and Changes in Net Assets for Empire Fidelity Investments Variable Annuity Account A for Years ended December 31, 1996 and 1995. Report of Coopers & Lybrand on the Financial Statements of Empire Fidelity Investments Variable Annuity Account A. Balance Sheets of Empire Fidelity Investments Life Insurance Company as of December 31, 199 and 1995. Statements of Income for Empire Fidelity Investments Life Insurance Company for the Year Ended December 31, 1996 and 1995. Statements of Changes in Stockholder's Equity for Empire Fidelity Investments Life Insurance Company for the Year Ended December 31, 1996 and 1995. Statements of Cash Flows for Empire Fidelity Investments Life Insurance Company for the Year Ended December 31, 1996 and 1995. Notes to Financial Statements of Empire Fidelity Investments Life Insurance Company. Report of Coopers & Lybrand on Financial Statements of Empire Fidelity Investments Life Insurance Company. b) Exhibits (1) Resolution of Board of Directors of Empire Fidelity Investments Life Insurance Company ("Empire Fidelity Investments Life") establishing the Empire Fidelity Investments Variable Annuity Account A. (Note 1). (2) Not Applicable. (3) (a) Distribution Agreement between Empire Fidelity Investments Life and Fidelity Brokerage Services, Inc. (Note 1). (4) (a) Specimen Variable Annuity Contract. (Note 1) (b) Endorsement for Unisex Contract. (Note 1) (c) Endorsement for Qualified Contracts. (Note 1) (5) (a) Application for Variable Annuity Contract. (Note 1) (6) (a) Charter of Empire Fidelity Investments Life. (Note 1) (b) Amended Bylaws of Empire Fidelity Investments Life. (Note 1) (7) Not Applicable. (8) (a) Service Agreement between Empire Fidelity Investments Life and Fidelity Investments Life. (Note 1) (b) Service Agreement between Empire Fidelity Investments Life and Fidelity Investments Corporate Services. (Note 1) (9) Opinion and consent of David J. Pearlman, as to the legality of securities being issued. (Note 4) (10) (a) Written consent of Coopers & Lybrand. (Note 4) (b) Written consent of Jorden Burt Berenson & Johnson LLP (Note 4) (11) Not Applicable (12) Not Applicable (13) Performance Advertising Calculations (Note 2) (14) (a) Participation Agreement among Empire Fidelity Investments Life, Variable Insurance Products Fund and Fidelity Distributors Corporation. (Note 1) (b) Participation Agreement among Empire Fidelity Investments Life, Variable Insurance Products Fund II and Fidelity Distributors Corporation (Note 1) (c) Participation Agreement among Empire Fidelity Investments Life, Variable Insurance Products Fund III and Fidelity Distributors Corporation (Note 1) (d) Form of Participation Agreement between Empire Fidelity Investments Life and Strong Variable Insurance Funds, Inc. on behalf of the Portfolios, and Strong Opportunity Fund II, Inc., Strong Capital Management, Inc. (the "Adviser"), (Note 4) (e) Form of Participation Agreement between Empire Fidelity Investments Life and PBHG INSURANCE SERIES FUND, INC. ("FUND"), and PILGRIM BAXTER & ASSOCIATES, LTD. ("ADVISER"). (Note 4) ` (f) Form of Participation Agreement between Empire Fidelity Investments Life and MORGAN STANLEY UNIVERSAL FUNDS, INC. (the "Fund"), and MORGAN STANLEY ASSET MANAGEMENT INC. and MILLER ANDERSON & SHERRERD, LLP (the "Advisers"). (Note 4) (g) Form of Participation Agreement between Empire Fidelity Investments Life and Warburg, Pincus Trust, (the "Fund"); Warburg, Pincus Counsellors, Inc. (the "Adviser"); and Counsellors Securities Inc. (Note 4) (15) (a) Powers of Attorney (Note 3) Powers of Attorney for Lena G. Goldberg and Paul J. Hondros (Note 4) (Note 1) Incorporated by reference to Post-Effective Amendment No. 5 to this Registration Statement filed electronically on April 27, 1997. (Note 2) Incorporated by reference to Post-Effective Amendment No. 11 to Registration Statement No.33-24400 filed April 24, 1997. (Note 3) Incorporated by reference to Post-Effective Amendment No. 4 to this Registration Statement filed April 26, 1996. (Note 4) Filed herein. Item 25. Directors and Officers of the Depositor The Directors and officers of Empire Fidelity Investments Life are as follows: Directors of Empire Fidelity Investments Life J. GARY BURKHEAD, Director JAMES C. CURVEY, Director LENA G. GOLDBERG, Director JOHN J. REMONDI, Director RODNEY R. ROHDA, Director and Chairman PAUL J. HONDROS, Director DAVID C. WEINSTEIN, Director DENIS M. McCARTHY, Director ROY BALLENTINE, Director PETER JOHANNSEN, Director JOSHUA BERMAN, Director MALCOLM MACKAY, Director FLOYD L. SMITH, Director The addresses of Roy Ballentine, Joshua Berman, Peter Johannsen, Malcolm MacKay, and Floyd L. Smith are 11 Depot Street, P. O. Box 1860, Wolfboro, New Hampshire 03894; 919 Third Avenue, New York, New York 10022; One Post Office Square, Boston, Massachusetts 02109; and 4 Peter Cooper Road, # 9G, New York, New York 10010, respectively. The principal business address of each of the other above persons is 82 Devonshire Street, Boston, Massachusetts 02109. Executive Officers Who Are not Directors Executive officers of Empire Fidelity Investments Life who are not directors are as follows. ALLAN BRANDON, Vice President and Chief Administrative Officer DAVID J. PEARLMAN, Vice President, Secretary and General Counsel JOSEPH L. KURTZER Jr., Treasurer The principal business address of Allan Brandon is One World Financial Center, 200 Liberty Street, Tower A, New York, New York 10281. The principal business address of Messrs. Kurtzer and Pearlman is 82 Devonshire Street, Boston, Massachusetts 02109. Item 26. Persons Controlled By or Under Common control with the Depositor or Registrant. See Exhibit 26 of the original registration statement filed on Form N-4 on August 17, 1991, Reg. No. 33-42376, on behalf of Empire Fidelity Investments Variable Annuity Account A. Item 27. Number of Contract Owners. As of December 31, 1996 there were 567 Qualified Contracts and 8,229 Non-qualified Contracts outstanding. Item 28. Indemnification FMR Corp. and its subsidiaries own a directors' and officers' liability reimbursement contract (the "Policy"), issued by National Union Fire Insurance Company, that provides coverage for "Loss" (as defined in the Policy) arising from any claim or claims by reason of any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by a person while he or she is acting in his or her capacity as a director or officer. The coverage is provided to these insureds, including Empire Fidelity Investments Life, to the extent required or permitted by applicable law, common or statutory, or under their respective charters or by-laws, to indemnify directors or officers for Loss arising from the above-described matters. Coverage is also provided to the individual directors or officers for such Loss, for which they shall not be indemnified, subject to relevant contract exclusions. Loss is essentially the legal liability on claims against a director or officer, including damages, judgments, settlements, costs, charges and expenses (excluding salaries of officers or employees) incurred in the defense of actions, suits or proceedings and appeals therefrom. There are a number of exclusions from coverage. Among the matters excluded are Losses arising as a result of (1) fines or penalties imposed by law or other matters that may be deemed uninsurable under the law pursuant to which Policy is construed, (2) claims brought about or contributed to by the fraudulent, dishonest, or criminal acts of a director or officer, (3) any claim made against the directors or officers for violation of any of the responsibilities, obligations, or duties imposed upon fiduciaries by the Employee Retirement Income Security Act of 1974 or amendments thereto, (4) professional errors or omission, and (5) claims for an accounting or profits in fact made from the purchase or sale by a director or officer of any securities of the insured corporations within the meaning of section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any state law. The limit of coverage of the Policy is $10 million, as an annual aggregate limit, with 95% co-insurance for the first $1 million of coverage, and with a deductible of $500,000 in the event that Empire Fidelity Investments Life indemnifies the director or officer (with a maximum aggregate per loss deductible of $25,000) if Empire Fidelity Investments Life does not indemnify the director or officer. New York law (N.Y. Bus. Corp. 722) provides, in part, that a corporation may indemnify a director, officer, employee or agent against liability if he acted in good faith and in a manner he reasonably believed to be in the best interests of the corporation and, in respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The text of Article VI of Empire Fidelity Investment Life's By-Laws, which relates to indemnification of the directors and officers, is as follows: Section 6.1. Indemnification of Directors, Officers, Employees and Agents. Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including any action or suit by or in the right of the Corporation to procure a judgment in its favor) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified to the extent permitted by the laws of the State of New York, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the defense of settlement of such action, suit or proceeding. The indemnification expressly provided by statute in a specific case shall not be deemed entitled under any lawful agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. The Board of Directors may purchase and maintain insurance on behalf on any person who is or was a director, officer, employee of agent of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture or trust or other enterprise against any liability incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify against such liability. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person in connection with the securities being registered), the Registrant will, unless in the opinion of is counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by its against is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 29. Principal Underwriters. (a) Fidelity Brokerage Services, Inc. acts as distributor for other variable life and variable annuity contracts registered by separate accounts of Empire Fidelity Investments Life Insurance Company, Fidelity Investments Life Insurance Company and PFL Life Insurance Company. (b) Name and Principal Positions and Offices with Underwriter Business Address Roger T. Servison Director Steven Akin Director and President Rodney Rohda Director Edward L. McCartney Executive Vice President Thomas E. Lewis Executive Vice President Bruce MacAlpine Executive Vice President Shaugn S. Stanley Treasurer and Chief Financial Officer Jeffrey R. Larsen Legal Counsel & Clerk Linda Holland Compliance Officer (c) Commissions and other compensation was received by the principal underwriter. See Item 24 (b) (3). No compensation was received by the principal underwriter from the registrant or depositor during the registrant's or depositor's last fiscal year. Item 30. Location of Accounts and Records The records regarding the Account required to be maintained by Section 31(a) of the Investment Company Act of 1940, and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained at Empire Fidelity Investments Life Insurance Company at One World Financial Center New York, New York 10281. Item 31. Management Services The contracts for management-related services between (a) Fidelity Investments Life and Empire Fidelity Investments Life is summarized in Part B. Payments under these contracts for 1996 and 1995 were $ 343,376 and $297,600, respectively. Item 32. Undertakings (a) Registrant undertakes to file a post-effective amendment to this Registration Statement as frequently as is necessary to ensure that the audited financial statements in the Registration Statement are never than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a postcard or similar written communication affixed to or included in a prospectus that the applicant can remove to send for a Statement of Additional Information. (c) Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. (d) Registrant represents that it meets the definition of a "separate account" under the federal securities laws. (e) Empire Fidelity Investment Life Insurance Company hereby represents that the aggregate charges under the variable annuity policy ("the contract") offered by Empire Fidelity Investment Life Insurance Company are reasonable in relation to services rendered, the expenses expected to be incurred, and the risks assumed by Empire Fidelity Investment Life Insurance Company SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Empire Fidelity Investments Variable Annuity Account A, certifies that it meets the requirements of the Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this Post-Effective Amendment No.6 to the Registration Statement to be signed on its behalf in the city of Boston and the Commonwealth of Massachusetts, on this 29th day of August, 1997. EMPIRE FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT A (Registrant) By: EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (Depositor) By: _/s/Rodney R. Rhoda Attest:_/s/David J. Pearlman Rodney R. Rohda, Chairman and David J. Pearlman, Chief Executive Officer Secretary As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on this 29th day of August, 1997. Signature Title _/s/Rodney R. Rhoda Chairman and Director Rodney R. Rohda (Chief Executive Officer) ) By:_/s/David J. Pearlman ) David J. Pearlman ________________ Director ) (Attorney-in-Fact) J. Gary Burkhead ) ) ________________ Director ) James C. Curvey ) ) ________________ Director ) John J. Remondi ) ) ________________ Director ) Lena G. Goldberg ) ) ________________ Director ) Paul J. Hondros ) ) _______________ Director ) Roy Ballentine ) ) _______________ Director ) Peter Johannsen ) )By_/s/David J. Pearlman ) David J. Pearlman _______________ Director ) (Attorney-in-Fact) Malcolm MacKay ) ) _______________ Director 0 Joshua Berman 0 ) _______________ Director ) Denis M. McCarthy ) ) _______________ Director ) Floyd L. Smith ) ) _______________ Director ) David Weinstein ) EX-99.B9 2 August 29, 1997 Board of Directors Empire Fidelity Investments Life Insurance Company 200 Liberty Street One World Financial Center New York, N.Y. 10281 Ladies and Gentlemen: In my capacity as Associate General Counsel of FMR Corp., I have provided legal advice to Empire Fidelity Investments Life Insurance Company ("Empire Fidelity Life") with respect to the establishment of Empire Fidelity Investments Variable Annuity Account A (the "Account") pursuant to section 4240 of the New York Insurance Law. The Account was established by Empire Fidelity Life on July 15, 1991 for the investment of assets held under certain variable annuity