<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1996
REGISTRATION NO. 333-10805
REGISTRATION NO. 811-07785
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 / /
(GROUP VARIABLE ANNUITY II)
Pre-Effective Amendment No. 1 /X/
Post-Effective Amendment No. / /
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 4 /X/
___________
LINCOLN LIFE & ANNUITY
VARIABLE ANNUITY ACCOUNT L
(Exact Name of Registrant)
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(Name of Depositor)
120 Madison Street, 17th Floor
Syracuse, New York 13202
(Address of Depositor's Principal Executive Offices)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-893-7168
JOHN L. STEINKAMP, ESQUIRE
VICE PRESIDENT & ASSOCIATE GENERAL COUNSEL
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 SOUTH CLINTON STREET, P.O. BOX 1110
FORT WAYNE, IN 46801
(Name and Complete Address of Agent for Service)
Copy to:
Frederick R. Bellamy, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
Variable Annuity Contracts -- Registration of an indefinite amount of securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940. The amount of
the filing fee is $500.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PROSPECTUS
<TABLE>
<CAPTION>
FORM N-4 PROSPECTUS CAPTION
<S> <C>
1. Cover Page............................................. Cover Page
2. Definitions............................................ Definitions
3. Synopsis or Highlights................................. Summary
4. Condensed Financial Information....... ................ Condensed Financial Information
5. General Description of Registrant,..................... Lincoln Life, the Variable Investment
Depositor and Portfolio Companies..... ................ Division and the Funds
6. Deductions and Expenses................................ Deductions and Charges
7. General Description of Variable........................ Contract Provisions; Other Contract
Annuity Contracts...................................... Provisions
8. Annuity Period......................................... Annuity Period
9. Death Benefit.......................................... Contract Provisions, Death Benefits
10. Purchases and Contract Values.......................... Contract Provisions
11. Redemptions............................................ Contract Provisions, Withdrawals
12. Taxes ................................................. Federal Income Tax Considerations
13. Legal Proceedings...................................... Not Applicable
14. Table of Contents of the Statement..................... Contents of Statement of Additional
of Additional Information............................. Information
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN STATEMENT OF ADDITIONAL INFORMATION
FORM N-4 STATEMENT OF ADDITIONAL INFORMATION CAPTION
15. Cover Page............................................. Cover Page
16. Table of Contents...................................... Table of Contents
17. General Information and History........................ Prospectus-Lincoln Life, The Variable Investment Division
and the Funds
18. Services............................................... Not Applicable
19. Purchase of Securities Being Offered................... Not Applicable
20. Underwriters........................................... Distribution of the Contracts
21. Calculation of Yield Quotations
of Money Market Sub Accounts.......................... Not Applicable
22. Annuity Payments....................................... Determination of Variable Annuity Payment
23. Financial Statements................................... Financial Statements
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PART C-OTHER INFORMATION
24(a) Financial Statements and Exhibits.................... Not Applicable
24(b) Exhibits............................................. Exhibits
25. Directors and Officers of the
Depositor ............................................ Directors and Officers of the Depositor
26. Persons Controlled by or Under
Common Control with the Depositor
or Registrant........................................ Organizational Chart
27. Number of Contract Owners ............................. Number of Contract Owners
28. Indemnification........................................ Indemnification
29. Principal Underwriters................................. Principal Underwriters
30. Location of Accounts and Records....................... Location of Accounts and Records
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
31. Management Services.................................... Management Services
32. Undertakings........................................... Undertakings
</TABLE>
<PAGE>
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
Group Variable Annuity Contracts
Lincoln Life & Annuity
Variable Annuity Account L
P.O. Box 9737
Portland, ME 04104
GROUP VARIABLE ANNUITY II
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
_________ __, 1996
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS OF
THE APPLICABLE UNDERLYING FUNDS WHICH SHOULD BE RETAINED FOR FUTURE REFERENCE.
INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISK, INCLUDING MARKET
FLUCTUATION AND POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This prospectus describes group annuity contracts ("Contracts") offered
by Lincoln Life & Annuity Company of New York ("Lincoln Life"), a subsidiary of
The Lincoln National Life Insurance Company. The Contracts are designed to
enable Participants and Employers to accumulate funds for retirement programs
meeting the requirements of the following Sections of the Internal Revenue Code
of 1986, as amended (the "Code"): 401(a), 403(b), 408 and 457 and other related
Sections as well as for programs offering non-qualified annuities. A
Participant is an employee or other person affiliated with the Contractholder on
whose behalf a Participant Account is maintained under the terms of the
Contract.
The Contracts permit Contributions to be deposited in the Guaranteed Interest
Division, which is part of Lincoln Life's General Account, and in certain Sub-
Accounts in Lincoln Life's Lincoln Life & Annuity Variable Annuity Account L
("Variable Investment Division"). Contributions to the Guaranteed Interest
Division earn interest at a guaranteed rate declared by Lincoln Life.
Contributions to the Variable Investment Division will increase or decrease in
dollar value depending on the investment performance of the underlying funds in
which the Sub-Accounts invest.
Currently, the Variable Investment Division consists of the nine Sub-Accounts
listed below: Next to each listed Sub-Account is the name of the fund (the
"Fund") in which the Sub-Account invests. For more information about the
investment objectives, policies and risks of the Funds please refer to the
prospectus for each of the Funds.
Index Account......................Dreyfus Stock Index Fund
Growth I Account...................Fidelity's Variable Insurance
Products Fund: Growth Portfolio
Asset Manager Account..............Fidelity's Variable
Insurance Products Fund II:
Asset Manager Portfolio
Growth II Account..................Twentieth Century's TCI
Portfolios, Inc.: TCI Growth
Balanced Account...................Twentieth Century's TCI
Portfolios, Inc.: TCI Balanced
International Stock Account........T. Rowe Price International
Series, Inc.
Socially Responsible Account......Calvert Responsibly Invested
Balanced Portfolio
Equity-Income Account..............Fidelity's Variable Insurance
Products Fund: Equity-Income Portfolio
Small Cap Account..................Dreyfus Variable Investment
Fund: Small Cap Portfolio
This prospectus is intended to provide information regarding the Contracts
offered by Lincoln Life that you should know before investing. Please read and
retain this prospectus for future reference. A Statement of Additional
Information ("SAI"), dated __________ __, 1996, has been filed with the
Securities and Exchange Commission and is incorporated by this reference into
this Prospectus. If you would like a free copy write to our service office at:
Lincoln Life & Annuity Company of New York P.O. Box 9737, Portland, ME 04104, or
call 1-800-893-7168. A table of contents for the SAI appears on the last
page of this Prospectus.
<PAGE>
TABLE OF CONTENTS
PAGE
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY (Including Fee Table and Performance Information). . . . . . . . . 6
CONDENSED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . 11
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
LINCOLN LIFE, THE VARIABLE INVESTMENT DIVISION AND THE FUNDS . . . . . . . 11
CONTRACT PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DEDUCTIONS AND CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ANNUITY PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . 26
VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
OTHER CONTRACT PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 32
GUARANTEED INTEREST DIVISION . . . . . . . . . . . . . . . . . . . . . . . 34
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION. . . . . . . . . 36
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<PAGE>
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to record amounts of
increases to, decreases from and accumulations in each Sub-Account during the
Accumulation Period.
ACCUMULATION UNIT VALUE: The dollar value of an Accumulation Unit in each Sub-
Account on any Valuation Date.
ACCUMULATION PERIOD: The period commencing on a Participant's Participation
Date and terminating when the Participant's Account balance is reduced to zero,
either through withdrawal(s), annuitization, imposition of charges, payment of a
Death Benefit or a combination thereof.
ANNUITANT: The person receiving annuity payments under the terms of the
Contract.
ANNUITY COMMENCEMENT DATE: The date on which Lincoln Life makes the first
annuity payment to the Annuitant as required by the Retired Life Certificate.
ANNUITY CONVERSION AMOUNT: The amount applied toward the purchase of an
annuity.
ANNUITY PERIOD: The period concurrent with or following the Accumulation
Period, during which an Annuitant's annuity payments are made.
BENEFICIARY: The person(s) designated to receive a Participant's Account
balance in the event of the Participant's death during the Accumulation Period
or the person(s) designated to receive any applicable remainder of an annuity in
the event of the Annuitant's death during the Annuity Period.
BUSINESS DAY: A day on which the New York Stock Exchange is customarily open
for business except for the following local business holidays: Veterans Day
(November 11) and the day after Thanksgiving.
CONTRIBUTIONS: All amounts deposited under a Contract, including any amount
transferred from another contract or Trustee.
CONTRACT: A Group Variable Annuity contract issued by Lincoln Life to the
Contractholder.
CONTRACTHOLDER: The party named as the Contractholder on the group annuity
contract issued by Lincoln Life. The Contractholder may be an Employer, a
retirement plan trust, an association or any other entity allowed under the law.
DIVISION(S): The Guaranteed Interest Division and/or the Variable Investment
Division.
EMPLOYER: The organization specified in the Contract which offers the Plan to
its employees.
FUNDS: The underlying funds in which the Sub-Accounts invest. Funds are
investment vehicles which offer their shares only to insurance companies'
separate accounts.
GENERAL ACCOUNT: All assets of Lincoln Life other than those in the Variable
Investment Division or any other separate account.
GROSS WITHDRAWAL AMOUNT: The amount by which a Participant's Account is reduced
when a withdrawal occurs, including any applicable contingent deferred sales
charge and Annual Administration Charge.
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<PAGE>
GUARANTEED ANNUITY: An annuity for which Lincoln Life guarantees the amount of
each payment for as long as the annuity is payable.
GUARANTEED INTEREST DIVISION: The Division maintained by Lincoln Life for the
Contracts and other contracts for which Lincoln Life guarantees the principal
amount and interest credited thereto subject to any fees and charges as set
forth in the Contract. Amounts allocated to the Guaranteed Interest Division
are part of the General Account.
LINCOLN LIFE: Lincoln Life & Annuity Company of New York.
NET CONTRIBUTIONS: The sum of all Contributions credited to a Participant
Account less any Net Withdrawal Amounts, outstanding loan (including principal
and due and accrued interest) and amounts converted to a Payout Annuity.
NET WITHDRAWAL AMOUNT: The amount paid when a withdrawal occurs.
PARTICIPANT: An employee or other person affiliated with the Contractholder on
whose behalf an Account is maintained under the terms of the Contract.
PARTICIPANT ACCOUNT: An account maintained for a Participant during the
Accumulation Period the total balance of which equals the Participant's Account
balance in the Variable Investment Division plus the Participant's Account
balance in the Guaranteed Interest Division.
PARTICIPATION ANNIVERSARY: For each Participant, a date at one year intervals
from the Participant's Participation Date. If an anniversary occurs on a non-
Business Day, it is treated as occurring on the next Business Day.
PARTICIPATION DATE: A date assigned to each Participant corresponding to the
date on which the first Contribution on behalf of that Participant is received
by Lincoln Life. A Participant will receive a new Participation Date if such
Participant makes a Total Withdrawal, as defined in this prospectus, and
Contributions on behalf of the Participant are resumed under any Contract.
PARTICIPATION YEAR: A period beginning with one Participation Anniversary and
ending the day before the next Participation Anniversary, except for the first
Participation Year which begins with the Participation Date.
PAYOUT ANNUITY: A series of payments paid under the terms of a Contract to a
person. A Payout Annuity may be either a Guaranteed Annuity or a Variable
Annuity or a combination Guaranteed and Variable Annuity.
PLAN: The retirement program offered by an Employer to its employees for which
a Contract is used to accumulate funds.
RECEIPT: Receipt by Lincoln Life at its service office in Portland, Maine.
SUB-ACCOUNT: An account established in the Variable Investment Division which
invests in shares of a corresponding Fund.
VALUATION DATE: A Business Day. Accumulation Units and Annuity Units are
computed as of the close of trading on the New York Stock Exchange.
-4-
<PAGE>
VALUATION PERIOD: A period used in measuring the investment experience of each
Sub-Account. The Valuation Period begins at the close of trading on the New
York Stock Exchange on one Valuation Date and ends at the corresponding time on
the next Valuation Date.
VARIABLE ANNUITY: An annuity with payments that increase or decrease in
accordance with the investment results of the selected Sub-Accounts.
VARIABLE INVESTMENT DIVISION: The Division which is maintained by Lincoln Life
for these Contracts and other Lincoln Life contracts for which Lincoln Life does
not guarantee the principal amount or investment results. The Variable
Investment Division is the Lincoln Life & Annuity Variable Annuity Account L
which is a group of assets segregated from the General Account whose income,
gains and losses, realized or unrealized, are credited to or charged against the
Variable Investment Division without regard to other income, gains or losses of
Lincoln Life. The Variable Investment Division currently consists of nine Sub-
Accounts. Additional Sub-Accounts may be added in the future.
-5-
<PAGE>
SUMMARY
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Lincoln Life is a life insurance company founded in New York on June 6,
1996. Lincoln Life is a subsidiary of The Lincoln National Life Insurance
Company.
CONTRACTS OFFERED
The Group Variable Annuity Contracts offered by this prospectus are
available to Employers and other entities to provide a way to accumulate funds
for retirement and to provide Payout Annuities. Lincoln Life offers Contracts
designed to enable Participants and Employers to accumulate funds for retirement
programs meeting the requirements of the following Sections of the Internal
Revenue Code of 1986, as amended (the "Code"): 401(a), 403(b), 408, 457 and
other related Sections as well as for programs offering non-qualified annuities.
HOW CONTRIBUTIONS ARE MADE
Contributions under the Contract are deposited by the Contractholder.
Depending upon the type of Plan offered, Contributions may consist of salary
reduction Contributions, Employer Contributions or Participant post-tax
Contributions. Contributions are forwarded by the Contractholder to Lincoln
Life and allocated among the two Divisions in accordance with information
provided by the Contractholder. See "Contract Provisions, Contributions under
the Contract."
DIVISIONS OFFERED
Contributions may be allocated to the Guaranteed Interest Division or to
the Variable Investment Division or to both Divisions. The Variable Investment
Division currently consists of nine Sub-Accounts. A Contractholder may choose
to offer between zero and nine of the Sub-Accounts to its Participants under a
Contract. The Sub-Accounts invest their assets in shares of a corresponding
Fund. For a full description of the Funds, see the prospectuses for the Funds.
TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
During the Accumulation Period, a Participant or a Contractholder under
certain Plans may make transfers between and among Divisions and Sub-Accounts.
Certain Plans may limit the transfers in dollar amount, type of Contribution, or
frequency. Certain Plans may require Contractholder approval for a transfer.
See "Transfers between Divisions and Sub-Accounts."
WITHDRAWALS AND DISTRIBUTIONS
During the Accumulation Period, a Participant may withdraw any part of
their Account balance subject to the restrictions imposed by the Code and
regulations thereof and by the applicable Plan. With respect to Section 401(a)
Plans and Plans subject to Title I of the Employee Retirement Income Security
Act of 1974 (ERISA), the Contractholder must authorize Lincoln Life to process a
withdrawal request by a Participant. Withdrawal requests under Section 457
Plans must also be authorized by the Contractholder. With respect to withdrawal
requests by Participants under Plans not subject to Title I of ERISA, certain
Contracts may require that the Participants must certify to Lincoln Life that an
eligible event under the Code has occurred. Withdrawal and Distribution
requests must be in writing and in a form acceptable to Lincoln Life.
-6-
<PAGE>
Certain Plans are also subject to the distribution requirements under
Section 401(a)(9) of the Code including the incidental death benefit
requirements of Section 401(a)(9)(G). Certain transfers from one Qualified Plan
contract to another Qualified Plan contract are not subject to withdrawal
restrictions under the Code. Withdrawals and distributions may have tax
consequences, including possibly a 10% Federal Excise Tax for premature
distributions. See "Federal Income Tax Considerations."
Certain types of withdrawals are subject to a contingent deferred sales
charge. See "Contract Provisions, Deductions and Charges."
DEATH BENEFITS
The Contracts provide for a Death Benefit for a Participant who dies during
the Accumulation Period. See "Contract Provisions, Death Benefits."
PAYOUT ANNUITIES
As permitted by the applicable Plan, a Contractholder or a Participant who
requests a withdrawal or a Beneficiary of a deceased Participant may elect to
convert all or part of the Participant's Account balance or the Death Benefit,
as appropriate, to a Payout Annuity. Lincoln Life offers both Guaranteed and
Variable Annuities or a combination Guaranteed and Variable Annuity. The range
of annuity options available includes life annuities and annuities for a
specific time period as well as others described more fully in this prospectus.
See "Annuity Period."
FREE-LOOK PROVISION
A Participant under a Section 403(b) or 408 Plan and certain Non-qualified
Plans has ten days, in most cases, from the date the Participant receives an
Active Life Certificate to notify Lincoln Life in writing that the Participant
does not choose to participate under the Contract and to receive a return of
funds. See "Free-Look Period."
FEE TABLE
The following table and examples, prescribed by the SEC, are included to
assist Contractholders and Participants in understanding the transaction and
operating expenses imposed directly or indirectly under the Contracts. The
standardized tables and examples assume the highest deductions possible under
the Contracts, whether or not such deductions actually would be made from a
Participant's Account. Contingent deferred sales charges ("CDSC") are deducted
from a Participant's Account balance only if a total or partial withdrawal is
made, and then only if one of the exceptions does not apply.
-7-
<PAGE>
CONTRACT RELATED TRANSACTION EXPENSES 1/
Sales Load Imposed on Purchases: 0%
MAXIMUM CDSC
(as a percentage of the Gross Withdrawal Amount): 6%
ANNUAL ADMINISTRATION CHARGE 2/ $25
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average daily net assets)
Mortality and Expense Risk Charge: 1.20%
Other Charges: 0.00%
Total Separate Account
Annual Expenses: 1.20%
FUND EXPENSES 3/
(as a percentage of average daily net assets)
Index4/ G-I AMgr5/ G-II Bal Int'l Soc Res6/ Eql SmCap
------- ---- ------ ---- --- ----- --------- --- -----
Management Fees: .27% .61% .71% 1.0% 1.0% 1.05% .70% .51% .75%
Other Expenses .12 .09 .08 .13 .10 .08
(after expense
reimbursements):
Total Fund Expenses: .39 .70 .79 1.0 1.0 1.05 .83 .61 .83
Example #1: Assuming total withdrawal of the Participant's Account balance
at the end of the period shown. 7/
A $1,000 investment would be subject to the expenses shown, assuming 5%
annual return on assets.
Index G-I AMgr G-II Bal Int'l Soc Res Eql SmCap
----- --- ---- ---- --- ----- ------- --- -----
1 Year $ 79 $ 82 $ 83 $ 85 $ 85 $ 85 $ 83 $ 81 $ 83
3 Years 118 127 131 136 136 137 131 125 131
Example #2: Assuming annuitization of the Participant's Account at the end of
the period shown.
A $1,000 investment would be subject to the expenses shown, assuming 5%
annual return on assets.
Index G-I AMgr G-II Bal Int'l Soc Res Eql SmCap
----- --- ---- ---- --- ----- ------- --- -----
1 Year $ 17 $ 20 $ 21 $ 23 $ 23 $ 24 $ 21 $ 19 $ 21
3 Years 52 62 65 71 71 72 66 59 66
-8-
<PAGE>
Example #3: Assuming persistency of the Participant's Account through the
periods shown.
A $1,000 investment would be subject to the expenses shown, assuming 5%
annual return on assets.
Index G-I AMgr G-II Bal Int'l Soc Res Eql SmCap
----- --- ---- ---- --- ----- ------- --- -----
1 Year $ 17 $ 20 $ 21 $ 23 $ 23 $ 24 $ 21 $ 19 $ 21
3 Years 52 62 65 71 71 72 66 59 66
For purposes of these examples, the effect of the Annual Administration Charge
has been computed based on an estimated aggregate amount of Annual
Administration Charges collected equal to $29,000 and an estimated
total Account value of $41,629,000.
- ---------------------------
1/ The examples do not take into account any deduction for premium taxes which
may be applicable.
2/ The Employer has the option of paying the Annual Administration Charge on
behalf of the Participants under a Contract. In such a situation, the
projected expenses would be lower than those indicated in the examples.
This charge is not imposed during the Annuity Period. In certain
situations the Annual Administrative Charge may be reduced or eliminated.
See "Deductions & Charges - Annual Administrative Charge".
3/ Until complete order instructions are received, initial Contributions
may be allocated temporarily to Fidelity's Variable Insurance Products
Fund: Money Market Portfolio. Management fees for this fund are 0.24%.
Other expenses are 0.09%. Total Fund Expenses are 0.33%. The Mortality
and Expense Risk Charge is not assessed. For a discussion of the Money
Market Portfolio, please see "Initial Contributions".
4/ Total Fund Operating Expenses, excluding brokerage commissions and
transaction fees, are guaranteed not to exceed .40% of the Dreyfus Stock
Index Fund, Inc.'s average daily net assets. To the extent these Fund
expenses exceed .40% of the Fund's average daily net assets, The Dreyfus
Corporation, the Fund's administrator, has voluntarily undertaken to
bear such excess expense. In the absence of such reimbursement, the Other
Expenses and Total Fund Expenses for fiscal year ending December 31,
1995 would have been 0.15% and 0.42% respectively.
5/ A portion of the brokerage commissions the Fund paid was used to reduce its
expenses. Without this reduction, total operating expenses would have
been: Asset Manager-0.81%.
6/ "Other Expenses" reflect an indirect fee of 0.02%. Total Fund
Expenses after reductions for fees paid indirectly (relating to an
expense arrangement with the Fund custodian) would be 0.81%.
7/ The Contracts are designed for retirement planning. Withdrawals prior to
retirement or the Annuity Commencement Date are not consistent with the
long-term purposes of the Contracts and the applicable tax laws. Early
withdrawals may be subject to a 10% Federal tax penalty.
The fee table and examples reflect expenses and charges of the Sub-Accounts
and the expenses of the applicable Fund for the year ended December 31, 1995.
However, the examples should not be considered a representation of past or
future expenses and charges of the Sub-Accounts or the Funds. Similarly, the
assumed 5% annual rate of return is not an estimate or a guarantee of future
investment performance. See "Deductions and Charges" in this prospectus and the
discussion of Fund Management in the prospectus for each of the Funds for
further information.
-9-
<PAGE>
PERFORMANCE INFORMATION
The Variable Investment Division may advertise or use in sales literature
information concerning the investment performance of the various Sub-Accounts.
No performance presentation should be considered as representative of future
investment results. Actual performance is a function not only of the investment
management of the underlying Funds and market forces, but of the time and
frequency of Contributions, the charges and fees imposed under the Contract, the
fees and expenses of the Funds, and transfers made by a Participant, among other
factors.
The investment performance of the Sub-Accounts may be advertised in
comparison with the performances of other variable annuities, other investment
companies (such as mutual funds), and recognized indices (such as the Dow Jones
Industrial Average, Standard & Poor's 500 Composite Stock Price Index, NASDAQ
Index, Consumer Price Index), and data published by Lipper Analytical Services,
Inc., Morningstar, and Variable Annuity Research and Data Service or comparable
services. Performance of the Sub-Accounts may also be compared with performance
of other types of investments. Some advertisements may also include published
editorial comments and performance rankings by independent organizations and
publications that monitor the performance of separate accounts and mutual funds.
The Sub-Accounts may advertise average annual total return performance
information according to the SEC standardized formula. Average annual total
return shows the average annual percentage increase, or decrease, in the value
of a hypothetical $1,000 contribution allocated to a Sub-Account from the
beginning to the end of each specified period of time. The SEC standardized
formula gives effect to all applicable charges under the Contracts. This method
of calculating performance further assumes that (i) a $1,000 contribution was
allocated to a Sub-Account, (ii) no transfers or additional payments were made
and (iii) the withdrawal of the investment occurs at the end of the period.
Premium taxes are not included in this calculation. The Sub-Accounts may also
advertise this total return performance as described above on a cumulative
basis.
The Sub-Accounts may present total return information computed on a
calendar year basis. The Sub-Accounts may also present total return information
over specified periods of time (computed on an average annual or cumulative
basis) either assuming that no CDSC will be deducted or assuming that no CDSC or
administrative charge will be deducted. The Sub-Accounts may present
hypothetical examples that apply the total return to a hypothetical initial
investment. The Sub-Accounts may also present total return information based on
different amounts of periodic investments. For additional performance
information, please refer to the Statement of Additional Information.
PUBLISHED RATINGS
From time to time, in advertisements or in reports to Contractholders,
Lincoln Life may reflect endorsements. Endorsements are often in the form of a
list of organizations, individuals or other parties which recommend Lincoln Life
or the Contracts. The endorser's name will be used only with the endorser's
consent. It should be noted that the list of endorsements may change from time
to time.
Also, from time to time, the rating of Lincoln Life as an Insurance company
by A.M. Best may be referred to in advertisements or in reports to
Contractholders. Each year the A.M. Best Company reviews the financial status
of thousands of Insurers, culminating in the assignment of Best's Ratings.
These ratings reflect their current opinion of the relative financial strength
and operating performance of an insurance company in comparison to the norms of
the life/health insurance Industry. Best's ratings range from A++ to F.
In addition, the claims-paying ability of Lincoln Life as measured by the
Standard and Poor's Rating Group may be referred to in advertisements or in
reports to Contractholders. A Standard and Poor's insurance claims-
-10-
<PAGE>
paying ability rating is an assessment of an operating insurance company's
financial capacity to meet the obligations of its insurance policies in
accordance with their terms. Standard and Poor's ratings range from AAA to CCC.
From time to time Lincoln Life may refer to Moody's Investors Service
rating of Lincoln Life. Moody's Investors Service financial strength ratings
indicate an insurance company's ability to discharge policyholder obligations
and claims and are based on an analysis of the insurance company and its
relationship to its parent, subsidiaries, and affiliates. Moody's Investors
Service ratings range from Aaa to C.
These ratings are opinions of an operating insurance company's financial
capacity to meet the obligations of its insurance contracts in accordance with
their terms. Claims-paying ability ratings do not refer to an insurer's ability
to meet non-contract obligations (i.e., debt/commercial paper). Lincoln Life's
ratings should not be considered as bearing on the investment performance of
assets held in the Variable Investment Division or the safety (or lack thereof)
for an investment in the Variable Investment Division.
CONDENSED FINANCIAL INFORMATION
No condensed financial information for the Variable Investment Division is
presented because, as of the date of this Prospectus, the Variable Investment
Division had not yet commenced operations.
FINANCIAL STATEMENTS
The balance sheet of Lincoln Life may be found in the Statement of
Additional Information. As of the date of this Prospectus, the Variable
Investment Division had not yet commenced operations. Accordingly, it has no
financial statements.
LINCOLN LIFE, THE VARIABLE INVESTMENT
DIVISION AND THE FUNDS
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Lincoln Life is a life insurance company chartered under New York law on
June 6, 1996. Lincoln Life's principal executive offices are located at 120
Madison Street, 17th Floor, Syracuse, New York 13202. Lincoln Life is licensed
to sell variable contracts in New York.
Lincoln Life is a subsidiary of The Lincoln National Life Insurance
Company. The Lincoln National Life Insurance Company is a stock life insurance
company incorporated under the laws of Indiana on June 12, 1905. The Lincoln
National Life Insurance Company is principally engaged in offering life
insurance policies and annuity policies, and ranks among the ten largest United
States stock life insurance companies in terms of assets and life insurance in
force.
The Lincoln National Life Insurance Company is wholly owned by Lincoln
National Corporation ("LNC"), a publicly held insurance holding company
incorporated under Indiana law on January 5, 1968. The principal offices of
both The Lincoln National Life Insurance Company and LNC are located at 1300
South Clinton Street, Fort Wayne, Indiana 46801. Through subsidiaries, LNC
engages primarily in the issuance of life insurance and annuities, property
casualty insurance, and other financial services. Administrative services
necessary for the operation of the Variable Investment Division and the
Contracts are currently provided by the Lincoln National Life Insurance Company.
See "Deductions and Charges - Annual Administration Charge."
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LNC EQUITY SALES CORPORATION
LNC Equity Sales Corporation ("LNC Equity"), a registered broker-dealer, is
the principal underwriter of the Contracts. As such, LNC Equity will be
offering the Contracts and performing all duties and functions that are
necessary and proper for distribution of the Contracts. LNC Equity has also
entered into sales agreements with independent broker-dealers for the sale of
the Contracts. LNC Equity may pay sales commissions to broker-dealers up to an
amount equivalent to 3.5% of Contributions under a Contract. LNC Equity's
principal business address is 1300 South Clinton Street, Fort Wayne, Indiana
46802.
THE VARIABLE INVESTMENT DIVISION
On July 24, 1996, the Board of Directors of Lincoln Life authorized the
establishment of the Variable Investment Division in accordance with New York
Insurance Laws. Under New York law, funds in the Variable Investment Division
are owned by Lincoln Life and Lincoln Life is not, nor can Lincoln Life be, a
trustee with respect to those funds. The Variable Investment Division is
registered with the Securities and Exchange Commission ("SEC") as a unit
investment trust under the Investment Company Act of 1940 ("1940 Act").
Registration with the SEC does not involve supervision of the management or
investment practices or policies of either the Variable Investment Division or
Lincoln Life by the SEC.
The Variable Investment Division currently consists of nine Sub-Accounts.
The Sub-Accounts invest in shares of the Funds. Therefore, the investment
experience of the Sub-Accounts depends on the performance of the Funds.
The Variable Investment Division is a segregated investment account,
meaning that its assets may not be charged with liabilities resulting from any
other business Lincoln Life may conduct. The income, gains and losses, realized
or unrealized, from assets allocated to each Sub-Account of the Variable
Investment Division are credited to or charged against that Sub-Account, without
regard to other income, gains or losses in Lincoln Life's general account or any
other separate account or Sub-Account. The Contract provides that the assets of
the Variable Investment Division may not be charged with liabilities arising out
of any other business of Lincoln Life. Lincoln Life may accumulate in the
Variable Investment Division proceeds from charges under the Contract and other
amounts in excess of the Variable Investment Division assets representing
Contract reserves and liabilities. Lincoln Life is the issuer of the Contracts
and the obligations set forth therein, other than those of the Contractholder or
the Participant, are obligations of Lincoln Life.
THE FUNDS
The nine Sub-Accounts invest directly in nine corresponding Funds. Each of
these Funds was formed as an investment vehicle for insurance company separate
accounts.
Information about each of the Funds, including their investment objectives
and investment management, is contained below. Additional information about the
Funds, their investment policies, risks, fees and expenses and all other aspects
of their operations, can be found in the prospectuses for the Funds, which
should be read carefully before investing. THERE IS NO ASSURANCE THAT ANY FUND
WILL ACHIEVE ITS STATED OBJECTIVES. Additional copies of the Funds'
prospectuses, as well as their Statements of Additional Information, can be
obtained directly from each of the Funds without charge by writing to the
particular Funds at the addresses noted on the front of the prospectus. Shares
of the Funds are sold not only to the Sub-Accounts but also to variable annuity
and variable life separate accounts of other insurance companies and qualified
retirement plans. For a disclosure of possible conflicts involved in the Sub-
Accounts investing in Funds that are so offered, see the applicable Fund
prospectus.
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DREYFUS STOCK INDEX FUND
Dreyfus Stock Index Fund is an open-end, non-diversified management
investment company known as an index fund. Its goal is to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. The Fund is neither sponsored by nor affiliated
with Standard & Poor's Corporation. The Fund sells its shares to the Index
Account at net asset value, without the imposition of a sales charge.
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York
10166, acts as the Fund manager and Mellon Equity Associates, an affiliate of
Dreyfus located at 500 Grant Street, Pittsburgh, Pennsylvania 15258, is the Fund
index manager.
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
The Calvert Responsibly Invested Balanced Portfolio is a series of Acacia
Capital Corporation (the "Fund"), an open-end management investment company
whose investment advisor is Calvert Asset Management Company, Inc. located at
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
The Calvert Responsibly Invested Balanced Portfolio seeks total return
above the rate of inflation through an actively managed, non-diversified
portfolio of common and preferred stocks, bonds, and money market instruments
which offer income and growth opportunity and which satisfy the social concern
criteria established for the Portfolio. Shares of the Fund are offered only to
insurance companies for allocation to certain of their variable accounts.
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus Variable Investment Fund is an open-end, diversified management
investment company that is intended to be a funding vehicle for variable annuity
contracts and variable life insurance policies to be offered by the separate
accounts of various life insurance companies.
THE SMALL CAP PORTFOLIO: The Portfolio seeks to maximize capital appreciation.
The Small Cap Portfolio seeks out companies that The Dreyfus Corporation
believes have the potential for significant growth. Under normal market
conditions, the Portfolio will invest at least 65% of its total assets in
companies with market capitalization of less than $750 million, at the time of
purchase, both domestic and foreign where there is a belief that new or
innovative products or services should enhance prospects for growth in future
earnings. The Portfolio may also invest in special situations such as corporate
restructurings, mergers or acquisitions.
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York
10166, serves as the Fund's investment adviser.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND
The Variable Insurance Products Fund was designed to provide investment
vehicles for variable annuity and variable life insurance contracts of various
life insurance companies.
EQUITY-INCOME PORTFOLIO: The Portfolio seeks reasonable income by normally
investing at least 65% of its total assets in income-producing common or
preferred stock and the remainder in debt securities.
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GROWTH PORTFOLIO: The Portfolio seeks to achieve capital appreciation. The
Portfolio normally purchases common stocks, although its 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.
MONEY MARKET PORTFOLIO: The Portfolio seeks to obtain as high a level of
current income as is consistent with preserving capital and providing liquidity.
For more information regarding the Portfolio, into which initial Contributions
are invested pending Lincoln Life's receipt of a complete order, please see the
"Initial Contributions" section.
Fidelity Management & Research Company ("FMR") is the manager of the
Equity-Income Portfolio, the Growth Portfolio and the Money Market Portfolio and
is located at 82 Devonshire Street, Boston, Massachusetts 02109.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II
Variable Insurance Products Fund II is designed to provide investment
vehicles for variable annuity and variable life insurance contracts.
ASSET MANAGER PORTFOLIO: The 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.
FMR is the manager of the Portfolio and is located at 82 Devonshire Street,
Boston, Massachusetts 02109.
TWENTIETH CENTURY'S TCI PORTFOLIOS, INC.
TCI Portfolios, Inc. is a fund which offers its shares only to life
insurance companies to fund the benefits of variable annuity or variable life
insurance contracts. The Portfolios are managed by Investors Research
Corporation which also manages the Twentieth Century family of mutual funds.
Investors Research Corporation has its principal place of business at Twentieth
Century Tower, 4500 Main Street, Kansas City, Missouri 64111.
Lincoln Life may perform certain administrative services that would
otherwise be performed by Twentieth Century Services, Inc., and Investors
Research may pay Lincoln Life for such services.
TCI GROWTH: The Portfolio seeks capital growth by investing in common stocks
(including securities convertible into common stocks) and other securities that
meet certain fundamental and technical standards of selection and, in the
opinion of the fund's management, have better than average potential for
appreciation.
TCI BALANCED: The Portfolio seeks capital growth and current income. Its
investment team intends to maintain approximately 60% of the portfolio's assets
in common stocks that are considered by its manager to have better than average
prospects for appreciation and the balance in bonds and other fixed income
securities.
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Series is a fund which offers its shares only
to life insurance companies to fund the benefits of variable annuity and
variable life contracts. It is managed by Rowe Price-Fleming International,
Inc., one of America's largest international no load mutual fund managers with
approximately $20.0 billion under management as of December 31, 1995 from its
offices in Baltimore, London, Tokyo and Hong Kong.
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The International Stock Portfolio seeks long-term growth of capital through
investments primarily in common stocks of established, non-U.S. companies.
CONTRACT PROVISIONS
GENERAL
These Contracts were designed for Employers and other entities to enable
Participants and Employers to accumulate funds for retirement programs meeting
the requirements of the following Sections of the Internal Revenue Code of 1986,
as amended (the "Code"): 401(a), 403(b), 408, 457 and other related Sections as
well as for programs offering non-qualified annuities. An Employer, Association
or trustee in some circumstances, may enter into a Contract with Lincoln Life by
filling out an application and returning it to Lincoln Life. Upon Lincoln
Life's acceptance of the application, Contractholders or an affiliated Employer
can forward Contributions on behalf of employees who then become Participants
under the Contracts. For Plans that have allocated rights to the Participant,
Lincoln Life will issue to each Participant a separate Active Life Certificate
that describes the basic provisions of the Contract to each Participant.
CONTRIBUTIONS UNDER THE CONTRACT
Generally, under the Contracts, Contributions are forwarded by the
Contractholders to Lincoln Life for investment. Depending on the Plan, the
Contributions may consist of salary reduction Contributions, Employer
Contributions or post-tax Contributions.
Contributions may accumulate on either a guaranteed or variable basis
depending upon the Divisions available under the Contract and/or the Division in
which the Contributions are deposited. Contributions to the Guaranteed Interest
Division become part of Lincoln Life's General Account and are guaranteed a
minimum rate of interest. Contributions to the Variable Investment Division
increase or decrease in value daily to reflect the investment experience of the
Sub-Accounts in which the Contributions are invested.
Contributions by Participants may be in any amount unless there is a
minimum amount set by the Contractholder or Plan. A Contract may require the
Contractholder to contribute a minimum annual amount on behalf of all
Participants. Annual Contributions under Qualified Plans may be subject to
maximum limits imposed by the Code. Annual Contributions under non-qualified
plans may be limited by the terms of the Contract. In the Statement of
Additional Information see "Tax Law Considerations" for a discussion of these
limits. Subject to any restrictions imposed by the Plan or the Code, transfers
from other contracts and qualified rollover Contributions will be accepted.
Contributions must be in United States funds. All withdrawals and
distributions under this Contract will be in U.S. funds. If a bank or other
financial institution does not honor the check or other payment method
constituting a Contribution, Lincoln Life will treat the Contribution as
invalid. All allocation and subsequent transfers resulting from the invalid
Contributions shall be reversed and the party responsible for the invalid
Contribution shall reimburse Lincoln Life for any losses or expenses resulting
from the invalid Contribution.
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INITIAL CONTRIBUTIONS
The initial Contribution for a Participant will be credited to the
Participant's Account no later than two Business Days after it is received by
Lincoln Life at its service office if it is preceded or accompanied by a
completed enrollment form containing all the information necessary for
processing the Participant's Contribution. If Lincoln Life does not receive a
complete enrollment form, Lincoln Life will notify the Contractholder or the
Participant that Lincoln Life does not have the necessary information to process
the Contribution. If the necessary information is not provided to Lincoln Life
within five (5) Business Days after Lincoln Life first receives the initial
Contribution, Lincoln Life will return the initial Contribution less any
withdrawal(s) by the Participant or by the Contractholder, unless the
Participant or the Contractholder specifically consents to Lincoln Life
retaining the Contribution until the enrollment form is made complete.
Notwithstanding the above, when the Contract includes language regarding
the "Pending Allocation Account", the following shall apply: Where state
approval has been obtained, if Lincoln Life receives Contributions which are not
accompanied by a properly completed Enrollment Form, Lincoln Life will notify
the Contractholder of that fact and deposit the Contributions to the Pending
Allocation Account, unless such Contributions are designated to another Account
in accordance with the Plan. Within two Business Days of receipt of a properly
completed Enrollment Form, the Participant's Account balance in the Pending
Allocation Account will be transferred in accordance with the allocation
percentages elected on the Enrollment Form. All future Contributions will also
be allocated in accordance with these percentages until such time as the
Participant may notify Lincoln Life of a change. If a properly completed
Enrollment Form is not received after three monthly notices have been sent, the
Participant's Account balance in the Pending Allocation Account will be refunded
to the Contractholder within 105 days of the date of the initial Contribution.
The Pending Allocation Account invests in Fidelity's Variable Insurance Products
Fund Money Market Portfolio and is not available as an investment option under
the group annuity contract. Mortality & Expense Risk Charges and the Annual
Administration Charge do not apply to this Account. These charges will be
applicable upon receipt of a properly completed Enrollment Form and the
Participant's contract Participation Date will be the date money was deposited
in the Pending Allocation Account.
ALLOCATION OF CONTRIBUTIONS
A Participant must designate in writing, subject to the Plan, the percent
of their Contribution which will be allocated to each Division and to each Sub-
Account available under their Contract. The Contributions allocation percentage
to the Guaranteed Investment Division or any Sub-Account can be in any whole
percent. Participants, whose Employer offers two or more Lincoln Life contracts
for the same type of Qualified or Non-qualified Plans, may allocate
Contributions to a maximum of ten Sub-Accounts and the Guaranteed Interest
Division. Participants, subject to the terms of the Plan, may change the
allocation of Contributions by notifying Lincoln Life in writing or by telephone
in accordance with procedures published by Lincoln Life. Telephone requests for
allocation changes follow the same verification of identity rules as for
Transfers. (See "Telephone Transfers.") When Lincoln Life receives a notice in
writing, the form must be acceptable to Lincoln Life. Upon receipt by Lincoln
Life, the change will be effective for all Contributions received concurrently
with the allocation change form and for all future Contributions, unless a later
date is requested. Changes in the allocation of future Contributions have no
effect on amounts a Participant may have already contributed. Such amounts,
however, may be transferred between Divisions and Sub-Accounts pursuant to the
requirements described in "Transfers between Divisions and Sub-Accounts."
Allocations of Employer Contributions may be restricted by the applicable plan.
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SUBSEQUENT CONTRIBUTIONS
The Contractholder will forward Contributions to Lincoln Life specifying
the amount being contributed on behalf of each Participant. The Contractholder
must send Contributions and provide such allocation information in accordance
with procedures established by Lincoln Life. The Contributions shall be
allocated among the Guaranteed Interest Division and the Variable Investment
Division in accordance with the Contractholder's or the Participant's written
instructions as described above in "Allocation of Contributions."
INVESTMENT OF CONTRIBUTIONS
Contributions are invested as of the date of receipt at Lincoln Life's
service office, provided that they are received prior to 4:00 p.m. (Eastern
Time) on a Business Day and allocation information is provided in a form
acceptable to Lincoln Life in accordance with procedures established by Lincoln
Life. If the Contribution is not received prior to 4:00 p.m. (Eastern Time),
Lincoln Life will invest the Contribution on the next Business Day.
Contributions on behalf of a Participant which are allocated to the Variable
Investment Division will be credited with Accumulation Units as of that date. A
Participant's interest in the Variable Investment Division during the
Accumulation Period is represented by the value of the Accumulation Units
credited to the Participant's Account balance in the Variable Investment
Division. The number of Accumulation Units credited to a Participant's Account
in a Sub-Account is calculated by dividing the Contribution allocated to the
Sub-Account by the dollar value of an Accumulation Unit next determined after
receipt of the Contribution. The number of Accumulation Units purchased will
not vary as a result of any subsequent fluctuations in the Accumulation Unit
Value. The Accumulation Unit Value, of course, fluctuates with the investment
performance of the underlying Fund and also reflects deductions and charges made
against the Variable Investment Division.
DETERMINATION OF ACCUMULATION UNIT VALUE
Lincoln Life determines the Accumulation Unit Value of each Sub-Account on
each Valuation Date. Accumulation Unit Values are determined by multiplying the
Net Investment Factor for the current Valuation Period by the Accumulation Unit
Value as of the end of the immediately preceding Valuation Period.
Lincoln Life uses a Net Investment Factor to measure the daily fluctuations
in value of a Sub-Account. The Net Investment Factor for any Valuation Period
is determined as follows:
(a) The net asset value per share of the underlying Fund as of the
end of a Valuation Period is added to the amount per share of any dividends
or capital gain distributions paid by the Fund during that Valuation
Period;
(b) The amount in (a) above is then divided by the net asset value
per share of the underlying Fund as of the end of the immediately preceding
Valuation Period;
(c) The result of (a) divided by (b) is then multiplied by one minus
the annual mortality and expense risk charge to the n/365th power where n
equals the number of calendar days since the immediately preceding
Valuation Date.
The above calculation will be adjusted by the amount per share of any taxes
which are incurred by Lincoln Life because of the existence of the Variable
Investment Division.
The Participant's Account balance is equal to the sum of the Participant's
Account balances in both the Variable Investment Division and the Guaranteed
Interest Division.
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TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
During the Accumulation Period, transfers may be made of all or part of a
Participant's Account balance in any Division or Sub-Account to another Sub-
Account or Division subject to the limitations described below and in the
applicable Plan. Transfers will not change the allocation of future
Contributions to the Divisions and Sub-Accounts. Lincoln Life does not require
that any minimum amount be transferred. To effect a transfer, Lincoln Life must
receive a written transfer request in a form acceptable to Lincoln Life.
Transfers to or from the Variable Investment Division are made using the
Accumulation Unit Value next computed following Lincoln Life's receipt of the
written transfer request.
TELEPHONE TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
Lincoln Life may accept telephone transfers from Participants when this is
allowed by the Contractholder. In order to prevent unauthorized or fraudulent
transfers, Lincoln Life will require a Participant to provide certain
identifying information before Lincoln Life will act upon their instructions.
Lincoln Life may also assign the Participant a Personal Identification Number
(PIN) to serve as identification. Lincoln Life will not be liable for following
telephone instructions it reasonably believes are genuine. Telephone transfer
requests may be recorded and written confirmation of all transfer requests will
be mailed to the Participant or Contractholder on the next Business Day.
Telephone transfers will be processed on the Business Day that they are received
when they are received at the Lincoln Life service office before 4:00 P.M.
Eastern Time. If the Participant or Contractholder determines that a transfer
has been made in error, the Participant or Contractholder must notify Lincoln
Life within 30 days of the confirmation notice date. See "Contract Provisions,
Transfers between Divisions and Sub-Accounts."
WITHDRAWALS
During the Accumulation Period, withdrawals may be made from either or both
Divisions of all or part of the Participant's Account balance in a Division or
Sub-Account remaining after deductions for any applicable (1) Contingent
Deferred Sales Charge ("CDSC"); (2) Annual Administration Charge (imposed on
Total Withdrawals), (3) premium taxes, and (4) outstanding loan including loan
security. Annuity Conversion Amounts are not considered withdrawals. See
"Annuity Period, Annuities: General."
All withdrawal requests must indicate the amount to be withdrawn and be
submitted in a form acceptable to Lincoln Life. If the request does not specify
the Sub-Accounts and/or the Divisions from which the withdrawal is to be made,
the withdrawal will be made pro rata based on balances in the Sub-Accounts and
the Guaranteed Investment Division. Lincoln Life does not require that any
minimum amount be withdrawn. Telephone withdrawal requests are not permitted.
Withdrawals from the Variable Investment Division are made by reducing the
Participant's number of Accumulation Units in the applicable Sub-Account. In
determining the number of Accumulation Units to be reduced, Lincoln Life uses
the Accumulation Unit Value next computed after Lincoln Life's receipt of the
written withdrawal request.
Payment of all Variable Investment Division withdrawal amounts generally
will be made within seven days after receipt by Lincoln Life of the withdrawal
request in a form acceptable to Lincoln Life. See "Market Emergencies."
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TOTAL WITHDRAWALS
A Total Withdrawal can only be made by a Participant who has no outstanding
loans under the Contract. A Total Withdrawal of a Participant's Account will
occur when (a) the Participant or Contractholder requests the liquidation of the
Participant's entire Account balance, or (b) the amount requested plus any CDSC
results in a remaining Participant's Account balance of less than or equal to
the Annual Administration Charge, in which case the request is treated as if it
were a request for liquidation of the Participant's entire Account balance.
Any Active Life Certificate must be surrendered to Lincoln Life when a
Total Withdrawal occurs. If a Contractholder resumes Contributions on behalf of
a Participant after a Total Withdrawal, the Participant will receive a new
Participation Date and Active Life Certificate.
A Participant refund under the free-look provisions is not considered a
Total Withdrawal.
PARTIAL WITHDRAWALS
A Partial Withdrawal of a Participant's Account will occur when less than a
Total Withdrawal is made from a Participant's Account.
SYSTEMATIC WITHDRAWAL OPTION
Participants who are at least age 59 1/2, are separated from service from
their employer or are disabled and certain spousal beneficiaries and alternate
payees who are former spouses may be eligible for a Systematic Withdrawal Option
("SWO") under the Contract. Payments are made only from the Guaranteed Interest
Division. Under the SWO a Participant may elect to withdraw either a monthly
amount which is an approximation of the interest earned between each payment
period based upon the interest rate in effect at the beginning of each
respective payment period or a flat dollar amount withdrawn on a periodic basis.
A Participant must have a vested pre-tax account balance of at least $10,000 in
the Guaranteed Interest Division in order to select the SWO. A Participant may
transfer amounts from the Variable Investment Division to the Guaranteed
Interest Division in order to support SWO payments. These transfers, however,
are subject to the transfer restrictions described in this Prospectus and/or
imposed by any applicable Plan. A one-time fee of up to $30 may be charged to
set up the SWO. This charge is waived for total vested pre-tax account balances
of $25,000 or more. More information about SWO, including applicable fees and
charges, is available in the Contracts and Active Life Certificates as well as
from Lincoln Life.
MAXIMUM CONSERVATION OPTION
Under certain Contracts Participants who are at least age 70 1/2 may
request that Lincoln Life calculate and pay to them the minimum annual
distribution required by Sections 401(a)(9), 403(b)(10), 408 or 457(d) of the
Code. The Participant must complete forms as required by Lincoln Life in order
to elect this option. Lincoln Life will base its calculation solely on the
Participant's Account value with Lincoln Life. Participants who select this
option are responsible for determining the minimum distributions amount
applicable to their non-Lincoln Life contracts.
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WITHDRAWAL RESTRICTIONS
Withdrawals under Section 403(b) Contracts are subject to the limitations
under Section 403(b)(11) of the Code and regulations thereof and in any
applicable Plan document. That section provides that salary reduction
Contributions deposited and earnings credited on any salary reduction
Contributions after December 31, 1988 may only be withdrawn if the Participant
has (1) died; (2) become disabled; (3) attained age 59 1/2; (4) separated from
service; or (5) incurred a hardship. If amounts accumulated in a Section
403(b)(7) custodial account are deposited in a Contract, such amounts will be
subject to the same withdrawal restrictions as are applicable to post-1988
salary reduction Contributions under the Contracts. For more information on
these provisions see "Federal Income Tax Considerations."
Withdrawal requests for a Participant under Section 401(a) Plans, Section
457(b) Plans and Plans subject to Title I of ERISA must be authorized by the
Contractholder on behalf of a Participant. All withdrawal requests will require
the Contractholder's written authorization and written documentation specifying
the portion of the Participant's Account balance which is available for
distribution to the Participant. Withdrawal requests for Section 457(f) Plans
must be requested by the Contractholder.
For withdrawal requests (other than transfers to other investment
vehicles), by Participants under Plans not subject to Title I of ERISA and
non-401(a) Plans and non-457 Plans, the Participant must certify to Lincoln Life
that one of the permitted distribution events listed in the Code has occurred
(and provide supporting information, if requested) and that Lincoln Life may
rely on such representation in granting such withdrawal request. See "Federal
Income Tax Considerations." A Participant should consult their tax adviser as
well as review the provisions of their Plan before requesting a withdrawal.
In addition to the restrictions noted above, a Plan and applicable law may
contain additional withdrawal or transfer restrictions.
Withdrawals may have Federal tax consequences. In addition, early
withdrawals, as defined under Section 72(q) and 72(t) of the Code, may be
subject to a ten percent excise tax.
DEATH BENEFITS
The payment of death benefits will be governed by the provisions of the
applicable Plan and the Code. In the event of the death of a Participant during
the Accumulation Period, Lincoln Life will pay the Beneficiary, if one is
living, or the Plan the greater of the following amounts:
(1) The Net Contributions, or
(2) The Participant's Account balance less any outstanding loan
(including principal and due and accrued interest)
PROVIDED THAT, if Lincoln Life is not notified of the Participant's death
within six months of such death, the Beneficiary will receive the Death Benefit
amount described in paragraph (2).
A Beneficiary may elect to have the Death Benefit (1) paid as a lump sum,
(2) converted to a Payout Annuity or (3) as a combination of a lump sum payment
and a Payout Annuity.
Lincoln Life will calculate the Death Benefit as of the end of the
Valuation Period during which it receives both satisfactory notification of the
Participant's death and an election of a form of Death Benefit (as described
below). Payment of a lump sum election generally will be made within seven days
following such calculation.
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Payment of an annuity option will be paid in accordance with the provisions
regarding annuities. See "Annuity Period." If no election is made within sixty
days following Lincoln Life's receipt of satisfactory notice of the
Participant's death, the Death Benefit will be paid in the form of a lump sum
payment and will be calculated as of the end of the Valuation Period during
which that sixtieth day occurs (and payment generally will be made within seven
days after such calculation date). See "Market Emergencies".
Satisfactory proof of death may consist of: a copy of a certified death
certificate; a copy of a certified decree of a court of competent jurisdiction
as to the finding of death; a written statement by a medical doctor who attended
the deceased at the time of death; or any other proof satisfactory to Lincoln
Life.
Notwithstanding the above, under qualified annuities, if the Beneficiary is
someone other than the spouse of the deceased Participant, the Code provides
that the Beneficiary may not elect an annuity which would commence later than
December 31st of the calendar year following the calendar year of the
Participant's death. If a non-spousal Beneficiary elects to receive payment in
a single lump sum, the Code provides that such payment must be received no later
than December 31st of the fourth calendar year following the calendar year of
the Participant's death.
If the Beneficiary is the surviving spouse of the deceased Participant,
distributions generally are not required under the Code to begin earlier than
December 31st of the calendar year in which the Participant would have attained
age 70 1/2. If the surviving spouse dies before the date distributions
commence, then, for purposes of determining the date distributions to the
Beneficiary must commence, the date of death of the surviving spouse is
substituted for the date of death of the Participant.
Other rules apply to non-qualified annuities. See Federal Income Tax
Considerations.
If there is no living named Beneficiary on file with Lincoln Life at the
time of a Participant's death and unless the Plan directs otherwise, Lincoln
Life will pay the Death Benefit to the Participant's estate in the form of a
lump sum payment, upon receipt of satisfactory proof of the Participant's death,
but only if such proof of death is received by Lincoln Life no later than the
end of the fourth calendar year following the year of the Participant's death.
In such case, valuation of the Death Benefit will occur as of the end of the
Valuation Period during which due proof of death is received by Lincoln Life,
and the lump sum Death Benefit generally will be paid within seven days of that
date. See "Market Emergencies".
DEDUCTIONS AND CHARGES
CHARGES AGAINST THE VARIABLE INVESTMENT DIVISION
Certain charges will be assessed as a percentage of the value of the net
assets of the Variable Investment Division to compensate Lincoln Life for risks
assumed in connection with the Contracts.
MORTALITY AND EXPENSE RISK CHARGES
Lincoln Life deducts from the net assets of the Variable Investment
Division a daily charge of 1.20% on an annual basis.
This charge is assessed both during the Accumulation Period and the Annuity
Period although, during the Annuity Period, Lincoln Life will bear no mortality
risk with respect to the Annuity Options that do not involve life contingencies.
This amount is intended to compensate Lincoln Life for certain Mortality and
Expense Risks Lincoln Life assumes in operating the Variable Investment Division
and for providing services to the Participant. The 1.2%
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total charge consists of .25% for the Expense Risk and .95% for the Mortality
Risk. The relative proportion of these charges, consistent with industry
practice, is estimated and, therefore, may change based on Lincoln Life's
experience in administering the Contracts. However, the total charge may not be
altered.
The Expense Risk is the risk that Lincoln Life's actual expenses in issuing
and administering the Contract will be more than Lincoln Life estimated. The
Mortality Risk borne by Lincoln Life arises from the chance that Lincoln Life's
actuarial estimate of mortality rates during the Annuity Period, as guaranteed
in the Contract, may prove erroneous and that an Annuitant may live longer than
expected. This contractual guarantee assures that neither an Annuitant's own
longevity nor an improvement in life expectancy generally will have any adverse
effect under the Contracts. In addition, Lincoln Life bears the Mortality Risk
because it guarantees to pay a Death Benefit that may be higher than the
Participant's Account balance upon the death of the Participant prior to the
Annuity Period.
Lincoln Life may ultimately realize a profit from these charges to the
extent they are not needed to meet the actual expenses incurred.
CHARGES AGAINST THE CONTRACTS
The charges that Lincoln Life assesses in connection with the Contracts are
described below.
ANNUAL ADMINISTRATION CHARGE
Lincoln Life provides many administrative functions in connection with the
Contracts, including receiving and allocating Contributions in accordance with
the Contracts, making annuity payments when they become due, and preparing and
filing all reports required to be filed by the Variable Investment Division. In
addition, Lincoln Life provides Participants with Account statements and
accounting services that keep track of pre-tax monies, employee and Employer
monies, vested Account balances and rollover or transferred monies.
In consideration for these administrative services, Lincoln Life currently
deducts $25 (or the balance of the Participant's Account if less) per year from
each Participant's Account balance on the last Business Day of the month in
which a Participation Anniversary occurs. This charge is deducted only during
the Accumulation Period. This Annual Administration Charge is also withdrawn
from a Participant's Account balance if and when a Participant's Account is
totally withdrawn. The charge may be increased or decreased (subject to any
appropriate regulatory approvals), but Lincoln Life does not anticipate a profit
from this charge.
The Annual Administration Charge may be reduced or waived for those
Participants who are participating under another Lincoln Life contract which
imposes an Annual Administration Charge or where Lincoln Life's interest costs
or expenses are reduced due to the terms of the Contract, economies of scale or
administrative assistance provided by the Contractholder. In addition, the
Employer has the option of paying the Annual Administration charge on behalf of
the Participants under a Contract.
Under certain Contracts, the Contractholder may also choose to have the
Annual Administration Charge paid only by those Participants in the Variable
Investment Division. Contracts offering this provision will typically have a
declared interest rate in the Guaranteed Interest Division which is lower than
under contracts not offering this provision. For contracts offering this
provision, the Annual Administration Charge will be deducted as described in
this section.
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PREMIUM TAXES
Certain states require that a premium tax be paid on contributions to a
variable annuity contract. Others assess a premium tax at the time of
annuitization. Lincoln Life will deduct a charge for any applicable premium tax
from the Participant's Account balance either: (1) at the time of a Total
Withdrawal of a Participant's Account balance; (2) on the Annuity Commencement
Date; (3) at such other date as the taxes are assessed. Various states levy a
premium tax, currently ranging from 0.5% to 4.0%, on variable annuity contracts.
CONTINGENT DEFERRED SALES CHARGE
Lincoln Life does not impose a sales charge at the time a Contribution is
made to a Participant's Account under the Contract. During the Accumulation
Period Lincoln Life charges a Contingent Deferred Sales Charge ("CDSC") in an
amount of 6% on all Total or Partial Withdrawals of a Participant's Account
balance unless Lincoln Life receives at the time of the withdrawal request
reasonable proof necessary to verify that: (a) the Participant has attained age
59 1/2; (b) the Participant has died; (c) the Participant has incurred a
disability as defined under the Contract; or (d) the Participant has terminated
employment with the Employer and is at least age 55.
The CDSC reimburses Lincoln Life for part or all of its expenses related to
distributing the Contracts. If the revenues generated by the CDSC are not
sufficient to cover Lincoln Life's actual costs of distribution, such costs will
be paid from Lincoln Life's General Account assets, which may include any
ultimate profit derived from the mortality and expense risk charge.
A Contractholder may choose to add "financial hardship" as another event
under the Contract which is not subject to a CDSC. A Contractholder may also
choose to eliminate the requirement that a Participant be at least age 55 when
he terminates employment. Finally, a Contractholder can add a provision to
their Contract entitling Participants to withdraw, once each calendar year, 20%
of their Account balance without the imposition of a CDSC. These Contracts,
which provide additional benefits to Participants, will typically have a
declared guaranteed interest rate which is lower than other Contracts not
providing these additional benefits.
The CDSC on any withdrawal may be reduced or eliminated but only to the
extent that Lincoln Life anticipates that it will incur lower sales expenses or
perform fewer sales services due to economies arising from (a) the size of the
particular group, (b) an existing relationship with the Contractholder or
Employer, (c) the utilization of mass enrollment procedures, or (d) the
performance of sales functions by the Contractholder or an Employer which
Lincoln Life would otherwise be required to perform.
The CDSC is imposed on the Gross Withdrawal Amount. A Participant may
request to receive a specific Net Withdrawal Amount. If the Participant
requests a specific Net Withdrawal Amount, the CDSC will be imposed on a Gross
Withdrawal Amount, which after deducting the CDSC, gives the Participant the Net
Withdrawal Amount requested. The following example illustrates the formula:
Participant requests a Net Withdrawal Amount of $100 in their tenth
Participation Year. Lincoln Life will impose the 1% CDSC on a Gross Withdrawal
Amount of $101.01 and the Participant will receive $100. This is the standard
procedure for withdrawals.
The CDSC will be deducted from the Divisions and Sub-Accounts in proportion
to amounts withdrawn therefrom. Death Benefit payments and amounts converted to
an annuity are not subject to a CDSC. In no event will the CDSC, when added to
any CDSC previously imposed due to a Participant withdrawal, exceed 8.5% of the
cumulative Contributions to a Participant's Account.
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MISCELLANEOUS
The Variable Investment Division purchases shares from the Funds at net
asset value. The net asset value reflects investment management fees and other
expenses that have already been deducted from the assets of the Funds. The
Funds' investment management fees, expenses and expense limitations, if
applicable, are more fully described in each prospectus for the Funds.
ANNUITY PERIOD
GENERAL
To the extent permitted by the Plan, the Participant, or the Beneficiary of
a deceased Participant, may elect to convert all or part of the Participant's
Account balance or the Death Benefit to a Payout Annuity. Payout Annuities are
available as either a Guaranteed or Variable Annuity or a combination of both.
Annuity payments from the Guaranteed Interest Division remain constant
throughout the annuity period. Annuity payments from the Variable Investment
Division fluctuate depending upon the investment experience of the applicable
Sub-Accounts. Variable Annuity payments are based upon Annuity Unit Values.
See "Annuity Payments" below and "Determination of Variable Annuity Payments" in
the Statement of Additional Information for further information.
The Annuity Commencement Date marks the date on which Lincoln Life makes
the first annuity payment to an Annuitant. For Plans subject to Section
401(a)(9)(B) of the Code, a Beneficiary must select an Annuity Commencement Date
that is not later than one year after the date of the Participant's death. A
Participant or Contractholder may select any Annuity Commencement Date for the
Annuitant which is then reflected in the Retired Life Certificate. However,
since an annuity payment is considered a distribution under the Code, selection
of an Annuity Commencement Date may be affected by the distribution restrictions
under the Code and the minimum distribution requirements under Section 401(a)(9)
of the Code. See "Federal Income Tax Considerations." The selection of an
Annuity Commencement Date, the annuity option, the amount of the Payout Annuity
and whether the amount is to be paid as a Guaranteed or a Variable Annuity must
be made by the Participant in writing, in a form satisfactory to Lincoln Life,
and received by Lincoln Life at least 30 days in advance of the Annuity
Commencement Date. After the Annuity Commencement Date an Annuitant may not
change either their annuity option or the type (i.e., variable or guaranteed) of
Payout Annuity for any amount applied toward the purchase of an annuity.
The Annuity Conversion Amount is either the Participant's Account balance,
or a portion thereof, or the Death Benefit plus interest, as of the Annuity
Payment Calculation Date. The initial Annuity Payment Calculation Date will be
the first day of the calendar month next following the Annuity Commencement Date
for a Guaranteed Annuity and 10 Business Days prior to the first day of the
calendar month next following the Annuity Commencement Date for a Variable
Annuity. For Guaranteed Annuities, the Annuity Payment Calculation Date is the
first day of a calendar month. For Variable Annuities, the Annuity Payment
Calculation Date is the date 10 Business Days prior to the first day of a
calendar month; the 10 Business Days being necessary to calculate the amount of
the Payout Annuity payments and to mail the checks in advance of their first-
of-month due dates.
If the Participant's Account balance or the Beneficiary's Death Benefit is
less than $2,000.00 or if the amount of the first scheduled payment is less than
$20.00, Lincoln Life may, at its option, cancel the annuity and pay the
Participant or Beneficiary the entire amount in a lump sum.
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PAYOUT ANNUITY PAYMENTS
The amount of each annuity payment will depend upon the Annuity Conversion
Amount applied to an annuity option, the form of the annuity option selected and
the age of the Participant at the Annuity Commencement Date. Unless otherwise
notified, Lincoln Life will apply the Participant's Account balance in the
Guaranteed Interest Division toward a Guaranteed Annuity and the Participant's
Account balance in the Variable Investment Division toward a Variable Annuity.
The payment amount for a Guaranteed Annuity is determined by dividing the
Participant's Annuity Conversion Amount in the Guaranteed Interest Division as
of the initial Annuity Payment Calculation Date by the applicable Annuity
Conversion Factor as defined in the Contract.
The initial payment amount for a Variable Annuity is determined by dividing
the Participant's Annuity Conversion Amount(s) in the applicable Sub-Account(s)
as of the initial Annuity Payment Calculation Date by the applicable Annuity
Conversion Factor as defined in the Contract. The amounts of subsequent
payments vary depending on the investment experience of the Sub-Account(s) and
the interest rate option selected by the Contractholder or Annuitant. The
payment amounts will not be affected by Lincoln Life's mortality or expense
experience and will not be reduced by an Annual Administration Charge. For
additional information on the determination of subsequent payment amounts, refer
to the Statement of Additional Information, "Determination of Variable Annuity
Payments."
PAYOUT ANNUITY OPTIONS
Lincoln Life offers a range of annuity options including, but not limited
to, the following:
LIFE ANNUITY
Payments are made monthly during the lifetime of the Annuitant, and the
annuity terminates with the last payment preceding death.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10, 15 OR 20 YEARS
Payments are made monthly during the lifetime of the Annuitant with a
monthly payment guaranteed to the Beneficiary for the remainder of the selected
number of years, if the Annuitant dies before the end of the period selected.
Payments under this annuity option are smaller than a Life Annuity without a
guaranteed payment period.
JOINT AND SURVIVOR ANNUITIES
Payments are made monthly during the joint lifetime of the Annuitant and a
designated second person.
PAYMENTS GUARANTEED FOR 10, 15 OR 20 YEARS
Annuity payments are guaranteed monthly for the selected number of years.
While there is no right to make any total or partial withdrawals during the
Annuity Period, an Annuitant who has selected this annuity option as a Variable
Annuity or a surviving Beneficiary may request at any time during the payment
period that the present value of any remaining installments be paid in one lump
sum. Such lump sum payment will be treated as a Total
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Withdrawal during the Accumulation Period and may be subject to a CDSC. See,
"Deductions and Charges" and "Federal Income Tax Considerations."
Under Qualified Plans, any annuity selected must be payable over a period
that does not extend beyond the life expectancy of the Participant and the
Participant's designated Beneficiary. If the Beneficiary is someone other than
the Participant's spouse, the present value of payments to be made to the
Participant must be more than 50% of the present value of the total payments to
be made to the Participant and the Beneficiary.
In the event that an Annuitant dies before the end of a designated Annuity
period, the Beneficiary, if any, or the Annuitant's estate will receive any
remaining payments due under the annuity option in effect.
NOTE CAREFULLY: Under the Life Annuity and Joint and Survivor Annuities
options it would be possible for only one annuity payment to be made if the
Annuitant(s) were to die before the due date of the second annuity payment; only
two annuity payments if the Annuitant(s) were to die before the due date of the
third annuity payment; and so forth.
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the
likelihood of the continuation of the present federal income tax laws or of the
current interpretation by the IRS. Moreover, no attempt has been made to
consider any applicable state or other tax laws.
The Contract may be purchased on a non-tax qualified basis ("Non-Qualified
Contract") or purchased and used in connection with certain retirement
arrangements entitled to special income tax treatment under section 401(a),
403(b), 408(b) or 457 of the Code ("Qualified Contracts"). The ultimate effect
of federal income taxes on the amounts held under a Contract, on Annuity
Payments, and on the economic benefit to the Contract Owner, the Annuitant, or
the Beneficiary may depend on the tax status of the individual concerned.
In addition, certain requirements must be satisfied in purchasing a
Qualified Contract with proceeds from a tax qualified retirement plan in order
to continue receiving favorable tax treatment. Therefore, you should consult
your legal counsel and tax adviser regarding the suitability of the Contract for
your situation, the applicable requirements and the tax treatment of the rights
and benefits of the Contract. This summary assumes that Qualified Contracts are
purchased with proceeds from retirement plans that qualify for the intended
special Federal income tax treatment.
All dollar amounts and percentages stated below are subject to change
according to Federal law. For additional Federal Income Tax Consideration,
please refer to the Statement of Additional Information.
NON-QUALIFIED CONTRACTS
In general, under non-qualified annuity contracts, an individual may make
Contributions to the Contracts which are not tax-deductible. A participant is
generally not taxed on increases in the value of a contract until a distribution
occurs. This can be in the form of a lump sum payment received by requesting
all or part of the cash value (i.e., WITHDRAWALS) or as Annuity Payouts. For
this purpose, the assignment or pledge of, or the agreement
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to assign or pledge, any portion of the value of a contract will be treated as a
distribution. A transfer of ownership of a contract, or designation of an
annuitant (or other beneficiary) who is not also the participant, may also
result in tax consequences. The taxed portion of a distribution (in the form of
a lump sum payment or an annuity) is taxed as ordinary income. For
Contributions made after February 28, 1986, a participant who is not a natural
person (for example, a corporation) will, subject to limited exceptions, be
taxed on any increase in the contract's cash value over the investment in the
contract during the taxable year, even if no distribution occurs. The following
discussion applies to contracts owned by or on behalf of participants who are
natural persons.