contracts (the "Contracts"). I have participated in the preparation and review of Post-Effective Amendment No. 6 to the Registration Statement on Form N-4 for the registration of the Contracts with the Securities and Exchange Commission under the Securities Act of 1933, Reg. No. 33-42376 and the registration of the Account under the Investment Company Act of 1940. I am of the following opinion: (1) Empire Fidelity Life is duly organized and validly existing under the laws of the State of New York. (2) The Account is duly created and validly existing as a separate account of Empire Fidelity Life under the laws of New York. (3) The portion of the assets to be held in the Account equal to the reserve and other liabilities for variable benefits under the Contracts is not chargeable with liabilities arising out of any other business Empire Fidelity Life may conduct. (4) The Contracts, when issued as set forth in the Registration Statement, will be legal and binding obligations of Empire Fidelity Life in accordance with their terms. In arriving at the foregoing opinion, I have made such examination of law and examined such records and other documents as I judged to be necessary or appropriate. I hereby consent to the filing of this opinion as an Exhibit to the Registration Statement, and to the reference to my name under the heading "Legal Matters" in the Statement of Additional Information. Very truly yours, /s/David J. Pearlman David J. Pearlman EX-99.B10 3 August 25, 1997 Empire Fidelity Investments Life Insurance Company Empire Fidelity Investments Variable Annuity Account A 82 Devonshire Street Boston, Massachusetts 02109 Re: Registration No. 33-42376 Ladies and Gentlemen: We hereby consent to the reference to our name under the caption "Legal Matters" in the Statement of Additional Information contained in Post-Effective Amendment No. 6 to the Registration Statement on Form N-4 (File No. 33-42376) for Empire Fidelity Investments Variable Annuity Account A filed by the Account with the Securities and Exchange Commission pursuant to the Securities Act of 1933. Very truly yours, JORDEN BURT BERENSON & JOHNSON LLP By: /s/Michael Berenson Michael Berenson EX-99.B10 4 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this registration statement on Form N-4 (File No. 33-42376) of our reports dated January 29, 1997, on our audits of the financial statements of Empire Fidelity Investments Life Insurance Company and Empire Fidelity Investments Variable Annuity Account A. We also consent to the reference of our Firm under the caption "Independent Accountants" in the Statement of Additional Information. COOPERS & LYBRAND L.L.P. Boston, Massachusetts August 28, 1997 EX-99.B14 5 PARTICIPATION AGREEMENT THIS AGREEMENT, is made as of August 28, 1997, by and among Empire Fidelity Investments Life Insurance Company ("Company"), on its own behalf and on behalf of Empire Fidelity Investments Variable Annuity Account A, 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 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 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. (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 Adviser 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 bill 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 Account; 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 New York 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. 100 Heritage Reserve Milwaukee, Wisconsin 53051 Attention: General Counsel Facsimile No.: 414/359-3948 If to Opportunity Fund II: Strong Opportunity Fund II, Inc. 100 Heritage Reserve Milwaukee, Wisconsin 53051 Attention: General Counsel Facsimile No.: 414/359-3948 If to Adviser: Strong Capital Management, Inc. 100 Heritage Reserve Milwaukee, Wisconsin 53051 Attention: General Counsel Facsimile No.: 414/359-3948 If to Distributors: Strong Funds Distributors, Inc. 100 Heritage Reserve Milwaukee, Wisconsin 53051 Attention: General Counsel Facsimile No.: 414/359-3948 If to Company: Empire Fidelity Investments Life Insurance Company 82 Devonshire Street, Mail Zone R25B Boston, MA 02109 Attention: Richard C. Murphy 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. EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY ________________________________________ Name: Title: STRONG CAPITAL MANAGEMENT, INC. Rochelle Lamm Wallach, President of Strong Advisory Services, a division of Strong Capital Management, Inc. STRONG FUNDS DISTRIBUTORS, INC. Stephen J. Shenkenberg, Vice President STRONG VARIABLE INSURANCE FUNDS, INC. on behalf of the Designated Portfolios ________________________________________ Stephen J. Shenkenberg, Vice President STRONG OPPORTUNITY FUND II, INC. _______________________________________ Stephen J. Shenkenberg, 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 Empire Fidelity Investments Life Insurance Company Participation Agreement Dear Sir or Madame: Pursuant to the Participation Agreement by and among Strong Capital Management, Inc. ("Strong"), Empire 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, the annual fee specified in Exhibit A (the "Fee") for all 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"), services which are substantially similar to the Services provided by Company to the Funds, (ii) Strong pays such Third Party Service Provider for such Services to such Strong Variable 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 the 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 Adviser 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, Rochelle Lamm Wallach President, Strong Advisory Services, a division of Strong Capital Management, Inc. Accepted and agreed to this _____ day of _____________, 1997. EMPIRE 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% EX-99.B14 6 FUND PARTICIPATION AGREEMENT THIS AGREEMENT made as of the 8th day of August, 1997, by and between the PBHG INSURANCE SERIES FUND, INC. ("FUND"), a Maryland corporation, PILGRIM BAXTER & ASSOCIATES, LTD. ("ADVISER"), a Delaware corporation, and EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY ("LIFE COMPANY"), a life insurance company organized under the laws of the State of New York. WHEREAS, FUND is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940, as amended (the "`40 Act"), as an open-end, diversified management investment company; and WHEREAS, FUND is organized as a series fund comprised of several Portfolios ("Portfolios"), with those currently available being listed on Appendix A hereto; and WHEREAS, FUND was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts ("Variable Contracts") offered by life insurance companies through separate accounts ("Separate Accounts") of such life insurance companies ("Participating Insurance Companies"); and WHEREAS, FUND may also offer its shares to certain qualified pension and retirement plans ("Qualified Plans"); and WHEREAS, FUND will apply for an order from the SEC, granting Participating Insurance Companies and their separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the `40 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Portfolios of the FUND to be sold to and held by Variable Contract separate accounts of both affiliated and unaffiliated Participating Insurance Companies and Qualified Plans ("Exemptive Order"); and WHEREAS, LIFE COMPANY has established or will establish one or more separate accounts ("Separate Accounts") to offer Variable Contracts and is desirous of having FUND as one of the underlying funding vehicles for such Variable Contracts; and WHEREAS, ADVISER is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940 and acts as the FUND's investment adviser; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase shares of FUND to fund the aforementioned Variable Contracts and FUND is authorized to sell such shares to LIFE COMPANY at net asset value; NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY, FUND, and ADVISER agree as follows: Article I. SALE OF FUND SHARES 1.1 FUND agrees to make available to the Separate Accounts of LIFE COMPANY shares of the selected Portfolios as listed on Appendix B for investment of purchase payments of Variable Contracts allocated to the designated Separate Accounts as provided in FUND's Registration Statement. 1.2 FUND agrees to sell to LIFE COMPANY those shares of the selected Portfolios of FUND which LIFE COMPANY orders, executing such orders on a daily basis at the net asset value next computed after receipt by FUND or its designee of the order for the shares of FUND. For purposes of this Section 1.2, LIFE COMPANY shall be the designee of FUND for receipt of such orders from the designated Separate Account and receipt by such designee shall constitute receipt by FUND; provided that LIFE COMPANY receives the order by the close of business of the New York Stock Exchange and FUND receives notice from LIFE COMPANY by telephone or facsimile (or by such other means as FUND and LIFE COMPANY may agree in writing) of such order by 9:00 a.m. New York time on the next following Business Day. In the event of a natural or manmade disaster, armed conflict, act of terrorism, riot, labor disruption or any other circumstance beyond LIFE COMPANY's control (not caused by its own negligence or which could have been adequately remedied if not for LIFE COMPANY's negligence), LIFE COMPANY shall transmit an estimate of such order by 9:00 a.m. New York time on the next following Business Day, with a definitive order to be transmitted by 12:00 noon on such day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which FUND calculates its net asset value pursuant to the rules of the SEC. 1.3 FUND agrees to redeem on LIFE COMPANY's request, any full or fractional shares of FUND held by LIFE COMPANY, executing such requests on a daily basis at the net asset value next computed after receipt by FUND or its designee of the request for redemption, in accordance with the provisions of this agreement and FUND's Registration Statement. For purposes of this Section 1.3, LIFE COMPANY shall be the designee of FUND for receipt of requests for redemption from the designated Separate Account and receipt by such designee shall constitute receipt by FUND; provided that LIFE COMPANY receives the request for redemption by the closing of business of the New York Stock Exchange and FUND receives notice from LIFE COMPANY by telephone or facsimile (or by such other means as FUND and LIFE COMPANY may agree in writing) of such request for redemption by 9:00 a.m. New York time on the next following Business Day. 1.4 FUND shall furnish, on or before the ex-dividend date, notice to LIFE COMPANY of any income dividends or capital gain distributions payable on the shares of any Portfolio of FUND. LIFE COMPANY hereby elects to receive all such income dividends and capital gain distributions as are payable on a Portfolio's shares in additional shares of the Portfolio. FUND shall notify LIFE COMPANY or its designee of the number of shares so issued as payment of such dividends and distributions. 1.5 FUND shall make the net asset value per share for the selected Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably practicable after the net asset value per share is calculated but shall use its best efforts to make such net asset value available by 6:30 p.m. New York time. If the net asset value per share for the selected Portfolio(s) are unavailable by 6:30 p.m. New York time, FUND shall provide LIFE COMPANY with such net asset value by no later than 7:30 p.m. New York time. If FUND provides LIFE COMPANY with materially incorrect share net asset value information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the Separate Accounts, shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the correct share net asset value. Any material error in the calculation of net asset value per share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY. If LIFE COMPANY suffers any out-of-pocket expenses as a result of FUND or its designee providing LIFE COMPANY with an incorrect net asset value for any Portfolio, ADVISER will reimburse LIFE COMPANY for all such reasonable expenses suffered by LIFE COMPANY. 1.6 At the end of each Business Day, LIFE COMPANY shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, LIFE COMPANY shall process each such Business Day's Separate Account transactions based on requests and premiums received by it to determine the net dollar amount of FUND shares which shall be purchased or redeemed at that day's closing net asset value per share. The net purchase or redemption orders so determined shall be transmitted to FUND by LIFE COMPANY by 9:00 a.m. New York Time on the Business Day next following LIFE COMPANY's receipt of such requests and premiums in accordance with the terms of Sections 1.2 and 1.3 hereof. 1.7 If LIFE COMPANY's order requests the purchase of FUND shares, LIFE COMPANY shall pay for such purchase by wiring federal funds to FUND or its designated custodial account on the day the order is transmitted by LIFE COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a payment of redemption proceeds to LIFE COMPANY, FUND shall use its best efforts to wire the redemption proceeds to LIFE COMPANY by the close of the Business Day on which the order is transmitted to FUND or its designee, subject to such longer period of time as may be permitted by the '40 Act or the rules, orders or regulations thereunder. 1.8 (a) FUND agrees that all shares of the Portfolios of FUND will be sold only to Participating Insurance Companies which have agreed to participate in FUND to fund their Separate Accounts and/or to Qualified Plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the Portfolios of FUND will not be sold directly to the general public. (b) The FUND agrees that through October 31, 1998, shares of the FUND's Select 20 Portfolio will be sold only to LIFE COMPANY and to Fidelity Investments Life Insurance Company, an affiliate of LIFE COMPANY. The foregoing sentence shall not apply if before October 31, 1998, LIFE COMPANY or Fidelity Investments Life Insurance Company adds any additional investment option to any of their Separate Accounts to be funded by an investment company other than those advised by or sponsored by Morgan Stanley & Co., Warburg, Pincus, Strong Capital Management or Fidelity Management & Research Company or any of their respective affiliates. 1.9 FUND may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of the shares of or liquidate any Portfolio of FUND if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Directors of the FUND (the "Board"), acting in good faith and in light of its duties under federal and any applicable state laws, deemed necessary, desirable or appropriate and in the best interests of the shareholders of such Portfolios. 