IN GENERAL. Section 72 of the Code governs taxation of annuities in
general. The Company believes that an Owner who is a natural person generally
is not taxed on increases in the Owner's Account Value until distribution occurs
by withdrawing all or part of such Account Value (e.g., withdrawals or Annuity
payments under the Annuity Option elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Account Value (and
in the case of a Qualified Contract, any portion of an interest in the qualified
plan) generally will be treated as a distribution. (The Contracts are not
assignable without Lincoln Life's prior written consent. See "Assignability".)
The taxable portion of a distribution (in the form of a single sum payment or an
annuity) is taxable as ordinary income.
The owner of any Contract who is not a natural person generally must
include in income any increase in the excess of the Account Value over the
"investment in the contract" (discussed below) during the taxable year. There
are some exceptions to this rule and prospective Owners that are not natural
persons may wish to discuss these with a competent tax adviser.
WITHDRAWALS. In the case of a withdrawal, generally amounts received are
first treated as taxable income to the extent that the cash value of the
contract immediately before the withdrawal exceeds the investment in the
contract at that time. Any additional amount withdrawn is not taxable. The
investment in the contract generally equals the portion, if any, of any
contributions paid by or on behalf of a participant under a contract which is
not excluded from the participant's gross income.
ANNUITY PAYOUTS. Even though the tax consequences may vary depending on
the form of Annuity Payout selected under the contract, the recipient of an
Annuity Payout generally is taxed on the portion of such payout that exceeds the
investment in the contract. For variable Annuity Payouts the taxable portion is
determined by a formula that establishes a specific dollar amount of each payout
that is not taxed. The dollar amount is determined by dividing the investment
in the contract by the total number of expected periodic payouts. For fixed
Annuity Payouts, there generally is no tax on the portion of each payout that
represents the same ratio that the investment in the contract bears to the total
expected value of payouts for the term of the annuity; the remainder of each
payout is taxable. For individuals whose annuity starting date is after
December 31, 1986, the entire distribution will be fully taxable once the
recipient is deemed to have recovered the dollar amount of the investment in the
contract.
EXCISE TAX. There may be imposed an excise tax on distributions equal to
10% of the amount treated as taxable income. The excise tax is not imposed in
certain circumstances, which generally are distributions:
1. Received on or after the participant attains age 59 1/2;
2. Made as a result of the participant's death or disability;
3. Received in substantially equal installments as a life annuity
(subject to special recapture rules if the series of payouts is
subsequently modified);
4. Allocable to the investment in the contract before August 14, 1982;
5. Under a qualified funding asset in a structured settlement;
6. Under an Immediate Annuity contract as defined in the Code; and/or
7. Under a contract purchased in connection with the termination of
certain retirement plans.
MULTIPLE CONTRACTS. All non-qualified annuity contracts entered into after
October 21, 1988, and issued by the same insurance company (or its affiliates)
to the same participant during any calendar year will be treated as a single
contract for tax purposes.
DIVERSIFICATION. Section 817(h) of the Code provides that separate account
investments (or the investments of a mutual fund the shares of which are owned
by separate accounts of insurance companies) underlying a non-qualified annuity
contract must be "adequately diversified" in accordance with treasury
regulations in order for the contract to qualify as an annuity contract under
section 72 of the Code. The Variable Investment Division, through the Fund,
intends to comply with the diversification requirements prescribed in the
regulations.
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REQUIRED DISTRIBUTIONS. In addition to the requirements of section 817(h),
the Code (section 72(s)) provides that non-qualified annuity contracts issued
after January 18, 1985, will not be treated as annuity contracts for purposes of
section 72 unless the contract provides that (a) if any Participant dies on or
after the annuity starting date but prior to the time the entire interest in the
contract has been distributed, the remaining portion of such interest must be
distributed at least as rapidly as under the method of distribution in effect at
the time of the Participant's death; and (B) if any Participant dies prior to
the annuity starting date, the entire interest must be distributed within five
years after the death of the Participant. These requirements are considered
satisfied if any portion of the Participant's interest that is payable to or for
the benefit of a "designated beneficiary" is distributed over that designated
beneficiary's life, or a period not extending beyond the designated
beneficiary's life expectancy, and if that distribution begins within one year
of the Participant's death. The "designated beneficiary" must be a natural
person. Contracts issued after January 18, 1985 contain provisions intended to
comply with these Code requirements, although regulations interpreting these
requirements have yet to be issued. The Company intends to review such
provisions and modify them, if necessary, to assure that they comply with the
requirements of section 72(s) when clarified by regulation or otherwise.
QUALIFIED CONTRACTS
IN GENERAL. The Qualified Contract is designed for use with several types
of retirement plans. The tax rules applicable to participants and beneficiaries
in retirement plans vary according to the type of plan and the terms and
conditions of the plan. Special favorable tax treatment may be available for
certain types of contributions and distributions. Adverse tax consequences may
result from contributions in excess of specified limits; distributions prior to
age 59 1/2 (subject to certain exceptions); distributions that do not conform to
specified commencement and minimum distribution rules; aggregate distributions
in excess of a specified annual amount; and in other specified circumstances.
The Company makes no attempt to provide more than general information about
use of the Contracts with the various types of retirement plans. Owners and
participants under retirement plans as well as annuitants and beneficiaries are
cautioned that the rights of any person to any benefits under Qualified
Contracts may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contract issued in connection with
such a plan. Some retirement plans are subject to distribution and other
requirements that are not incorporated in the administration of the Contracts.
Owners are responsible for determining that contributions, distributions and
other transactions with respect to the Contracts satisfy applicable law.
Purchasers of Contracts for use with any retirement plan should consult their
legal counsel and tax adviser regarding the suitability of the Contract.
SECTION 401(A) PLANS. Section 401(a) of the Code provides special tax
treatment for pension, profit sharing and stock bonus Plans established by
Employers for their employees. Contributions to a Section 401(a) Plan and any
earnings attributable to such Contributions are currently excluded from the
Participant's income. Section 401(a) Plans are subject to, among other things,
limitations on: maximum Contributions, minimum coverage and participation,
minimum funding, minimum vesting requirements and distribution requirements.
The specific limitations are outlined in the plan document adopted by the
employer.
A Participant who makes a withdrawal from a Section 401(a) program
generally must include that amount in current income. In addition, Section
401(k)(2) of the Code requires that salary reduction Contributions made and/or
earnings credited on any salary reduction Contributions may not be withdrawn
from the Participant's Section 401(k) program prior to the Participant having
(1) attained age 59 1/2, (2) separated from service, (3) become disabled, (4)
died or (5) incurred a hardship. Hardship withdrawals may not include any
income credited after December 31, 1988 that is attributable to any salary
reduction Contributions. In addition, Section 402 of the Code permits tax-free
rollovers from Section 401(a) programs to individual retirement annuities or
certain other Section 401(a) programs under certain circumstances. Qualified
distributions eligible for rollover treatment may be subject
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to a 20% federal tax withholding depending on whether or not the distribution is
paid directly to an eligible retirement plan.
SECTION 403(b) PLANS. A Participant who is an employee of a hospital or
other tax-exempt organization described in Section 501(c)(3) or 501(e) of the
Code may exclude from current earnings amounts contributed to a Section 403(b)
program. Under the terms of a Section 403(b) program, an Employer may make
Contributions directly to the program on behalf of the Participant, the
Participant may enter into a salary reduction agreement with the Participant's
Employer authorizing the Employer to contribute a percentage of the
Participant's salary to the program and/or the Participant may authorize the
Employer to make after tax Contributions to the program. Currently, the Code
permits employees to defer up to $9,500 of their income through salary reduction
agreements. All Contributions made to the Section 403(b) program are subject to
the limitations described in Code Sections 402(g) regarding elective deferral
amounts, 403(b)(2) regarding the maximum exclusion allowance, and 415(a)(2) and
415(c) regarding the limitations on annual additions.
A Participant who makes a withdrawal from their Section 403(b) program
generally must include that amount in current income. In addition, Section
403(b)(11) of the Code requires that salary reduction Contributions made and/or
earnings credited on any salary reduction Contributions after December 31, 1988
may not be withdrawn from the Participant's Section 403(b) program prior to the
Participant having (1) attained age 59 1/2, (2) separated from service, (3)
become disabled, (4) died or (5) incurred a hardship. Hardship withdrawals may
not include any income credited after December 31, 1988 that is attributable to
any salary reduction Contributions. The Internal Revenue Service has ruled
(Revenue Ruling 90-24) that amounts may be transferred between Section 403(b)
investment vehicles as long as the transferred funds retain withdrawal
restrictions at least as restrictive as that of the transferring investment
vehicle. Such transferred amounts are considered withdrawals under the Contract
and will be subject to a CDSC, if applicable. See "Deductions and Charges -
Contingent Deferred Sales Charges." In addition, Section 403(b)(8) of the Code
permits tax-free rollovers from Section 403(b) programs to individual retirement
annuities or other Section 403(b) programs under certain circumstances.
Qualified distributions eligible for rollover treatment may be subject to a 20%
federal tax withholding depending on whether or not the distribution is paid
directly to an eligible retirement plan.
SECTION 408 PLANS (IRAS). Under current law, individuals may contribute
and deduct the lesser of $2,000 or 100% of their compensation to an IRA. In the
case of a spousal IRA, the maximum deduction is the lesser of $2,250 or 100% of
compensation. The deduction for Contributions is phased out for individuals who
are considered active participants under qualified Plans and whose Adjusted
Gross Income attains a certain level. For a single person the $2,000 deduction
is available when the taxpayers Adjusted Gross Income is $25,000 or less. For
each $50 that the taxpayer's Adjusted Gross Income rises above $25,000, the
taxpayer's deductible IRA is reduced by $10. When the single taxpayer's
Adjusted Gross Income is $35,000 or greater, a tax deduction for an IRA is no
longer available. For a married couple filing jointly, the threshold level is
$40,000 rather than $25,000. For a married person filing separately, the
threshold is $0.
In addition, certain amounts distributed from Section 401(a) and 403(b)
Plans may be rolled over to an IRA on a tax-free basis if done in a timely
manner (within 60 days of the Participant's receipt of the distribution). The
limitations on contributions discussed above do not apply to amounts rolled over
to an IRA.
All Participants in an IRA receive an IRA Disclosure. This document
explains the tax rules that apply to IRAs in greater detail.
ELIGIBLE SECTION 457 PLANS. Eligible Section 457 Plans may be established
by state and local governments as well as private tax-exempt organizations
(other than churches). Participants may contribute on a before tax basis to a
deferred compensation Plan of their employer in accordance with the employer's
Plan and Section 457 of the Code. Section 457 places limitations on the amount
of Contributions to these Plans. Generally, the limitation is one-third of
includable compensation or $7,500 whichever is less. In the Participant's final
three years of employment before normal retirement age, the $7,500 limit is
increased to $15,000.
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Participants in an Eligible 457 Plan may not receive a withdrawal or other
distribution from their Plan except in the event of separation of service from
the employer, attainment of age 70 1/2, or when faced with an unforeseen
emergency. The Contractholder's Plan may further restrict the Participant's
rights to a withdrawal. In general, all amounts received under a Section 457
Plan are taxable.
An employee electing to participate in an Eligible Section 457 Plan should
understand that their rights and benefits are governed strictly by the terms of
the Plan, that they are in fact a general creditor of the Employer under the
terms of the Plan, that the Employer is legal owner of any contract issued with
respect to the Plan and that the Employer retains all rights under the contract
issued with respect to the Plan. Depending on the terms of the particular Plan,
the Employer may be entitled to draw on deferred amounts for purposes unrelated
to its Section 457 Plan obligations. Participants under Eligible Section 457
Plans should look to the terms of their Plan for any charges in regard to
participation other than those disclosed in this Prospectus.
SECTION 457(f) PLANS. Section 457(f) Plans may be established by state and
local governments as well as private tax-exempt organizations. Employers and
Participants may contribute on a before-tax basis to a deferred compensation
Plan of their Employer in accordance with the Employer's Plan. Section 457(f)
does not place limitations on the amount of Contributions to these Plans;
however, the Internal Revenue Service may review these plans to determine if the
deferral amount is acceptable to the IRS based on the nature of the 457(f) Plan.
Participants in 457(f) Plans may not receive a withdrawal or other
distribution from their 457(f) Plans until a distributable event occurs. The
Plan will define such events.
An employee electing to participate in a Section 457(f) Plan should
understand that their rights and benefits are governed strictly by the terms of
the Plan, that they are in fact a general creditor of the Employer under the
terms of the Plan, that the Employer is legal owner of any contract issued with
respect to the Plan and that the Employer retains all rights under the contract
issued with respect to the Plan. Participants under Section 457(f) Plans should
look to the terms of their Plan for any charges in regard to participating other
than those disclosed in this Prospectus.
TAXATION OF QUALIFIED ANNUITIES: GENERAL. In Qualified Plans such as
401(a), 403(b) and 408 and Eligible 457, the Participant is not taxed on the
value in their Accounts until they receive payments from the Account. In some
situations, default or forgiveness of a loan, assignment or other transactions
will result in taxable income. Distributions from all these Plans are taxed
under the rules of Sections 72 and 402 of the Code.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS. Section 72(t) imposes a 10%
excise tax on certain premature distributions for non-qualified and Section
401(a), 403(b) and 408 Plans. The penalty tax will not apply to distributions
made on account of the Participant having (i) attained age 59 1/2; (ii) become
disabled; or (iii) died. The penalty tax will also not apply under 401(a) and
403(b) retirement plans where a Participant separates from service after age 55.
In addition, the penalty does not apply if the distribution is received as a
series of substantially equal periodic payments made for the life (or life
expectancy) of the Participant or the joint lives (or life expectancies) of the
Participant and a designated Beneficiary. Certain other exceptions may also
apply. The 10% excise tax is an additional tax; it does not apply to any money
that the Participant receives as a return of their cost basis. The 10% excise
tax does not apply to Section 457 Plans.
MINIMUM DISTRIBUTIONS. Participants in Plans subject to Code Sections
401(a), 403(b), 408 and Eligible 457 Plans are subject to Minimum Distribution
Rules. For a Participant who attains age 70 1/2 after December 31, 1987,
distributions generally must begin by April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2. For a Participant
who attains age 70 1/2 before January 1, 1988, distributions must begin on the
April 1 of the calendar year following the later of (1) the calendar year in
which the Participant attains age 70 1/2 or (2) the calendar year in which the
Participant retires. Additional requirements may apply with respect to certain
Plans.
-30-
<PAGE>
Participants in Eligible 457 Plans are taxed when Plan benefits are
distributed or made available to them. Participants in 457(f) Plans are taxed
when services related to contributions are performed or when distributions are
not subject to a substantial risk of forfeiture. Distributions under Eligible
457 or 457(f) Plans are taxed as ordinary income.
The following discussion generally applies to a Contract owned by a natural
person.
WITHDRAWALS. In the case of a withdrawal under a Qualified Contract,
including withdrawals under the Systematic Withdrawal Option, a ratable portion
of the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the individual's total accrued benefit under the
retirement plan. The "investment in the contract" generally equals the amount
of any non-deductible Contributions paid by or on behalf of any individual.
For a Contract issued in connection with qualified plans, the "investment in the
contract" can be zero. Special tax rules may be available for certain
distributions from a Qualified Contract.
With respect to Non-Qualified Contracts, partial withdrawals are
generally treated as taxable income to the extent that the Account Value
immediately before the withdrawal exceeds the "investment in the contract" at
that time.
Full surrenders of a Non-qualified Contract are treated as taxable income
to the extent that the amount received exceeds the "investment in the contract".
ANNUITY PAYMENTS. Although the tax consequences may vary depending on the
Annuity payment elected under the Contract, in general, only the portion of the
Annuity payment that represents the amount by which the Account Value exceeds
the "investment in the contract" will be taxed; after the "investment in the
contract" is recovered, the full amount of any additional Annuity payments is
taxable. For Variable Annuity payments, the taxable portion is generally
determined by an equation that establishes a specific dollar amount of each
payment that is not taxed. The dollar amount is determined by dividing the
"investment in the contract" by the total number of expected periodic payments.
However, the entire distribution will be taxable once the recipient has
recovered the dollar amount of his or her "investment in the contract". For
Fixed Annuity payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the Annuity payments for the term of the
payments; however, the remainder of each Annuity payment is taxable. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional Annuity payments is taxable. If Annuity payments cease as a result
of an Annuitant's death before full recovery of the "investment in the
contract," consult a competent tax advisor regarding deductibility of the
unrecovered amount.
RESTRICTIONS UNDER QUALIFIED CONTRACTS. Other restrictions with respect to
the election, commencement, or distribution of benefits may apply under
Qualified Contracts or under the terms of the plans in respect of which
Qualified Contracts are issued.
-31-
<PAGE>
INVESTOR CONTROL
The Treasury Department has indicated that guidelines may be issued under
which a variable annuity contract will not be treated as an annuity contract for
tax purposes if the contract owner has excessive control over the investments
underlying the contract. The issuance of those guidelines may require us to
impose limitations on your right to control the investment. We do not know
whether any such guidelines would
have a retroactive effect.
VOTING RIGHTS
Lincoln Life is the legal owner of the shares of the Funds held by the
Variable Investment Division. As such, Lincoln Life is entitled to vote those
Fund shares with respect to issues such as the election of a Fund's directors,
ratification of a Fund's choice of independent auditors and other matters
required by the 1940 Act to be voted on by shareholders.
In those years in which the Funds hold a shareholder meeting, Lincoln Life
will solicit from Contractholders voting instructions with respect to Fund
shares held by the Variable Investment Division. Each Contractholder will
receive a number of votes in proportion to the Contractholder's investment in
the corresponding Sub-Account as of the record date established by the Fund.
During the Accumulation Period, a Participant has the right to instruct
Contractholders as to the votes attributable to their Participant Account
balance in the Sub-Accounts. Annuitants have similar rights with respect to the
annuity amount attributable to the Sub-Accounts.
Lincoln Life will furnish Contractholders with sufficient Fund proxy
material and voting instruction forms for all Participants who have voting
rights under the Contract. Lincoln Life will vote those Fund shares
attributable to the Contract for which Lincoln Life receives no voting
instructions in the same proportion as Lincoln Life will vote shares for which
Lincoln Life has received instructions. Lincoln Life will vote shares
attributable to amounts Lincoln Life may have in the Variable Investment
Division in the same proportion as votes that Lincoln Life receives from
Contractholders. If the federal securities laws or regulations or any
interpretation of them changes so that Lincoln Life is permitted to vote shares
of the Fund in Lincoln Life's own right or to restrict Participant voting,
Lincoln Life may do so.
Fund shares may be held by separate accounts of insurance companies
unaffiliated with Lincoln Life. Fund shares held by those separate accounts
will be voted, in most cases, according to the instruction of owners of
insurance policies and contracts issued by those other unaffiliated insurance
companies. This will dilute the effect of the voting instructions of the
Contractholders in the Variable Investment Division. Lincoln Life does not
foresee any disadvantage to this. Pursuant to conditions imposed in connection
with regulatory relief, the Fund's Board of Directors has an obligation to
monitor events to identify conflicts that may arise and to determine what
action, if any, should be taken. For further information, see the prospectuses
for the Funds.
OTHER CONTRACT PROVISIONS
RIGHTS RESERVED BY LINCOLN LIFE
Lincoln Life reserves the right, subject to compliance with applicable law,
including approval by the Contractholder or the Participants if required by law,
(1) to create additional Sub-Accounts in the Variable Investment Division, (2)
to combine or eliminate Sub-Accounts in the Variable Investment Division, (3) to
transfer assets from one Sub-Account in the Variable Investment Division to
another, (4) to transfer assets to the General Account and other separate
accounts, (5) to cause the deregistration of the Variable Investment Division
under the
-32-
<PAGE>
Investment Company Act of 1940, (6) to operate the Variable Investment Division
under a committee and to discharge such committee at any time, and (7) to
eliminate any voting rights which the Contractholder or the Participants may
have with respect to the Variable Investment Division, (8) to amend the Contract
to meet state law requirements or to meet the requirements of the Investment
Company Act of 1940 or other federal securities laws and regulations, (9) to
operate the Variable Investment Division in any form permitted by law, (10) to
substitute shares of another fund for the shares held by a Sub-Account, and (11)
to make any change required by the Internal Revenue Code, ERISA or the
Securities Act of 1933. Participants will be notified if any changes are made
that result in a material change in the underlying investments of the Variable
Investment Division.
ASSIGNABILITY
The Contracts are not assignable without Lincoln Life's prior written
consent. In addition, a Participant, a Beneficiary or an Annuitant may not,
unless permitted by law, assign or encumber any payment due under the Contract.
MARKET EMERGENCIES
While Lincoln Life generally may not suspend the right of redemption or
delay payment from the Variable Investment Division for more than seven days,
the following events may delay payment for more than seven days: (1) any period
when the New York Stock Exchange is closed (other than customary weekend and
holiday closings); (2) any period when trading in the markets normally utilized
is restricted, or an emergency exists as determined by the Securities and
Exchange Commission, so that disposal of investments or determination of the
Accumulation Unit Value or Variable Annuity payment value is not reasonably
practicable; or (3) for such other periods as the Securities and Exchange
Commission by order may permit for the protection of the Participants.
CONTRACT DEACTIVATION
Under certain Contracts, Lincoln Life may deactivate a Contract by
prohibiting new contributions and/or new Participants after the date of
deactivation. Lincoln Life will give the Contractholder and the Participants
at least 90 days notice of the date of deactivation.
FREE-LOOK PERIOD
Participants under Sections 403(b), 408 and certain Non-qualified Plans
will receive an Active Life Certificate upon Lincoln Life's receipt of a duly
completed participation enrollment form. If the Participant chooses not to
participate under the Contract, the Participant may exercise the free-look right
by sending a written notice to Lincoln Life that the Participant does not wish
to participate under the Contract, within 10 days after the date the Active Life
Certificate is received by the Participant. For purposes of determining the
date on which the Participant has sent written notice, the postmark date will be
used.
If a Participant exercises the free-look right in accordance with the
foregoing procedure, Lincoln Life will refund in full the Participant's
aggregate Contributions less aggregate withdrawals made on behalf of the
Participant or, if greater, with respect to Contributions to the Variable
Investment Division, the Participant's Account balance in the Variable
Investment Division on the date the Participant's written notice is received by
Lincoln Life.
-33-
<PAGE>
GUARANTEED INTEREST DIVISION
GENERAL
Contributions to the Guaranteed Interest Division become part of Lincoln
Life's General Account. The General Account is subject to regulation and
supervision by the New York Insurance Department as well as the insurance laws
and regulations of the jurisdictions in which the Contracts are distributed.
IN RELIANCE ON CERTAIN EXEMPTIONS, EXCLUSIONS AND RULES, LINCOLN LIFE HAS
NOT REGISTERED THE INTERESTS IN THE GENERAL ACCOUNT AS A SECURITY UNDER THE
SECURITIES ACT OF 1933 AND HAS NOT REGISTERED THE GENERAL ACCOUNT AS AN
INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE GENERAL ACCOUNT
NOR ANY INTERESTS THEREIN ARE SUBJECT TO REGULATION UNDER THE 1933 ACT OR THE
1940 ACT. LINCOLN LIFE HAS BEEN ADVISED THAT THE STAFF OF THE SEC HAS NOT MADE
A REVIEW OF THE DISCLOSURES WHICH ARE INCLUDED IN THIS PROSPECTUS WHICH RELATE
TO THE GENERAL ACCOUNT AND THE GUARANTEED INTEREST DIVISION. THESE DISCLOSURES,
HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE
FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS
MADE IN PROSPECTUSES. THIS PROSPECTUS IS GENERALLY INTENDED TO SERVE AS A
DISCLOSURE DOCUMENT ONLY FOR ASPECTS OF THE CONTRACT INVOLVING THE VARIABLE
INVESTMENT DIVISION AND CONTAINS ONLY SELECTED INFORMATION REGARDING THE
GUARANTEED INTEREST DIVISION. COMPLETE DETAILS REGARDING THE GUARANTEED
INTEREST DIVISION ARE IN THE CONTRACT.
Amounts contributed to the Guaranteed Interest Division are guaranteed a
minimum interest rate of at least 3.0%. A Participant who makes a Contribution
to the Guaranteed Interest Division is credited with interest from the day of
deposit in the Guaranteed Interest Division.
ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN LINCOLN LIFE'S SOLE
DISCRETION. THE PARTICIPANTS BEAR THE RISK THAT NO INTEREST IN EXCESS OF 3.0%
WILL BE DECLARED.
PARTICIPANT'S ACCOUNT BALANCE IN THE GUARANTEED INTEREST DIVISION
The Participant's Account balance in the Guaranteed Interest Division on
any Valuation Date will reflect the amount and frequency of any Contributions
allocated to the Guaranteed Interest Division, plus any transfers from the
Variable Investment Division and interest credited to the Guaranteed Interest
Division, less any withdrawals, CDSC, Annual Administration Charges and loan-
related charges allocated to the Guaranteed Interest Division and any transfers
to the Variable Investment Division.
TRANSFERS, TOTAL AND PARTIAL WITHDRAWALS
Amounts in the Guaranteed Interest Division are generally subject to the
same rights and limitations and will be subject to the same charges as are
amounts allocated to the Variable Investment Division with respect to Total or
Partial Withdrawals. See "Deferral Periods."
LOANS
During a Participant's Accumulation Period, a Participant, whose Plan
permits loans, may apply for a loan under the Contract by completing a loan
application available from Lincoln Life. Loans are secured by the Participant's
Account balance in the Guaranteed Interest Division. The amounts and terms of a
Participant loan may be subject to the restrictions imposed under Section 72(p)
of the Code, Title I of ERISA, and any applicable Plans. With respect to Plans
subject to Title I of ERISA, the initial amount of a Participant loan may not
exceed the lesser
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<PAGE>
of 50% of the Participant's vested Account balance in the Guaranteed Interest
Division or $50,000 and must be at least $1,000.00. A Participant in a Plan
that is not subject to ERISA may borrow up to $10,000 of their vested Account
balance without regard to the 50% limitation stated above. A Participant may
have only one loan outstanding at any time and may not establish more than one
loan in any six month period. More information about loans, including interest
rates and applicable fees and charges, is available in the Contracts, Active
Life Certificates, and Annuity Loan Agreement as well as from Lincoln Life.
DEFERRAL PERIODS
If a payment is to be made from the Guaranteed Interest Division, Lincoln
Life may defer the payment for the period permitted by the law of the
jurisdiction in which the Contract is distributed, but in no event, for more
than 6 months after a written election is received by Lincoln Life. During the
period of deferral, interest at the then current interest rate will continue to
be credited to a Participant's Account in the Guaranteed Interest Division.
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<PAGE>
TABLE OF CONTENTS FOR
STATEMENT OF ADDITIONAL INFORMATION
PAGE
DEFINITIONS.............................................................. 2
DETERMINATION OF ACCUMULATION UNIT VALUES................................ 2
DETERMINATION OF VARIABLE ANNUITY PAYMENTS............................... 3
PERFORMANCE CALCULATIONS ................................................ 4
TAX LAW CONSIDERATIONS................................................... 10
DISTRIBUTION OF CONTRACTS................................................ 12
INDEPENDENT AUDITORS..................................................... 13
FINANCIAL STATEMENTS..................................................... 13
Balance Sheet of Lincoln Life ......................................... 14
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<PAGE>
VARIABLE ANNUITY II
STATEMENT OF ADDITIONAL INFORMATION
__________ __, 1996
GROUP ANNUITY CONTRACTS
FUNDED THROUGH THE SUB-ACCOUNTS OF
LINCOLN LIFE & ANNUITY
VARIABLE ANNUITY ACCOUNT L
OF
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
TABLE OF CONTENTS
PAGE
----
Definitions.............................................................. 2
Determination of Accumulation Unit Values................................ 2
Determination of Variable Annuity Payments............................... 3
Performance Calculations................................................. 4
Tax Law Considerations................................................... 10
Distribution of Contracts................................................ 12
Independent Auditors..................................................... 13
Financial Statements..................................................... 13
Balance Sheet of Lincoln Life.......................................... 14
This Statement of Additional Information (SAI) is not a prospectus. It should
be read in conjunction with the prospectus for the Group Annuity Contracts (the
"Contracts"), dated ___________ __, 1996.
A copy of the prospectus to which this SAI relates is available at no
charge by writing to our service office at: Lincoln Life &
Annuity Company of New York, P.O. Box 9737, Portland, ME 04104 or by calling
Lincoln Life at 1-800-893-7168.
<PAGE>
DEFINITIONS
ANNUITY CONVERSION FACTOR: The factor applied to the Annuity Conversion Amount
in determining the dollar amount of an annuitant's annuity payments for
Guaranteed Annuities or the initial payment for Variable Annuities.
ANNUITY PAYMENT CALCULATION DATE: For Guaranteed Annuities, this is the first
day of a calendar month. For Variable Annuities, this is the Valuation Date ten
(10) business days prior to the first day of a calendar month.
ANNUITY UNIT: An accounting unit of measure that is used in calculating the
amounts of annuity payments to be made from a Sub-Account during the Annuity
Period.
ANNUITY UNIT VALUE: The dollar value of an Annuity Unit in a Sub-Account on any
Valuation Date.
CODE: The Internal Revenue Code of 1986, as amended.
DETERMINATION OF ACCUMULATION UNIT VALUES
As described more fully in the prospectus, Contributions are allocated to the
Divisions in accordance with directions from the Employer. A Participant who
makes Contributions which are allocated to the Variable Investment Division is
credited with Accumulation Units. The following examples illustrate the method
by which Lincoln Life determines the Net Investment Factor (NIF) for the current
Valuation Period and the Accumulation Unit Value as of the end of the current
Valuation Period.
DETERMINATION OF NIF:
(a) Assumed Fund net asset value as of the close of the New York Stock Exchange
on June 1 = 10.45.
(b) Assumed Fund net asset value as of the close of the New York Stock Exchange
on June 2 = 10.56 (no capital gains or dividend distributions or deductions
for taxes).
(c) The NIF for the current Valuation Period = (b) divided by (a) times
(1-annual M & E) to the 1/365th power.
(d) 1.010526 x .999966 = 1.0104916.
DETERMINATION OF ACCUMULATION UNIT VALUE:
The Accumulation Unit Value as of the end of the current Valuation Period is
determined by multiplying the NIF for the current Valuation Period by the
Accumulation Unit Value as of the end of the immediately preceding Valuation
Period.
(a) Assumed Accumulation Unit Value as of the end of the immediately preceding
Valuation Period = 11.125674.
(b) Accumulation Unit Value as of the end of the current Valuation Period =
11.125674 x 1.0104916 (NIF) = 11.2424.
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<PAGE>
The number of Accumulation Units which are credited to the Participant's Account
for each Sub-Account on each Valuation Date equals the amount of Contributions
allocated to the Sub-Account on each Valuation Date divided by the Accumulation
Unit Value rounded to four decimal places. For example,
(a) Participant's assumed Contribution allocated to a Sub-Account on June 2 =
$150.
(b) Number of Accumulation Units credited to Participant = $150 divided by
11.2424 = 13.3423.
DETERMINATION OF VARIABLE ANNUITY PAYMENTS
As stated in the prospectus, the amount of each Variable Annuity payment will
vary depending on the investment experience of the selected Sub-Accounts. The
initial payment amount of the Annuitant's Variable Annuity for each Sub-Account
is determined by dividing his Annuity Conversion Amount in each Sub-Account as
of the initial Annuity Payment Calculation Date ("APCD") by the Applicable
Annuity Conversion Factor as defined as follows:
The Annuity Conversion Factors which are used to determine the initial payments
are based on the 1983 Individual Annuity Mortality Table, set back four (4)
years, and an interest rate in an integral percentage ranging from zero to six
percent (0 to 6.00%) as selected by the Annuitant.
The amount of the Annuitant's subsequent Variable Annuity payment for each Sub-
Account is determined by:
(a) Dividing the Annuitant's initial Variable Annuity payment amount by the
Annuity Unit Value for that Sub-Account selected for his interest rate
option as described above as of his initial APCD; and
(b) Multiplying the resultant number of annuity units by the Annuity Unit
Values for the Sub-Account selected for his interest rate option for his
respective subsequent APCDs.
Each Annuity Unit Value for a Sub-Account for an interest rate option is
determined by:
Dividing the Accumulation Unit Value for the Sub-Account as of subsequent
APCD by the Accumulation Unit Value for the Sub-Account as of the
immediately preceding APCD;
Dividing the resultant factor by one (1.00) plus the interest rate option
to the n/365 power where n is the number of days from the immediately
preceding APCD to the subsequent APCD; and
Multiplying this factor times the Annuity Unit Value as of the immediately
preceding APCD.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
<TABLE>
<CAPTION>
<S> <C>
1. Annuity Unit Value as of immediately preceding Annuity Payment Calculation Date.......... $11.0000
2. Accumulation Unit Value as of Annuity Payment Calculation Date............................ $20.0000
3. Accumulation Unit Value as of immediately preceding Annuity Payment Calculation Date..... $19.0000
4. Interest Rate............................................................................ 6.00%
5. Interest Rate Factor (30 days)........................................................... 1.0048
6. Annuity Unit Value as of Annuity Payment Calculation Date =
1 times 2 divided by 3 divided by 5..................................................... $11.5236
</TABLE>
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<PAGE>
ILLUSTRATION OF ANNUITY PAYMENTS
<TABLE>
<CAPTION>
<S> <C>
1. Annuity Conversion Amount as of Participant's initial Annuity Payment Calculation Date............ $100,000.00
2. Assumed Annuity Conversion Factor per $1 of Monthly Income for an individual age 65 selecting
a Life Annuity with Assumed Interest Rate of 6%...................................................... $138.63
3. Participant's initial Annuity Payment = 1 divided by 2................................................ $721.34
4. Assumed Annuity Unit Value as of Participant's initial Annuity Payment
Calculation Date.................................................................................... $11.5236
5. Number of Annuity Units = 3 divided by 4............................................................. 62.5968
6. Assumed Annuity Unit Value as of Participant's second Annuity Payment Calculation
Date................................................................................................ $11.9000
7. Participant's second Annuity Payment = 5 times 6..................................................... $744.90
</TABLE>
PERFORMANCE CALCULATIONS
STANDARD TOTAL RETURN CALCULATION
The Variable Investment Division may advertise average annual total return
information calculated according to a formula prescribed by the Securities and
Exchange Commission ("SEC"). Average annual total return shows the average
annual percentage increase, or decrease, in the value of a hypothetical
Contribution allocated to a Sub-Account from the beginning to the end of each
specified period of time. The SEC standardized version of this performance
information is based on an assumed Contribution of $1,000 allocated to a Sub-
Account at the beginning of each period and surrender or withdrawal of the value
of that amount at the end of each specified period, giving effect to any CDSC
and all other charges and fees applicable under the Contract. This method of
calculating performance further assumes that (i) a $1,000 Contribution was
allocated to a Sub-Account and (ii) no transfers or additional payments were
made. Premium taxes are not included in the term "charges" for purposes of this
calculation. Average annual total return is calculated by finding the average
annual compounded rates of return of a hypothetical Contribution that would
compare the Accumulation Unit value on the first day of the specified period to
the ending redeemable value at the end of the period according to the following
formula:
T = (ERV/C) 1/n - 1
Where T equals average annual total return, where ERV (the ending redeemable
value) is the value at the end of the applicable period of a hypothetical
Contribution of $1,000 made at the beginning of the applicable period, where C
equals a hypothetical Contribution of $1,000, and where n equals the number of
years.
NON-STANDARDIZED CALCULATION OF TOTAL RETURN PERFORMANCE
In addition to the standardized average annual total return information
described above, we may present total return information computed on bases
different from that standardized method. The Variable Investment Division may
present total return information computed on the same basis as the standardized
method except that charges deducted from the hypothetical Contribution will not
include any CDSC. Consistent with the long-term investment and retirement
objectives of the Contract, this total return presentation assumes investment in
the Contract continues beyond the period when the CDSC applies. The Variable
Investment Division may also present total return information computed on the
same basis as the standardized method except that charges deducted from the
hypothetical Contribution will not include either the CDSC or the Annual
Administration Charge. The total return percentage under both of these non-
standardized methods will be higher than that resulting from the standardized
method.
-4-
<PAGE>
The Sub-Accounts also may present total return information calculated by
subtracting a Sub-Account's Accumulation Unit Value at the beginning of a period
from the Accumulation Unit Value of that Sub-Account at the end of the period
and dividing that difference (in that Sub-Account's Accumulation Unit Value) by
the Accumulation Unit Value of that Sub-Account at the beginning of the period.
This computation results in a total growth rate for the specified period which
we annualize in order to obtain the average annual percentage change in the
Accumulation Unit Value for the period used. This method of calculating
performance does not take into account CDSC, the Annual Administration Charge
and premium taxes, and assumes no transfers. Such percentages would be lower if
these charges were included in the calculation.
In addition, the Variable Investment Division may present actual aggregate total
return figures for various periods, reflecting the cumulative change in value of
an investment in the Variable Investment Division for the specified period.
PERFORMANCE INFORMATION
The tables below provide performance information for each Sub-Account for
specified periods ending December 31, 1995. For the periods prior to the date
the Sub-Accounts commenced operations, performance information for the Contracts
will be calculated based on the performance of the fund portfolios and the
assumption that the Sub-Accounts were in existence for the same periods as those
indicated for the fund portfolios, with the level of Contract charges that were
in effect at the inception of the Sub-Accounts (this is referred to as
"hypothetical performance data"). This information does not indicate or
represent future performance.
TOTAL RETURN
Total returns quoted in sales literature or advertisements reflect all aspects
of a Sub-Account's return. Average annual returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in the
Sub-Account over a stated period of time, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline had been constant over the period. Contractholders and
participants should recognize that average annual returns represent averaged
returns rather than actual year-to-year performance.
The respective underlying funds in which the Sub-Accounts invest had performance
history prior to the Sub-Accounts' inception. Performance information covering
those periods reflects a hypothetical performance as if the funds were part of
the Lincoln Life & Annuity Variable Annuity Account L at that time, using the
charges applicable to the Contracts.
Table 1A below assumes a hypothetical investment of $1,000 at the beginning of
the period via the Sub-Account investing in the applicable fund and withdrawal
of the investment on 12/31/95. The rates thus reflect the mortality and expense
risk charge, the withdrawal charge and a pro rata portion of the Annual
Administrative Charge. Table 1B shows the cumulative total return on the same
basis.
<TABLE>
<CAPTION>
TABLE 1A -- SUB-ACCOUNT STANDARDIZED "HYPOTHETICAL" AVERAGE ANNUAL TOTAL RETURN
LIFE
FUND 1 YEAR 3 YEARS 5 YEARS OF FUND
INCEPTION ENDING ENDING ENDING ENDING
DATE 12/31/95 12/31/95 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C>
Fund VIP II: Asset Manager 09/06/89 8.48 6.35 9.94 8.74
(Asset Manager)
Calvert Responsibly Invested
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Balanced Portfolio 09/02/86 20.45 7.06 8.42 8.07
(Socially Responsible)
TCI Balanced 05/01/91 12.49 5.98 N/A 7.08
(Balanced)
VIP Equity-Income 10/09/86 25.29 15.63 18.31 11.15
(Equity-Income)
Dreyfus Stock Index 09/29/89 26.96 10.94 13.10 9.82
(Index Account)
Fund VIP Growth 10/09/86 25.50 13.41 17.76 12.62
(Growth I)
TCI Growth 11/20/87 21.65 8.96 12.06 10.60
(Growth II)
T. Rowe Price International
Stock 03/31/94 3.18 N/A N/A 2.26
Portfolio (International
Stock)
Dreyfus Small Cap 08/31/90 19.94 28.48 55.83 52.10
(Small Cap)
</TABLE>
<TABLE>
<CAPTION>
TABLE 1B -- SUB-ACCOUNT "HYPOTHETICAL" CUMULATIVE TOTAL RETURN
LIFE
FUND YEAR TO 1 YEAR 3 YEARS 5 YEARS OF FUND
INCEPTION QUARTER DATE ENDING ENDING ENDING ENDING
DATE 12/31/95 12/31/95 12/31/95 12/31/95 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C> <C> <C>
Fund VIP II: Asset Manager 09/06/89 -2.87 8.48 8.48 20.27 60.64 69.80
(Asset Manager)
Calvert Responsibly Invested
Balanced Portfolio 09/02/86 -2.95 20.45 20.45 22.72 49.84 106.35
(Socially Responsible)
TCI Balanced 05/01/91 -4.14 12.49 12.49 19.04 N/A 37.64
(Balanced)
VIP Equity-Income 10/09/86 -0.71 25.29 25.29 54.60 131.82 165.39
(Equity-Income)
Dreyfus Stock Index 09/29/89 -0.91 26.96 26.96 36.55 85.06 79.74
(Index)
Fund VIP Growth 10/09/86 -10.42 25.50 25.50 45.85 126.49 199.48
(Growth I)
TCI Growth 11/20/87 -9.92 21.65 21.65 29.36 76.67 126.51
(Growth II)
T. Rowe Price International
Stock 03/31/94 -3.90 3.18 3.18 N/A N/A 3.99
Portfolio (International
Stock)
Dreyfus Small Cap 08/31/90 -5.64 19.94 19.94 112.08 819.01 837.46
(Small Cap)
</TABLE>
-6-
<PAGE>
Table 2A below shows annual average total return on the same assumptions as
Table 1A except that the value in the Sub-Account is not withdrawn at the end of
the period or is withdrawn to affect an annuity. Table 2B shows the cumulative
total return on the same basis. The rates of return shown below reflect the
mortality and expense risk charge and a pro rata portion of the Annual
Administrative Charge.
<TABLE>
<CAPTION>
TABLE 2A -- SUB-ACCOUNT "HYPOTHETICAL" AVERAGE TOTAL RETURN ASSUMING NO WITHDRAWAL
LIFE
FUND 1 YEAR 3 YEARS 5 YEARS OF FUND
INCEPTION ENDING ENDING ENDING ENDING
DATE 12/31/95 12/31/95 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C>
Fund VIP II: Asset Manager 09/06/89 15.40 8.56 11.31 9.81
(Asset Manager)
Calvert Responsibly Invested
Balanced Portfolio 09/02/86 28.14 9.29 9.77 8.79
(Socially Responsible)
TCI Balanced 05/01/91 19.67 8.19 N/A 8.51
(Balanced)
VIP Equity-Income 10/09/86 33.29 18.04 19.79 11.90
(Equity-Income)
Dreyfus Stock Index 09/29/89 35.06 13.25 14.51 10.91
(Index Account)
Fund VIP Growth 10/09/86 33.51 15.77 19.23 13.38
(Growth I)
TCI Growth 11/20/87 29.42 11.23 13.45 11.45
(Growth II)
T. Rowe Price International
Stock 03/31/94 9.76 N/A N/A 5.93
Portfolio (International
Stock)
Dreyfus Small Cap 08/31/90 27.59 31.16 57.78 53.87
(Small Cap)
</TABLE>
<TABLE>
<CAPTION>
TABLE 2B -- SUB-ACCOUNT "HYPOTHETICAL" CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
LIFE
FUND YEAR TO 1 YEAR 3 YEARS 5 YEARS OF FUND
INCEPTION QUARTER DATE ENDING ENDING ENDING ENDING
DATE 12/31/95 12/31/95 12/31/95 12/31/95 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C> <C> <C>
Fund VIP II: Asset Manager 09/06/89 3.33 15.40 15.40 27.95 70.89 80.64
(Asset Manager)
Calvert Responsibly Invested
Balanced Portfolio 09/02/86 3.25 28.14 28.14 30.56 59.40 119.53
(Socially Responsible)
TCI Balanced 05/01/91 1.98 19.67 19.67 26.64 N/A 46.43
(Balanced)
VIP Equity-Income 10/09/86 5.62 33.29 33.29 64.47 146.62 182.33
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(Equity-Income)
Dreyfus Stock Index 09/29/89 5.41 35.06 35.06 45.26 96.87 91.21
(Index)
Fund VIP Growth 10/09/86 -4.70 33.51 33.51 55.16 140.94 218.60
(Growth I)
TCI Growth 11/20/87 -4.17 29.42 29.42 37.62 87.95 140.97
(Growth II)
T. Rowe Price International
Stock 03/31/94 2.23 9.76 9.76 N/A N/A 10.63
Portfolio (International
Stock)
Dreyfus Small Cap 08/31/90 0.38 27.59 27.59 125.62 877.67 897.29
(Small Cap)
</TABLE>
Tables 3A and 3B show performance information on the same assumptions as
Tables 2A and 2B except that Tables 3A and 3B do not reflect deductions of
the pro rata portion of the Annual Administrative Charge because certain
Contract and Participants are not assessed such a charge.
<TABLE>
<CAPTION>
TABLE 3A -- SUB-ACCOUNT "HYPOTHETICAL" AVERAGE ANNUAL TOTAL RETURN ASSUMING
NO WITHDRAWAL AND NO ANNUAL ADMINISTRATIVE CHARGE
LIFE
FUND 1 YEAR 3 YEARS 5 YEARS OF FUND
INCEPTION ENDING ENDING ENDING ENDING
DATE 12/31/95 12/31/95 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C>
Fund VIP II: Asset Manager 09/06/89 15.57 8.71 11.42 9.92
(Asset Manager)
Calvert Responsibly Invested
Balanced Portfolio 09/02/86 28.24 9.38 9.84 8.84
(Socially Responsible)
TCI Balanced 05/01/91 19.68 8.20 N/A 8.52
(Balanced)
VIP Equity-Income 10/09/86 33.49 18.18 19.88 11.99
(Equity-Income)
Dreyfus Stock Index 09/29/89 35.16 13.33 14.57 10.98
(Index Account)
Fund VIP Growth 10/09/86 33.75 15.95 19.35 13.47
(Growth I)
TCI Growth 11/20/87 29.55 11.33 13.53 11.51
(Growth II)
T. Rowe Price International
Stock 03/31/94 9.86 N/A N/A 6.04
Portfolio (International
Stock)
Dreyfus Small Cap 08/31/90 27.85 31.30 57.82 53.91
(Small Cap)
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
TABLE 3B -- SUB-ACCOUNT "HYPOTHETICAL" CUMULATIVE TOTAL RETURN ASSUMING NO
WITHDRAWAL AND NO ANNUAL ADMINISTRATIVE CHARGE
LIFE
FUND YEAR TO 1 YEAR 3 YEARS 5 YEARS OF FUND
INCEPTION QUARTER DATE ENDING ENDING ENDING ENDING
DATE 12/31/95 12/31/95 12/31/95 12/31/95 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C> <C> <C>
Fund VIP II: Asset Manager 09/06/89 3.50 15.57 15.57 28.46 71.74 81.82
(Asset Manager)
Calvert Responsibly Invested
Balanced Portfolio 09/02/86 3.35 28.24 28.24 30.85 59.90 120.51
(Socially Responsible)
TCI Balanced 05/01/91 1.99 19.68 19.68 26.68 N/A 46.50
(Balanced)
VIP Equity-Income 10/09/86 5.82 33.49 33.49 65.06 147.61 184.31
(Equity-Income)
Dreyfus Stock Index 09/29/89 5.51 35.16 35.16 45.56 97.36 91.90
(Index)
Fund VIP Growth 10/09/86 -4.46 33.75 33.75 55.88 142.14 221.00
(Growth I)
TCI Growth 11/20/87 -4.04 29.55 29.55 38.00 88.59 142.11
(Growth II)
T. Rowe Price International
Stock 03/31/94 2.33 9.86 9.86 N/A N/A 10.83
Portfolio (International
Stock)
Dreyfus Small Cap 08/31/90 0.64 27.85 27.85 126.38 878.94 898.82
(Small Cap)
</TABLE>
Table 4 below shows total return information on a calendar year basis using the
same assumptions as Tables 3A and 3B. The rates of return shown reflect the
mortality and expense risk charge. Similar to Tables 3A and 3B, Table 4 does
not reflect deduction of the pro rata portion of the Annual Administrative
Charge because certain Contracts and Participants are not assessed such a
charge.
<TABLE>
<CAPTION>
TABLE 4 -- SUB-ACCOUNT "HYPOTHETICAL" CALENDAR YEAR ANNUAL RETURN ASSUMING NO
WITHDRAWAL AND NO ANNUAL ADMINISTRATIVE CHARGE*
1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Asset Manager na na na 5.45 21.11 10.53 19.60 -7.20 15.57
Socially Responsible 5.51 10.42 19.53 2.94 15.02 6.33 6.72 -4.39 28.24
Balanced na na na na na -7.17 6.38 -0.58 19.68
Equity-Income -2.30 21.25 15.95 -16.29 29.88 15.50 16.89 5.80 33.49
Index na na na -4.69 28.29 5.82 8.02 -0.32 35.16
Growth I 2.43 14.21 29.95 -12.78 43.78 8.00 17.94 -1.21 33.75
Growth II na -3.41 27.17 -2.40 40.18 -2.52 8.99 -2.34 29.55
International Stock na na na na na na na na 9.86
Small Cap na na na na 156.65 69.25 66.31 6.47 27.85
</TABLE>
-9-
<PAGE>
*The above calendar-year returns assume a hypothetical investment of $1,000 on
January 1 of the first full calendar year that the underlying fund was in
existence. The returns assume that the money will be left on account until
retirement and thus no CDSC will be deducted. Returns are provided for years
before the fund was an available investment option under the Contract. Returns
for those periods reflect a hypothetical return as if those funds were available
under the Contract, and reflect the deduction of the mortality and expense risk
charge. The returns do not reflect deductions for the pro rata portion of the
Annual Administrative Charge or the CDSC.
SEC regulations require that any product performance data be accompanied by
standardized performance data.
TAX LAW CONSIDERATIONS
Retirement Programs:
Participants are urged to discuss the income taxes considerations of their
retirement plan with their tax advisors. In many situations special rules may
apply to the plans and/or to the participants. See the Prospectus for a more
complete discussion of tax considerations and for limitations on the following
discussion.
Contributions to retirement programs subject to Sections 401(a), 403(b), 408 and
457(b) may be excludable from a Participant's reportable gross income if the
Contributions do not exceed the limitations imposed under the Code. Certain
plans allow employees to make Elective Salary Deferral Contributions. Certain
Plans allow Employers to make Contributions. The information below is a brief
summary of some the important federal tax considerations that apply to
retirement plans. When there is a written Plan, often the Contribution limits,
withdrawal rights and other provisions of the Plan may be more restrictive than
those allowed by the Code.
Elective Salary Deferral Contributions
For calendar year 1996 the maximum elective salary deferral contributions to a
401(k) Plan which is a type of 401(a) Plan is limited to $9,500; For a 403(b)
plan the limit is $9,500 unless the employee is a qualified employee; For an
Eligible 457 Plan the limit is $7,500. When an employee is covered by two or
more of these Plans, the elective salary deferral contribution limits for all
the Plans must be coordinated.
Total Salary Deferral & Employer Contributions
QUALIFIED RETIREMENT PLAN - 401(a) PLAN
The Code limits the Contributions to a defined contribution 401(a) plan to the
lesser of $30,000 or 25% of compensation.
TAX SHELTERED ANNUITY PLAN - 403(b) PLAN
Total contributions which include both salary deferral contributions and
employer contributions are also limited.
The combined limit is:
(a) the amount determined by multiplying 20 percent of the employee's
includable compensation by the number of years of service, over
(b) the aggregate of the amount contributed by the employer for annuity
contracts and excludable from the gross income of the employee for the prior
taxable year.
-10-
<PAGE>
Therefore, if the maximum exclusion allowance is less than $9,500 a year, the
employee's elective deferrals plus any other employer Contributions cannot
exceed this lesser amount.
Section 415 of the Code imposes limitations with respect to annual contributions
to all Section 403(b) programs, qualified plans and simplified employee pensions
maintained by the Employer. A Participant's annual contributions to these
programs and defined contribution plans generally cannot exceed the lesser of
$30,000 or 25 percent of the employee's compensation. This amount is subject to
the maximum exclusion allowance and the salary deferral amount limitations.
ELIGIBLE 457 PLAN - 457(b) PLAN
For a 457(b) plan the contribution limit is generally the lesser of $7,500 or
33% of the employee's compensation.
SECTION 457(f) PLANS
These are non-qualified deferred compensation arrangements between an Employer
and its employees. There are no stated limits in the Code regarding this type
of Plan.
INDIVIDUAL RETIREMENT ACCOUNT - IRA OR 408 PLAN
For IRA's the maximum deductible contribution is the lesser of $2,000 or 100% of
taxable income. The $2,000 is increased to $2,250 when the IRA covers the
taxpayer and a non-working spouse.
Transfers and Rollovers
Participants who receive distributions from their 401(a) or 403(b) contract may
transfer the amount not representing employee contributions to an Individual
Retirement Account or Annuity (IRA) or another Section 401(a) or 403(b) program
without including that amount in gross income for the taxable year in which
paid. Note 401(a) distributions may not be transferred to a 403(b) plan or vice
versa. If the amount is paid directly to an acceptable rollover account,
Lincoln Life is not required to withhold any amount. In order for the
distribution to qualify for rollover, the distribution must be made on account
of the employee's death, after the employee attains age 59-1/2, on account of
the employee's separation from service, or after the employee has become
disabled. The distribution cannot be part of a series of substantially equal
payments made over the life expectancy of the employee or the joint life
expectancies of the employee and his or her spouse or made for a specified
period of 10 years or more. The rollover must be made within sixty days of the
distribution to avoid taxation.
Pursuant to Revenue Ruling 90-24, a Participant, to the extent permitted by any
applicable Contract or Plan, may transfer funds between Section 403(b)
investment vehicles, including both Section 403(b)(1) annuity contracts and
Section 403(b)(7) custodial accounts. Any amount transferred must continue to be
subject to withdrawal restrictions at least as restrictive as that of the
transferring investment vehicle. Lincoln Life considers any total or partial
transfer from a Lincoln Life investment vehicle to a non-Lincoln Life investment
vehicle to be a withdrawal.
Once every twelve months a participant in an IRA may roll the money from one IRA
to another IRA.
The rollover rules are not available to Section 457 Plans; limited transfers are
permitted under Eligible 457 Plans. If the rollover amount is paid directly to
the Participant, the amount distributed may be subject to a 20% federal tax
withholding.
-11-
<PAGE>
Excise Tax on Early Distributions
Section 72(t) of the Code provides that any distribution made to a
Participant in a 401(a), 403(b) or 408 plan other than on account of the
following events will be subject to a 10 percent excise tax on the taxable
amount distributed:
a) the employee has attained age 59 1/2;
b) the employee has died;
c) the employee is disabled;
d) the employee is 55 and has separated from service (Does not apply to
IRA's).
Distributions which are received as a life annuity where payment is made at
least annually will not be subject to an excise tax. Certain amounts paid for
medical care may also not be subject to an excise tax.
Minimum Distribution Rules
The value in a contract under Sections 401(a), 403(b), 408 and Eligible 457
Plans are subject to the distribution rules provided in Section 401(a)(9) of the
Code. Generally, that section requires that an employee must begin receiving
distributions of his post-1986 balance by April 1 of the calendar year following
the calendar year in which the employee attains age 70 1/2. Such distributions
must not exceed the life expectancy of the employee or the life expectancy of
such employee and the designated beneficiary (as defined under the plan). An
employee who attained age 70 1/2 before January 1, 1988 must begin receiving
distributions by April 1 of the calendar year following the later of (a) the
calendar year in which the employee attains age 70 1/2 or (b) the calendar year
in which the employee retires. There are special rules for Section 403(b)
Plans.
Amounts contributed to an Eligible 457 contract must be distributed not earlier
than the earliest of: (1) calendar year in which the Participant attains age 70
1/2, (2) the Participant separates from service with the Employer, or (3) when
the Participant has an unforeseen emergency. However, in no event may the
distribution begin any later than described in Sections 401(a)(9) and 457(d) of
the Code.
Additionally, distribution of an employee's entire account balance (including
pre-1987 funds) must satisfy the minimum distribution incidental benefit
requirement. In general, this requires that death and other non-retirement
benefits payable under the above plans be incidental to the primary purpose of
the program which is to provide deferred compensation to the employee. A payee
is subject to a penalty for failing to receive the required minimum annual
distribution. Section 4974(a) of the Code provides that a payee will be subject
to a penalty equal to 50 percent of the amount by which the required minimum
distribution exceeds the actual amount distributed during the taxable year.
Additional information on federal income taxation is included in the prospectus.
DISTRIBUTION OF CONTRACTS
LNC Equity Sales Corporation ("LNC Equity"), an indirect subsidiary of Lincoln
National Corporation, is registered with the Securities and Exchange Commission
as a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. LNC Equity is the Variable
Investment Division's principal underwriter and also enters into selling
agreements with other unaffiliated broker-dealers authorizing them to offer the
Contracts.
-12-
<PAGE>
INDEPENDENT AUDITORS
The balance sheet appearing in this SAI and registration statement has been
audited by Ernst & Young LLP, independent auditors, to the extent indicated in
their report thereon, also appearing elsewhere herein and in the registration
statement. Such balance sheet has been included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
As of the date of this SAI, the Variable Investment Division had not yet
commenced operations, had no assets or liabilities and no income. Accordingly,
it has no financial statements for prior periods.
The balance sheet of Lincoln Life which is included in this SAI, should be
considered only as bearing on the ability of Lincoln Life to meet its
obligations under the Contracts. The balance sheet of Lincoln Life is presented
in accordance with accounting practices prescribed or permitted by the New York
Insurance Department.
-13-
<PAGE>
Balance Sheet--Statutory Basis
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SEPTEMBER 20, 1996
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
Lincoln Life & Annuity Company of New York
Balance Sheet--Statutory Basis
September 20, 1996
CONTENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . .1
Balance Sheet--Statutory Basis . . . . . . . . . . . . . . . . .2
Notes to Balance Sheet--Statutory Basis. . . . . . . . . . . . .3
<PAGE>
Report of Independent Auditors
Board of Directors
Lincoln Life & Annuity Company of New York
We have audited the accompanying statutory-basis balance sheet of Lincoln Life &
Annuity Company of New York (a wholly owned subsidiary of The Lincoln National
Life Insurance Company) as of September 20, 1996. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of this balance sheet provides a reasonable basis for our opinion.
The Company presents its balance sheet in conformity with accounting practices
prescribed or permitted by the New York Insurance Department. The variances
between such practices and generally accepted accounting principles and the
effects on the accompanying balance sheet are described in Note 1.
In our opinion, because of the materiality of the effects of the variances
between generally accepted accounting principles and the accounting practices
referred to in the preceding paragraph, the balance sheet referred to above is
not intended to and does not present fairly, in conformity with generally
accepted accounting principles, the financial position of Lincoln Life & Annuity
Company of New York at September 20, 1996. However, in our opinion, the
supplementary information included in Note 1 presents fairly, in all material
respects, shareholder's equity at September 20, 1996 in conformity with
generally accepted accounting principles.
Also, in our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Lincoln Life & Annuity Company
of New York at September 20, 1996 in conformity with accounting practices
prescribed or permitted by the New York Insurance Department.
/s/ Ernst & Young LLP
September 24, 1996
<PAGE>
Lincoln Life & Annuity Company of New York
Balance Sheet--Statutory Basis
September 20, 1996
<TABLE>
<CAPTION>
<S> <C>
ADMITTED ASSETS
Cash and investments:
Bonds $ 6,002,810
Cash 1,876,542
-----------
Total cash and investments 7,879,352
Accrued investment income 122,619
-----------
Total admitted assets $ 8,001,971
-----------
-----------
LIABILITY AND CAPITAL AND SURPLUS
Liability--payable to The Lincoln
National Life Insurance Company $ 850,927
Capital and surplus:
Common stock, $100 par value:
Authorized, issued and outstanding shares--20,000
(owned by The Lincoln National Life Insurance Company) 2,000,000
Paid-in surplus 6,000,000
Unassigned surplus - deficit (848,956)
-----------
Total capital and surplus 7,151,044
-----------
Total liability and capital and surplus $ 8,001,971
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
Lincoln Life & Annuity Company of New York
Notes to Balance Sheet--Statutory Basis
September 20, 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Lincoln Life & Annuity Company of New York (the "Company") is a wholly owned
subsidiary of The Lincoln National Life Insurance Company ("Lincoln Life"),
which is a wholly owned subsidiary of Lincoln National Corporation. The Company
was organized under the laws of the state of New York on June 6, 1996 for the
purpose of being an insurance company.
The Company is currently seeking the approval of the New York Insurance
Department (the "Department") to operate as a licensed insurance company in the
state of New York. Once approval is obtained, the Company's operations will
consist of group tax-sheltered annuity business acquired from UNUM Corporation
affiliates. The purchase by the Company and Lincoln Life is expected to be
completed on October 1, 1996 in the form of a reinsurance transaction with an
initial ceding commission of approximately $15,600,000. This transaction will
increase the Company's assets and policy liabilities and accruals by
approximately $600,000,000.
BASIS OF PRESENTATION
The accompanying balance sheet has been prepared in conformity with accounting
practices prescribed or permitted by the Department. Such practices differ from
generally accepted accounting principles ("GAAP"); the more significant
variances from GAAP are as follows:
INVESTMENTS
Investments in bonds are reported at amortized cost or market value based
on their National Association of Insurance Commissioners ("NAIC") rating.
For GAAP, such investments are designated as available-for-sale, and
accordingly, are reported at fair value with unrealized holding gains and
losses reported as a separate component of shareholder's equity. Fair values
of certain investments in bonds and stocks are based on values specified by
the NAIC rather than on actual or estimated market values.
<PAGE>
Lincoln Life & Annuity Company of New York
Notes to Balance Sheet--Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NONADMITTED ASSETS
Organization costs ($850,927 at September 20, 1996) are designated as
"nonadmitted" assets and are excluded from the accompanying balance sheet
and are charged directly to unassigned surplus.
Following is a reconciliation of statutory-basis capital and surplus to
shareholder's equity as it would be reported as of September 20, 1996 in
accordance with GAAP:
Statuatory-basis capital and surplus as reported
in accordance with statutory accounting practices $7,151,044
Unrealized loss on bond (32,810)
Nonadmitted assets 850,927
----------
Shareholder's equity in accordance with GAAP $7,969,161
----------
----------
USE OF ESTIMATES
The preparation of this balance sheet requires management to make estimates and
assumptions that affect amounts reported in the balance sheet and accompanying
notes. Actual results could differ from these estimates.
INVESTMENTS
The discount or premium on bonds is amortized using the interest method.
2. INVESTMENTS
The Company has an investment in a U. S. Treasury bond with a maturity date of
May 31, 2001. The fair value of the bond at September 20, 1996 based on quoted
market prices was $5,970,000 and the gross unrealized loss was $32,810.
<PAGE>
Lincoln Life & Annuity Company of New York
Notes to Balance Sheet--Statutory Basis (continued)
3. CAPITAL AND SURPLUS
The Company was initially capitalized on August 12, 1996 with a contribution
from Lincoln Life in the amount of $2,000,000. An additional capital
contribution from Lincoln Life in the amount of $6,000,000 was received on
September 16, 1996. The payment of dividends by the Company requires
notification to the Department.
4. TRANSACTION WITH AFFILIATE
Organization costs, including salaries, legal and professional fees and travel,
of the Company are being paid by Lincoln Life. The Company will reimburse
Lincoln Life once business operations commence and cash flows are generated.
5. SUBSEQUENT EVENT
On September 24, 1996, the Company received an additional capital contribution
from Lincoln Life in the amount of $62,000,000. The contribution was made after
the Company received approval from the New York Insurance Department for its
plan of operation.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial statements and Exhibits
(a) The following financial statements are included in Part B:
Financial Statements of Registrant - Lincoln Life & Annuity Variable
Annuity Account L.
Balance Sheet of Depositor - Lincoln Life & Annuity Company of New York:
(b) Exhibits
1. Resolution adopted by the Board of Directors of Lincoln
Life & Annuity Company of New York on July 24, 1996
establishing the Lincoln Life & Annuity Variable Annuity
Account L of Lincoln Life & Annuity Company of New York.(1)
2. Not applicable.
3(a). Principal Underwriting Contract.
3(b). Broker-dealer sales agreement.
4. Forms of Group Annuity Contracts.
5(a). Form of application for Group Annuity Contract.(1)
5(b). Form of Participant enrollment form (including
acknowledgement of restrictions on redemption imposed by
I.R.C. Section 403(b)).
6. Copy of certificate of incorporation and by-laws of Lincoln
Life & Annuity Company of New York.(1)
7. Not applicable.
8(a). Participation Agreement between Lincoln Life & Annuity
Company of New York and Dreyfus Life & Annuity Index Fund,
Inc. and Dreyfus Variable Investment Fund.
8(b). Participation Agreement between Lincoln Life & Annuity
Company of New York and Variable Insurance Products Fund
and Fidelity Distributors Corporation.
8(c). Participation Agreement between Lincoln Life & Annuity
Company of New York and Variable Insurance Products Fund II
and Fidelity Distributors Corporation.
8(d). Participation Agreement between Lincoln Life & Annuity
Company of New York and Twentieth Century Securities, Inc.
(1) Incorporated herein by reference to the registrant's initial registration
statement filed with the Securities and Exchange Commission on August 26,
1996 (File No. 333-10805).
C-1
<PAGE>
8(e). Participation Agreement between Lincoln Life & Annuity
Company of New York and Acacia Capital Corporation and
Calvert Distributors, Inc.
8(f). Participation Agreement between Lincoln Life & Annuity
Company of New York and T. Rowe Price International
Series, Inc. and T. Rowe Price Investment Services, Inc.
9. Consent and opinion of Counsel, as to the legality of the
securities being registered.
10(a). Consent of Ernst & Young LLP, Independent Auditors.
10(b). Not applicable.
11. Not applicable.
12. Not applicable.
13. Schedule for Computation of Performance Quotations.
14(a). Organizational Chart of the Lincoln National Holding
Company System.
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following list contains the officers and directors of Lincoln Life & Annuity
Company of New York who are engaged directly or indirectly in activities
relating to the Lincoln Life & Annuity Variable Annuity Account L as well as the
Contracts. The list also shows Lincoln Life & Annuity Company of New York's
executive officers.
Item. 25
- --------
DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME POSITIONS AND OFFICES WITH LINCOLN LIFE & ANNUITY
- ---- COMPANY OF NEW YORK
--------------------------------------------------
Philip L. Holstein* Chairman, Chief Executive Officer and Director
Robert A. Anker*** Director
Roland C. Baker Director
John P. Barrett Director
Thomas D. Bell Jr. Director
Jon A. Boscia** Director
Harry L. Kavetas Director
Barbara S. Kowalczyk*** Director
Marguerite L. Lachman Director
John W. Pietruski Director
Gabriel L. Shaheen**** Director
John L. Steinkamp*** Director
Richard C. Vaughan*** Director
* Principal business address of each person is 120 Madison Street,
17th Floor, Syracuse, New York 13202.
** Principal business address of each person is 1300 S. Clinton
Street, Fort Wayne, Indiana 46802.
*** Principal business address of each person is 200 E. Berry
Street, Fort Wayne, Indiana 46802.
**** Principal business address of each person is 1700 Magnovox Way,
One Reinsurance Place, Fort Wayne, Indiana 4684.
Item 26. Persons Controlled by or Under Common Control with Lincoln Life &
Annuity Company of New York or the Lincoln Life & Annuity Variable Annuity
Account L.
Lincoln Life & Annuity Variable Annuity Account L is a separate account of
Lincoln Life and may be deemed to be controlled by Lincoln Life although Lincoln
Life will follow voting instructions of Contractholders with respect to voting
on certain important matters requiring a vote of Contractholders.
See Exhibit 14(a): The Organizational Chart of the Lincoln National Holding
Company System.
Item 27. Number of Contractholders
Not applicable.
C-2
<PAGE>
Item 28. Indemnification
Under the Participation Agreements entered into between Lincoln Life and the
Dreyfus Life & Annuity Index Fund, Inc., Dreyfus Variable Investment Fund and
Dreyfus Corporation, Variable Insurance Products Funds I and II and Fidelity
Distributors Corporation, Twentieth Century Management Company, Acacia Capital
Corporation, and T. Rowe Price (the "Funds"), Lincoln Life and its directors,
officers, employees, agents and control persons have been indemnified by the
Funds against any losses, claims or liabilities that arise out of any untrue
statement or alleged untrue statement or omission of a material fact in the
Funds' registration statements, prospectuses or sales literature. In addition,
the Funds will indemnify Lincoln Life against any liability, loss, damages,
costs or expenses which Lincoln Life may incur as a result of the Funds'
incorrect calculations, incorrect reporting and/or untimely reporting of the
Funds' net asset values, dividend rates or capital gain distribution rates.
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 Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriter
(a) LNC EQUITY SALES CORPORATION ACTS AS THE PRINCIPAL UNDERWRITER FOR
Lincoln National Variable Annuity Account L and Lincoln Life & Annuity
Variable Annuity Account L.
(b)(1) The following table sets forth certain information regarding the
officers and directors of LNC Equity Sales Corporation:
Item 29. Principal Underwriter
NAME AND ADDRESS POSITIONS AND OFFICES
- --------------- WITH LNC EQUITY SALES
---------------------
Priscilla S. Brown* President, Product/Market Officer and Director
JoAnn E. Becker* Director
John M. Behrendt* Vice President
Richard C. Boyles*** Director and Chief Financial Officer
Kenneth Ehinger*** Executive Director, Chief Operating Officer
Gary D. Giller**** Director
Phillip A. Hartman* Director
Janet C. Whitney** Vice President and Treasurer
C. Suzanne Womack* Secretary
* Principal business address of each person in 1300 S. Clinton Street,
Fort Wayne, Indiana 46802.
** Principal business address of each person is 200 East Berry Street, Fort
Wayne, Indiana 46802-2706.