1.10 Issuance and transfer of Portfolio shares will be by book entry only. Stock certificates will not be issued to LIFE COMPANY or the Separate Accounts. Shares ordered from Portfolio will be recorded in appropriate book entry titles for the Separate Accounts. Article II. REPRESENTATIONS AND WARRANTIES 2.1 LIFE COMPANY represents and warrants that it is an insurance company duly organized and in good standing under the laws of the State of New York and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that Fidelity Brokerage Services, Inc., the principal underwriter for the Variable Contracts, is registered as a broker-dealer under the Securities Exchange Act of 1934 (the "'34 Act"). 2.2 LIFE COMPANY represents and warrants that it has registered or, prior to any issuance or sale of the Variable Contracts, will register each Separate Account as a unit investment trust ("UIT") in accordance with the provisions of the `40 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. 2.3 LIFE COMPANY represents and warrants that the Variable Contracts will be registered under the Securities Act of 1933 (the "`33 Act") unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with applicable state insurance law suitability requirements. 2.4 LIFE COMPANY represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify FUND immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5 FUND represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the '33 Act and sold in accordance with all applicable federal and state laws, and FUND shall be registered under the `40 Act prior to and at the time of any issuance or sale of such shares. FUND, subject to Section 1.9 above, shall amend its registration statement under the `33 Act and the `40 Act from time to time as required in order to effect the continuous offering of its shares. FUND shall register and qualify its shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by FUND. 2.6 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 Treasury Regulation 1.817-5, and will notify LIFE 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. Contemporaneously with the execution of this Agreement, FUND will furnish a copy of its written compliance procedures concerning Section 817 and Regulation 1.817-5 to LIFE COMPANY. ADVISER agrees to provide LIFE COMPANY a statement of the assets of each Portfolio in which LIFE COMPANY invests within 20 days after the end of each calendar quarter, together with a statement certifying that each such Portfolio has complied with the requirements of Section 817 and Rule 1.817-5 for the quarter, and that 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. 2.7 FUND represents and warrants that each Portfolio invested in by the Separate Account has elected to be treated as a "regulated investment company" under Subchapter M of the Code, and to qualify for such treatment for each taxable year and will notify LIFE COMPANY immediately upon having a reasonable basis for believing it has ceased to so qualify or might not so qualify in the future. 2.8. ADVISER represents and warrants that it is and will remain duly registered and licensed in all material respects under all applicable federal and state securities laws and shall perform its obligations hereunder in compliance in all material respects with any applicable state and federal laws. The FUND and ADVISER represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the FUND are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the FUND in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. The FUND and 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 $30,000,000. Article III. PROSPECTUS AND PROXY STATEMENTS 3.1 FUND shall prepare and be responsible for filing with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of FUND. FUND shall bear the costs of registration and qualification of shares of the Portfolios, preparation and filing of the documents listed in this Section 3.1 and all taxes and filing fees to which an issuer is subject on the issuance and transfer of its shares. 3.2 At least annually, FUND or its designee shall provide LIFE COMPANY, free of charge, with as many copies of the current prospectus, proxy materials, notices, annual report and semi-annual report for the shares of the Portfolios as LIFE COMPANY may reasonably request for distribution to existing Variable Contract owners whose Variable Contracts are funded by such shares. FUND or its designee shall provide LIFE COMPANY, at ADVISER's expense, with as many copies of the current prospectus, annual report and semi-annual report for the shares as LIFE COMPANY may reasonably request for distribution to prospective purchasers of Variable Contracts and existing Variable Contract owners whose Variable Contracts are not funded by shares of the Fund. If requested by LIFE COMPANY in lieu thereof, FUND or its designee shall provide such documentation (including a "camera ready" copy of the new prospectus, annual report and semi-annual report as set in type or, at the request of LIFE COMPANY, as a diskette in the form sent to the financial printer) and other assistance as is reasonably necessary in order for the parties hereto once a year (or more frequently if the prospectus for the shares is supplemented or amended) to have the prospectus, annual report and semi-annual report for the Variable Contracts and the prospectus, annual report and semi-annual report for the FUND shares printed together in one document. The FUND's share of printing and production costs for such materials shall be determined by assigning to the FUND a pro-rata share of such expenses, the calculation of which shall be determined by applying the following formula: A/B x C Where A equals the number of pages contained in the document relating to the Fund; B equals the total number of pages in the entire document and C equals the total cost of printing and producing the entire document. LIFE COMPANY shall provide the FUND, or its designee, and the ADIVSER with such information as may be reasonably necessary to allow the FUND and the ADVISER to assure themselves that the FUND's allocated portion of 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 Variable Contracts whose contracts are funded by the FUND's shares. 3.3 LIFE COMPANY shall bear the expenses of distributing the FUND's prospectuses, annual reports and semi-annual reports to prospective Variable Contract owners. Fund shall bear a portion of the postage and mailing expenses with respect to such materials that are delivered to Variable Contract owners. The FUND shall bear a portion of such expenses in accordance with the following formula: A x F A + B + C + D + E Where A is the aggregate number of Variable Contract Owners who own shares of the Fund, B is the aggregate number of Variable Contract owners who own shares of mutual funds advised by FMR; C, D and E are the aggregate number of Variable Contract owners who own shares in the other mutual funds participating in the Variable Contracts as available investment options. F equals the total cost of postage and handling attributable to such materials to all Variable Contract owners. In the event that LIFE COMPANY requests that FUND, or its designee, provide FUND's prospectus, annual report and semi-annual report in a "camera ready" or diskette format, FUND shall be responsible for providing the prospectus, annual report and semi-annual report in the format in which it is accustomed and shall bear the expense of providing the prospectus, annual report and semi-annual report in such format (e.g. typesetting expenses), and LIFE COMPANY shall bear the expense of adjusting or changing the format to conform with its customary format. 3.4 FUND will provide LIFE COMPANY with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Portfolios promptly after the filing of each such document with the SEC or other regulatory authority. LIFE COMPANY will provide FUND with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account promptly after the filing of each such document with the SEC or other regulatory authority. Article IV. SALES MATERIALS 4.1 LIFE COMPANY will furnish, or will cause to be furnished, to FUND and ADVISER, each piece of sales literature or other promotional material in which FUND or ADVISER is named, at least ten (10) Business Days prior to its intended use. No such material will be used if FUND or ADVISER objects to its use in writing within seven (7) Business Days after receipt of such material. 4.2 FUND and ADVISER will furnish, or will cause to be furnished, to LIFE COMPANY, each piece of sales literature or other promotional material in which LIFE COMPANY or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if LIFE COMPANY objects to its use in writing within seven (7) Business Days after receipt of such material. 4.3 FUND and its affiliates and agents shall not give any information or make any representations on behalf of LIFE COMPANY or concerning LIFE COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE COMPANY, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or other promotional material approved by LIFE COMPANY or its designee, except with the written permission of LIFE COMPANY. 4.4 LIFE COMPANY and its affiliates and agents shall not give any information or make any representations on behalf of FUND or concerning FUND other than the information or representations contained in a registration statement or prospectus for FUND, as such registration statement and prospectus may be amended or supplemented from time to time, or in sales literature or other promotional material approved by FUND or its designee, except with the written permission of FUND. 4.5 For purposes of this Agreement, the phrase "sales literature or other promotional material" or words of similar import include, without limitation, 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 (such as any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, or 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, registration statements, prospectuses, statements of additional information, shareholder reports and proxy materials, and any other material constituting sales literature or advertising under National Association of Securities Dealers, Inc. ("NASD") rules, the `40 Act or the '33 Act. Article V. POTENTIAL CONFLICTS 5.1 The parties acknowledge that FUND will be filing an application with the SEC to request an order granting relief from various provisions of the '40 Act and the rules thereunder to the extent necessary to permit FUND shares to be sold to and held by Variable Contract separate accounts of both affiliated and unaffiliated Participating Insurance Companies and Qualified Plans. It is anticipated that the Exemptive Order, when and if issued, shall require FUND and each Participating Insurance Company to comply with conditions and undertakings substantially as provided in this Section 5. If the Exemptive Order imposes conditions materially different from those provided for in this Section 5, the conditions and undertakings imposed by the Exemptive Order shall govern this Agreement and the parties hereto agree to amend this Agreement consistent with the Exemptive Order. The Fund will not enter into a participation agreement with any other Participating Insurance Company unless it imposes the same conditions and undertakings as are imposed on LIFE COMPANY hereby. 5.2 The Board will monitor FUND for the existence of any material irreconcilable conflict between the interests of Variable Contract owners of all separate accounts investing in FUND. An irreconcilable material conflict may arise for a variety of reasons, which may include: (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 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 FUND are being managed; (e) a difference in voting instructions given by Variable Contract owners; (f) a decision by a Participating Insurance Company to disregard the voting instructions of Variable Contract owners and (g) if applicable, a decision by a Qualified Plan to disregard the voting instructions of plan participants. 5.3 LIFE COMPANY will report any potential or existing conflicts to the Board. LIFE COMPANY will be responsible for assisting the Board in carrying out its duties in this regard by providing the Board with all information reasonably necessary for the Board to consider any issues raised. The responsibility includes, but is not limited to, an obligation by the LIFE COMPANY to inform the Board whenever it has determined to disregard Variable Contract owner voting instructions. These responsibilities of LIFE COMPANY will be carried out with a view only to the interests of the Variable Contract owners. 5.4 If a majority of the Board or majority of its disinterested Directors, determines that a material irreconcilable conflict exists affecting LIFE COMPANY, LIFE COMPANY, at its expense and to the extent reasonably practicable (as determined by a majority of the Board's disinterested Directors), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, including; (a) withdrawing the assets allocable to some or all of the Separate Accounts from FUND or any Portfolio thereof and reinvesting those assets in a different investment medium, which may include another Portfolio of FUND, or another investment company; (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and as appropriate, segregating the assets of any appropriate group (i.e variable annuity or variable life insurance Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Variable Contract owners the option of making such a change; and (c) establishing a new registered management investment company (or series thereof) or managed separate account. If a material irreconcilable conflict arises because of LIFE COMPANY's decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY may be required, at the election of FUND, to withdraw the Separate Account's investment in FUND, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners. For the purposes of this Section 5.4, a majority of the disinterested members of the Board shall determine whether or not any proposed action adequately remedies any irreconcilable material conflict but in no event will FUND or ADVISER (or any other investment adviser of FUND) be required to establish a new funding medium for any Variable Contract. Further, LIFE COMPANY shall not be required by this Section 5.4 to establish a new funding medium for any Variable Contracts if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially and adversely affected by the irreconcilable material conflict. 5.5 The Board's determination of the existence of an irreconcilable material conflict and its implications shall be made known promptly and in writing to LIFE COMPANY. 