*** Principal business address of each person is 3811 Illinois Road, Suite
205, Fort Wayne, Indiana 46804-1202.
**** Principal business address is 7650 Rivers Edge Dr., Suite 250, Columbus,
OH 43235.
(c) Not applicable
Name of Net Underwriting
Principal Discounts and Compensation Brokerage
Underwriter Commissions on Redemption Commissions Compensation
- ----------- ---------------- ------------- ----------- ------------
Not applicable.
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 thereunder are maintained by Lincoln Life
at 82 Running Hill Road, South Portland, ME 04101.
C-3
<PAGE>
Item 31. Management Services
None
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements
in this registration statement are never more than 16 months old for so
long as payments under the variable annuity contracts may be accepted,
unless otherwise permitted.
(b) 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 post card or similar written
communication affixed to or included in the prospectus that the applicant
can remove to send for a Statement of Additional Information.
(c) 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.
403(b) ANNUITIES
The Registrant intends to rely on the no-action response dated November 28,
1988, from Ms. Angela C. Goelzer of the Commission staff to the American Council
of Life Insurance concerning the redeemability of Section 403(b) annuity
contracts and the Registrant has complied with the provisions of paragraphs
(1)-(4) thereof.
C-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant and the Depositor have duly caused this Amendment to the
Registration Statement to be signed on their behalf, in the City of Syracuse,
and State of New York on this 27th day of September, 1996.
Lincoln Life & Annuity Variable Annuity Account L
(Registrant)
By: Lincoln Life & Annuity Company of New York
By: /s/ Philip L. Holstein
--------------------------------------------
President
Lincoln Life & Annuity Company of New York
(Depositor)
By: /s/ Philip L. Holstein
--------------------------------------------
President
As required by the Securities Act of 1933 this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Philip L. Holstein September 27, 1996
- ---------------------------
Philip L. Holstein
/s/ Robert A. Anker September 27, 1996
- ---------------------------
Robert A. Anker Director
- ---------------------------
Roland C. Baker Director
<PAGE>
- ---------------------------
John P. Barrett Director
- ---------------------------
Thomas D. Bell, Jr. Director
/s/ Jon A. Boscia September 27, 1996
- ---------------------------
Jon A. Boscia Director
- ---------------------------
Harry L. Kavetas Director
/s/Barbara Steury Kowalczyk September 27, 1996
- ----------------------------
Barbara Steury Kowalczyk Director
- -----------------------------
Marguerite Leanne Lachman Director
- -----------------------------
John M. Pietruski Director
/s/ Gabriel L. Shaheen September 27, 1996
- -----------------------------
Gabriel L. Shaheen Director
/s/ John L. Steinkamp September 27, 1996
- -----------------------------
John L. Steinkamp Director
/s/ Richard C. Vaughan September 27, 1996
- -----------------------------
Richard C. Vaughan Director
<PAGE>
FORM OF
PRINCIPAL UNDERWRITING AGREEMENT
THIS AGREEMENT is entered into on this 30th day of September, 1996 among
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ("LLANY"), a life insurance company
organized under the laws of the State of New York, on behalf of itself and
SEPARATE ACCOUNT L of LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ("Separate
Account"), a separate account established by LLANY pursuant to New York
Insurance Code, and LNC EQUITY SALES CORPORATION ("Equity Sales"), a corporation
organized under the laws of the State of Indiana. Both LLANY and Equity Sales
are indirect subsidiaries of Lincoln National Corporation.
WITNESSETH:
WHEREAS, LLANY proposes to issue to the public certain group variable
annuity contracts known as Variable Annuity I, Variable Annuity II, and Variable
Annuity III ("Contracts") and has, by resolution of its Board of Directors,
authorized the creation of a segregated investment account in connection
therewith; and
WHEREAS, LLANY has established the Separate Account for the purpose of
issuing the Contracts and has registered the Separate Account with the
Securities and Exchange Commission ("Commission") as a unit investment trust
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Contracts to be issued by LLANY are registered with the
Commission for offer and sale to the public, and otherwise are in compliance
with all applicable laws; and
WHEREAS, Equity Sales is a broker-dealer registered under the Securities
Exchange Act of 1934 (the "1934 Act") and a member of the National Association
of Securities Dealers, Inc., and proposes to form a selling group for the
distribution of said Contracts; and
WHEREAS, LLANY desires to obtain the services of Equity Sales as
principal underwriter of the Contracts issued by LLANY through the Separate
Account;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, LLANY, the Separate Account and Equity Sales hereby agree as
follows:
DUTIES OF EQUITY SALES
1. Equity Sales will form a selling group consisting of broker-dealers
which have as associated individuals persons who are licensed to sell insurance
pursuant to the laws of the state of New York and appointed by LLANY to
distribute the Contracts which are issued by LLANY through the Separate Account
and are registered with the Commission for offer and sale to the public.
1
<PAGE>
2. Equity Sales will enter into and maintain a selling group agreement
on behalf of itself and LLANY with each broker-dealer (which has as associated
persons individuals who are licensed to sell insurance pursuant to the laws of
the state of New York and appointed by LLANY to distribute the Contracts)
joining such selling group ("member"). An executed copy of each such selling
group agreement will be provided to LLANY. Any such selling group agreement
will expressly be made subject to this Agreement. Any such selling group
agreement will provide: (i) that each member will distribute the Contracts only
in those jurisdictions in which the Contracts are registered or qualified for
sale and only through duly licensed registered representatives of the members
who are fully licensed and appointed with LLANY to sell the Contracts in the
applicable jurisdiction(s); (ii) that all applications and initial and
subsequent payments under the Contracts collected by the member will be
forwarded promptly by the member to LLANY at such address as it may from time to
time designate; and (iii) that each member will comply with all applicable
federal and state laws, rules and regulations.
3. Equity Sales will not distribute any prospectus, sales literature,
advertising material or any other printed matter or material relating to the
Contracts or the funds if, to its knowledge, misstates any of the foregoing
relating to the duties, obligations or liabilities of LLANY or Equity Sales.
Equity Sales will be responsible for filing sales literature and advertising
material, if necessary, with appropriate federal regulatory authorities,
including the NASD.
4. Equity Sales shall not be responsible for (i) taking or
transmitting applications for the Contracts; (ii) examining or inspecting risks
or approving, issuing or delivering Contracts; (iii) receiving, collecting or
transmitting payments; (iv) assisting in the completion of applications for
Contracts; and (v) otherwise offering and selling Contracts directly to the
public.
5. Equity Sales will bear all its expenses incurred while performing
its duties as described in this agreement.
6. Equity Sales will advise LLANY immediately upon Equity Sales
becoming aware of: (a) any request by the Commission for amendment of the
registration statement relating to the Contracts or the funds or for additional
information; (b) the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement of the Contracts or the funds or the
initiation of any proceeding for that purpose; (c ) the institution of any
proceeding, investigation or hearing involving the offer or sale of the
Contracts or the funds of which it becomes aware; or (d) the happening of any
material event, if known, which makes untrue any statement made in the
registration statement of the Contracts or the funds or which requires the
making of a change therein in order to make any statement made therein not
misleading.
DUTIES OF LLANY
7. LLANY or its agent will receive and process applications and
premium payments in accordance with the terms of the Contracts. All
applications for Contracts are subject to acceptance
2
<PAGE>
or rejection by LLANY in its sole discretion. LLANY will inform Equity Sales of
any such rejection and the reason therefore.
8. LLANY will be responsible for filing the Contracts, applications,
forms, sales literature and advertising material, where necessary, with
appropriate insurance regulatory authorities. LLANY will use reasonable efforts
to provide information and marketing assistance to the members, including
preparing and providing members with advertising materials and sales literature,
and providing members with current prospectuses of the Contracts and of the
underlying funds. LLANY will use reasonable efforts to ensure that members
deliver only the currently effective prospectuses of the Contracts and the
funds. Equity Sales and LLANY will cooperate in the development of advertising
and sales literature, as requested. LLANY will deliver to members, and use
reasonable efforts to ensure that members use, only sales literature and
advertising material which conforms to the requirements of federal and state
laws and regulations and which has been authorized by LLANY and Equity Sales.
9. LLANY will furnish to Equity Sales such information with respect to
the Separate Account and the Contracts in such form and signed by such of its
officers as Equity Sales may reasonably request, and will warrant that the
statements therein contained when so signed will be true and correct. LLANY
will advise Equity Sales immediately of : (a) any request by the Commission for
amendment of the registration statement relating to the Contracts of the funds
or for additional information; (b) the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement of the
Contracts or the funds or the initiation of any proceeding for that purpose; (c
) the institution of any proceeding, investigation, hearing or other action
involving the offer or sale of the Contracts or funds of which it becomes aware;
(d) the happening of any material event, if known, which makes untrue any
statement made in the registration statement of the Contracts or the funds or
which requires the making of a change therein in order to make any statement
made therein not misleading.
10. LLANY will use reasonable efforts to register for sale an
indefinite amount of securities under the Securities Act of 1933 pursuant to
Rule 24f-2 of the Investment Company Act of 1940, and, should it ever be
required, under state securities laws and to file for approval under state
insurance laws when necessary. LLANY will maintain the registration of the
Separate Account under the Securities Act of 1933 and Investment Company Act of
1940.
11. LLANY will pay to members of the selling group such commissions on
behalf of and as agent of Equity Sales, as are from time to time set forth in
selling group agreements. LLANY shall pay such commissions and service fees in
compliance with applicable state insurance laws and not inconsistent with the
applicable federal securities laws and the rules and regulations of the NASD.
Such selling group agreements shall provide for the return of sales commissions
by the members to LLANY if the Contracts are tendered for redemption to LLANY in
accordance with the "right to examine contract" provision in the Contract.
3
<PAGE>
12. LLANY will bear its expenses of providing services under this
Agreement, including, but not limited to, the cost of preparing (including
typesetting costs), printing and mailing of prospectuses of the Contracts to
Contract owners, expenses and fees of registering or qualifying the Contracts
and the Separate Account under federal or state laws, and any expenses incurred
by its employees in assisting Equity Sales in performing its duties hereunder.
LLANY will reimburse Equity Sales for its services and for the services of its
salaried employees, and provide reimbursement for its charges and expenses.
WARRANTIES
13. LLANY represents and warrants to Equity Sales that: (i)
registration statements under the 1933 Act (File No. 33- _____), (File No. 33-
_____), (File No. 33- _____) and under the 1940 Act (File No. 811-_____) on
Form N-4 with respect to the Contracts and the Separate Account has been filed
with the Commission in the form previously delivered to Equity Sales, and copies
of any and all amendments thereto will be forwarded to Equity Sales at the time
that they are filed with the Commission; (ii) the registration statement and any
amendments or supplements thereto have become effective, conform in all material
respects to the requirements of the 1933 Act and the 1940 Act, and the rules and
regulations of the Commission thereunder, and do not and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to any
statement or omission made in reliance upon and in conformity with information
furnished in writing to LLANY by Equity Sales expressly for use therein; (iii)
LLANY is validly existing as a stock life insurance company in good standing
under the laws of the State of New York, with power (corporate or other) to own
its properties and conduct its business as described in the prospectus, and has
been duly qualified for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification; (iv) the
Contracts to be issued through the Separate Account have been duly and validly
authorized and, when issued and delivered against payment therefore as provided
in the prospectus and in the Contracts, will be duly and validly issued and
conform to the description of such Contracts contained in the prospectus
relating thereto; (vi) LLANY will only accept applications submitted by and pay
commissions to persons who, to the best of LLANY's knowledge, are appropriately
licensed to offer and sell the Contracts in a manner as to comply with the state
insurance laws; (vi) the performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a breach or violation of
any of the terms or provisions of, or constitute a default under any statute,
any indenture, mortgage, deed of trust, note agreement or other agreement or
instrument to which LLANY is a party or by which LLANY is bound, LLANY's Charter
as a stock life insurance company or By-Laws, or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over LLANY or
any of its properties; and no consent, approval, authorization or order of any
court or governmental agency or body which has not been obtained by the
effective date of this Agreement is required for the consummation by LLANY of
the transactions contemplated by this Agreement; and (vii) there are no material
legal or governmental proceedings pending to which LLANY or the Separate Account
is a party or of which any property of LLANY or the Separate Account is the
subject, other than
4
<PAGE>
litigation incidental to the kind of business conducted by LLANY which, if
determined adversely to LLANY, would not individually or in the aggregate have a
material adverse effect on the financial position, surplus or operations of
LLANY.
14. Equity Sales represents and warrants to LLANY that: (i) it is a
broker-dealer duly registered with the Commission pursuant to the Securities
Exchange Act of 1934 and a member in good standing of the National Association
of Securities Dealers, Inc. and is in compliance with the securities laws in
those states in which it conducts business as a broker-dealer; (ii) the
performance of its duties under this Agreement by Equity Sales will not result
in a breach or violation of any of the terms or provisions of or constitute a
default under any statute, any indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which Equity Sales is a party or
by which Equity Sales is bound, the Certificate of Incorporation or By-Laws of
Equity Sales, or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over Equity Sales or its property; and (iii)
it will use reasonable efforts to ensure that no offering, sale or other
disposition of the Contracts will be made until it has been notified by LLANY
that the subject registration statements have been declared effective and the
Contracts have been released for sale by LLANY, and that such offering, sale or
other disposition shall be limited to those jurisdictions that have approved or
otherwise permit the offer and sale of the Contracts by LLANY; (iv) it will
comply in all material respects with the requirements of state broker-dealer
regulations and the 1934 Act as each applies to Equity Sales and shall conduct
its affairs in acordance with the Rules of Fair Practice of the NASD; and (v)
any information furnished in writing by Equity Sales to LLANY for use in the
registration statement for the Contracts will not result in the registration's
failing to conform in all respects to the requirements of the 1933 Act and the
rules and regulations thereunder or containing any untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
MISCELLANEOUS
15. Equity Sales shall maintain and preserve for the periods prescribed
by law or other agreement such accounts, books and other documents as are
required of it by applicable law and regulation. The books, records and
accounts of LLANY, of the Separate Account and of Equity Sales as to all
transactions hereunder shall be maintained such that they clearly and accurately
disclose the nature and details of such transactions, including such accounting
information as is necessary to support the reasonableness of the amounts to be
paid by LLANY.
16. Equity Sales makes no representation or warranty regarding the
number of Contracts to be sold by licensed broker-dealers and insurance agents
or the amount to be paid thereunder. Equity Sales does, however, represent that
it will actively engage in its duties under this Agreement on a continuous basis
while the Agreement is in effect.
17. Equity Sales may act as principal underwriter, sponsor, distributor
or dealer for issuers other than LLANY or its affiliates in connection with
mutual funds or insurance products and otherwise.
5
<PAGE>
18. Nothing in this Agreement shall obligate LLANY to appoint any
member or representative of a member its agent for purposes of the distribution
of the Contracts. Nothing in this Agreement shall be construed as requiring
Equity Sales to effect sales of the Contracts directly to the public or to act
as an insurance agent or insurance broker on behalf of LLANY for purposes of
state insurance laws.
19. Equity Sales agrees to indemnify LLANY (or any control person,
shareholder, director, officer or employee of LLANY) for any liability incurred
(including costs relating to defense of any action) arising out of any Equity
Sales act or omission relating to (i) rendering services under this Agreement or
(ii) the purchase, retention or surrender of a Contract by any person or entity;
provided, however that indemnification will not be provided hereunder for any
such liability that results from the willful misfeasance, bad faith or gross
negligence of LLANY or from the reckless disregard by LLANY of the duties and
obligations arising under this Agreement.
20. LLANY agrees to indemnify Equity Sales (or any control person,
shareholder, director, officer or employee of Equity Sales) for any liability
incurred (including costs relating to defense of any action) arising out of any
LLANY act or omission relating to (i) rendering services under this Agreement or
(ii) the purchase, retention or surrender of a Contract by any person or entity;
provided, however, that indemnification will not be provided hereunder for any
such liability that results from the willful misfeasance, bad faith and gross
negligence of Equity Sales or from the reckless disregard by Equity Sales of the
duties and obligations arising under this Agreement.
21. This Agreement will terminate automatically upon its assignment, as
that term is defined in the Investment Company Act of 1940. The parties
understand that there is no intention to create a joint venture in the subject
matter of this Agreement. Accordingly, the right to terminate this Agreement
and to engage in any activity not inconsistent with this Agreement is absolute.
This Agreement will terminate, without the payment of any penalty by either
party:
(a) at the option of LLANY upon six months' advance written
notice to Equity Sales; or
(b) at the option of Equity Sales upon six months' advance
written notice to LLANY; or
(c) at the option of LLANY upon institution of formal
proceedings against Equity Sales by a regulatory body;
(d) at the option of Equity Sales upon the institution of formal
proceedings against LLANY by the Department of Insurance of
a state or any other federal or state regulatory body;
(e) as otherwise required by the Investment Company Act of 1940.
6
<PAGE>
(f) at the option of either party upon the termination of the
Administrative Services Agreement(s) entered into between
the Lincoln National Life Insurance Company and the UNUM
Life Insurance Company of America and/or affiliates of each.
22. Each notice required by this Agreement shall be given in writing
and delivered by certified mail-return receipt requested.
23. This Agreement shall be subject to the laws of the State of New
York and construed so as to interpret the Contracts as insurance products
written within the business operation of LLANY.
24. This Agreement covers and includes all agreements, oral and written
(expressed or implied) between LLANY and Equity Sales with regard to the
marketing and distribution of the Contracts, and supersedes any and all
Agreements between the parties with respect to the subject matter of this
Agreement.
25. This Agreement may be amended from time to time by the mutual
agreement and consent of the undersigned parties, provided such amendment be in
writing and duly executed.
This Agreement shall become effective on September 30, 1996.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed and attested on the date first stated above.
Lincoln Life & Annuity Company of New York
on behalf of itself and
Separate Account L of Lincoln
Life & Annuity Company of New York
Attest:
______________________________ By:_____________________________________
LNC EQUITY SALES CORPORATION
Attest:
______________________________ By:_____________________________________
7
<PAGE>
LNC Equity Sales Corporation
1300 South Clinton Street
Fort Wayne, Indiana 46801
- -----------------------------------------
The Lincoln Life & Annuity Company of New York
(Separate Account L)
FORM OF
SELLING GROUP AGREEMENT
Gentlemen:
We have entered into Principal Underwriting Agreements with the Lincoln
Life & Annuity Company of New York ("LLANY") and Separate Account L of LLANY
under which we are appointed to form a selling group of duly registered and
licensed brokers or dealers to distribute the Group Variable Annuity Contracts
(the "Contracts") issued by LLANY through Separate Account L. The Contracts are
considered securities under the Securities Act of 1933. This Agreement is
subject to all provisions of the relevant Principal Underwriting Agreements
among the parties mentioned above. This Agreement on your part runs to us and
to LLANY and Separate Account L and is for the benefit of and enforceable by
each party. The terms "you" and "your" as used herein refer to the firm
actually signing this Agreement as well as the signing firm's insurance agency
subsidiaries, if any.
You are authorized to offer and sell the Contracts subject to the following
conditions:
1. You represent that you are a properly registered and licensed broker
or dealer under applicable federal and state securities laws and regulations and
a member in good standing of the NASD and agree to notify us immediately if you
cease to be so registered or licensed or a member in good standing of that
Association. (The provisions of the preceding sentence do not apply to a broker
or dealer located in a foreign country and doing business outside the
jurisdiction of the United States.)
2. You agree to abide by all rules and regulations of the NASD, including
its Rules of Fair Practice, and to comply with all applicable federal and state
laws, rules and regulations (all of which shall control and override any
provision to the contrary in this Agreement).
You are responsible for such supervision of your registered representatives
and other associated persons which will enable you to ensure that your
registered representatives and associated persons are in compliance with
applicable securities laws, rules, regulations and statements of policy
promulgated thereunder.
<PAGE>
Your authority under this Agreement extends only to the Contracts described
herein.
3. You represent that you will not sell any Contracts until you are a
properly licensed insurance agent duly appointed by LLANY.
4. You will distribute the Contracts only in those jurisdictions in
which the Contracts are registered or qualified for sale and only through your
duly licensed registered representatives (in accordance with the rules of the
NASD) who are also fully licensed with LLANY to sell the Contracts or Policies
in the applicable jurisdictions (in accordance with the insurance regulations
and laws of such jurisdictions).
5. All applications and initial and subsequent payments under the
Contracts or Policies collected by you will be remitted promptly by you to LLANY
at such address as LLANY may from time to time designate.
6. You agree to indemnify and hold LLANY harmless from any liabilities
(and reasonable attorney fees and court costs) that may result from your actions
or omissions or those of your registered representatives and other associated
persons.
7. All applications are subject to acceptance or rejection by LLANY at it
sole discretion. LLANY will make payment of compensation directly to you with
respect to the sale of Contracts according to the attached schedules A & B.
Where state law prohibits direct payment to you, payments will be made in
accordance with the applicable state law. Any Compensation paid on a
Contract or Policy that is canceled under the Contract's or Policy's review
provisions will be repaid to LLANY or charged against your account.
8. We will use reasonable efforts to provide information and marketing
assistance to you, including providing you without charge reasonable quantities
of advertising materials, sales literature, reports, current Prospectuses of the
Contracts and of the underlying variable funding vehicles.
9. In making all offers of the Contracts you will deliver the applicable
currently effective Prospectuses.
10. You are to offer and sell the Contracts only at the regular public
offering price currently determined by the applicable Separate Account in the
manner described in the current applicable Prospectus or Contract and will make
no representation not included in the Prospectus or Contract or in any
authorized supplement material. This Agreement is in all respects subject to
all provisions of the current applicable Prospectuses.
11. We will deliver and you will use only sales literature and advertising
material which conforms to the requirements of federal and state laws and
regulations and which have been authorized by LLANY and us.
<PAGE>
12. The signing of this Agreement does not obligate LLANY to license any
particular registered representative as a salesman of Contracts. All licensing
matters under any applicable state insurance law shall be handled directly by
you and the registered representative involved, but LLANY must be furnished all
required proof of state insurance licensing before commission payments may be
made.
13. The Contracts have been designed primarily for sale to plans
qualified under Section 403(b) of the Internal Revenue Code.
14. You understand that with respect to LNC Equity Sales Corporation you
are acting in the capacity of an independent contractor.
15. Any party to this Agreement may cancel at any time upon written notice
to all other parties, effective upon receipt.
16. All communications to us should be sent to the above address. All
communications to LLANY should be sent to their address, which is listed below.
Any notice to you shall be duly given if mailed or telegraphed to you at the
address specified by you below.
Three originals of this Agreement should be executed. Two of the originals
should be returned to us for our files. The Agreement shall be effective as of
the date of acceptance by you, but only upon receipt by us of the two originals.
This Agreement may be amended by notification from us and orders received
following such notification shall be deemed to be an acceptance of such
amendments. This Agreement shall be construed in accordance with the laws of
the State of Indiana.
Very truly yours,
LNC Equity Sales Corporation
1300 South Clinton Street
Fort Wayne, IN 46801
By:
-------------------------------------
The Lincoln Life & Annuity Company
of New York
120 Madison Street, 17th Floor
Syracuse, New York 13202
By:
-------------------------------------
<PAGE>
Accepted:
- ----------------------------------------
Firm
By:
-------------------------------------
Signature of Officer or Partner
-------------------------------------
Print Name of Officer or Partner
Address:
- ----------------------------------------
- ----------------------------------------
Date:
-----------------------------------
<PAGE>
SCHEDULE A
Products Covered by This Agreement:
- LLANY Group Variable Annuity I
- LLANY Group Variable Annuity II
- LLANY Group Variable Annuity III
<PAGE>
Exhibit 99.4
Company LOGO LINCOLN LIFE & ANNUITY COMPANY
120 Madison Street, 17th Floor OF NEW YORK
Syracuse, NY 13202
GROUP VARIABLE
ANNUITY CONTRACT NO.: EFFECTIVE DATE:
CONTRACTHOLDER:
herein referred to as "You" or "Your")
THIS CONTRACT WAS DELIVERED IN THE State of New York and is subject to the laws
of that jurisdiction.
Lincoln Life & Annuity Company of New York (herein referred to as "LL&A") by
this Contract agrees to provide benefits for Participants in accordance with
the terms and conditions of the Contract. The entire Contract consists of the
provisions on the following pages, including any amendments, schedules, or
endorsements.
This Contract is issued in consideration of the payment of contributions
provided for herein, and your Application, a copy of which is attached hereto
when issued.
IN WITNESS HEREOF, LL&A has issued this Contract at Syracuse, New York on this
day of , 19 , and caused this Contract to
be in full force as of its Effective Date as set forth above.
Corporate Secretary President
Registrar
THE ANNUAL MORTALITY AND EXPENSE RISK CHARGE UNDER THIS CONTRACT IS 1.20% AND
THE ASSUMED INTEREST RATE FOR A VARIABLE ANNUITY WILL RANGE FROM 0% TO 6%. SEE
SECTIONS 5.5 AND 9.3 FOR FURTHER INFORMATION.
Non-Participating
PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
Form No.: GAC 96-101 (NY)
<PAGE>
TABLE OF CONTENTS
I. CONTRACT SPECIFICATIONS
1.1Minimum Contribution Amount
1.2Separate Account
1.3Divisions Available Under This Contract
1.4Limitations On Transfers During The Accumulation Period
1.5 Annual Administration Charge
1.6 Annual Mortality and Expense Risk Charge
1.7 Plan Name
1.8 Employer
1.9 Systematic Withdrawal Set-up Charge
1.10 Pending Allocation Account
II. DEFINITIONS
2.1Accumulation Unit
2.2 Accumulation Unit Value
2.3 Accumulation Period
2.4 Annuitant
2.5 Annuity Commencement Date
2.6 Annuity Conversion Amount
2.7 Annuity Conversion Factor
2.8 Annuity Payment Calculation Date
2.9 Annuity Period
2.10 Annuity Unit
2.11 Annuity Unit Value
2.12 Beneficiary
2.13 Business Day
2.14 Certificate
2.15 Contributions
2.16 Division(s)
2.17 LL&A
2.18 General Account
2.19 Gross Withdrawal Amount
2.20 Guaranteed Annuity
2.21 Guaranteed Interest Division
2.22 Net Withdrawal Amount
2.23 Participant
2.24 Participant's Account
2.25 Participation Anniversary
2.26 Pending Allocation Account
2.27 Participation Date
2.28 Participation Year
2.29 Plan
2.30 Separate Account
2.31 Sub-Account
2.32 Valuation Date
2.33 Valuation Period
2.34 Variable Annuity
2.35 Variable Investment Division
2.36 You or Your
III.CONTRIBUTIONS
3.1 Initial Contribution
3.2 Allocation of Contributions
3.3 Payment of Subsequent Contributions
3.4 Characterization of Transfer Contributions
3.5 Maximum Contribution
3.6 Valuation
3.7 Annual Administration Charge
3.8 Unallocated Contributions
<PAGE>
IV. GUARANTEED INTEREST DIVISION
4.1 Participant's Account Balance in Guaranteed Interest Division
4.2 Interest
V. VARIABLE INVESTMENT DIVISION
5.1 Participant's Account Balance in Variable Investment Division
5.2 Accumulation Units
5.3 Accumulation Unit Value
5.4 Net Investment Factor
5.5 Mortality and Expense Risk Charge
VI. TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
6.1 Transfers During Accumulation Period
6.2 Transfers During Annuity Period
VII.WITHDRAWALS AND DISTRIBUTIONS
7.1 Withdrawals During the Accumulation Period
7.2 Total Withdrawals
7.3 Partial Withdrawals
7.4 Withdrawal Requirements for Section 403(b) Plans
7.5 Minimum Distribution Requirements for Section 403(b) Plans
[7.6 Contingent Deferred Sales Charge]
[7.6 Limitations on Withdrawals from the Guaranteed Interest Division]
7.7 Systematic Withdrawal Option
7.8 Deferred Rollover Option
VIII. DEATH BENEFITS
8.1 Death Benefit During the Accumulation Period
8.2 Notification of Death
8.3 Payment of Death Benefit
8.4 Death During the Annuity Period
<PAGE>
IX. ANNUITIES
9.1 Election of Annuity Option
9.2 Guaranteed Annuity
9.3 Variable Annuity
9.4 Basis of Annuity Conversion Factors
9.5 Annuity Options
9.6 Retired Life Certificate
X. LOANS
10.1 General
10.2 Restrictions on Loan Amount
10.3 Minimum Loan Amount
10.4 Number of Loans Outstanding
10.5 Loan Interest Rate
10.6 Effect of Loan on Participant's Account
10.7 Default in Loan Repayment
10.8 Reservation of Rights by LL&A
10.9 Loan Set-up Charge
XI. DISCONTINUANCE AND TERMINATION OF CONTRACT
11.1 Contract Discontinuance By Contractholder
11.2 Contract Discontinuance By LL&A
11.3 Effect of Discontinuance
11.4 Contract Termination
XII.GENERAL PROVISIONS
12.1 Contract
12.2 Deactivation
12.3 Contract Amendments
12.4 Contract Interpretation
12.5 Information, Reports and Determinations
12.6 Misstatements
12.7 Assignment
12.8 Market Emergencies
12.9 Deferral Periods
12.10 Deductions for Premium Taxes
12.11 Facility of Payment
12.12 Evidence of Survival
12.13 Non-Waiver
12.14 Receipt of Notice
12.15 Separability of Provisions
12.16 The Separate Account
12.17 Payment of Benefits
12.18 Free-Look Period
<PAGE>
ARTICLE I - CONTRACT SPECIFICATIONS
1.1 MINIMUM CONTRIBUTION AMOUNT: Your minimum annual Contribution on behalf
of all Participants under this Contract shall be twenty thousand dollars
($20,000). This minimum figure is for aggregate annual Contributions, not
for each Participant.
1.2 SEPARATE ACCOUNT: VA-L
1.3 DIVISIONS AVAILABLE UNDER THIS CONTRACT:
A. Guaranteed Interest Division
B. Variable Investment Division:
Asset Manager Account (Fidelity's VIPF II: Asset Manager Portfolio)
Balanced Account (TCI Portfolios, Inc.: TCI Balanced Portfolio)
Growth I Account (Fidelity's VIPF: Growth Portfolio)
Growth II Account (TCI Portfolios, Inc.: TCI Growth Portfolio)
Index Account (Dreyfus Life and Annuity Index Fund, Inc.)
International Stock Account (T. Rowe Price International Series, Inc.)
Socially Responsible Account (Calvert Responsibly Invested Balanced
Portfolio)
Equity-Income Account (Fidelity's VIPF: Equity-Income Portfolio)
Small Cap Account (Dreyfus Variable Investment Fund: Small Cap
Portfolio)
1.4 LIMITATIONS ON TRANSFERS AND WITHDRAWALS DURING THE ACCUMULATION PERIOD:
OPTION 1: Unlimited transfer requests may be made by a Participant in one
(1) calendar year.
OPTION 2: Unlimited transfer requests may be made between Sub-Accounts by a
Participant in one (1) calendar year.
OPTION 3: During any one (1) calendar year, a Participant may make one (1)
transfer from the Guaranteed Interest Division to the Variable
Investment Division, or one (1) withdrawal from the Guaranteed
Interest Division in an amount not to exceed twenty percent (20%)
of the Participant's Account balance in the Guaranteed Interest
Division.
1.5 ANNUAL ADMINISTRATION CHARGE:
OPTION 1: Twenty-five dollars ($25) per Participant
OPTION 2: Twenty-five dollars ($25) per Participant who allocates a
contribution, during the year ending on a Participation
Anniversary, to any one (1) or more of the Sub- Accounts
established in the Variable Investment Division.
1.6 ANNUAL MORTALITY AND EXPENSE RISK CHARGE APPLICABLE TO VARIABLE INVESTMENT
DIVISION: Annual rate of one and two-tenths percent (1.20%).
1.7 PLAN NAME: ABC Hospital Tax Sheltered Annuity Plan
1.8 EMPLOYER: ABC Hospital
1.9 SYSTEMATIC WITHDRAWAL SET-UP CHARGE: Thirty dollars ($30). If the total
Account balance is twenty-five thousand dollars ($25,000) or greater, such
amount will be waived.
1.10 Pending Allocation Account: An account established under the Variable
Investment Division that invests unallocated contributions in shares of
a money market mutual fund. LL&A does not guarantee the principal amount
or investment results.
<PAGE>
ARTICLE II - DEFINITIONS
2.1ACCUMULATION UNIT: An accounting unit of measure used to record amounts
of increases to, decreases from and accumulations in each Sub-Account
during the Accumulation Period.
2.2ACCUMULATION UNIT VALUE: The dollar value of an Accumulation Unit in
each Sub-Account on any Valuation Date.
2.3ACCUMULATION PERIOD: The period commencing on a Participant's
Participation Date and terminating when the Participant's Account balance
is reduced to zero, either through withdrawal(s), conversion to an
annuity, imposition of charges, payment of a Death Benefit or a
combination thereof.
2.4ANNUITANT: The person receiving annuity payments under the terms of
this Contract.
2.5ANNUITY COMMENCEMENT DATE: The date on which LL&A makes the first
annuity payment to the Annuitant as required by the Retired Life
Certificate. This date, as well as the date each subsequent annuity
payment is made, will be the first day of a calendar month.
2.6ANNUITY CONVERSION AMOUNT: The amount of a Participant's Account
applied toward the purchase of an Annuity.
2.7ANNUITY CONVERSION FACTOR: The factor applied to the Annuity Conversion
Amount in determining the dollar amount of an annuitant's annuity payments
for Guaranteed Annuities or the initial payment for Variable Annuities.
2.8ANNUITY PAYMENT CALCULATION DATE: For Guaranteed Annuities, this is the
first day of a calendar month. For Variable Annuities, this is the
Valuation Date ten (10) business days prior to the first day of a calendar
month.
2.9ANNUITY PERIOD: The period concurrent with or following the
Accumulation Period, during which an Annuitant's annuity payments are
made.
2.10ANNUITY UNIT: An accounting unit of measure that is used in
calculating the amounts of annuity payments to be made from each Sub-
Account during the Annuity Period.
2.11ANNUITY UNIT VALUE: The dollar value of an Annuity Unit in each
Sub-Account on any Valuation Date.
2.12BENEFICIARY: The person(s) designated to receive a Participant's
Account balance in the event of the Participant's death during the
Accumulation Period or the person(s) designated to receive any applicable
remainder of an annuity in the event of the Annuitant's death during the
Annuity Period.
2.13BUSINESS DAY: A day on which LL&A and the New York Stock Exchange are
customarily open for business.
2.14CERTIFICATE: An Active Life Certificate is issued to each Participant
outlining the basic provisions of the Contract. A Retired Life
Certificate is issued to each Annuitant outlining the basic provisions of
his Annuity.
2.15CONTRIBUTIONS: All amounts deposited by You or the Participant under
this Contract including any amount transferred from another contract.
2.16DIVISION(S): The Guaranteed Interest Division and/or the Variable
Investment Division named in Section 1.3.
<PAGE>
2.17LL&A: Lincoln Life & Annuity Company of New York, at its home office
in Syracuse, New York.
2.18GENERAL ACCOUNT: All assets of LL&A other than those in the Separate
Account specified in Section 1.2 or any other separate account.
2.19GROSS WITHDRAWAL AMOUNT: The amount by which a Participant's Account
is reduced when a withdrawal occurs, including any applicable [ Contingent
Deferred Sales Charge and ] Annual Administration Charge.
2.20GUARANTEED ANNUITY: An annuity for which LL&A guarantees the amount of
each payment as long as the annuity is payable.
2.21GUARANTEED INTEREST DIVISION: The Division maintained by LL&A for this
and other contracts for which LL&A guarantees the principal amount and
interest credited thereto, subject to any fees and charges as set forth in
this Contract. Amounts allocated to the Guaranteed Interest Division are
part of the General Account.
2.22NET WITHDRAWAL AMOUNT: The amount paid to a Participant when a
withdrawal occurs.
2.23PARTICIPANT: A person who has enrolled under this Contract and
maintains a Participant's Account.
2.24PARTICIPANT'S ACCOUNT: An account maintained for a Participant during
the Accumulation Period, the total balance of which equals the
Participant's Account balance in the Variable Investment Division plus the
Participant's Account balance in the Guaranteed Interest Division.
2.25PARTICIPATION ANNIVERSARY: For each Participant, a date at one year
intervals from that Participant's Participation Date. If an anniversary
occurs on a non-Business Day, it is treated as occurring on the next
Business Day.
<PAGE>
2.26PARTICIPATION DATE: A date assigned to each Participant corresponding
to the date on which the first Contribution on behalf of that Participant
under this Contract is received by LL&A. A Participant will receive a
new Participation Date if such Participant makes a Total Withdrawal as
defined in Section 7.2, and Contributions on behalf of the Participant are
resumed under any Contract.
2.27PENDING ALLOCATION ACCOUNT: An account established under the Variable
Investment Division that invests unallocated contributions in shares of a
money market mutual fund. LL&A does not guarantee the principal amount or
investment results.
2.28PLAN: The Plan named in Section 1.8 which qualifies for federal tax
benefits under Section 403(b) of the Internal Revenue Code of 1986 and
under which this Contract is authorized.
2.29PARTICIPATION YEAR: A period beginning with one Participation
Anniversary and ending the day before the next Participation Anniversary,
except for the first Participation Year which begins with the
Participation Date.
2.30SEPARATE ACCOUNT: The VA-L Separate Account is a group of assets
segregated from LL&A's General Account whose income, gains and losses,
realized or unrealized, are credited to or charged against the Separate
Account without regard to other income, gains or losses of LL&A.
Additional information is provided in Section 12.15.
2.31SUB-ACCOUNT(S): An account established in the Variable Investment
Division which invests in shares of a corresponding mutual fund.
2.32VALUATION DATE: A Business Day. Accumulation and Annuity Units are
computed on each Valuation Date as of the close of trading on the New York
Stock Exchange.
2.33VALUATION PERIOD: A period used in measuring the investment experience
of each Sub-Account. The Valuation Period begins at the close of trading
on the New York Stock Exchange on one Valuation Date and ends at the
corresponding time on the next Valuation Date.
2.34VARIABLE ANNUITY: An annuity with payments that increase or decrease
in accordance with the investment results of the selected Sub-Account(s).
2.35VARIABLE INVESTMENT DIVISION: The Division specified in Section 1.3
which is maintained by LL&A for this and other Section 403(b) LL&A
contracts for which LL&A does not guarantee the principal amount or
investment results. Amounts allocated to the Variable Investment Division
are part of the Separate Account.
2.36YOU OR YOUR: The Contractholder named on the face page of this
Contract.
<PAGE>
ARTICLE III - CONTRIBUTIONS
3.1INITIAL CONTRIBUTION: The initial Contribution for a Participant will
be credited to the Participant's Account no later than two Business Days
after it is received by LL&A if it is preceded or accompanied by a
completed enrollment form containing all the information necessary for
processing the Participant's Contribution.
3.2ALLOCATION OF CONTRIBUTIONS: Participant Contributions will be
allocated to the Divisions and Sub-Accounts according to the percentages
requested by the Participant. The percentages must be whole numbers and
may be changed on an unlimited basis. You or the Participant shall notify
LL&A in a form acceptable to LL&A of such changes. Upon receipt by LL&A,
the change will be effective for all Contributions received concurrently
with the allocation change form and for all future Contributions.
3.3PAYMENT OF SUBSEQUENT CONTRIBUTIONS: You shall forward Contributions
to LL&A specifying the amount being contributed on behalf of each
Participant. You shall forward such Contributions and provide such
allocation information in accordance with procedures established by LL&A.
The Contributions shall be allocated among the Guaranteed Interest
Division and each Sub-Account in accordance with the percentage
information provided by the Participant subject to the terms of the Plan.
3.4CHARACTERIZATION OF TRANSFER CONTRIBUTIONS: For all Contributions
transferred from another Contract, LL&A must be provided with the following
information in a form acceptable to LL&A:
(a)The source of the Contributions transferred (e.g. salary reduction,
employer match or post-tax Contributions). LL&A will record all such
transferred amounts where no source information is provided as salary
reduction Contributions.
(b)Identification of Contributions transferred as Contributions made or
earnings credited:
(i) prior to January 1, 1987;
(ii) during 1987 and 1988; or
(iii) subsequent to December 31, 1988.
Amounts not so identified will be treated as attributable to period (iii)
for purposes of Sections 7.4 and 7.5.
3.5MAXIMUM CONTRIBUTION: Total and overall limitations on Contributions in
a calendar year for a Participant are subject to the limits imposed under
Sections 402(g), 403(b) and 415 of the Internal Revenue Code of 1986 (the
Code), as it may be amended from time to time. LL&A assumes no
responsibility for monitoring these limits for a Participant.
<PAGE>
3.6VALUATION: A Guaranteed Interest Division Contribution will be
allocated as of the Business Day that LL&A receives the Contribution and
LL&A will credit interest beginning with the next calendar day following
the Business Day that LL&A receives the Contribution.
For a Variable Investment Division Sub-Account Contribution, LL&A will
credit a Participant's Account with the number of Accumulation Units for
each Sub-Account selected by the Participant with the number of
Accumulation Units equal to the Contribution Amount divided by the
Accumulation Unit Value which is next computed following LL&A's receipt of
the Contribution.
OPTION 1:
- ---------
3.7ANNUAL ADMINISTRATION CHARGE: LL&A will deduct the amount stated in
Section 1.5 from each Participant's Account each year on the last Business
Day of the month in which his Participation Anniversary occurs unless the
Contractholder pays the charge in a single payment. If the Participant's
Account balance is less than this amount on that day, LL&A will deduct the
entire balance from his Account.
When a Total Withdrawal of a Participant's Account, as defined in Section
7.2, occurs on a date other than the last Business Day of the month in
which his Participation Anniversary occurs, LL&A will first deduct the
amount stated in Section 1.5 from his Participant's Account.
OPTION 2:
- ---------
ANNUAL ADMINISTRATION CHARGE: LL&A will deduct the amount stated in
Section 1.5 on a pro-rata basis from the Participant's Variable Investment
Division Account balance each year on the last Business Day of the month
in which his Participation Anniversary occurs unless the Contractholder
pays the charge in a single payment. If the Participant's Variable
Investment Division Account balance is less than this amount on that day,
LL&A will deduct the entire balance from his Variable Investment Division
Account.
When a Participant requests, on a date other than the last Business Day of
the month in which his Participation Anniversary occurs,
(a) a withdrawal, or
(b) a transfer,
from the Variable Investment Division, which would leave a remaining
balance of less than the Annual Administration Charge defined in Section
1.5, UNUM will first deduct the amount stated in Section 1.5 from the
Participant's Variable Investment Division Account balance prior to the
Withdrawal or Transfer.
<PAGE>
3.8 UNALLOCATED CONTRIBUTION: If a properly completed enrollment form
has not been received for a Participant, LL&A will deposit such
Contributions to the Pending Allocation Account as described in ARTICLE II
- DEFINITIONS, unless such Contributions are designated to another Account
in accordance with the Plan.
LL&A will follow up with the Contractholder monthly for a period of ninety
(90) days for enrollment information for Participants with deposits in the
Pending Allocation Account.
Within two (2) business days of receipt of a completed enrollment form, the
Participant's Account balance in the Pending Allocation Account will be
transferred to the Divisions and/or Sub-Accounts according to the
percentages requested by the Participant. When the completed enrollment
form is received, the Participation Date will be the date on which the
first Contribution on behalf of the Participant was deposited into the
Pending Allocation Account.
If an enrollment form is not received after the ninety (90) day notice, a
Participant's Account balance in the Pending Allocation Account will be
refunded to the Contractholder within one hundred five (105) days of the
date of the initial Contribution. Contributions received after a refund
while there is still no allocation information, will be deposited to the
Pending Allocation Account.
The Pending Allocation Account will only be used for the purpose mentioned
above; Participants may not direct a portion of their Contributions to
this Account. Contributions deposited in the Pending Allocation Account
will not be afforded the same rights as Contributions under this Contract.
The following Articles and/or Sections under this Contract will not be
applicable: (i) Section 3.7 ANNUAL ADMINISTRATION CHARGE, (ii) ARTICLE
VI - TRANSFERS BETWEEN DIVISION AND SUB- ACCOUNTS, (iii) ARTICLE VII -
WITHDRAWALS AND DISTRIBUTIONS, (iv) ARTICLE IX - PAYOUT ANNUITIES, and
(v) ARTICLE X - LOANS.
<PAGE>
ARTICLE IV - GUARANTEED INTEREST DIVISION
4.1PARTICIPANT'S ACCOUNT BALANCE IN GUARANTEED INTEREST DIVISION: The
dollar value of a Participant's Account balance in the Guaranteed Interest
Division as of a date will be equal to the sum of:
(a)Contributions allocated, on behalf of the Participant, to the Guaranteed
Interest Division on or prior to that date, and
(b)Amounts transferred, on behalf of the Participant, to the Guaranteed
Interest Division from the Variable Investment Division on or prior to
that date, less any;
(c)Gross Withdrawal Amounts from the Guaranteed Interest Division, on
behalf of the Participant, on or prior to that date; and
(d)Amounts transferred, on behalf of the Participant, to the Variable
Investment Division on or prior to that date; and
(e)Applicable charges to the Participant's Account on or prior to that
date; and
(f)Annuity Conversion Amounts, on behalf of the Participant, on or prior to
that date, plus any;
(g)Interest credited to the Participant's Account balance in the Guaranteed
Interest Division on or prior to that date.
4.2INTEREST: LL&A will credit interest each day to the portion of the
Participant's Account balance in the Guaranteed Interest Division, using
the previous day's ending balance. The rate of interest credited each
day, if compounded for three hundred sixty- five (365) days, yields the
annual interest rate in effect for the day.
LL&A will declare in advance a guaranteed interest rate which will be
effective for all amounts in the Participant's Account balance in the
Guaranteed Interest Division during the designated year. This rate will
never be less than three percent (3%).
LL&A May also declare in advance separate interest rate guarantees which
are in excess of the guaranteed interest rate for some or all of the
Participant's Account balance in the Guaranteed Interest Division for
specific period(s) during the designated year.
<PAGE>
ARTICLE V - VARIABLE INVESTMENT DIVISION
5.1PARTICIPANT'S ACCOUNT BALANCE IN THE VARIABLE INVESTMENT DIVISION: The
Participant's Account balance in the Variable Investment Division is equal
to the sum of the dollar value of a Participant's Account balance in each
Sub- Account as of the end of a Valuation Period which will be equal to the
product of:
(a) The Participant's number of Accumulation Units as of the end of that
Valuation Period; times
(b)The Accumulation Unit Value as of the end of that Valuation Period.
5.2ACCUMULATION UNITS: The number of Accumulation Units a Participant has
in a Sub-Account as of the end of any Valuation Period is the number of
Accumulation Units the Participant had in that Sub-Account as of the end
of the preceding Valuation Period; plus
(a)The number of Accumulation Units attributable to amounts deposited to or
transferred to that Sub-Account during the current Valuation Period; minus
(b)The number of Accumulation Units attributable to amounts transferred
from, converted to an annuity, removed as a charge, paid as a death
benefit, or withdrawn from that Sub-Account during the current Valuation
Period.
5.3ACCUMULATION UNIT VALUE: The initial Accumulation Unit Value for each
Sub-Account was set when the Sub-Account was established. The
Accumulation Unit Value may increase or decrease from one Valuation
Period to the next. Subsequent Accumulation Unit Values are determined
by multiplying:
(a) The Net Investment Factor for the current Valuation Period by;
(b) The Accumulation Unit Value as of the end of the immediately preceding
Valuation Period.
For further information concerning Accumulation Unit Value, please consult
the section in the prospectus for the Contract entitled "Determination of
Accumulation Unit Value."
5.4NET INVESTMENT FACTOR: The Net Investment Factor is used to measure the
investment experience of a Sub-Account net of the Mortality and Expense
Risk Charge as defined in Section 5.5. The Net Investment Factor for a
Valuation Period is equal to (a) divided by (b) with the result multiplied
by (c) and adjusted by the amount per share of any taxes which are
incurred by LL&A because of the existence of the Sub-Account;
<PAGE>
where (a) is;
the net asset value per share of the underlying mutual fund held by the
Sub- Account as of the end of the Valuation Period, plus;
the amount per share of any dividend or capital gain distribution from the
underlying mutual fund held by the Sub-Account during the Valuation Period,
where (b) is;
the net asset value per share of the underlying mutual fund held by the
Sub- Account as of the end of the immediately preceding Valuation Period,
where (c) is;
one (1.00) minus the Annual Mortality and Expense Risk Charge shown in
Section 1.6 to the n/365th power where n equals the number of calendar days
since the immediately preceding Valuation Date.
5.5MORTALITY AND EXPENSE RISK CHARGE: This charge is imposed to
compensate LL&A for its assumption of mortality and expense risks under
this Contract. This charge is shown on an annualized basis in Section 1.6
and is deducted on a daily basis as described in Section 5.4.
<PAGE>
ARTICLE VI - TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
6.1TRANSFERS DURING ACCUMULATION PERIOD: Participants may transfer all or
part of their Account balance in any Division or Sub-Account to another
Division or Sub- Account subject to the limitations stated in Section 1.4.
You or the Participant must provide transfer requests to LL&A in a form
acceptable to LL&A.
6.2TRANSFERS DURING ANNUITY PERIOD: An Annuitant may not transfer any part
of the Annuitant's Annuity Conversion Amount.
<PAGE>
ARTICLE VII - WITHDRAWALS AND DISTRIBUTIONS
7.1WITHDRAWALS DURING THE ACCUMULATION PERIOD: During the Accumulation
Period, a Participant may withdraw from any or all Divisions, subject to
the restrictions stated in Section 7.4, all or part of the Participant's
Account balance in the Division or Sub-Accounts remaining after reductions
for any applicable Annual Administration Charge (imposed on Total
Withdrawals), Contingent Deferred Sales Charge (CDSC), premium taxes and
outstanding loan, including the loan security thereon. Annuity Conversion
Amounts are not considered withdrawals.
The amount available for withdrawal is subject to all applicable law.
Liquidation of the Participant's Account balance to meet the withdrawal
amount will be made on a pro rata basis from the Guaranteed Interest
Division and the Sub-Accounts unless the Participant specifies otherwise.
Amounts to be liquidated from the Guaranteed Interest Division will be
withdrawn on a first-in first-out basis in the event that Contributions
from different contribution periods earn different interest rates. The
Contributions from the first contribution period will be withdrawn before
Contributions from the second contribution period.
All withdrawal requests must be submitted in a form acceptable to LL&A and
must indicate the amount and the Division(s) from which the withdrawal is
to be made.
LL&A reserves the right to delay payment of Guaranteed Interest Division
withdrawal amounts per Section 12.9.
7.2 TOTAL WITHDRAWALS: A Total Withdrawal of a Participant's Account will
occur when a Participant who has no outstanding loans
(a)requests the liquidation of his entire Account balance, or
(b)requests an amount such that the amount requested [ plus any CDSC as
defined in Section 7.6 ] results in a remaining Participant's Account
balance being less than the applicable Annual Administration Charge as
defined in Section 1.5; in which case, the request is treated as if it
were a request for liquidation of the Participant's entire Account
balance.
The Participant's Active Life Certificate must be surrendered to LL&A when
a Total Withdrawal of a Participant's Account occurs.
A Participant refund under the Free-look provisions of Section 12.18 is not
considered a Total Withdrawal under this Article.
<PAGE>
7.3PARTIAL WITHDRAWALS: A Partial Withdrawal of a Participant's Account
will occur when:
(a) A Participant who has an outstanding loan makes a withdrawal; or
(b)A Participant who has no outstanding loans, requests an amount less than
a total withdrawal.
7.4WITHDRAWAL REQUIREMENTS FOR SECTION 403(B) PLANS: Withdrawals are
subject to the requirements set forth in Section 403(b) of the Code and
regulations thereof.
(a)Withdrawal Requests for Participants under Section 403(b) Plans Subject
to Title I of ERISA: You must make withdrawal requests on behalf of
Participants. All withdrawal requests will require Your written
authorization and written documentation specifying the portion of the
Participant's Account balance which is available for distribution to the
Participant.
(b)Withdrawal Requests for Participants under Section 403(b) Plans NOT
Subject to Title I of ERISA: Any portion of the Participant's Account
balance that has been recorded by LL&A as a salary reduction contribution
made and/or earnings credited prior to January 1, 1989 (including
transferred amounts recorded as such pursuant to Section 3.4), may be
withdrawn for any reason. Any portion of the Participant's Account
balance that has been recorded by LL&A as a salary reduction Contribution
made and/or earnings credited after December 31, 1988 (including
transferred amounts recorded as such pursuant to Section 3.4), are subject
to the withdrawal restrictions stated in Section 403(b) of the Code.
Participants must certify to LL&A (and provide supporting information, if
requested), that an event permitting withdrawal has occurred and that LL&A
may rely on such representation in granting the withdrawal request.
7.5MINIMUM DISTRIBUTION REQUIREMENTS FOR SECTION 403(B) PLANS: Section
403(b)(10) of the Code and regulations thereunder require that
distributions be made from this Contract in a manner which satisfies
requirements similar to the requirements of Section 401(a)(9) including
the incidental death benefit requirements of Section 401(a)(9)(G).
Section 401(a)(9) requires that:
(a) the Participant's Account be distributed not later than the required
beginning date; or
(b)the Participant's Account be distributed not later than the required
beginning date, over the life of the Participant or over the lives of the
Participant and a designated Beneficiary.
<PAGE>
A Participant may choose to have the Participant's Account distributed in
one of the following manners:
(a) As a lump sum payment;
(b) As an annuity meeting the requirements of Section 401(a)(9) of the
Code;
(c)As an annual distribution where the amount distributed each calendar
year is at least an amount equal to the quotient obtained by dividing:
(a) the amount of the Participant's Account required to be distributed as
of December 31 of the calendar year immediately preceding the calendar
year for which the distribution is being made; by (b) the life expectancy
of the Participant, or the life expectancy of the Participant and the
Beneficiary; or
(d)A combination of the above.
With respect to (c) and (d) above, the life expectancy of the Participant
and a surviving spouse Beneficiary may be recalculated, but not more
frequently than annually. A non- spouse Beneficiary's life expectancy may
not be recalculated.
OPTION 1:
- ---------
7.6CONTINGENT DEFERRED SALES CHARGE: The following schedule of CDSC shall
apply to all Withdrawal Amounts.
(a) WHEN A WITHDRAWAL IS THE CDSC
REQUESTED AND ONE OR WILL EQUAL:
MORE OF THE FOLLOWING
CONDITIONS IS MET:
SUB-OPTIONS:
- ------------
A1: The Participant has died 0%
A2: The Participant has incurred 0%
a disability for which he is
receiving Social Security
payments
A3: The Participant has incurred 0%
a disability for at least a
six (6) month period which
continues to prevent him from
performing each of the material
duties of his regular occupation
A4: The Participant has attained age 0%
fifty-nine and one-half (59 1/2)
<PAGE>
A5: The Participant has separated 0%
from service with the Contract-
holder and is age fifty-five (55)
A6: The Participant has separated 0%
from service with the Contract-
holder
A7: The Participant has demonstrated 0%
a financial hardship need
A8: A Participant has requested a 0%
withdrawal which will not exceed
twenty (20%) percent of his
Participant's Account balance
and no other withdrawal has been
made in that calendar year
SUB-OPTIONS:
- ------------
B1: (b) For all other amounts subject
to a CDSC, the CDSC will equal: 6%
B2: (b) For all other amounts subject to a CDSC, the CDSC will be in
accordance with the schedule below.
During Participation Year CDSC Percent
1-6 5%
7 4%
8 3%
9 2%
10 1%
11 and later 0%
LL&A may request any reasonable proof necessary to verify that the
withdrawal meets the conditions described above in Section 7.6(a). If You
or the Participant do not furnish the proof requested by LL&A, the CDSC
stated in Section 7.6(b) shall apply.
The CDSC on any withdrawal may be reduced or eliminated but only to the
extent that LL&A anticipates that it will incur lower sales expenses or
perform fewer sales services due to economies arising from (i) the size of
the particular group, (ii) an existing relationship with the
Contractholder, (iii) the utilization of mass enrollment procedures, or
(iv) the performance of sales functions by the Contractholder or an
employee organization which LL&A would otherwise be required to perform.
<PAGE>
In no event will the CDSC, when added to any CDSC previously imposed due to
a Participant withdrawal, exceed eight and one-half percent (8.5%) of the
cumulative Contributions to a Participant's Account.
OPTION II:
- ----------
7.6 LIMITATIONS ON WITHDRAWALS FROM THE GUARANTEED INTEREST DIVISION: A
Participant may make a withdrawal from the Guaranteed Interest Division
for a specified percentage of their Participant's Account balance based on
the following schedule:
(a) WHEN A WITHDRAWAL IS THE PERCENTAGE OF
REQUESTED AND ONE OR THE PARTICIPANT'S
MORE OF THE FOLLOWING ACCOUNT BALANCE
CONDITIONS IS MET: AVAILABLE IS:
SUB-OPTIONS:
- ------------
A1: The Participant has died 100%
A2: The Participant has incurred 100%
a disability for which he is
receiving Social Security
payments
A3: The Participant has incurred a 100%
disability for at least a six
(6) month period which continues
to prevent him from performing
each of the material duties of
his regular occupation
A4: The Participant has attained age 100%
fifty-nine and one-half (59 1/2)
A5: The Participant has separated from 100%
service with the Contractholder
A6: The Participant has demonstrated 100%
a financial hardship need
A7: The Participant has separated from 100%
service with the Contractholder
and is age fifty-five (55)
<PAGE>
A8: (b) In addition, during any one (1) calendar year, a Participant may
make one (1) withdrawal or transfer from the Guaranteed Interest
Division in an amount not to exceed twenty percent (20%) of the
Guaranteed Interest Division Account balance. Any Participant
stating their intention to liquidate their Guaranteed Interest
Division Account balance, however, may make one (1) withdrawal or
transfer for five (5) consecutive calendar years from their Guaranteed
Interest Division Account balance in the following percentage:
Percentage of
Year Request Received Guaranteed Interest
by LL&A Division Available
1 20%
2 25%
3 33 1/3%
4 50%
5 100%
The five (5) consecutive withdrawals or transfers may not be submitted more
frequently than twelve (12) months apart. LL&A also reserves the right to
require that any Participant stating their intention to liquidate their
Guaranteed Interest Division Account balance stop contributions to the
Contract.
(c) There are no limitations on withdrawals from the Variable Investment
Division.
LL&A may request any reasonable proof necessary to verify that the
withdrawal meets the conditions described above in Section 7.6(a).
However, all financial hardship withdrawals will require the
Contractholder's written documentation authorizing such request.
7.7SYSTEMATIC WITHDRAWAL OPTION: Any Participant who: (a) is at least age
fifty-nine and one-half (59 1/2), or (b) [is disabled and receiving Social
Security disability benefits,] or (c) is separated from service with the
Contractholder may elect this option. A Participant must also have a
vested Participant Account balance of at least [ten thousand dollars
($10,000)] of pre-tax Contributions under this Contract at the date of the
election.
Amounts held for a spousal payee under a Qualified Domestic Relations Order
(QDRO) shall be recognized as eligible for the Systematic Withdrawal
Option. Any spousal payee who wishes to elect this distribution option
must also meet the minimum [ten thousand dollar ($10,000)] Account balance
requirement and either the age or disability requirement as discussed
above.
A Participant may elect to receive monthly, quarterly, semi-annual, or
annual payments in a flat amount or payments on a monthly basis for an
interest equivalency amount. An interest equivalency amount is an
approximation of the interest earned between each payment period based
upon the interest rate in effect at the beginning of each respective
payment period. This amount will be determined by LL&A. (See Attachment I
for illustration.) A Participant may change the frequency, payment type,
or payment amount of his Systematic Withdrawal Option by submitting a
request in writing on a form acceptable to LL&A. A Participant may make
such a change only once during each calendar year.
A Participant may at any time direct LL&A to cease payments under this
option provided the request is made in writing. A Participant who chooses
to stop receiving systematic withdrawals may not request that any
systematic
<PAGE>
withdrawal payments begin again untilthe next calendar year.
Systematic withdrawals shall be withdrawn from amounts allocated to the
Guaranteed Interest Division of the Participant's Account balance. If the
balance of the Guaranteed Interest Division is not sufficient to meet the
payment amount requested, the Participant, in writing, may direct LL&A on
a form acceptable to LL&A to transfer the appropriate amount to the
Guaranteed Interest Division; otherwise, such payment will cease.
LL&A will deduct the Systematic Withdrawal Set-Up Charge indicated in
Section 1.9 from the Participant's Account balance each time a Systematic
Withdrawal Option is established.
Payments under this option shall stop upon the earliest of the following
events.
(a) On the date of the Participant's death. A Beneficiary who is a spouse
may elect this option by requesting it in writing on a form acceptable to
LL&A, unless election of this form of benefit would violate any other
requirements of this contract. The spousal Beneficiary must meet the ten
thousand dollar ($10,000) minimum Account balance requirement prior to
electing the Systematic Withdrawal Option; or
(b) When there is an insufficient Participant Account balance after
deducting the Annual Administration Charge, if any, to pay the amount
requested; or
(c)The Participant fails to meet the requirements of the Systematic
Withdrawal Option as outlined above in the first (1st) paragraph of this
Section.
If a disabled or terminated Participant, who is currently receiving a
Systematic Withdrawal Option payment, returns to service with the
Contractholder, the Contractholder or Participant must notify LL&A in
writing within thirty (30) days from the date of return to service. LL&A
reserves the right to discontinue the Systematic Withdrawal Option payment
under these circumstances.
If a Participant wishes to exercise this option under another LL&A Annuity
Contract, such request shall be considered separate from this Contract and
shall follow the Systematic Withdrawal Option rules under that Annuity
Contract, if permitted.
LL&A may, at its option, discontinue the Systematic Withdrawal Option under
this Contract at any time provided You are given at least thirty (30) days
advance written notice.
7.8DIRECT ROLLOVER OPTION: Beginning January 1, 1993, a Participant or
Beneficiary may elect this option for any distribution that qualifies as an
Eligible Rollover Distribution as defined by Section 402(c) of the Code
and that meets all the following requirements:
(1)The distribution must be paid directly to either a single Individual
Retirement Account or to a single Tax Sheltered Annuity. The check, wire,
or other form of remittance shall be made payable to the trustee,
custodian, or financial institution sponsoring the Individual Retirement
Account or Tax Sheltered Annuity. The form of remittance will not be an
instrument that can be negotiated by the Participant.
(2)The Participant must provide, in a form acceptable to LL&A, all
information necessary to make the payment to an Individual Retirement
<PAGE>
Account or Tax Sheltered Annuity.
(3)The Participant or Beneficiary may not revoke a request for payment
under this option for any payment after LL&A has received a written
request for a direct rollover.
<PAGE>
ARTICLE VIII - DEATH BENEFITS
8.1DEATH BENEFIT DURING THE ACCUMULATION PERIOD: If death of the
Participant occurs during the Accumulation Period, LL&A will pay the
Beneficiary, if one is living, the greater of the following amounts:
(a)The sum of all Contributions, less any Net Withdrawal Amounts, any
outstanding loan (including principal and due and accrued interest) and
Annuity Conversion Amounts, or
(b)The Participant's Account balance less any outstanding loan (including
principal and due and accrued interest).
LL&A will calculate the Death Benefit as of the end of the Valuation Period
during which it receives both satisfactory notification of the
Participant's death, pursuant to Section 8.2, and the election of a form
of benefit pursuant to Section 8.3. If no election is made pursuant to
Section 8.3 within sixty (60) days following LL&A's receipt of satisfactory
notice of death, the Death Benefit will be calculated as of the end of the
Valuation Period during which that sixtieth (60th) day occurs.
If LL&A makes a withdrawal payment pursuant to a Participant request prior
to receiving notice that the Participant has died, but subsequent to the
Participant's death, LL&A will deduct that payment from each of (a) and
(b) above in calculating the Death Benefit.
8.2NOTIFICATION OF DEATH: LL&A must be notified of a Participant's death
no later than six (6) months from the Participant's date of death in order
for the Beneficiary to receive the Death Benefit amount described in
Section 8.1(a) above. The six (6) month period may be extended in
situations where giving notice was not possible. Such notification must
be in a form satisfactory to LL&A. Beneficiaries for whom notification of
a Participant's death is received more than six (6) months after the
Participant's date of death shall receive the Death Benefit amount
described in Section 8.1(b) above.
8.3PAYMENT OF DEATH BENEFIT: Within sixty (60) calendar days after LL&A
receives satisfactory notification of the Participant's death, the
Beneficiary must make an election to have the Death Benefit applied in one
of the following ways:
(a)As a lump sum payment to the Beneficiary; or
(b)Towards an annuity to be distributed in substantially equal installments
over the life expectancy of the Beneficiary or a period certain not
exceeding the life expectancy of the Beneficiary; or
(c)A combination of the above.
<PAGE>
A Beneficiary who does not make an election pursuant to this section within
sixty (60) days after LL&A receives notification of the Participant's
death will receive a lump sum payment calculated in accordance with
Section 8.1(b) above.
If the Beneficiary is someone other than the spouse of the deceased
Participant, the Code provides that the Beneficiary may not elect an
annuity which would commence later than December 31st of the calendar year
following the calendar year of the Participant's death. If a non-spousal
Beneficiary elects to receive payment in a single lump sum, such payment
must be received no later than December 31st of the fourth (4th) calendar
year following the calendar year of the Participant's death.
If the Beneficiary is the surviving spouse of the deceased Participant,
under the Code, distributions are not required to begin earlier than
December 31st of the calendar year in which the Participant would have
attained age seventy and one-half (70-1/2). If the surviving spouse dies
before the date on which annuity distributions commence, then, for
purposes of the Death Benefit, the surviving spouse shall be deemed to be
the Participant.
If there is no living named Beneficiary on file with LL&A at the time of a
Participant's death, LL&A will pay the Death Benefit to the Participant's
estate in a single lump sum upon receipt of satisfactory proof of the
Participant's death, but not later than December 31st of the fourth (4th)
calendar year following the calendar year of the Participant's death.
Valuation of the Death Benefit shall occur as of the end of the Valuation
Period during which due proof of the Participant's death is received by
LL&A.
8.4DEATH DURING THE ANNUITY PERIOD: If the Annuitant dies during the
Annuity Period, the Beneficiary, if any, or the Annuitant's estate will
receive the amount payable, if any, according to the in-force annuity
options. Any remaining Participant's Account balance will be paid in
accordance with the provisions of this Article.
<PAGE>
ARTICLE IX - ANNUITIES
9.1ELECTION OF ANNUITY OPTION: A Participant eligible to receive a
distribution under the Code or a Beneficiary of a deceased Participant may
notify LL&A in writing in a form acceptable to LL&A that the Participant
or the Beneficiary is electing to convert all or part of the Participant's
Account balance or Death Benefit to an annuity option available under this
Contract. Upon being notified of such an election, LL&A shall calculate
the amount to be converted to an annuity as either the Participant's
Account balance, or a portion thereof, or the Death Benefit as of the
initial Annuity Payment Calculation Date, as appropriate, less the charge
for premium taxes, if any.
If the Participant's Account balance or the Beneficiary's Death Benefit is
less than two thousand dollars ($2,000) or if the amount of the first
scheduled payment is less than twenty dollars ($20), LL&A may, at its
option, cancel the annuity and pay the Participant or Beneficiary his
entire Account balance or Death Benefit in a lump sum.
9.2GUARANTEED ANNUITY: The payment amount is determined by dividing the
Annuitant's Annuity Conversion Amount in the Guaranteed Interest Division
as of the initial Annuity Payment Calculation Date by the applicable
Annuity Conversion Factor as defined in Section 9.4.
9.3VARIABLE ANNUITY: The initial payment amount of the Annuitant's
Variable Annuity for each Sub-Account is determined by dividing his
Annuity Conversion Amount in each Sub-Account as of the initial Annuity
Payment Calculation Date by the applicable Annuity Conversion Factor as
defined in Section 9.4.
The amount of the Annuitant's subsequent Variable Annuity payment for each
Sub- Account is determined by:
(a)Dividing the Annuitant's initial Variable Annuity payment amount by the
Annuity Unit Value for that Sub-Account selected for his interest rate
option as described in Section 9.4 as of his initial Annuity Payment
Calculation Date; and
(b)Multiplying the resultant number of annuity units by the Annuity Unit
Values for the Sub-Account selected for his interest rate option for his
respective subsequent Annuity Payment Calculation Dates.
The Annuity Unit Values for each Sub-Account were initially set at ten
dollars ($10), except for the Index Account which was set at nine and nine
hundred six one thousands ($9.9060) of a dollar, for each interest rate
option. Each subsequent Annuity Unit Value for the Sub-Account selected
for an interest rate option is determined by:
(c)Multiplying the Net Investment Factor for the Valuation Period which
ends on the subsequent Valuation Date by the Annuity Unit Value for the
Sub-Account selected as of the end of the immediately preceding Valuation
Period; and
<PAGE>
(d)Dividing this resultant number by one (1.00) plus the interest rate to
the n/365th power, where n is the number of days in the Valuation Period.
The expenses actually experienced or the mortality actually experienced by
LL&A shall not adversely affect the dollar amount of Variable Annuity
payments to any Annuitant for whom Variable Annuity payments have
commenced.
9.4BASIS OF ANNUITY CONVERSION FACTORS:
Annuity benefits at their time of commencement will not be less than those
that would be provided by the application of an amount to purchase any
single consideration immediate annuity contract offered by LL&A at the
time to the same class of Annuitants.