5.6 No less than annually, LIFE COMPANY shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out its obligations. Such reports, materials, and data shall be submitted more frequently if deemed appropriate by the Board. Article VI. VOTING 6.1 LIFE COMPANY will provide pass-through voting privileges to all Variable Contract owners so long as the SEC continues to interpret the `40 Act as requiring pass-through voting privileges for Variable Contract owners. Accordingly, LIFE COMPANY, where applicable, will vote shares of the Portfolio held in its Separate Accounts in a manner consistent with voting instructions timely received from its Variable Contract owners. LIFE COMPANY will be responsible for assuring that each of its Separate Accounts that participates in FUND calculates voting privileges in a manner consistent with other Participating Insurance Companies. LIFE COMPANY will vote shares for which it has not received timely voting instructions, as well as shares it owns, in the same proportion as its votes those shares for which it has received voting instructions. ADVISER will bear all expenses incurred by LIFE COMPANY in connection with the (solicitation) tabulation and any necessary archiving of any proxy materials, provided LIFE COMPANY uses a tabulation service designated by ADVISER. 6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule 6e-3 is adopted, to provide exemptive relief from any provision of the `40 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Exemptive Order, then FUND, and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable. Article VII. INDEMNIFICATION 7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify and hold harmless FUND, ADVISER and each of their directors, principals, officers, employees and agents and each person, if any, who controls FUND or ADVISER within the meaning of Section 15 of the `33 Act (collectively, the "Indemnified Parties" for purposes of this Article VII) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of LIFE COMPANY, which consent shall not be unreasonably withheld) 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 FUND's shares or the Variable Contracts and: (a) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement or prospectus for the Variable Contracts or contained in the Variable 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 LIFE COMPANY by or on behalf of FUND for use in the registration statement or prospectus for the Variable Contracts or in the Variable Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or FUND shares; or (b) 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 FUND not supplied by LIFE COMPANY, or persons under its control) or wrongful conduct of LIFE COMPANY or persons under its control, with respect to the sale or distribution of the Variable Contracts or FUND shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, or sales literature of 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 statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to FUND by or on behalf of LIFE COMPANY; or (d) arise as a result of any failure by LIFE COMPANY to provide substantially the services and furnish the materials under the terms of this Agreement; or (e) arise out of or result from any material breach of any representation and/or warranty made by LIFE COMPANY in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY. 7.2 LIFE 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 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. 7.3 LIFE 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 LIFE 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 LIFE COMPANY of any such claim shall not relieve LIFE COMPANY from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, LIFE COMPANY shall be entitled to participate at its own expense in the defense of such action. LIFE COMPANY also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from LIFE COMPANY to such party of LIFE 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 LIFE 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. 7.4 Indemnification by ADVISER. ADVISER agrees to indemnify and hold harmless LIFE COMPANY and each of its directors, officers, employees, and agents and each person, if any, who controls LIFE COMPANY within the meaning of Section 15 of the `33 Act (collectively, the "Indemnified Parties" for the purposes of this Article VII) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of ADVISER which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of FUND's shares or the Variable Contracts and: (a) 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 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 ADVISER or FUND by or on behalf of LIFE COMPANY for use in the registration statement or prospectus for FUND or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or FUND shares; or (b) 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 Variable Contracts not supplied by ADVISER or persons under its control) or wrongful conduct of FUND or ADVISER or persons under their control, with respect to the sale or distribution of the Variable Contracts or FUND shares; or (c) 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 Variable 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 or such alleged statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY for inclusion therein by or on behalf of FUND; or (d) arise as a result of (i) a failure by FUND to provide substantially the services and furnish the materials under the terms of this Agreement; or (ii) a failure by a Portfolio(s) invested in by the Separate Account to comply with the diversification requirements of Section 817(h) of the Code; or (iii) a failure by a Portfolio(s) invested in by the Separate Account to qualify as a "regulated investment company" under Subchapter M of the Code; or (e) arise out of or result from any material breach of any representation and/or warranty made by ADVISER in this Agreement or arise out of or result from any other material breach of this Agreement by ADVISER. 7.5 ADVISER shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or 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. 7.6 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 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 ADVISER of any such claim shall not relieve 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, ADVISER shall be entitled to participate at its own expense in the defense thereof. ADVISER also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from ADVISER to such party of 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 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. Article VIII. TERM; TERMINATION 8.1 This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein. 8.2 This Agreement shall terminate in accordance with the following provisions: (a) At the option of LIFE COMPANY at any time from the date hereof upon 60 days' notice, unless a shorter time is agreed to by the parties; (b) At the option of the FUND at any time from the date hereof upon 120 days' notice, unless shorter time is agreed to by the parties; (c) At the option of LIFE COMPANY, if FUND shares are not reasonably available to meet the requirements of the Variable Contracts as determined by LIFE COMPANY. Prompt notice of election to terminate shall be furnished by LIFE COMPANY, said termination to be effective ten days after receipt of notice unless FUND makes available a sufficient number of shares to reasonably meet the requirements of the Variable Contracts within said ten-day period; (d) At the option of LIFE COMPANY, upon the institution of formal proceedings against FUND by the SEC, the NASD, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in LIFE COMPANY's reasonable judgment, materially impair FUND's ability to meet and perform FUND's obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by LIFE COMPANY with said termination to be effective upon receipt of notice; (e) At the option of FUND, upon the institution of formal proceedings against LIFE COMPANY by the SEC, the NASD, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in FUND's reasonable judgment, materially impair LIFE COMPANY's ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by FUND with said termination to be effective upon receipt of notice; (f) In the event FUND's 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 medium of Variable Contracts issued or to be issued by LIFE COMPANY. Termination shall be effective upon such occurrence without notice; (g) At the option of FUND if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if FUND reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by LIFE COMPANY; (h) At the option of LIFE COMPANY, upon FUND's breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of LIFE COMPANY within ten days after written notice of such breach is delivered to FUND; (i) At the option of FUND, upon LIFE COMPANY's breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of FUND within ten days after written notice of such breach is delivered to LIFE COMPANY; (j) At the option of FUND, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice; (k) In the event this Agreement is assigned without the prior written consent of LIFE COMPANY, FUND, and ADVISER, termination shall be effective immediately upon such occurrence without notice, except that LIFE COMPANY may assign this Agreement to an affiliated life insurance company without consent. 8.3 Notwithstanding any termination of this Agreement pursuant to Section 8.2(a), 8.2(c), (d), (h) or (k) hereof, the FUND shall, at the option of LIFE COMPANY, continue to make available additional FUND shares, pursuant to the terms and conditions of this Agreement, for all Variable 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 or LIFE COMPANY, whichever shall have legal authority to do so, shall be permitted to reallocate investments in FUND, redeem investments in FUND and/or invest in FUND upon the payment of additional premiums under the Existing Contracts. If FUND shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect. 8.4 LIFE COMPANY shall not redeem FUND shares attributable to the Variable Contracts (as opposed to FUND shares attributable to LIFE COMPANY's assets held in its Separate Accounts) except (i) as necessary to implement Variable Contract owner initiated or approved transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally Required Redemption") or (iii) as permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, LIFE COMPANY will promptly furnish to the FUND and the ADVISER the opinion of counsel for LIFE 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. Furthermore, except in cases where permitted under the terms of the Variable Contracts, LIFE COMPANY shall not prevent Variable Contract owners from allocating payments to a Portfolio that was otherwise available under the Variable Contracts without first giving the FUND and the ADVISER sixty (60) days notice of its intention to do so. Article IX. NOTICES Any notice hereunder shall be given by registered or certified mail return receipt requested 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 FUND: PBHG Insurance Series Fund, Inc. 1255 Drummers Lane, Suite 300 Wayne, PA 19087 Attention: Mr. Brian F. Bereznak With a copy to: PBHG Insurance Series Fund, Inc. 1255 Drummers Lane, Suite 300 Wayne, PA 19087 Attention: John M. Zerrr, Esq. If to the ADVISER: PBHG Insurance Series Fund, Inc. 1255 Drummers Lane, Suite 300 Wayne, PA 19087 Attention: Mr. Brian F. Bereznak With a copy to: PBHG Insurance Series Fund, Inc. 1255 Drummers Lane, Suite 300 Wayne, PA 19087 Attention: John M. Zerrr, Esq. If to LIFE COMPANY: Empire Fidelity Investments Life Insurance Company 82 Devonshire Street Mail Zone R25B Boston, MA 02109-3614 Attn: Richard C. Murphy Notice shall be deemed given on the date of receipt by the addressee as evidenced by the return receipt. Article X. MISCELLANEOUS 10.1 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. 10.2 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 10.3 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. 10.4 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Pennsylvania. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders. 10.5 It is understood and expressly stipulated that neither the shareholders of shares of any Portfolio nor the Directors or officers of FUND or any Portfolio shall be personally liable hereunder. No Portfolio shall be liable for the liabilities of any other Portfolio. All persons dealing with FUND or a Portfolio must look solely to the property of FUND or that Portfolio, respectively, for enforcement of any claims against FUND or that Portfolio. It is also understood that each of the Portfolios shall be deemed to be entering into a separate Agreement with LIFE COMPANY so that it is as if each of the Portfolios had signed a separate Agreement with LIFE COMPANY and that a single document is being signed simply to facilitate the execution and administration of the Agreement. 10.6 Each party shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 10.7 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. 10.8 No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by FUND, ADVISER and the LIFE COMPANY. IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written. PBHG INSURANCE SERIES FUND, INC. By:_____________________________ Name: Title: PILGRIM BAXTER & ASSOCIATES, LTD. By:_____________________________ Name: Title: EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY By:______________________________ Name: Title: APPENDIX A PBHG Insurance Series Fund, Inc. - Portfolios PBHG Growth II Portfolio PBHG Technology & Communications Portfolio PBHG Select 20 Portfolio PBHG Large Cap Value Portfolio PBHG Small Cap Value Portfolio APPENDIX B Separate Accounts Selected Portfolios Empire Fidelity Investments PBHG Growth II Portfolio Variable Annuity Account I PBHG Technology & Communications Portfolio PBHG Select 20 Portfolio PBHG Large Cap Value Portfolio PBHG Small Cap Value Portfolio FundPart\Fidelity EX-99.B14 7 THIS AGREEMENT, made and entered into as of the 1st day of September, 1997 by and among EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY (hereinafter the "Company"), a New York corporation, on its own behalf and on behalf of each 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 MORGAN STANLEY UNIVERSAL FUNDS, INC. (hereinafter the "Fund"), a Maryland corporation, and MORGAN STANLEY ASSET MANAGEMENT INC. and MILLER ANDERSON & SHERRERD, 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, Morgan Stanley & 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 4240 of The New York Insurance Law 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 1940 Act. The Fund shall amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund. 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: Morgan Stanley Universal Funds, Inc. 1221 Avenue of the Americas New York, New York 10020 Attention: Secretary If to Adviser: Morgan Stanley Asset Management Inc. 1221 Avenue of the Americas New York, New York 10020 Attention: Harold J. Schaaff, Jr., Esq. If to Adviser: Miller Anderson & Sherrerd, LLP One Tower Bridge West Conshohocken, Pennsylvania 19428 Attention: Lorraine Truten If to the Company: Empire Fidelity Investments Life Insurance Company 82 Devonshire Street Mail Zone R25B Boston, MA 02109 Attention: Richard C. Murphy 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. EMPIRE FIDELITY INVESTMENTS LIFE INSURANCE COMPANY By: ______________________________ NAME: TITLE: MORGAN STANLEY UNIVERSAL FUNDS, INC. By: ______________________________ NAME: TITLE: MORGAN STANLEY ASSET MANAGEMENT INC. By: ______________________________ NAME: TITLE: MILLER ANDERSON & SHERRERD, 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 Empire Fidelity Investments Variable Annuity EVA-91100 Account A, established July 15, 1991 EVA-92100