(a)Guaranteed Annuities - The maximum Annuity Conversion Factors which may
be used by LL&A under this Contract are based on the 1983 Individual
Annuity Mortality Table, set back four (4) years, and an interest rate of
three percent (3.0%). From time to time, lower conversion factors may be
used by LL&A. (Lowering the conversion factor will increase the amount of
the annuity payment.)
(b)Variable Annuities - The Annuity Conversion Factors which are used to
determine the initial payments are based on the 1983 Individual Annuity
Mortality Table, set back four (4) years, and an interest rate in an
integral percentage ranging from zero to six percent (0 to 6.00%) as
selected by the Annuitant.
9.5ANNUITY OPTIONS: The following annuity options are available:
(a) Life
(b) Life with payments guaranteed for ten (10), fifteen (15) or twenty
(20) years
(c) Joint and Survivor
(d) Payments guaranteed for ten (10), fifteen (15) or twenty (20) years
(e) Other offered by LL&A.
To the extent option (d) is elected for a Variable Annuity, the Annuitant
may request at any time during the payment period that the present value
of any remaining installments be paid in one lump sum. [ However, any
lump sum so elected will be treated as a withdrawal during the
Accumulation Period subject to the applicable CDSC stated in Section 7.6.
The CDSC will be determined as of the date a lump sum is elected by the
Annuitant. ]
9.6RETIRED LIFE CERTIFICATE: Once an annuity option is selected by a
Participant, or the Beneficiary of a deceased Participant, LL&A will issue
to the Annuitant an appropriate Certificate evidencing LL&A's obligations.
<PAGE>
ARTICLE X - LOANS
10.1GENERAL: During a Participant's Accumulation Period, the Participant,
if permitted by the applicable Section 403(b) Plan, may apply for a loan
under this Contract by completing a loan application available from LL&A.
Loans are secured by the Participant's Account balance in the Guaranteed
Interest Division.
10.2RESTRICTIONS ON LOAN AMOUNT: The maximum amount of each loan, when
added to the outstanding balance of all other loans to the Participant,
shall not exceed the lesser of:
(a)fifty thousand dollars ($50,000) reduced by the excess (if any) of the
highest outstanding balance of loans from the Plan to the Participant
during the one (1) year period ending on the day before the date on which
such loan is made, minus the outstanding balance of loans from the Plan to
the Participant on the date on which such loan was made, or
(b)if the Plan is not subject to Title I of ERISA, the greater of (i) ten
thousand dollars ($10,000) and (ii) one-half (1/2) of the present value of
the vested benefits of the Participant under such plan, or
(c)if the Plan is subject to Title I of ERISA, one-half (1/2) of the
present value of the vested benefits of the Participant under such plan.
Additionally, the initial amount of a Participant's loan may not exceed
ninety percent (90%) of the Participants Account balance in the Guaranteed
Interest Division.
The term of the loan shall not exceed five (5) years unless the loan is
used to acquire or construct the principal residence of the Participant.
Level amortization of the loan (with payments not less frequently than
quarterly) is required over the term of the loan.
The above terms are subject to the restrictions imposed under Section 72(p)
of the Code, as it may be amended from time to time.
10.3MINIMUM LOAN AMOUNT: The initial amount of a loan must be at least one
thousand dollars ($1,000).
10.4NUMBER OF LOANS OUTSTANDING: A Participant may have only one (1) loan
outstanding at any time and may not establish more than one (1) loan in any
six (6) month period. However, a Participant may renegotiate an
outstanding loan balance once during the term of the loan .
10.5LOAN INTEREST RATE: The initial interest rate on a loan will be the
lesser of (a) the rate being credited in the Guaranteed Interest Division
as of the date of the loan, plus one percent (1%), and (b) the Moody's
Corporate Bond Yield Average, rounded to the nearest five basis points
(0.05%) for the first month in the calendar quarter which precedes the
date of the loan. The loan interest rate will remain fixed for the term of
the loan, unless the initial interest rate on a hypothetical new loan to
the Participant would be lower than the Participant's actual loan rate by
more than fifty basis points (0.50%). In such case, the loan interest
rate will be reduced to such lower rate as of the first day that such lower
rate would hypothetically be effective but in no event will it decrease
less than the guaranteed minimum interest rate of three percent (3%) as
specified in Section 4.2
10.6EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT: When a Participant takes a
loan, LL&A will subdivide his Participant's Account balance in the
Guaranteed
<PAGE>
Interest Division by establishing a loan reserve account in an amount
initially equal to the initial loan amount. Funds held in the loan
reserve account are held as security for the loan and will accrue interest
at a rate which is three percent (3.0%) below the loan interest rate but
will never be less than the minimum interest rate of three percent (3%) as
specified in Section 4.2. To the extent that the loan interest rate is
subsequently reduced, the rate credited to funds in the loan reserve
account will also be reduced in order to maintain the three percent (3.0%)
differential.As the Participant makes repayments to LL&A on the loan, an
amount equal to the principal component of the repayment, plus the interest
accrued in the loan reserve account, will be transferred from his loan
reserve account back to his Participant's Account balance in the
Guaranteed Interest Division.
In addition, an amount equal to ten percent (10%) of the principal of the
loan will be held as security to cover the interest, should the
Participant fail to make the required quarterly payments of principal and
interest. This amount will earn interest at the interest rate in effect
in the Guaranteed Interest Division but will not be available for
withdrawals. As the principal is reduced, the amount held as security
will also be reduced.
10.7DEFAULT IN LOAN REPAYMENT: If a Participant fails to make any
quarterly principal and interest payment within thirty-one (31) days of
the payment due date that payment will be in default. For tax purposes, a
default will be treated as a withdrawal of contributions under the
Contract. The Participant may elect to repay the outstanding loan
principal and interest until such time as the original loan term ends.
10.8LOAN FORECLOSURE: LL&A will foreclose on a loan in default by
liquidating the value in the Participant's Guaranteed Interest Division to
pay off the loan. The amount liquidated shall equal the sum of:
(1)the outstanding loan balance which includes unpaid principal and
interest due and accrued, and
[(2) any CDSC that applies unless the Participant meets conditions of
Section 7.6(a)- (b).]
But in no event shall the amount liquidated exceed the Participant's value
in the Guaranteed Interest Division.
<PAGE>
As provided for by Federal tax law, LL&A may foreclose on the loan as soon
as one or more of the following events has occurred:
(a)the Participant has attained age fifty-nine and one-half (59-1/2);
(b)the Participant has died;
(c)the Participant has incurred a disability for which he is receiving
Social Security payments;
(d)the Participant has separated from service with the Contractholder; or
(e) the Participant has a financial hardship.
However, in no event will LL&A foreclose on a loan in default until the
original loan term ends.
LL&A will notify the Participant at least thirty-one (31) days in advance
of the effective date of such Loan Foreclosure to provide the Participant
an opportunity to take action to remove the loan from its default status.
On the effective date of such Loan Foreclosure, LL&A will deduct from the
Participant's loan reserve account and from his Participant's Account
balance in the Guaranteed Interest Division an amount sufficient to pay
off the loan principal and interest due and accrued.
10.9DEFERRAL PERIODS: LL&A may defer the payment of a loan for a period
permitted by the law of the state in which this Contract was delivered but
not more than six (6) months after a written request for the loan was
received.
<PAGE>
ARTICLE XI - DISCONTINUANCE AND TERMINATION OF CONTRACT
11.1CONTRACT DISCONTINUANCE BY CONTRACTHOLDER: You may discontinue this
Contract by written notice to LL&A. This contract will be deemed
discontinued on the later of the date You specify or the date the written
notice is received by LL&A.
11.2CONTRACT DISCONTINUANCE BY LL&A: LL&A may, at its option, discontinue
this Contract in whole or in part if (a) You fail to meet the Minimum
Contribution Amount specified in Section 1.1 or (b) a modification in this
Contract is necessary in order to comply with Federal or State
requirements, including the Employee Retirement Income Security Act of
1974, and You refuse to accept a substantially similar contract offered by
LL&A that incorporates such modification. Discontinuance pursuant to this
Section shall be effective as of a date specified by LL&A, provided You are
given at least thirty-one (31) days advance written notice in which to
cure any remediable defaults. Discontinuance by LL&A supersedes any date
established under Section 11.1.
11.3EFFECT OF DISCONTINUANCE: As of the date this Contract is discontinued
under either 11.1 or 11.2 above:
(a)No further Contributions will be accepted by LL&A.
(b)Participants will be allowed to request withdrawals subject to the
restrictions set forth in Section 403(b) of the Code and regulations
thereof.
(c)Participants will be allowed to request transfers from each Sub-Account
of the Variable Investment Division to the Guaranteed Interest Division.
Transfers from the Guaranteed Interest Division to the Variable Investment
Division are not allowed. Transfers among the Sub-Accounts of the
Variable Investment Division are not allowed.
(d)Participants will not be allowed to request loans.
(e)LL&A will send written notice to each Participant's last known address
stating that the Contract is discontinued and that the Participant's
remaining Account balance will be distributed in a lump sum payment at the
earlier of:
(1)the Participant's attainment of age fifty-nine and one-half (59 1/2), or
(2)separation from service, or
(3)the date the Participant directs LL&A to transfer the entire value of
the Participant's Account to another 403(b) funding vehicle.
11.4CONTRACT TERMINATION: This Contract will terminate when there are no
Participant Account balances under this Contract.
<PAGE>
ARTICLE XII - GENERAL PROVISIONS
12.1CONTRACT: This Contract, together with Your attached Application and
any riders, constitutes the entire Contract between You and LL&A. LL&A is
not a party to any Plan document, and is not responsible for the validity
of any Plan or actions taken by You under that Plan. The terms of this
Contract shall govern with respect to the rights and obligations of LL&A,
notwithstanding any contrary provisions or conditions of any trust or
plan.
LL&A may rely on any action or information provided by You under the terms
of this Contract and shall be relieved and discharged from any further
liability to any party in acting at the direction and upon the authority
of You. All statements made by You shall be deemed representations and
not warranties.
12.2DEACTIVATION: LL&A may prohibit new Contributions and/or new
Participants under this Contract when LL&A discontinues accepting new
Contributions and/or new Participants for the class of Contractholders
covered by this Contract. This is termed deactivation. LL&A may
deactivate this Contract for the following reasons: (1) fewer than one
hundred (100) Participants are covered by the Contract for the entire prior
twelve (12) month period; or (2) LL&A discontinues offering this Contract
form to the public. In the event of a deactivation, the CDSC in Section
7.6 shall not apply to any Total Withdrawals or partial Withdrawals. LL&A
will give You not less than ninety (90) days notice of the date of
deactivation.
12.3CONTRACT AMENDMENTS: LL&A may amend this Contract at any time by
amendment or replacement. Such amendments will not, without Your consent,
adversely alter (a) the minimum interest rate set forth in Section 4.2,
(b) the maximum annuity conversion factors under Section 9.4, or (c) the
amount or terms of any annuity benefit already selected under Section 9.1
prior to the effective date of the change. No change in this Contract
will adversely affect the rights of a Participant with respect to
Contributions received or annuities purchased before the effective date of
the change unless:
(a)Such amendments are made in order to comply with rulings, regulations
and laws applicable to the program provided by this Contract; or
(b)Your consent to the Amendment is obtained.
LL&A will give You not less than ninety (90) days notice prior to the
effective date of any change made in accordance with this Section.
12.4CONTRACT INTERPRETATION: Whenever the context so requires, the plural
includes the singular, the singular the plural and the masculine the
feminine.
<PAGE>
12.5INFORMATION, REPORTS AND DETERMINATIONS: You shall furnish LL&A with
such facts and information as LL&A may require for the administration of
this Contract, including, upon request, the original or photocopy of any
pertinent records You keep. All information that You furnish to LL&A
pursuant to this Contract, shall be legible, accurate and satisfactory in
form to LL&A. Such information shall be sent to a location designated by
LL&A.
You shall make any determination required under this Contract pursuant to
the terms of the Contract or required under ERISA and shall report that
determination in writing to LL&A. Such determination shall be conclusive
for the purpose of this Contract. LL&A shall be fully protected in
relying on the reports and other information furnished by You and need not
inquire as to the accuracy or completeness of such reports and information.
12.6MISSTATEMENTS: If LL&A provides a benefit under this Contract based
upon misstated or omitted information, including but not limited to
misstatement of age, LL&A will make adjustments to the benefit to reflect
the correct information using an interest rate of six percent (6%) per
annum. LL&A is relieved and discharged from any liability and
responsibility with respect to benefits provided in reliance upon
information You furnish.
12.7ASSIGNMENT: You may not assign this Contract without LL&A's prior
written consent. A Participant or Beneficiary under this Contract may
not, unless permitted by law, assign or encumber any payment due under
this Contract.
12.8MARKET EMERGENCIES: If transactions are to be made to or from the
Variable Investment Division, LL&A may not suspend the right of redemption
or delay payment for more than seven (7) calendar days after tender for
redemption, except for (1) any period when the New York Stock Exchange is
closed (other than customary weekend and holiday closings); (2) any
period when trading in the markets normally utilized is restricted, or an
emergency exists as determined by the Securities and Exchange Commission,
so that disposal of investments or determination of the Accumulation Unit
Value is not reasonably practicable; or (3) for such other periods as the
Securities and Exchange Commission by order may permit for the protection
of the Participants.
12.9DEFERRAL PERIODS: If a withdrawal is to be made from the Guaranteed
Interest Division, LL&A may defer the payment for the period permitted by
the law of the state in which this Contract was delivered but not more
than six (6) months after a written election is received by LL&A. During
the period of deferral, interest at the then current interest rate(s) will
continue to be credited to a Participant's Account in the Guaranteed
Interest Division.
12.10DEDUCTIONS FOR PREMIUM TAXES: LL&A will deduct from Participant
Account balances any premium tax levied as a result of the existence of
Participant Accounts by any state or other governmental entity.
<PAGE>
12.11FACILITY OF PAYMENT: If any person is, in the judgment of LL&A,
physically or mentally incapable of personally receiving and giving a
valid receipt for any payment due him under this Contract, LL&A may,
unless and until claim shall have been made by a duly appointed legal
guardian or conservator of the person and property of such person, make
such payment or any part thereof to such other person or institution which,
in the judgment of LL&A, is then contributing toward or providing for the
care and maintenance of such person. In no event will any such payment
exceed the maximum allowed under the applicable law of the state in which
this Contract is delivered. Such payment shall fully discharge LL&A of
its obligations to the extent of the payment.
LL&A will make any payment which has become due to a Participant or an
Annuitant and has not been paid prior to his death, to the Participant's
Beneficiary or Beneficiaries, his executors or administrators. If no
Beneficiary or personal representative has been named, LL&A may make
payment to any one or more of the surviving members of the following
classes of relatives; spouse, children, grandchildren, brothers, sisters,
and parents. Such payment shall fully discharge LL&A for all liability to
the extent of the payment.
12.12EVIDENCE OF SURVIVAL: When a benefit payment is contingent upon the
survival of any person, evidence of such person's survival must be
furnished to LL&A, either by such person's endorsement of the check drawn
for such payment, or by other satisfactory means.
12.13NON-WAIVER: The failure on LL&A's part to perform or insist upon the
strict performance of any provision or condition of this Contract shall
neither constitute a waiver of LL&A's rights to perform or require
performance of such provision or condition, nor stop LL&A from exercising
any other rights it may have in such provision, condition, or otherwise in
this Contract or any Plan.
12.14RECEIPT OF NOTICE: Whenever LL&A receives information establishing
any right or conferring any benefit upon any Participant or Beneficiary,
such receipt shall be deemed to take place on any Business Day that such
information is received.
12.15SEPARABILITY OF PROVISIONS: If any provision of this Contract is
determined to be invalid, the remainder of the provisions shall remain in
full force and effect.
12.16THE SEPARATE ACCOUNT: The Separate Account is registered and
operated as a Unit Investment Trust under the Investment Company Act of
1940. As such, the assets of each Sub-Account are invested in a
registered management investment company (mutual fund).
The Separate Account will be legally separated from LL&A's other accounts.
The Separate Account's assets will, at the time during the year that
adjustments in the reserves are made, have a value of at least equal to
the reserves and other contract liabilities with respect to the Separate
Account, and at all other times, will have a value approximately equal to,
or in excess of, such reserves and liabilities. The portion of the assets
having a value equal to, or approximately equal to, the reserves and
contract liabilities will not be chargeable with liabilities arising out
of any other business which LL&A may conduct.
LL&A reserves the right, subject to compliance with applicable law,
including approval by You or the Participants if required by law, (1) to
create additional Sub-Accounts, (2) to combine or eliminate Sub-Accounts,
(3) to transfer assets from one Sub-Account to another, (4) to transfer
<PAGE>
assets to the General Account and other separate accounts, (5) to cause
the deregistration and subsequent re-registration of the Separate Account
under the Investment Company Act of 1940, (6) to operate the Separate
Account under a committee and to discharge such committee at any time, and
(7) to eliminate any voting rights which You or Participants may have with
respect to the Separate Account, (8) to amend the Contract to meet the
requirements of the Investment Company Act of 1940 or other federal
securities laws and regulations, (9) to operate the Separate Account in any
form permitted by law, (10) to substitute shares of another fund for the
shares held by a Sub- Account, and (11) to make any change required by the
Internal Revenue Code, the Employee Retirement Income Security Act of
1974, or the Securities Act of 1933, to the extent not provided in Section
12.3.
12.17PAYMENT OF BENEFITS: LL&A shall make payment of benefits under this
Contract directly to a Participant or Beneficiary at the last known
address on file with LL&A.
12.18FREE-LOOK PERIOD: A Participant will receive an Active Life
Certificate upon LL&A's receipt of a duly completed participation
enrollment form. If the Participant chooses not to participate under this
Contract, he may exercise his Free-look right by sending a written notice
to LL&A that he does not wish to participate under this Contract within
ten (10) days after the date the Certificate is received by the
Participant. For purposes of determining the date on which the
Participant has sent written notice, the postmark date will be used.
If a Participant exercises his Free-look right in accordance with the
foregoing procedure, LL&A will refund in full the Participant's aggregate
Contributions less aggregate withdrawals, or if greater, with respect to
Contributions to the Variable Investment Division, the Participant's
Account balance in the Variable Investment Division on the date the
cancelled Certificate is received by LL&A.
<PAGE>
SYSTEMATIC WITHDRAWAL OPTION
ATTACHMENT I
The formula for the interest equivalency amount (IEA) is:
29.5/366
IEA = ACCT.BAL x ( (1 + I )
- 1)
WHERE:
IEA is the Interest Equivalency Amount.
ACCT. BAL. is the Participant's Account balance at
the later of: the beginning of the contract
year and the most recent date on which the
credited interest rate changed.
I is the interest rate currently being credited
to the contract
EXAMPLE: The Account balance at the beginning of the year is
one hundred thousand dollars ($100,000) and the interest rate
credited to the contract is six percent (6.00%). The Interest
Equivalency Amount for each month of the current year is:
29.5/366
IEA = $100,000 x (1.06 - 1)
= $470.76
<PAGE>
LOGO LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SYRACUSE, NEW YORK
ACTIVE LIFE CERTIFICATE
PAYMENT AND VALUES PROVIDED UNDER THE CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO THE
DOLLAR AMOUNT.
A PARTICIPANT MAY CHOOSE AN ASSUMED INTEREST RATE RANGING BETWEEN 0% AND 6% FOR
A VARIABLE ANNUITY.
CONTRACTHOLDER: [ ABC Hospital ]
GROUP ANNUITY CONTRACT NUMBER: [ 00000 ]
EFFECTIVE DATE OF CONTRACT: [ June 4, 1994 ]
EMPLOYER: [ ABC Hospital ]
PLAN: [ ABC Hospital TSA Plan ]
CERTIFICATION: Lincoln Life & Annuity Company of New York (herein called LL&A)
will provide Participants with the benefits described in this Certificate,
under the terms of the Group Annuity Contract. A Participant's benefits
described in this Certificate may be subject to Contractholder approval under
the terms of the Plan named above. This Certificate summarizes but does not
alter or void the terms of the Contract between the Contractholder and LL&A.
This Certificate replaces any certificates previously issued to you as a
Participant regarding this Contract.
TEN DAY RIGHT TO EXAMINE THIS CERTIFICATE (FREE-LOOK PERIOD): A Participant
may choose not to participate in this Contract within ten (10) days of receiving
this Certificate. The Participant must return this Certificate to LL&A and
state in writing that he or she does not wish to participate in this Contract.
LL&A will refund all contributions, less any withdrawals, made by the
Participant. The refunded contributions will not be reduced by any charges or
losses nor credited with any gains or interest.
CONTRACT SPECIFICATIONS: The above referenced Contract is being used to fund a
Tax Sheltered Annuity plan, also known as a Section 403(b) plan. Federal law
may restrict contributions, withdrawals, loans or other benefits under the
Contract.
Divisions Available Under The Contract:
A.Guaranteed Interest Division
B.Variable Investment Division:
Asset Manager Account (Fidelity's VIPF II: Asset Manager Portfolio)
Balanced Account (TCI Portfolios, Inc.: TCI Balanced Portfolio)
Growth I Account (Fidelity's VIPF: Growth Portfolio)
Growth II Account (TCI Portfolios, Inc.: TCI Growth Portfolio)
Index Account (Dreyfus Life and Annuity Index Fund, Inc.)
International Stock Account (T. Rowe Price International Series,Inc.)
Socially Responsible Account (Calvert Responsibly Invested Balanced
Portfolio)
Equity-Income Account (Fidelity's VIPF: Equity-Income Portfolio)
Small Cap Account (Dreyfus Variable Investment Fund: Small Cap Portfolio)
Annual Administration Charge:
OPTION 1: Twenty-five dollars ($25) per Participant
OPTION 2: Twenty-five dollars ($25) per Participant who allocates a
contribution, during the year ending on a Participation
Anniversary, to any one (1)
Form No.: 96-101 C1(NY)
Action Life Cert.
<PAGE>
or more of the Sub- Accounts established in the Variable Investment
Division
Annual Mortality and Expense Risk Charge Applicable to Variable Investment
Division Sub- Accounts: Annual rate of one and two-tenths percent (1.20%)
The expenses actually experienced or the mortality actually experienced by LL&A
shall not adversely affect the dollar amount of Variable Annuity payments to
any Annuitant for whom Variable Annuity payments have commenced.
OPTION 1:
CONTINGENT DEFERRED SALES CHARGE (CDSC): The following schedule of CDSC shall
apply to all withdrawal Amounts.
(a) WHEN A WITHDRAWAL IS THE CDSC WILL
REQUESTED AND ONE OR EQUAL:
MORE OF THE FOLLOWING
CONDITIONS IS MET:
SUB-OPTIONS:
- ------------
A1: The Participant has died 0%
A2: The Participant has incurred a 0%
disability for which he is
receiving Social Security
payments
A3: The Participant has incurred a 0%
disability for at least a six
(6) month period which continues
to prevent him from performing
each of the material duties of
his regular occupation
A4: The Participant has attained age 0%
fifty-nine and one-half (59 1/2)
A5: The Participant has separated 0%
from service with the Contract-
holder and is receiving pension
benefits
A6: The Participant has separated 0%
from service with the Contract-
holder
A7: The Participant has demonstrated 0%
a financial hardship need
A8: A Participant has requested a 0%
withdrawal which will not exceed
twenty (20%) percent of his
Participant's Account balance
and no other withdrawal has been
made in that calendar year
<PAGE>
SUB-OPTIONS:
- ------------
B1: (b) For all other amounts subject to a
CDSC, the CDSC will equal: 6%
B2: (b) For all other amounts subject to a CDSC, the CDSC will be in
accordance with the schedule below.
During Participation Year CDSC Percent
1-6 5%
7 4%
8 3%
9 2%
10 1%
11 and later 0%
LL&A may request any reasonable proof necessary to verify that the
withdrawal meets the conditions described above in subsection (a). If
You or the Participant do not furnish the proof requested by LL&A, the
CDSC stated in subsection (b) shall apply.
In no event will the CDSC, when added to any CDSC previously imposed due to
a Participant withdrawal, exceed eight and one-half percent (8.5%) of the
cumulative Contributions to a Participant's Account.
OPTION 2:
- ---------
Limitations on withdrawals from the Guaranteed Interest Division: A Participant
may make a withdrawal from the Guaranteed Interest Division for a specified
percentage of their Participant's Account balance based on the following
schedule:
(a) WHEN A WITHDRAWAL IS THE PERCENTAGE OF
REQUESTED AND ONE OR THE PARTICIPANT'S
MORE OF THE FOLLOWING ACCOUNT BALANCE
CONDITIONS IS MET: AVAILABLE IS:
SUB-OPTIONS:
- ------------
A1: The Participant has died 100%
A2: The Participant has incurred a 100%
disability for which he is
receiving Social Security
payments
A3: The Participant has incurred a 100%
disability for at least a six
(6) month period which continues
to prevent him from performing
each of the material duties of
his regular occupation
A4: The Participant has attained age 100%
fifty-nine and one-half (59 1/2)
<PAGE>
A5: The Participant has separated 100%
from service with the Contract-
holder
A6: The Participant has demonstrated 100%
a financial hardship need
A7: The Participant has separated 100%
from service with the Contract-
holder and is receiving pension
benefits
A8: (b) In addition, during any one (1) calendar year, a Participant may
make one (1) withdrawal or transfer from the Guaranteed Interest
Division in an amount not to exceed twenty percent (20%) of the
Guaranteed Interest Division Account balance. Any Participant
stating their intention to liquidate their Guaranteed Interest
Division Account balance, however, may make one (1) withdrawal
or transfer for five (5) consecutive calendar years from their
Guaranteed Interest Division Account balance in the following
percentage:
Percentage of
Year Request Received Guaranteed Interest
by LL&A Division Available
1 20%
2 25%
3 33 1/3%
4 50%
5 100%
The five (5) consecutive withdrawals or transfers may not be
submitted more frequently than twelve (12) months apart. LL&A
also reserves the right to require that any Participant stating
their intention to liquidate their Guaranteed Interest Division
Account balance stop contributions to the Contract.
(c) There are no limitations on withdrawals from the Variable
Interest Division.
LL&A may request any reasonable proof necessary to verify that the
withdrawal meets the conditions described above in subsection (a).
However, all financial hardship withdrawals will require the
Contractholder's written documentation authorizing such request.
SYSTEMATIC WITHDRAWAL SET-UP CHARGE: [Thirty dollars ($30). If the total
Account balance is twenty-five thousand dollars ($25,000) or greater, such
amount will be waived.]
CONTRIBUTIONS: Contributions shall be split among the Guaranteed Interest
Division and each Sub-Account as directed by the Participant. A Participant
may change on an unlimited basis, the split between the Guaranteed Interest
Division and each Sub-Account.
<PAGE>
ACCOUNT BALANCE IN GUARANTEED INTEREST DIVISION: The dollar value of the
Participant's Account balance in the Guaranteed Interest Division as of any date
is:
(1)Contributions and interest credited to the Guaranteed Interest Division
and amounts transferred from the Variable Investment Division; less any
(2)Any amounts: deducted for withdrawals from the Guaranteed Interest
Division, transferred to the Variable Investment Division, converted to
retirement annuities, Annual Administrative Charges.
LL&A will declare in advance a guaranteed interest rate which will be effective
for all amounts in the Participant's Account balance in the Guaranteed Interest
Division during the designated year. This rate will never be less than three
percent (3%).
Fist UNUM may also declare in advance separate interest rate guarantees which
are in excess of the guaranteed interest rate for some or all of the
Participant's Account balance in the Guaranteed Interest Division for specific
period(s) during the designated year.
ACCOUNT BALANCE IN THE VARIABLE INVESTMENT DIVISION: The dollar value of the
Participant's Account balance in each Sub-Account as of the end of a Valuation
Period will be equal to:
(1)The Participant's number of Accumulation Units as of the end of that
Valuation Period; times
(2)The Accumulation Unit Value as of the end of that Valuation Period.
OPTION 1:
- ---------
ANNUAL ADMINISTRATION CHARGE: The Annual Administration Charge in the Contract
Specifications will be deducted on the last business day of the month in which
the Participant's Participation Anniversary occurs unless the Contractholder
pays the charge in a single payment. In no event will the deduction be greater
than the value of the Participant's Account. A Participation Anniversary is
the yearly anniversary of the day LL&A credited the first contribution to the
Participant's Account. The Annual Administration Charge is also deducted when
a Participant requests any withdrawal which would reduce his or her Account
balance below the Annual Administration Charge.
OPTION 2:
- ---------
ANNUAL ADMINISTRATION CHARGE: The Annual Administration Charge in the Contract
Specifications will be deducted on a pro-rata basis on the last business day of
the month in which the Participant's Participation Anniversary occurs unless
the Contractholder pays the charge in a single payment. In no event will the
deduction be greater than the value of the Participant's Variable Investment
Division Account balance. A Participation Anniversary is the yearly
anniversary of the day LL&A credited the first contribution to the
Participant's Variable Investment Division Account. The Annual Administration
Charge is also deducted when a Participant requests any withdrawal or transfer
which would reduce his or her Variable Investment Division Account balance
below the Annual Administration Charge.
<PAGE>
TRANSFERS BETWEEN INVESTMENT DIVISIONS: A Participant may transfer his or her
Account balance from one Division to another Division, subject to the following
conditions:
OPTION 1: Unlimited transfers are allowed each calendar year.
OPTION 2: Unlimited transfer requests may be made between Sub-Accounts by a
Participant in one (1) calendar year.
OPTION 3: During any one (1) calendar year, a Participant may make one (1)
transfer from the Guaranteed Interest Division to the Variable
Investment Division or one (1) withdrawal from the Guaranteed
Interest Division in an amount not to exceed twenty percent (20%)
of the Participant's Account balance in the Guaranteed Interest
Division to the Sub-Accounts in the Variable Investment Division.
WITHDRAWALS: Participants may make withdrawals by filling out a Withdrawal
Request Form available from LL&A. [All withdrawals shall be subject to the
CDSC described above in Contract Specifications.] Annuity Conversions are not
considered withdrawals.
Withdrawals are subject to the requirements set forth in Section 403(b) of the
Internal Revenue Code. Any portion of the Participant's Account balance that
has been recorded by LL&A as a salary reduction contribution made and/or
earnings credited prior to January 1, 1989 may be withdrawn for any reason
unless restricted by the Plan. Any portion of the Participant's Account
balance that has been recorded by LL&A as a salary reduction Contribution made
and/or earnings credited after December 31, 1988 are subject to the withdrawal
restrictions stated in Section 403(b) of the Code and by the Plan. Participants
must certify to LL&A (and provide supporting information, if requested), that
an event permitting withdrawal has occurred and that LL&A may rely on such
representation in granting the withdrawal request.
All withdrawal requests will require written authorization by the Contractholder
and written documentation specifying the portion of the participant's Account
balance which is available for distribution to the Participant.
To meet the withdrawal amount, the liquidation of the Participant's Account
Balance will be made on a pro rata basis from the Guaranteed Interest Division
and the Sub-Accounts, unless the Participant specifies otherwise. Amounts to
be liquidated from the Guaranteed Interest Division will be withdrawn on a
first-in-first-out basis. All contributions from the first contribution period
will be withdrawn before contributions from the second contribution period are
withdrawn.
LL&A may not defer the right of withdrawal and transfer with respect to the
Variable Investment Division more than seven (7) days after receiving such
transaction request, unless the New York Stock Exchange is closed or the
Securities and Exchange Commission declares a Market Emergency to protect the
Participants. If, in LL&A's opinion, the payment of a withdrawal under this
section will adversely affect the other Participants under this and other
contracts of this class, LL&A reserves the right to delay payments from the
Guaranteed Interest Division for up to one hundred eighty (180) days. The then
current interest rate will be credited during the one hundred eighty (180)
days.
<PAGE>
LOANS: A Participant may request a loan by completing a loan application. When
the Plan is subject to Title I of ERISA, the payment of any loan must be
authorized by the Contractholder. A Participant may only have one loan
outstanding at any time and may not have more than one (1) loan in any six (6)
month period. [However, a Participant may renegotiate an outstanding loan
balance once during the term of the loan.] LL&A may defer the payment of a loan
not more than six (6) months after a written request for the loan was received.
The amount of a loan must be at least one thousand dollars ($1,000). No loan
may exceed ninety percent (90%) of the Participant's Account balance in the
Guaranteed Interest Division; or, if less:
(a)fifty thousand dollars ($50,000) reduced by the excess (if any) of the
highest outstanding balance of loans from the Plan to the Participant
during the one (1) year period ending on the day before the date on which
such loan is made, minus the outstanding balance of loans from the Plan to
the Participant on the date on which such loan was made, or
(b)if the Plan is not subject to Title I of ERISA, the greater of (i) ten
thousand dollars ($10,000) and (ii) one-half (1/2) of the present value of
the vested benefits of the Participant under such Plan, or
(c)if the Plan is subject to Title I of ERISA, one-half (1/2) of the
present value of the vested benefits of the Participant under such Plan.
The term of the loan shall not exceed five (5) years unless the loan is used to
acquire or construct the principal residence of the Participant. Level
payments (at least quarterly) is required over the term of the loan.
Quarterly, LL&A will establish the loan interest rate under the Contract. When a
Participant requests a loan, LL&A will notify him or her of the applicable loan
interest rate. The initial interest rate will be the lesser of (a) the rate
being credited to the Guaranteed Interest Division plus 1%, or (b) Moody's
Corporate Bond Yield Average. This rate will not increase during the term of
the loan. If on any quarterly determination date, the new loan interest rate
under the Contract decreases by more than one-half of one percent (0.5%) below
the Participant's current loan rate, the Participant's current loan interest
rate will be reduced to the new loan rate. However, the new loan rate will
never be less than the guaranteed minimum interest rate of three percent (3%).
Loans are secured by the Participant's Account balance in the Guaranteed
Interest Division. The secured amount is composed of a loan reserve account,
plus an amount equal to ten percent (10%) of the borrowed amount. The amount
of the loan reserve account is equal to the amount borrowed. The loan reserve
account will accrue interest at a rate which is three percent (3%) less than
the loan interest rate but will never be less than the guaranteed minimum
interest rate of three percent (3%). The secured amount in excess of the loan
reserve account will accrue interest at the rate in effect for the Guaranteed
Interest Division. This excess amount will cover interest [and CDSC] if the
Participant defaults on the loan.
If a Participant fails to make a loan payment within thirty-one (31) days of its
due date, that payment will be in default. For tax purposes, a default will be
treated as a withdrawal of contributions under the Contract. The Participant
may elect to repay the outstanding loan principal and interest until such time
as the original loan term ends.
<PAGE>
LL&A may foreclose on the loan as soon as one or more of the following events
has occurred:
(a)the Participant has attained age fifty-nine and one-half (59-1/2);
(b)the Participant has died;
(c)the Participant has incurred a disability for which he is receiving
Social Security payments;
(d)the Participant has separation from service with the Contractholder; or
(e)the Participant has a financial hardship.
However, in no event will LL&A foreclose on a loan in default until the original
loan term ends.