*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 MORGAN STANLEY 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 "John A. Smith, 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 MORGAN STANLEY UNIVERSAL FUNDS, INC., MORGAN STANLEY ASSET MANAGEMENT INC. MILLER ANDERSON & SHERRERD, LLP AND EMPIRE 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 Morgan Stanley Universal Funds, Inc. B-1 SCHEDULE C Proxy Voting Procedures C-1 EX-99.B14 8 EMPIRE FIDELITY INVESTMENTS CORPORATION EXECUTION COPY PARTICIPATION AGREEMENT BY AND AMONG EMPIRE FIDELITY INVESTMENTS CORPORATION AND WARBURG, PINCUS TRUST AND WARBURG, PINCUS COUNSELLORS, INC. AND COUNSELLORS SECURITIES INC. THIS AGREEMENT, made and entered into this day of _____________, 1997, by and among Empire Fidelity Investments Corporation, a New York corporation (the "Company"), on its own behalf and on behalf of each separate account of the Company named in Schedule 1 to this Agreement as may be amended from time to time (each account referred to as the "Account"), Warburg, Pincus Trust, an open-end management investment company and business trust organized under the laws of the Commonwealth of Massachusetts (the "Fund"); Warburg, Pincus Counsellors, Inc. a corporation organized under the laws of the State of Delaware (the "Adviser"); and Counsellors Securities Inc., a corporation organized under the laws of the State of New York ("CSI"). WHEREAS, the Fund engages in business as an open-end management investment company and was established for the purpose of serving as the investment vehicle for separate accounts established for variable life insurance contracts and variable annuity contracts to be offered by insurance companies that have entered into participation agreements similar to this Agreement (the "Participating Insurance Companies"), and WHEREAS, beneficial interests in the Fund are divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets (the "Portfolios"); and WHEREAS, the Fund has received an order from the Securities and Exchange Commission (the "SEC") granting Participating Insurance Companies and variable annuity separate accounts and variable life insurance separate accounts relief from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended (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 separate accounts and variable life insurance separate accounts of both affiliated and unaffiliated Participating Insurance Companies and qualified pension and retirement plans outside of the separate account context (the "Mixed and Shared Funding Exemptive Order"). The parties to this Agreement agree that the conditions or undertakings specified in the Mixed and Shared Funding Exemptive Order and that may be imposed on the Company, the Fund, the Adviser and/or CSI by virtue of the receipt of such order by the SEC will be incorporated herein by reference, and such parties agree to comply with such conditions and undertakings to the extent applicable to each such party; 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 (the "1933 Act"); and WHEREAS, the Company has registered or will register certain variable annuity contracts (the "Contracts") under the 1933 Act; and WHEREAS, the Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Company and existing under the laws of the State of New York, to set aside and invest assets attributable to the Contracts; and WHEREAS, the Company has registered the Account as a unit investment trust under the 1940 Act; and WHEREAS, CSI, the Fund's distributor, is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934 (the "1934 Act") and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of the Portfolios named in Schedule 2, as such schedule may be amended from time to time (the "Designated Portfolios"), on behalf of the Account to fund the Contracts, and the Fund is authorized to sell such shares to unit investment trusts such as the Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund, the Adviser and CSI agree as follows: ARTICLE I. SALE OF FUND SHARES 1.1. The Fund agrees to sell to the Company those shares of the Designated Portfolios that each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt and acceptance by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company will be the designee of the Fund for receipt of such orders from each Account and receipt by such designee will constitute receipt by the Fund; provided that the Fund receives notice of such order by 10:00 a.m. Eastern Time on the next following Business Day ("T+1"). 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 T+1, with the final order to be transmitted by 12:00 p.m. on such day. "Business Day" will mean any day on which the New York Stock Exchange, Inc. (the "NYSE") is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the SEC. 1.2. The Company will pay for Fund shares on T+1 in each case that an order to purchase Fund shares is made in accordance with Section 1.1 above. Payment will be in federal funds transmitted by wire. This wire transfer will be initiated by 2:00 p.m. Eastern Time. 1.3. The Fund agrees to make shares of the Designated Portfolios available indefinitely for purchase at the applicable net asset value per share by Participating Insurance Companies and their separate accounts on those days on which the Fund calculates its Designated Portfolio net asset value pursuant to rules of the SEC and the Fund shall use reasonable efforts to calculate such net asset value on each day the NYSE is open for trading; provided, however, that the Fund, the Adviser or CSI may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in its or their sole discretion acting in good faith, necessary in the best interests of the shareholders of such Portfolio. 1.4. On each Business Day on which the Fund calculates its net asset value, the Company will aggregate and calculate the net purchase or redemption orders for each Account maintained by the Fund in which contract owner assets are invested. Net orders will only reflect orders that the Company has received prior to the close of regular trading on the NYSE (currently 4:00 p.m., Eastern Time) on that Business Day. Orders that the Company has received after the close of regular trading on the NYSE will be treated as though received on the next Business Day. Each communication of orders by the Company will constitute a representation that such orders were received by it prior to the close of regular trading on the NYSE on the Business Day on which the purchase or redemption order is priced in accordance with Rule 22c-1 under the 1940 Act. Other procedures relating to the handling of orders will be in accordance with the prospectus and statement of information of the relevant Designated Portfolio or with oral or written instructions that CSI or the Fund will forward to the Company from time to time. 1.5. The Fund agrees that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts, qualified pension and retirement plans or such other persons as are permitted under applicable provisions of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and regulations promulgated thereunder, the sale to which will not impair the tax treatment currently afforded the Contracts. No shares of any Portfolio will be sold to the general public except as set forth in this Section 1.5. 1.6. The Fund agrees to redeem for cash, upon 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 and acceptance by the Fund or its designee of the request for redemption. For purposes of this Section 1.6, the Company will be the designee of the Fund for receipt of requests for redemption from each Account and receipt by such designee will constitute receipt by the Fund, provided the Fund receives notice of request for redemption by 10:00 a.m. Eastern Time on the next following Business Day. Payment will be in federal funds transmitted by wire to the Company's account as designated by the Company in writing from time to time, on the same Business Day the Fund receives notice of the redemption order from the Company. The Fund reserves the right to delay payment of redemption proceeds, but in no event may such payment be delayed longer than the period permitted by the 1940 Act. The Fund will not bear any responsibility whatsoever for the proper disbursement or crediting of redemption proceeds; the Company alone will be responsible for such action. If notification of redemption is received after 10:00 a.m. Eastern Time, payment for redeemed shares will be made on the next following Business Day. As promptly as reasonably practicable upon receipt of any purchase or redemption order placed by Company, CSI will send an acknowledgement to Company of receipt of such order by fax, e-mail or other medium agreed to by CSI and Company. 1.7. The Company agrees to purchase and redeem the shares of the Designated Portfolios offered by the then current prospectus of the Fund in accordance with the provisions of such prospectus. 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. Purchase and redemption orders for Fund shares will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account. 1.9. The Fund will furnish same day notice (by telecopier, followed by written confirmation) to the Company of the declaration of any income, dividends or capital gain distributions payable on each Designated Portfolio's shares. The Company hereby elects to receive all such dividends and distributions as are payable on the Designated Portfolio shares in the form of additional shares of that Designated Portfolio. The Fund will notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election upon reasonable prior notice to the Fund and to receive all such dividends and distributions in cash. 1.10. The Fund will make the net asset value per share for each Designated Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and will use its best efforts to make such net asset value per share available by 6:00 p.m., Eastern Time, but in no event later than 7:00 p.m., Eastern Time, each Business Day. 1.11. In the event adjustments are required to correct any error in the computation of the net asset value of the Fund's shares, the Fund or CSI will notify the Company as soon as practicable after discovering the need for those adjustments that result in an aggregate reimbursement of $150 or more to any one Account maintained by a Designated Portfolio unless notified otherwise by the Company (or, if lesser, results in an adjustment of $10 or more to each contractowner's account). Any such notice will state for each day for which an error occurred the incorrect price, the correct price and, to the extent communicated to the Fund's shareholders, the reason for the price change. The Company may send this notice or a derivation thereof (so long as such derivation is approved in advance by CSI or the Adviser) to contractowners whose accounts are affected by the price change. The parties will negotiate in good faith to develop a reasonable method for effecting such adjustments. CSI or the Adviser will reimburse Company for any reasonable out-of-pocket expenses incurred by Company as a result of the Fund or its designee providing Company with an incorrect net asset value for a Designated Portfolio, provided, however, that such reimbursement shall not exceed $10,000 for any such incorrectly reported net asset value. ARTICLE II. REPRESENTATIONS AND WARRANTIES 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act and that the Contracts will be issued and sold in compliance with all applicable federal and state laws, including 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 as a separate account under applicable state law and has registered the Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts, and that it will maintain such registration for so long as any Contracts are outstanding. The Company will amend the registration statement under the 1933 Act for the Contracts and the registration statement under the 1940 Act for the Account from time to time as required in order to effect the continuous offering of the Contracts or as may otherwise be required by applicable law. The Company will register and qualify the Contracts for sale in accordance with the securities laws of the various states only if and to the extent deemed necessary by the Company. 2.2. The Company represents that the Contracts are currently and at the time of issuance will be treated as annuity contracts under applicable provisions of the Internal Revenue Code, and that it will make every effort to maintain such treatment and that it will notify the Fund and the Adviser 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. 2.3. The Company represents and warrants that it will not purchase shares of the Designated Portfolios with assets derived from tax-qualified retirement plans except, indirectly, through Contracts purchased in connection with such plans. 2.4. The Fund represents and warrants that Fund shares of the Designated Portfolios sold pursuant to this Agreement will be registered under the 1933 Act and duly authorized for issuance in accordance with applicable law and that the Fund is and will remain registered under the 1940 Act for as long as such shares of the Designated Portfolios are outstanding. The Fund will 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 or as may otherwise be required by applicable law. The Fund will register and qualify the shares of the Designated Portfolios for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund. 2.5. The Fund represents that each Designated Portfolio will elect to be treated as a "regulated investment company" under Subchapter M of the Internal Revenue 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 a Designated Portfolio has ceased to so qualify or that it might not so qualify in the future. 2.6. The Fund represents and warrants that in performing the services described in this Agreement, the Fund will comply with all applicable laws, rules and regulations. The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies, objectives and restrictions) complies with the insurance laws and regulations of any state. The Fund and CSI agree that upon request they will use their best efforts to furnish the information required by state insurance laws so that the Company can obtain the authority needed to issue the Contracts in the various states. 2.7. The Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it reserves the right to make such payments in the future. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1 the Fund undertakes to have its Fund Board formulate and approve any plan under Rule 12b-1 to finance distribution expenses in accordance with the 1940 Act. 2.8. The Fund represents that it is lawfully organized and validly existing under the laws of The Commonwealth of Massachusetts and that it does and will comply in all material respects with applicable provisions of the 1940 Act. 2.9. CSI represents and warrants that it will distribute the Fund shares of the Designated Portfolios in accordance with all applicable federal and state securities laws including, without limitation, the 1933 Act, the 1934 Act and the 1940 Act. 2.10. CSI represents and warrants that it is and will remain duly registered under all applicable federal and state securities laws and that it will perform its obligations for the Fund in accordance in all material respects with any applicable state and federal securities laws. 2.11. The Fund represents and warrants that all of its trustees, officers, employees, and other individuals/entities having access to the funds and/or securities of the Fund are and continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. CSI and the Fund's investment advisers represent and warrant that they are and continue to be at all times covered by policies similar to the aforesaid bond. The Fund and Adviser further represent and warrant that the Fund and its trustees are and at all times during the term of this Agreement will be covered by an errors and omissions insurance policy in an amount of not less than $3 million. ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING 3.1. The Fund or CSI will provide a copy of the current Fund prospectus for the Designated Portfolios (the "Portfolio Prospectus"), including a computer diskette of the Company's specification or a final copy of a current Portfolio Prospectus set in type at the Fund's or its affiliate's expense, and such other assistance as is reasonably necessary in order for the Company at least annually (or more frequently if the Portfolio Prospectus is amended more frequently) to have the Portfolio Prospectus, the prospectus for the Contracts and the prospectuses of other mutual funds in which assets attributable to the Contracts may be invested printed together in one document (the "Multifund Prospectus"). The Fund's share of printing costs for such materials shall be determined by assigning the Fund a pro-rata share of such expenses, the calculation of which shall be determined by applying the following formula: A/B x C where "A" equals the number of pages of the Multifund Prospectus attributable to the Portfolio Prospectus, "B" equals the total number of pages of the Multifund Prospectus and "C" represents the total costs for printing the Multifund Prospectus. The Company agrees to provide the Fund or its designee with such information as may reasonably be requested by the Fund or CSI to insure that the Fund's expenses do not include the cost of printing any prospectuses other than those actually distributed to existing owners of the Contracts. 3.2. The Fund or CSI will provide the Company, at the Fund's or its affiliate's expense, with as many copies of the prospectus, statement of additional information, annual report or semi-annual report as the Company may reasonably request for distribution to prospective Contract owners and applicants. The Fund or CSI will provide, at the Fund's or its affiliate's expense, as many copies of said documents as necessary for distribution to any existing Contract owner who requests such documents or whenever state or federal law otherwise requires that such documents be provided. The Fund or CSI will provide the copies of said documents to the Company or to its mailing agent. 3.3 The Company shall bear the expenses of distributing the Multifund Prospectus, statements of additional information, annual reports, semi-annual reports and proxies to prospective Contract owners. The Fund shall reimburse the Company for a portion of such postage and mailing expenses with respect to such materials that are delivered to Contract owners in an amount as determined by the following formula: a/(a+b+c+d+e . . .+n) x C where "a" equals the aggregate number of Contract owners who own shares of the Fund; "b" is the aggregate number of Contract owners who own shares of mutual funds advised by Fidelity Management and Research; "c" through "n" each respectively equal the aggregate number of Contract owners who own shares of funds advised by each of the other individual fund companies whose funds serve as investment media for Contracts; and C is the total cost of mailing such materials to all Contract owners. 3.4. To the extent that the Fund or CSI desires to change (whether by revision or supplement) any of the information contained in any form of Fund prospectus or statement of additional information provided to the Company for inclusion in a Multifund Prospectus, the Company agrees to make such changes within a reasonable period of time after receipt of a request to make such change from the Fund or CSI, subject to the following limitation. To the extent that the Fund is legally required to make a change to a Fund prospectus or statement of additional information provided to the Company for inclusion in a Multifund Prospectus, the Company agrees to make any such change as soon as possible following receipt of the form of revised prospectus and/or statement of additional information or supplement, as applicable, but in no event later than five days following receipt. To the extent that the Fund is required by law to cease selling shares of a Designated Portfolio, the Company agrees to cease offering shares of the Designated Portfolio until the Fund or CSI notifies the Company otherwise. 3.5. If and to the extent required by law the Company will: (a) solicit voting instructions from Contract owners; (b) vote the shares of the Designated Portfolios held in the Account in accordance with instructions received from Contract owners; and (c) vote shares of the Designated Portfolios held in the Account for which no timely instructions have been received, as well as shares it owns, in the same proportion as shares of such Designated Portfolio for which instructions have been received from the Company's Contract owners; so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. Except as set forth above, 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 Company will be responsible for assuring that each of its separate accounts participating in the Fund calculates voting privileges in a manner consistent with all legal requirements, including the Mixed and Shared Funding Exemptive Order. The Fund or its affiliate will bear all reasonable expenses incurred by Company in connection with the solicitation, tabulation and archiving, to the extent required by law, rule or regulation, of the Fund's proxy material, provided Company uses a solicitation and tabulation service designated by CSI or the Adviser. 3.6. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular, the Fund either will provide for annual meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not to require such meetings) or, as the Fund currently intends, will comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the SEC's interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the SEC may promulgate with respect thereto. ARTICLE IV. SALES MATERIAL AND INFORMATION 4.1. CSI will provide the Company on a timely basis with investment performance information for each Designated Portfolio in which the Company maintains an Account, including total return for the preceding calendar month and calendar quarter, the calendar year to date, and the prior one-year, five-year, and ten year (or life of the Designated Portfolio) periods. The Company may, based on the SEC mandated information supplied by CSI, prepare communications for contractowners ("Contractowner Materials"). The Company will provide copies of all Contractowner Materials concurrently with their first use for CSI's internal recordkeeping purposes. It is understood that neither CSI nor any Designated Portfolio will be responsible for errors or omissions in, or the content of, Contractowner Materials except to the extent that the error or omission resulted from information provided by or on behalf of CSI or the Designated Portfolio. Any printed information that is furnished to the Company pursuant to this Agreement other than each Designated Portfolio's prospectus or statement of additional information (or information supplemental thereto), periodic reports and proxy solicitation materials is CSI's sole responsibility and not the responsibility of any Designated Portfolio or the Fund. The Company agrees that the Portfolios, the shareholders of the Portfolios and the officers and governing Board of the Fund will have no liability or responsibility to the Company in these respects. 4.2. The Company will 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, prospectus or statement of additional information for Fund shares, as such registration statement, prospectus and statement of additional information may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in published reports for the Fund which are in the public domain or approved by the Fund or CSI for distribution, or in sales literature or other material provided by the Fund, the Adviser or by CSI, except with permission of CSI. The Company will furnish, or will cause to be furnished, to the Fund, the Adviser or CSI, each piece of sales literature or other promotional material in which the Company or its Account is named, at least ten (10) business days prior to its use. No such sales literature or other promotional material which requires the permission of CSI prior to use will be used if CSI reasonably objects to such use within five (5) business days after receipt. Nothing in this Section 4.2 will be construed as preventing the Company or its employees or agents from giving advice on investment in the Fund. 4.3. The Fund, the Adviser and CSI will not give any information or make any representations or statements 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, prospectus or statement of additional information for the Contracts, as such registration statement, prospectus and statement of additional information may be amended or supplemented from time to time, or in published reports for each Account or the Contracts which are in the public domain or approved by the Company for distribution to contractowners, or in sales literature or other material provided by the Company, except with permission of the Company. The Company agrees to respond to any request for approval on a prompt and timely basis. The Fund, the Adviser or CSI will furnish, or will cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company or its Account is named at least ten (10) business days prior to its use. No such material will be used if the Company reasonably objects to such use within five (5) business days after receipt of such material. 4.4. The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, statements of additions information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, contemporaneously with the filing of such document with the SEC, the NASD or other regulatory authority. 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 Contracts or each Account, contemporaneously with the filing of such document with the SEC, the NASD or other regulatory authority. 4.6. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media (e.g., on-line networks such as the Internet or other electronic messages)), 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 advertisements sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports, proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act. 4.7. The Fund and CSI hereby consent to the Company's use of the names Warburg, Pincus Trust Post-Venture Capital Portfolio, or other Designated Portfolio, and Warburg, Pincus Counsellors, Inc. in connection with the marketing of the Contracts, subject to the terms of Sections 4.1 and 4.2 of this Agreement. Such consent will continue only as long as any Contracts are invested in the relevant Designated Portfolio. ARTICLE V. FEES AND EXPENSES 5.1. The Fund, the Adviser and CSI will pay no fee or other compensation to the Company (other than as set forth in Article III hereof and in the administrative services letter agreement between CSI and the Company) except if the Fund or any Designated Portfolio adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses, then, subject to obtaining any required exemptive orders or other regulatory approvals, the Fund may make payments to the Company or to the underwriter for the Contracts if and in such amounts agreed to by the Fund in writing. 5.2. All expenses incident to performance by the Fund of this Agreement will be paid by the Fund to the extent permitted by law. The Fund will bear the expenses for the cost of registration and qualification of the Fund's shares; preparation and filing of the Fund's prospectus, statement of additional information and registration statement, proxy materials and reports; setting in type and printing the Fund's prospectus; setting in type and printing proxy materials and reports by it to contractowners (including the costs of printing a Fund prospectus that contains an annual report); the preparation of all statements and notices required by any federal or state law; all taxes on the issuance or transfer of the Fund's shares; any expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act; and all other expenses set forth in Article III of this Agreement. ARTICLE VI. DIVERSIFICATION 6.1. The Adviser will ensure that each Portfolio will comply at all times during the term of this Agreement with (a) the diversification requirements set forth in Section 817(h) of the Internal Revenue Code and the rules and regulations thereunder, as amended from time to time, including without limitation Regulation 1.817-5 and (b) the requirements for qualification as a regulated investment company under Section 851 of the Internal Revenue Code. In the event of a breach of this Article VI the Adviser will take all reasonable steps: (a) to notify the Company immediately of such breach; and (b) with respect to Section 817(h), to adequately diversify the Fund so as to achieve compliance therewith within the grace period afforded by Treasury Regulation 1.817-5. ARTICLE VII. POTENTIAL CONFLICTS 7.1. The Board of Trustees of the Fund (the "Fund Board") will monitor the Fund for the existence of any irreconcilable material conflict among the interests of the contractowners 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 Participating Insurance Companies or by variable annuity and variable life insurance contractowners; or (f) a decision by an insurer to disregard the voting instructions of contractowners. The Fund Board will 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 Fund Board. The Company agrees to assist the Fund Board in carrying out its responsibilities, as delineated in the Mixed and Shared Funding Exemptive Order, by providing the Fund Board with all information reasonably necessary for the Fund Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Fund Board whenever contractowner voting instructions are to be disregarded. The Company's responsibilities hereunder will be carried out with a view only to the interest of contractowners. 7.3. If it is determined by a majority of the Fund Board, or a majority of its disinterested trustees, that an irreconcilable material conflict exists, the Company will, at its expense and to the extent reasonably practicable (as determined by a majority of the disinterested trustees), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (a) withdrawing the assets allocable to some or all of the Accounts from the Fund or any Designated 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 contractowners and, as appropriate, segregating the assets of any appropriate group (i.e., variable annuity contractowners or variable life insurance contractowners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contractowners the option of making such a change; and (b) 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 contractowner voting instructions, and the Company's judgment represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the affected subaccount of the Account's investment in the Fund and terminate this Agreement with respect to such subaccount; provided, however, that such withdrawal and termination will be limited to the extent required by the foregoing irreconcilable material conflict as determined by a majority of the disinterested trustees of the Fund Board. No charge or penalty will be imposed as a result of such withdrawal. 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 insurance regulators, then the Company will withdraw the affected subaccount of the Account's investment in the Fund and terminate this Agreement with respect to such subaccount; provided, however, that such withdrawal and termination will be limited to the extent required by the foregoing irreconcilable material conflict as determined by a majority of the disinterested directors of the Fund Board. No charge or penalty will be imposed as a result of such withdrawal. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Fund Board will determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund or the Adviser (or any other investment adviser to the Fund) be required to establish a new funding medium for the Contracts. The Company will 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 contractowners materially affected by the irreconcilable material conflict. 7.7. The Company will at least annually submit to the Fund Board such reports, materials or data as the Fund Board may reasonably request so that the Fund Board may fully carry out the duties imposed upon it as delineated in the Mixed and Shared Funding Exemptive Order, and said reports, materials and data will be submitted more frequently if deemed appropriate by the Fund Board. 7.8. 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 Mixed and Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Mixed and Shared Funding Exemptive Order, then: (a) the Fund and/or the Participating Insurance Companies, as appropriate, will 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 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement will 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 (a) The Company agrees to indemnify and hold harmless the Fund, the Adviser, CSI, and each person, if any, who controls or is associated with the Fund, the Adviser or CSI within the meaning of such terms under the federal securities laws and any director, trustee, officer, partner, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including reasonable 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: (1) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus or statement of additional information for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), including any prospectuses or statements of additional information of the Fund to which the Company has made any changes to the information provided to the Company or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated or necessary to make such statements not misleading in light of the circumstances in which they were made; provided that this agreement to indemnify will 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 the Company by the Fund, the Adviser or CSI for use in the registration statement, prospectus or statement of additional information 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 (2) arise out of or as a result of statements or representations by or on behalf of the Company or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund shares (other than statements or representations contained in the Fund registration statement, Fund prospectus, Fund statement of additional information, sales literature or other promotional material of the Fund not supplied by the Company or persons under its control); or (3) arise out of any untrue statement or alleged untrue statement of a material fact contained in the Fund registration statement, prospectus, statement of additional information or sales literature or other promotional material of the Fund (or amendment or supplement) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make such statements not misleading in light of the circumstances in which they were made, 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 persons under its control; or (4) 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 (5) arise out of 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 by the Company of this Agreement, including, but not limited to, a failure to comply with the provisions of Section 3.3; except to the extent provided in Sections 8.1(b) and 8.3 hereof. This indemnification will be in addition to any liability that the Company otherwise may have. (b) No party will be entitled to indemnification under Section 8.1(a) to the extent such loss, claim, damage, liability or litigation is due to the willful misfeasance, bad faith, or gross negligence in the performance of such party's duties under this Agreement, or by reason of such party's reckless disregard of its obligations or duties under this Agreement by the party seeking indemnification. (c) The Indemnified Parties promptly will notify the Company of the commencement of any litigation, proceedings, complaints or actions by regulatory authorities 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 Adviser, the Fund and CSI (a) The Adviser, the Fund and CSI, in each case solely to the extent relating to such party's responsibilities hereunder, agree to indemnify and hold harmless the Company and each person, if any, who controls or is associated with the Company within the meaning of such terms under the federal securities laws and any director, trustee, officer, partner, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including reasonable 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: (1) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information for the Fund or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing) or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated or necessary to make such statements not misleading in light of the circumstances in which they were made (in each case substantially as transmitted to you by the Fund or CSI), provided that this agreement to indemnify will 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 Adviser, CSI or the Fund by or on behalf of the Company for use in the registration statement, prospectus or statement of additional information for the Fund or in sales literature of the Fund (or any amendment or supplement thereto) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (2) arise out of or as a result of statements or representations or wrongful conduct of the Adviser, the Fund or CSI or persons under the control of the Adviser, the Fund or CSI respectively, with respect to the sale of the Fund shares (other than statements or representations contained in a registration statement, prospectus, statement of additional information, sales literature or other promotional material covering the Contracts not supplied by CSI or persons under its control); or (3) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, statement of additional information or sales literature or other promotional material covering the Contracts (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact required to be stated or necessary to make such statement or statements not misleading in light of the circumstances in which they were made, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Adviser, the Fund or CSI or persons under the control of the Adviser, the Fund or CSI; or (4) arise as a result of any failure by the Fund, the Adviser or CSI to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements and procedures related thereto specified in Article VI of this Agreement); or (5) arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Fund or CSI in this Agreement, or arise out of or result from any other material breach of this Agreement by the Adviser the Fund or CSI; except to the extent provided in Sections 8.2(b) and 8.3 hereof. These indemnifications will be in addition to any liability that the Fund, Adviser or CSI otherwise may have. (b) No party will be entitled to indemnification under Section 8.2(a) to the extent such loss, claim, damage, liability or litigation is due to the willful misfeasance, bad faith, or gross negligence in the performance of such party's duties under this Agreement, or by reason of such party's reckless disregard of its obligations or duties under this Agreement by the party seeking indemnification. (c) The Indemnified Parties will promptly notify the Adviser, the Fund and CSI of the commencement of any litigation, proceedings, complaints or actions by regulatory authorities against them in connection with the issuance or sale of the Contracts or the operation of the account. 8.3. Indemnification Procedure Any person obligated to provide indemnification under this Article VIII ("Indemnifying Party" for the purpose of this Section 8.3) will not be liable under the indemnification provisions of this Article VIII with respect to any claim made against a party entitled to indemnification under this Article VIII ("Indemnified Party" for the purpose of this Section 8.3) unless such Indemnified Party will have notified the Indemnifying Party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim will have been served upon such Indemnified Party (or after such party will have received notice of such service on any designated agent), but failure to notify the Indemnifying Party of any such claim will not relieve the Indemnifying Party from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of the indemnification provision of this Article VIII, except to the extent that the failure to notify results in the failure of actual notice to the Indemnifying Party and such Indemnifying Party is damaged solely as a result of failure to give such notice. In case any such action is brought against the Indemnified Party, the Indemnifying Party will be entitled to participate, at its own expense, in the defense thereof. The Indemnifying Party also will be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Indemnifying Party to the Indemnified Party of the Indemnifying Party's election to assume the defense thereof, the Indemnified Party will bear the fees and expenses of any additional counsel retained by it, and the Indemnifying Party 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, unless: (a) the Indemnifying Party and the Indemnified Party will have mutually agreed to the retention of such counsel; or (b) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Indemnifying Party will not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there is a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from and against any loss or liability by reason of such settlement or judgment. A successor by law of the parties to this Agreement will be entitled to the benefits of the indemnification contained in this Article VIII. The indemnification provisions contained in this Article VIII will survive any termination of this Agreement. ARTICLE IX. APPLICABLE LAW 9.1. This Agreement will be construed and the provisions hereof interpreted under and in accordance with the laws of the State of New York. 9.2. This Agreement will be subject to the provisions of the 1933 Act, the 1934 Act and the 1940 Act, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Mixed and Shared Funding Exemptive Order) and the terms hereof will be interpreted and construed in accordance therewith. ARTICLE X. TERMINATION 10.1. This Agreement will terminate: (a) at the option of any party, with or without cause, with respect to some or all of the Designated Portfolios, upon one hundred twenty (120) days' advance written notice to the other parties; or (b) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Designated Portfolio if shares of the Designated Portfolio are not reasonably available to meet the requirements of the Contracts as determined in good faith by the Company; or (c) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Designated Portfolio in the event any of the Designated Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or Federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by Company; or (d) at the option of the Fund, upon receipt of the Fund's written notice by the other parties, upon institution of formal proceedings against the Company by the NASD, the SEC, the insurance commission of any state or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the administration of the Contracts, the operation of the Account, or the purchase of the Fund shares, provided that the Fund determines in its sole judgment, exercised in good faith, that any such proceeding would have a material adverse effect on the Company's ability to perform its obligations under this Agreement; or (e) at the option of the Company, upon receipt of the Company's written notice by the other parties, upon institution of formal proceedings against the Fund, Adviser or CSI by the NASD, the SEC, or any state securities or insurance department or any other regulatory body, provided that the Company determines in its sole judgment, exercised in good faith, that any such proceeding would have a material adverse effect on the Fund's, Adviser's or CSI's ability to perform its obligations under this Agreement; or (f) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Designated Portfolio if the Designated Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Internal Revenue Code, or under any successor or similar provision, or if the Company reasonably and in good faith believes that the Designated Portfolio may fail to so qualify; or (g) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Designated Portfolio if the Designated Portfolio fails to meet the diversification requirements specified in Article VI hereof or if the Company reasonably and in good faith believes the Designated Portfolio may fail to meet such requirements; or (h) at the option of any party to this Agreement, upon written notice to the other parties, upon another party's material breach of any provision of this Agreement which material breach is not cured within thirty (30) days of said notice; or (i) at the option of the Company, if the Company determines in its sole judgment exercised in good faith, that either the Fund, the Adviser or CSI has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Company, such termination to be effective sixty (60) days' after receipt by the other parties of written notice of the election to terminate; or (j) at the option of the Fund or CSI, if the Fund or CSI respectively, determines in its sole judgment exercised in good faith, that the Company has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Fund or the Adviser, such termination to be effective sixty (60) days' after receipt by the other parties of written notice of the election to terminate; or (k) at the option of the Company or the Fund upon receipt of any necessary regulatory approvals and/or the vote of the contractowners having an interest in the Account (or any subaccount) to substitute the shares of another investment company for the corresponding Designated Portfolio shares of the Fund in accordance with the terms of the Contracts for which those Designated Portfolio shares had been selected to serve as the underlying investment media. The Company will give sixty (60) days' prior written notice to the Fund of the date of any proposed vote or other action taken to replace the Fund's shares; or (l) at the option of the Company or the Fund upon a determination by a majority of the Fund Board, or a majority of the disinterested Fund Board members, that an irreconcilable material conflict exists among the interests of: (1) all contractowners of variable insurance products of all separate accounts; or (2) the interests of the Participating Insurance Companies investing in the Fund as set forth in Article VII of this Agreement; or (m) at the option of the Fund in the event any of the Contracts are not issued or sold in accordance with applicable federal and/or state law. Termination will be effective immediately upon such occurrence without notice. 10.2. Notice Requirement Except as specified in Section 10.1(m), no termination of this Agreement will be effective unless and until the party terminating this Agreement gives prior written notice to all other parties of its intent to terminate, which notice will set forth the basis for the termination. 10.3. Effect of Termination In the event of any termination of this Agreement other than pursuant to subsection (d), (j), (l) or (m) of Section 10.1, the Fund and CSI will, 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 will be permitted to reallocate investments in the Designated Portfolios (as in effect on such date), redeem investments in the Designated Portfolios and/or invest in the Designated Portfolios upon the making of additional purchase payments under the Existing Contracts. In the event of such termination, the Company agrees (i) to terminate the availability of shares of the Fund to Contracts other than Existing Contracts and (ii) to use its best efforts to receive approval from the SEC as soon as reasonably practicable to replace shares of the Fund with other investments for Contracts and, if and when granted such approval, thereafter to so replace the shares of the Fund, in each such case as soon as reasonably practicable. 10.4. Surviving Provisions Notwithstanding any termination of this Agreement, each party's obligations under Article VIII to indemnify other parties will survive and not be affected by any termination of this Agreement. In addition, each party's obligations under Section 12.6 will survive and not be affected by any termination of this Agreement. Finally, with respect to Existing Contracts, all provisions of this Agreement also will survive and not be affected by any termination of this Agreement. ARTICLE XI. NOTICES 11.1. Any notice will be deemed duly 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 parties. If to the Company: If to the Fund, the Adviser and/or CSI: Fidelity Investments 466 Lexington Avenue Life Insurance Company 10th Floor 82 Devonshire Street New York, NY 10017 Mail Zone R25B Attn: Eugene P. Grace Boston, MA 02109 Senior Vice President Attn: Richard C. Murphy ARTICLE XII. MISCELLANEOUS 12.1. The Fund, the Adviser and CSI acknowledge that the identities of the customers of the Company or any of its affiliates (collectively the "Company Protected Parties" for purposes of this Section 12.1), information maintained regarding those customers, and all computer programs and procedures or other information developed or used by the Company Protected Parties or any of their employees or agents in connection with the Company's performance of its duties under this Agreement are the valuable property of the Company Protected Parties. The Fund, the Adviser and CSI agree that if they come into possession of any list or compilation of the identities of or other information about the Company Protected Parties' customers, or any other information or property of the Company Protected Parties, other than such information as is publicly available or as may be independently developed or compiled by the Fund, the Adviser or CSI from information supplied to them by the Company Protected Parties' customers who also maintain accounts directly with the Fund, the Adviser or CSI, the Fund, the Adviser and CSI will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with the Company's prior written consent; or (b) as required by law or judicial process. The Company acknowledges that the identities of the customers of the Fund, the Adviser, CSI or any of their affiliates (collectively the "Adviser Protected Parties" for purposes of this Section 12.1), information maintained regarding those customers, and all computer programs and procedures or other information developed or used by the Adviser Protected Parties or any of their employees or agents in connection with the Fund's, the Adviser's or CSI's performance of their respective duties under this Agreement are the valuable property of the Adviser Protected Parties. The Company agrees that if it comes into possession of any list or compilation of the identities of or other information about the Adviser Protected Parties' customers, or any other information or property of the Adviser Protected Parties, other than such information as is publicly available or as may be independently developed or compiled by the Company from information supplied to them by the Adviser Protected Parties' customers who also maintain accounts directly with the Company, the Company will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with the Fund's, the Adviser's or CSI's prior written consent; or (b) as required by law or judicial process. Each party acknowledges that any breach of the agreements in this Section 12.1 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. 12.2. 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. 12.3. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together will constitute one and the same instrument. 12.4. If any provision of this Agreement will be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement will not be affected thereby. 12.5. This Agreement will not be assigned by any party hereto without the prior written consent of all the parties, except that the Company may delegate its responsibilities under this Agreement to an insurance company controlled by or under common control with the Company (the "Company Affiliate"), provided that the Company shall remain fully liable for the performance of all services hereunder and the Company Affiliate shall at such time and thereafter throughout the term of this Agreement be deemed to make all representations, warranties and covenants made by Company in this Agreement and in the administrative services letter between CSI and the Company. The Company shall give written notice to CSI of such delegation. 12.6. Each party to this Agreement will maintain all records required by law, including records detailing the services it provides. Such records will be preserved, maintained and made available to the extent required by law and in accordance with the 1940 Act and the rules thereunder. Each party to this Agreement will cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and will permit each other and 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. Upon request by the Fund or CSI, the Company agrees to promptly make copies or, if required, originals of all records pertaining to the performance of services under this Agreement available to the Fund or CSI, as the case may be. The Fund agrees that the Company will have the right to inspect, audit and copy all records pertaining to the performance of services under this Agreement pursuant to the requirements of any state insurance department. Each party also agrees to promptly notify the other parties if it experiences any difficulty in maintaining the records in an accurate and complete manner. This provision will survive termination of this Agreement. 12.7. Each party represents that the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate or board action, as applicable, by such party and when so executed and delivered this Agreement will be the valid and binding obligation of such party enforceable in accordance with its terms. 12.8. The parties to this Agreement acknowledge and agree that all liabilities of the Fund arising, directly or indirectly, under this agreement, will be satisfied solely out of the assets of the Fund and that no trustee, officer, agent or holder of shares of beneficial interest of the Fund will be personally liable for any such liabilities. No Portfolio or series of the Fund will be liable for the obligations or liabilities of any other Portfolio or series. 12.9. The parties to this Agreement may amend the schedules to this Agreement from time to time to reflect changes in or relating to the Contracts, the Accounts or the Designated Portfolios of the Fund or other applicable terms of this Agreement. 12.10. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and behalf by its duly authorized representative as of the date specified below. FIDELITY INVESTMENTS LIFE INSURANCE COMPANY By:_____________________________________ Name:___________________________________ Title:____________________________________ WARBURG, PINCUS TRUST By:_____________________________________ Name:___________________________________ Title:____________________________________ WARBURG, PINCUS COUNSELLORS, INC. By:_____________________________________ Name:___________________________________ Title:____________________________________ COUNSELLORS SECURITIES INC. By:_____________________________________ Name:___________________________________ Title:____________________________________ SCHEDULE 1 PARTICIPATION AGREEMENT BY AND AMONG EMPIRE FIDELITY INVESTMENTS CORPORATION AND WARBURG, PINCUS TRUST AND WARBURG, PINCUS COUNSELLORS, INC. AND COUNSELLORS SECURITIES INC. The following separate accounts of Empire Fidelity Investments Corporation are permitted in accordance with the provisions of this Agreement to invest in Designated Portfolios of the Fund shown in Schedule 2: Empire Fidelity Investments Variable Annuity Account A established July 15, 1991 SCHEDULE 2 PARTICIPATION AGREEMENT BY AND AMONG EMPIRE FIDELITY INVESTMENTS CORPORATION AND WARBURG, PINCUS TRUST AND WARBURG, PINCUS COUNSELLORS, INC. AND COUNSELLORS SECURITIES INC. The Separate Account(s) shown on Schedule 1 may invest in the following Designated Portfolios of the Warburg, Pincus Trust: International Equity Portfolio Small Company Growth Portfolio Post-Venture Capital Portfolio EX-99.B15 9 POWER OF ATTORNEY I the undersigned Director of Empire Fidelity Investments Life Insurance Company (the "Company"), hereby constitute and appoint David J. Pearlman, my true and lawful attorneys-in-fact, with full power of substitution, to sign for me and in my name in the appropriate capacities, all Initial Registration Statements of the Company, all Pre-Effective Amendments to any Registration Statements of the Company, any and all subsequent Post-Effective Amendments to said Registration Statements, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and Investment Company Act of 1940, and all related requirements of the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or their substitutes may do or cause to be done by virtue hereof. /s/Lena G. Goldberg__________ 29 May 1997 Lena G. Goldberg EX-99.B15 10 POWER OF ATTORNEY I the undersigned Director of Empire Fidelity Investments Life Insurance Company (the "Company"), hereby constitute and appoint David J. Pearlman, my true and lawful attorneys-in-fact, with full power of substitution, to sign for me and in my name in the appropriate capacities, all Initial Registration Statements of the Company, all Pre-Effective Amendments to any Registration Statements of the Company, any and all subsequent Post-Effective Amendments to said Registration Statements, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and Investment Company Act of 1940, and all related requirements of the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or their substitutes may do or cause to be done by virtue hereof. /s/Paul J. Hondros__________ 25 April 1997 Paul J. Hondros EX-27 11
6 0000878467 Empire Fidelity Investments Variable Annuity Account A 1 Empire Fidelity Investments Variable Annuity Account A 1,000 year dec-31-1996 dec-31-1996 491,332 578,323 0 0 0 578,323 0 0 0 0 0 0 0 0 0 0 0 0 0 578,323 21,870 0 0 5,043 16,827 12,612 35,163 64,602 0 0 0 0 0 0 0 170,015 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -----END PRIVACY-ENHANCED MESSAGE-----