LL&A will notify the Participant at least thirty-one (31) days in advance of the
effective date of such loan foreclosure to provide the Participant an
opportunity to take action to remove the loan from its default status.
When a loan is foreclosed, LL&A will deduct from the Participant's loan reserve
account and from his Participant's Account balance in the Guaranteed Interest
Division an amount sufficient to pay off the loan principal, interest due and
accrued, [and any CDSC].
DEATH BENEFITS: Upon proof of death, LL&A will pay a death benefit to the
Beneficiary named on the Enrollment Form or its most recent amendment. The
amount of the Death Benefit will be determined as follows:
(1)If the Participant dies during the Accumulation Period, the Death
Benefit will equal the greater of:
(a)All contributions made to the Participant's Account less any net
withdrawal amounts including charges, any outstanding loans (principal and
due and accrued interest) and annuity conversion amounts; or
(b)The Participant's Account balance less any outstanding loans (principal
and due and accrued interest).
(2)If LL&A is notified of the Participant's death more than six (6) months
after the Participant's death, the Death Benefit will be that described in
1(b).
LL&A will calculate the Death Benefit as of the end of the Valuation Period
during which it receives both satisfactory proof of the Participant's death and
the election of a form of benefit as described below.
The Beneficiary may choose to receive the Death Benefit in the form of a lump
sum, an annuity, or a combination of the two. The Beneficiary will have sixty
(60) days to make this choice. If the Beneficiary does not make a choice
within sixty (60) days, LL&A will pay the Death Benefit in the form of a lump
sum.
The Participant may change his or her Beneficiary at any time by written notice
to LL&A at its Home Office. Written notice must be in a form satisfactory to
LL&A, and must be signed and dated by the Participant. Such change of
Beneficiary takes effect on the date it is signed by the Participant whether or
not the Participant is living on the date notice is received by LL&A. LL&A
will not be liable to the Beneficiary for any payments made before receipt of
such notice at its Home Office. If there is no living Beneficiary at the
Participant's death, LL&A will pay the Death Benefit to the Participant's
estate.
<PAGE>
ANNUITIES: Upon request, LL&A will quote for the Participant the amounts of
annuity available under the various annuity options. Annuity benefits will not
be less than those that would be provided if a single premium immediate annuity
contract was purchased with LL&A. A Participant or Beneficiary may select
either a Guaranteed Annuity or a Variable Annuity. A Guaranteed Annuity is an
annuity for which LL&A guarantees the amount of each payment as long as the
annuity is payable. A Variable Annuity is an annuity with payments that
increase or decrease in accordance with the investment results of the
applicable Sub-Account. LL&A will provide the Participant with a Retirement
Certificate when Annuity Payments begin.
SYSTEMATIC WITHDRAWAL OPTION: Any Participant who: (a) is at least age
fifty-nine and one-half (59 1/2), or (b) [is disabled and receiving Social
Security disability benefits], or (c) is separated from service and (d) has a
vested pre-tax Participant Account balance of at least [ten thousand dollars
($10,000)] may elect this option.
Amounts held for a spousal payee under a Qualified Domestic Relations Order
(QDRO) shall be recognized as eligible for the Systematic Withdrawal Option.
Any spousal payee must also meet the minimum [ten thousand dollar ($10,000)]
Account balance requirement and either the age or disability requirements as
discussed above.
A Participant may elect to receive monthly, quarterly, semi-annual, or annual
payments in a flat amount or payments on a monthly basis for an interest
equivalency amount. An interest equivalency amount is an approximation of the
interest earned between each payment period based upon the interest rate in
effect at the beginning of each respective payment period. This amount will be
determined by LL&A. A Participant may change the frequency, payment type, or
payment amount by submitting a request in writing to LL&A. This change may only
occur once during each calendar year.
A Participant may direct LL&A in writing to cease payments and may not request
that any systematic withdrawal payments begin again until the next calendar
year.
Systematic withdrawals shall be withdrawn from amounts allocated to the
Guaranteed Interest Division of the Participant's Account balance.
LL&A will deduct the Systematic Withdrawal Set-Up Charge each time a Systematic
Withdrawal Option is established.
Payments under this option shall stop upon the earliest of the following events.
(a)On the date of the Participant's death. A Beneficiary who is a spouse
may elect this option by requesting it in writing on a form acceptable to
LL&A, unless election of this form of benefit would violate any other
requirements of this contract. Then the spousal Beneficiary must meet the
[ten thousand dollar ($10,000)] minimum Account balance requirement prior
to electing the Systematic Withdrawal Option; or
(b)When there is an insufficient Participant Account balance after
deducting the applicable Annual Administration Charge, if any, to pay the
amount requested; or
(c)The Participant fails to meet the requirements of the Systematic
Withdrawal Option as outlined above in the first (1st) paragraph of this
Section.
<PAGE>
If a disabled or terminated participant, who is currently receiving a Systematic
Withdrawal Option payment, returns to service with the Contractholder, the
Contractholder or Participant must notify LL&A in writing within thirty (30)
days from the date of return to service. LL&A reserves the right to
discontinue the Systematic Withdrawal Option payment under these circumstances.
If a Participant wishes to exercise this option under another LL&A Annuity
Contract, such request shall be considered separate from this Contract and
shall follow the Systematic Withdrawal Option rules under that Annuity
Contract, if permitted.
LL&A may, at its option, discontinue the Systematic Withdrawal Option under this
Contract at any time provided You are given at least thirty (30) days advance
written notice.
DIRECT ROLLOVER OPTION: Beginning January 1, 1993, a Participant or
Beneficiary may elect this option for any distribution that qualifies as an
Eligible Rollover Distribution as defined by Section 402(c) of the Internal
Revenue Code and that meets all the following requirements.
(1)The distribution must be paid directly to either a single Individual
Retirement Account or to a single Tax Sheltered Annuity. The check, wire,
or other form of remittance shall be made payable to the trustee,
custodian, or financial institution sponsoring the Individual Retirement
Account or Tax Sheltered Annuity. The form of remittance will not be an
instrument that can be negotiated by the Participant.
(2)The Participant must provide in a form acceptable to LL&A, all
information necessary to make the payment to an Individual Retirement
Account or Tax Sheltered Annuity.
(3)The Participant or Beneficiary may not revoke a request for payment
under this option for any payment after LL&A has received a written
request for a direct rollover.
NONASSIGNABILITY: No sum payable under the Group Annuity Contract may be sold,
discounted, or pledged as collateral for a loan or as a security for the
performance of any obligation to anyone other than LL&A. To the fullest extent
allowed by law, no such sum shall be subject to any legal process for payment
of any claim against the payee.
EFFECT OF MISSTATEMENTS: LL&A has the right to require information and proof as
to any matter relating to its obligations under the Group Annuity Contract. If
age, or any other fact affecting the amount or date of any payment under the
Group Annuity Contract is misstated, the payment will be adjusted to what would
have been paid based on the correct information using an interest rate of six
percent (6%).
CHANGES IN THE GROUP ANNUITY CONTRACT: The Group Annuity Contract between LL&A
and the Contractholder may be changed or amended in accordance with its terms.
Such changes do not require the consent of any Participant under the Group
Annuity Contract. Any change in minimum interest guarantees, expense charges,
or minimum contribution requirements will not adversely affect contributions
received or annuities purchased before the effective date of the change unless
such change was required by law.
Nothing in the Group Annuity Contract impairs any right granted to the
Participant by this Certificate or the applicable state insurance code.
Participants may review the Contract by contacting the Contractholder's
personnel office.
<PAGE>
A failure by LL&A to insist upon the strict performance of any provision of the
Contract shall not be construed a waiver of any of LL&A's rights for future
actions.
DEACTIVATION: LL&A may prohibit the addition of new contributions and/or new
Participants to the Contract. LL&A will notify the Contractholder of this
action at least ninety (90) days before it is effective. When this occurs,
total or partial withdrawals are not subject to a CDSC.
<PAGE>
LOGO LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SYRACUSE, NEW YORK
VARIABLE ANNUITY PAYMENTS INCREASE OR DECREASE IN AMOUNT BASED ON THE NET
INVESTMENT RESULTS OF THE VARIABLE INVESTMENT DIVISION.
THE ASSUMED INTEREST RATE FOR THE VARIABLE ANNUITY IS [4%]. THE MORTALITY AND
EXPENSE RISK CHARGE IS 1.2%. IF THE INVESTMENT RETURN IS [5.2%] OR GREATER,
THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE.
ANNUITANT: [John Doe] CERTIFICATE NO.: [000-00-0000]
CONTRACTHOLDER: [ABC Hospital] GROUP ANNUITY
CONTRACT NO.: [90000]
CERTIFICATE ISSUE DATE: [6/1/91] INITIAL VARIABLE ANNUITY PAYMENT:
[ $50.00 ]
ASSUMED INTEREST RATE: [0-6%] VARIABLE INVESTMENT SUB-ACCOUNT:
[ ]
ANNUITY COMMENCEMENT FREQUENCY OF PAYMENTS: [monthly]
DATE: [6/1/91]
BENEFICIARY: [Jane Doe] GUARANTEED NUMBER OF PAYMENTS:
[120]
CERTIFICATION: Lincoln Life & Annuity Company of New York (called "LL&A")
agrees to pay the benefits described in this Certificate to the named Annuitant
under the terms of the Group Annuity Contract between LL&A and the
Contractholder. The amount and terms of the benefits are subject to the
provisions of the Group Annuity Contract. This Certificate describes, but in no
way alters or voids the benefits provided under the Group Annuity Contract.
TERMS OF PAYMENT: LL&A will begin Variable Annuity Payments to the Annuitant as
of his/her Annuity Commencement Date. Payments to the Annuitant will end on
his/her date of death.
If the Annuitant dies before the Guaranteed Number of Payments have been made,
LL&A will pay each remaining Payment to the named Beneficiary. If there is no
living Beneficiary on file with LL&A at the death of the Annuitant, LL&A will
pay any death benefit to the Annuitant's estate.
Form No.: 96-101 C2a(NY)
Variable Annuity Cert.: C2C
<PAGE>
DETERMINING VARIABLE ANNUITY PAYMENT: An Annuity Payment Calculation Date is a
Valuation Date which is ten (10) Business Days prior to the first day of a
calendar month. A Valuation Period is the period between two Valuation Dates.
Each Variable Annuity Payment for each Sub-Account except the Initial Variable
Annuity Payment is determined by:
(1)Dividing the Initial Variable Annuity Payment by an Annuity Unit Value
for the Interest Rate Option as of the Initial Annuity Payment Calculation
Date, and
(2)Multiplying the resultant number of Annuity Units by the value of the
Annuity Unit Value for the Interest Rate Option on the Annuity Payment
Calculation Date just prior to subsequent payment.
INFORMATION AND PROOF: LL&A has the right to require information and proof as
to any matter relating to its obligations under the Group Annuity Contract.
Annuitants may make arrangements to examine the Group Annuity Contract at the
Contractholder's place of business or at LL&A's Home Office.
The Annuitant must notify LL&A of any change in address. All correspondence
should include the Annuitant's name, social security number, and the Group
Annuity Contract Number.
BENEFICIARY: The Annuitant may change his/her Beneficiary by written notice to
LL&A at its Home Office. Written notice must be in a form satisfactory to LL&A
and must be signed and dated by the Annuitant.
Such change of Beneficiary takes effect on the date the notice is signed by the
Annuitant, whether or not the Annuitant is living on the date the notice is
received by LL&A. LL&A will not be liable to the Beneficiary on account of any
payments made before receipt of such notice at its Home Office.
NONASSIGNABILITY: No sum payable under the Group Annuity Contract may be sold,
discounted, or pledged as collateral for a loan or as security for the
performance of any obligation by the payee. To the fullest extent allowed by
law, no such sum shall be subject to any legal process for payment of any claim
against the payee.
EFFECT OF MISSTATEMENT: If age or any other fact affecting the amount or date
of any payment under the Group Annuity Contract has been misstated or omitted,
the Variable Annuity Payments will be adjusted. The adjustment in Variable
Annuity Payments will be based on the amounts that would have been paid using
the correct information.
FACILITY OF PAYMENT: Upon notice from a duly appointed guardian or other legal
representative that a Payee is legally incapable of receiving payment, LL&A will
pay the legal representative on behalf of the Payee. If, in the judgment of
LL&A, any payee is physically, mentally, or legally incapable of acknowledging
receipt of a payment due to him/her, LL&A will pay the person or institution
who, in the opinion of LL&A, is then maintaining or has custody of the payee.
Such payments will constitute a full discharge of LL&A's liability, to the
extent paid.
<PAGE>
LOGO LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SYRACUSE, NEW YORK
VARIABLE ANNUITY PAYMENTS INCREASE OR DECREASE IN AMOUNT BASED ON THE NET
INVESTMENT RESULTS OF THE VARIABLE INVESTMENT DIVISION.
THE ASSUMED INTEREST RATE FOR THE VARIABLE ANNUITY IS [4%]. THE MORTALITY AND
EXPENSE RISK CHARGE IS 1.2%. IF THE INVESTMENT RETURN IS [5.2%] OR GREATER,
THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE.
ANNUITANT: [John Doe] CERTIFICATE NO.: [000-00-0000]
CONTRACTHOLDER: [ABC Hospital] GROUP ANNUITY CONTRACT NO.:
[90000]
CERTIFICATE ISSUE DATE: [6/1/91] INITIAL VARIABLE ANNUITY PAYMENT:
[ $100.00 ]
ASSUMED INTEREST RATE: [0-6%] VARIABLE INVESTMENT SUB-ACCOUNT:
[ ]
ANNUITY COMMENCEMENT FREQUENCY OF PAYMENTS: [Monthly]
DATE: [6/1/91]
INITIAL DEATH BENEFIT: [$50,000] BENEFICIARY: [Jane Doe]
CERTIFICATION: Lincoln Life & Annuity Company of New York (called "LL&A")
agrees to pay the benefits described in this Certificate to the named Annuitant
under the terms of the Group Annuity Contract between LL&A and the
Contractholder. The amount and terms of the benefits are subject to the
provisions of the Group Annuity Contract. This Certificate describes, but in no
way alters or voids the benefits provided under the Group Annuity Contract.
TERMS OF PAYMENT: LL&A will begin Variable Annuity Payments to the Annuitant as
of his/her Annuity Commencement Date. Payments to the Annuitant will end on
his/her date of death.
If, at the Annuitant's death, the Initial Death Benefit exceeds the total
Variable Annuity Payments received by the Annuitant, LL&A will pay a lump sum
Death Benefit to the named Beneficiary. The amount of the Death Benefit will
be the Initial Death Benefit minus the sum total Variable Annuity Payments paid
to the Annuitant.
If the Beneficiary dies after the date of the Annuitant's death but before the
lump sum Death Benefit is paid, the Death Benefit shall be paid to the
Beneficiary's estate. If there is no living Beneficiary at the Annuitant's
Death, LL&A will pay the lump sum Death Benefit to the Annuitant's estate.
DETERMINING VARIABLE ANNUITY PAYMENT: An Annuity Payment Calculation Date
is a Valuation Date which is ten (10) Business Days prior to the first day of a
calendar month. A Valuation Period is the period between two Valuation Dates.
Each Variable Annuity Payment for each Sub-Account except the Initial Variable
Annuity Payment is determined by:
Form No.: 96-101 Cab(NY)
Variable Annuity Cert.: CR
<PAGE>
(1)Dividing the Initial Variable Annuity Payment by an Annuity Unit Value
for the Interest Rate Option as of the Initial Annuity Payment Calculation
Date, and
(2)Multiplying the resultant number of Annuity Units by the value of the
Annuity Unit Value for the Interest Rate Option on the Annuity Payment
Calculation Date just prior to subsequent payment.
INFORMATION AND PROOF: LL&A has the right to require information and proof as
to any matter relating to its obligations under the Group Annuity Contract.
Annuitants may make arrangements to examine the Group Annuity Contract at the
Contractholder's place of business or at LL&A's Home Office.
The Annuitant must notify LL&A of any change in address. All correspondence
should include the Annuitant's name, social security number, and the Group
Annuity Contract Number.
BENEFICIARY: The Annuitant may change his/her Beneficiary by written notice to
LL&A at its Home Office. Written notice must be in a form satisfactory to LL&A
and must be signed and dated by the Annuitant.
Such change of Beneficiary takes effect on the date the notice is signed by the
Annuitant, whether or not the Annuitant is living on the date the notice is
received by LL&A. LL&A will not be liable to the Beneficiary on account of any
payments made before receipt of such notice at its Home Office.
NONASSIGNABILITY: No sum payable under the Group Annuity Contract may be sold,
discounted, or pledged as collateral for a loan or as security for the
performance of any obligation by the payee. To the fullest extent allowed by
law, no such sum shall be subject to any legal process for payment of any claim
against the payee.
EFFECT OF MISSTATEMENT: If age or any other fact affecting the amount or date
of any payment under the Group Annuity Contract has been misstated or omitted,
the Variable Annuity Payments will be adjusted. The adjustment in Variable
Annuity Payments will be based on the amounts that would have been paid using
the correct information.
FACILITY OF PAYMENT: Upon notice from a duly appointed guardian or other legal
representative that a Payee is legally incapable of receiving payment, LL&A
will pay the legal representative on behalf of the Payee. If, in the judgment
of LL&A, any payee is physically, mentally, or legally incapable of
acknowledging receipt of a payment due to him/her, LL&A will pay the person or
institution who, in the opinion of LL&A, is then maintaining or has custody of
the payee. Such payments will constitute a full discharge of LL&A's liability,
to the extent paid.
<PAGE>
LOGO LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SYRACUSE, NEW YORK
VARIABLE ANNUITY PAYMENTS INCREASE OR DECREASE IN AMOUNT BASED ON THE NET
INVESTMENT RESULTS OF THE VARIABLE INVESTMENT DIVISION.
THE ASSUMED INTEREST RATE FOR THE VARIABLE ANNUITY IS [4%]. THE MORTALITY AND
EXPENSE RISK CHARGE IS 1.2%. IF THE INVESTMENT RETURN IS [5.2%] OR GREATER,
THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE.
ANNUITANT: [John Doe] CERTIFICATE NO.: [000-00-0000]
CONTRACTHOLDER: [ABC Hospital] GROUP ANNUITY
CONTRACT NO.: [00000]
CERTIFICATE ISSUE DATE: [6/1/91] INITIAL VARIABLE ANNUITY PAYMENT:
[ $50.00 ]
ASSUMED INTEREST RATE: [0-6%] VARIABLE INVESTMENT SUB-ACCOUNT:
[ ]
ANNUITY COMMENCEMENT FREQUENCY OF PAYMENTS: [monthly]
DATE: [ 6/1/91 ]
CERTIFICATION: Lincoln Life & Annuity Company of New York (called LL&A") agrees
to pay the benefits described in this Certificate to the named Annuitant under
the terms of the Group Annuity Contract between LL&A and the Contractholder.
The amount and terms of the benefits are subject to the provisions of the Group
Annuity Contract. This Certificate describes, but in no way alters or voids
the benefits provided under the Group Annuity Contract.
TERMS OF PAYMENT: LL&A will begin Variable Annuity Payments to the Annuitant as
of his/her Annuity Commencement Date. Payments to the Annuitant will end on
his/her date of death. No further benefits will be paid under this Certificate
or the Group Annuity Contract.
DETERMINING VARIABLE ANNUITY PAYMENT: An Annuity Payment Calculation Date is a
Valuation Date which is ten (10) Business Days prior to the first day of a
calendar month. A Valuation Period is the period between two Valuation Dates.
Each Variable Annuity Payment for each Sub-Account excpet the Initial Variable
Annuity Payment is determined by:
(1)Dividing the Initial Variable Annuity Payment by an Annuity Unit Value
for the Interest Rate Option as of the Initial Annuity Payment Calculation
Date, and
(2)Multiplying the resultant number of Annuity Units by the value of the
Annuity Unit Value for the Interest Rate Option on the Annuity Payment
Calculation Date just prior to subsequent payment.
Form No.: 96-101 C2c(NY)
Variable Annuity Cert.: Life
<PAGE>
INFORMATION AND PROOF: LL&A has the right to require information and proof as
to any matter relating to its obligations under the Group Annuity Contract.
Annuitants may make arrangements to examine the Group Annuity Contract at the
Contractholder's place of business or at LL&A's Home Office.
The Annuitant must notify LL&A of any change in address. All correspondence
should include the Annuitant's name, social security number, and the Group
Annuity Contract Number.
NONASSIGNABILITY: No sum payable under the Group Annuity Contract may be sold,
discounted, or pledged as collateral for a loan or as security for the
performance of any obligation by the payee. To the fullest extent allowed by
law, no such sum shall be subject to any legal process for payment of any claim
against the payee.
EFFECT OF MISSTATEMENT: If age or any other fact affecting the amount or date
of any payment under the Group Annuity Contract has been misstated or omitted,
the Variable Annuity Payments will be adjusted. The adjustment in Variable
Annuity Payments will be based on the amounts that would have been paid using
the correct information.
FACILITY OF PAYMENT: Upon notice from a duly appointed guardian or other legal
representative that a Payee is legally incapable of receiving payment, LL&A will
pay the legal representative on behalf of the Payee. If, in the judgment of
LL&A, any payee is physically, mentally, or legally incapable of acknowledging
receipt of a payment due to him/her, LL&A will pay the person or institution
who, in the opinion of LL&A, is then maintaining or has custody of the payee.
Such payments will constitute a full discharge of LL&A's liability, to the
extent paid.
<PAGE>
LOGO LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SYRACUSE, NEW YORK
VARIABLE ANNUITY PAYMENTS INCREASE OR DECREASE IN AMOUNT BASED ON THE NET
INVESTMENT RESULTS OF THE VARIABLE INVESTMENT DIVISION.
THE ASSUMED INTEREST RATE FOR THE VARIABLE ANNUITY IS [4%]. THE MORTALITY AND
EXPENSE RISK CHARGE IS 1.2%. IF THE INVESTMENT RETURN IS [5.2%] OR GREATER,
THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE.
ANNUITANT: [John Doe] CERTIFICATE NO.: [000-00-0000]
CONTRACTHOLDER: [ABC Hospital] GROUP ANNUITY
CONTRACT NO.: [90000]
CERTIFICATE ISSUE DATE: [6/1/91] INITIAL VARIABLE ANNUITY PAYMENT:
[ $50.00 ]
ASSUMED INTEREST RATE: [0-6%] VARIABLE INVESTMENT SUB-ACCOUNT:
[ ]
ANNUITY COMMENCEMENT FREQUENCY OF PAYMENTS: [monthly]
DATE: [6/1/91]
BENEFICIARY: [Jane Doe] GUARANTEED NUMBER OF PAYMENTS:
[120]
CERTIFICATION: Lincoln Life & Annuity Company of New York (called "LL&A")
agrees to pay the benefits described in this Certificate to the named Annuitant
under the terms of the Group Annuity Contract between LL&A and the
Contractholder. The amount and terms of the benefits are subject to the
provisions of the Group Annuity Contract. This Certificate describes, but in no
way alters or voids the benefits provided under the Group Annuity Contract.
TERMS OF PAYMENT: LL&A will begin Variable Annuity Payments to the Annuitant as
of his/her Annuity Commencement Date. Payments to the Annuitant will end when
the Guaranteed Number of Payments have been made.
If the Annuitant dies before the Guaranteed Number of Payments have been made,
LL&A will pay each remaining Payment to the named Beneficiary. If there is no
living Beneficiary on file with LL&A at the death of the Annuitant, LL&A will
pay any death benefit to the Annuitant's estate.
Form No.: 96-101 C2d(NY)
Variable Annuity Cert.: Ctn
<PAGE>
DETERMINING VARIABLE ANNUITY PAYMENT: An Annuity Payment Calculation Date is a
Valuation Date which is ten (10) Business Days prior to the first day of a
calendar month. A Valuation Period is the period between two Valuation Dates.
Each Variable Annuity Payment for each Sub-Account except the Initial Variable
Annuity Payment is determined by:
(1) Dividing the Initial Variable Annuity Payment by an Annuity Unit Value for
the Interest Rate Option as of the Initial Annuity Payment Calculation
Date, and
(2)Multiplying the resultant number of Annuity Units by the value of the
Annuity Unit Value for the Interest Rate Option on the Annuity Payment
Calculation Date just prior to subsequent payment.
INFORMATION AND PROOF: LL&A has the right to require information and proof as
to any matter relating to its obligations under the Group Annuity Contract.
Annuitants may make arrangements to examine the Group Annuity Contract at the
Contractholder's place of business or at LL&A's Home Office.
The Annuitant must notify LL&A of any change in address. All correspondence
should include the Annuitant's name, social security number, and the Group
Annuity Contract Number.
BENEFICIARY: The Annuitant may change his/her Beneficiary by written notice to
LL&A at its Home Office. Written notice must be in a form satisfactory to LL&A
and must be signed and dated by the Annuitant.
Such change of Beneficiary takes effect on the date the notice is signed by the
Annuitant, whether or not the Annuitant is living on the date the notice is
received by LL&A. LL&A will not be liable to the Beneficiary on account of any
payments made before receipt of such notice at its Home Office.
NONASSIGNABILITY: No sum payable under the Group Annuity Contract may be sold,
discounted, or pledged as collateral for a loan or as security for the
performance of any obligation by the payee. To the fullest extent allowed by
law, no such sum shall be subject to any legal process for payment of any claim
against the payee.
EFFECT OF MISSTATEMENT: If age or any other fact affecting the amount or date
of any payment under the Group Annuity Contract has been misstated or omitted,
the Variable Annuity Payments will be adjusted. The adjustment in Variable
Annuity Payments will be based on the amounts that would have been paid using
the correct information.
FACILITY OF PAYMENT: Upon notice from a duly appointed guardian or other legal
representative that a Payee is legally incapable of receiving payment, LL&A will
pay the legal representative on behalf of the Payee. If, in the judgment of
LL&A, any payee is physically, mentally, or legally incapable of acknowledging
receipt of a payment due to him/her, LL&A will pay the person or institution
who, in the opinion of LL&A, is then maintaining or has custody of the payee.
Such payments will constitute a full discharge of LL&A's liability, to the
extent paid.
<PAGE>
LOGO LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SYRACUSE, NEW YORK
VARIABLE ANNUITY PAYMENTS INCREASE OR DECREASE IN AMOUNT BASED ON THE NET
INVESTMENT RESULTS OF THE VARIABLE INVESTMENT DIVISION.
THE ASSUMED INTEREST RATE FOR THE VARIABLE ANNUITY IS [4%]. THE MORTALITY AND
EXPENSE RISK CHARGE IS 1.2%. IF THE INVESTMENT RETURN IS [5.2%] OR GREATER,
THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE.
ANNUITANT: [John Doe] CERTIFICATE NO.: [000-00-0000]
CONTRACTHOLDER: [ABC Hospital] GROUP ANNUITY
CONTRACT NO.: [90000]
CERTIFICATE ISSUE DATE: [6/1/91] INITIAL VARIABLE ANNUITY PAYMENT:
[ $50.00 ]
ASSUMED INTEREST RATE: [0-6%] VARIABLE INVESTMENT SUB-ACCOUNT:
[ ]
ANNUITY COMMENCEMENT FREQUENCY OF PAYMENTS: [monthly]
DATE: [ 6/1/91 ]
JOINT ANNUITANT: [Jane Doe] SURVIVORSHIP ANNUITY PERCENTAGE:
[75%]
CERTIFICATION: Lincoln Life & Annuity Company of New York (called "LL&A")
agrees to pay the benefits described in this Certificate to the named Annuitant
under the terms of the Group Annuity Contract between LL&A and the
Contractholder. The amount and terms of the benefits are subject to the
provisions of the Group Annuity Contract. This Certificate describes, but in no
way alters or voids the benefits provided under the Group Annuity Contract.
TERMS OF PAYMENT: LL&A will begin Variable Annuity Payments to the Annuitant as
of his/her Annuity Commencement Date. Payments will continue until the death
of the Annuitant or the Joint Annuitant. At the death of the Annuitant or
Joint Annuitant, the Annuity Payment, which otherwise would have been paid had
both the Annuitant and Joint Annuitant lived, will be multiplied by the
Survivorship Annuity Percentage and paid to the survivor as long as he/she
lives. All Payments will end when both the Annuitant and the Joint Annuitant
are dead.
Form No.: 96-101 C2e(NY)
Variable Annuity Cert.: J2S
<PAGE>
DETERMINING VARIABLE ANNUITY PAYMENT: An Annuity Payment Calculation Date is a
Valuation Date which is ten (10) Business Days prior to the first day of a
calendar month. A Valuation Period is the period between two Valuation Dates.
Each Variable Annuity Payment for each Sub-Account except the Initial Variable
Annuity Payment is determined by:
(1) Dividing the Initial Variable Annuity Payment by an Annuity Unit Value for
the Interest Rate Option as of the Initial Annuity Payment Calculation
Date, and
(2)Multiplying the resultant number of Annuity Units by the value of the
Annuity Unit Value for the Interest Rate Option on the Annuity Payment
Calculation Date just prior to subsequent payment.
INFORMATION AND PROOF: LL&A has the right to require information and proof as
to any matter relating to its obligations under the Group Annuity Contract.
Annuitants may make arrangements to examine the Group Annuity Contract at the
Contractholder's place of business or at LL&A's Home Office.
The Annuitant must notify LL&A of any change in address. All correspondence
should include the Annuitant's name, social security number, and the Group
Annuity Contract Number.
NONASSIGNABILITY: No sum payable under the Group Annuity Contract may be sold,
discounted, or pledged as collateral for a loan or as security for the
performance of any obligation by the payee. To the fullest extent allowed by
law, no such sum shall be subject to any legal process for payment of any claim
against the payee.
EFFECT OF MISSTATEMENT: If age or any other fact affecting the amount or date
of any payment under the Group Annuity Contract has been misstated or omitted,
the Variable Annuity Payments will be adjusted. The adjustment in Variable
Annuity Payments will be based on the amounts that would have been paid using
the correct information.
FACILITY OF PAYMENT: Upon notice from a duly appointed guardian or other legal
representative that a Payee is legally incapable of receiving payment, LL&A will
pay the legal representative on behalf of the Payee. If, in the judgment of
LL&A, any payee is physically, mentally, or legally incapable of acknowledging
receipt of a payment due to him/her, LL&A will pay the person or institution
who, in the opinion of LL&A, is then maintaining or has custody of the payee.
Such payments will constitute a full discharge of LL&A's liability, to the
extent paid.
<PAGE>
LOGO LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
SYRACUSE, NEW YORK
VARIABLE ANNUITY PAYMENTS INCREASE OR DECREASE IN AMOUNT BASED ON THE NET
INVESTMENT RESULTS OF THE VARIABLE INVESTMENT DIVISION.
THE ASSUMED INTEREST RATE FOR THE VARIABLE ANNUITY IS [4%]. THE MORTALITY AND
EXPENSE RISK CHARGE IS 1.2%. IF THE INVESTMENT RETURN IS [5.2%] OR GREATER,
THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE.
ANNUITANT: [John Doe] CERTIFICATE NO.: [000-00-0000]
CONTRACTHOLDER: [ABC Hospital] GROUP ANNUITY
CONTRACT NO.: [90000]
CERTIFICATE ISSUE DATE: [6/1/91] INITIAL VARIABLE ANNUITY PAYMENT:
[ $50.00 ]
ASSUMED INTEREST RATE: [0-6%] VARIABLE INVESTMENT SUB-ACCOUNT:
[ ]
ANNUITY COMMENCEMENT FREQUENCY OF PAYMENTS: [monthly]
DATE: [6/1/91]
JOINT ANNUITANT: [Jane Doe] SURVIVORSHIP ANNUITY PERCENTAGE:
[75%]
CERTIFICATION: Lincoln Life & Annuity Company of New York (called "LL&A")
agrees to pay the benefits described in this Certificate to the named Annuitant
under the terms of the Group Annuity Contract between LL&A and the
Contractholder. The amount and terms of the benefits are subject to the
provisions of the Group Annuity Contract. This Certificate describes, but in no
way alters or voids the benefits provided under the Group Annuity Contract.
TERMS OF PAYMENT: LL&A will begin Variable Annuity Payments to the Annuitant as
of his/her Annuity Commencement Date. Payments will continue until the death
of the Annuitant. At the death of the Annuitant, the Annuity Payment, which
otherwise would have been paid had both the Annuitant and Joint Annuitant
lived, will be multiplied by the Survivorship Annuity Percentage and paid to the
Joint Annuitant as long as he/she lives.
Form No.: 96-101 C2f(NY)
Variable Annuity Cert.: ERISA J2S/CAO
<PAGE>
DETERMINING VARIABLE ANNUITY PAYMENT: An Annuity Payment Calculation Date is a
Valuation Date which is ten (10) Business Days prior to the first day of a
calendar month. A Valuation Period is the period between two Valuation Dates.
Each Variable Annuity Payment for each Sub-Account except the Initial Variable
Annuity Payment is determined by:
(1) Dividing the Initial Variable Annuity Payment by an Annuity Unit Value for
the Interest Rate Option as of the Initial Annuity Payment Calculation
Date, and
(2)Multiplying the resultant number of Annuity Units by the value of the
Annuity Unit Value for the Interest Rate Option on the Annuity Payment
Calculation Date just prior to subsequent payment.
INFORMATION AND PROOF: LL&A has the right to require information and proof as
to any matter relating to its obligations under the Group Annuity Contract.
Annuitants may make arrangements to examine the Group Annuity Contract at the
Contractholder's place of business or at LL&A's Home Office.
The Annuitant must notify LL&A of any change in address. All correspondence
should include the Annuitant's name, social security number, and the Group
Annuity Contract Number.
NONASSIGNABILITY: No sum payable under the Group Annuity Contract may be sold,
discounted, or pledged as collateral for a loan or as security for the
performance of any obligation by the payee. To the fullest extent allowed by
law, no such sum shall be subject to any legal process for payment of any claim
against the payee.
EFFECT OF MISSTATEMENT: If age or any other fact affecting the amount or date
of any payment under the Group Annuity Contract has been misstated or omitted,
the Variable Annuity Payments will be adjusted. The adjustment in Variable
Annuity Payments will be based on the amounts that would have been paid using
the correct information.
FACILITY OF PAYMENT: Upon notice from a duly appointed guardian or other legal
representative that a Payee is legally incapable of receiving payment, LL&A will
pay the legal representative on behalf of the Payee. If, in the judgment of
LL&A, any payee is physically, mentally, or legally incapable of acknowledging
receipt of a payment due to him/her, LL&A will pay the person or institution
who, in the opinion of LL&A, is then maintaining or has custody of the payee.
Such payments will constitute a full discharge of LL&A's liability, to the
extent paid.
<PAGE>
[LOGO] ENROLLMENT/CHANGE REQUEST &
LINCOLN LIFE & ANNUITY COMPANY SALARY REDUCTION AGREEMENT--VARIABLE ANNUITY
OF NEW YORK
TDA CLIENT SERVICES -------------------------
PO BOX 9739 FOR INTERNAL USE ONLY
PORTLAND, ME 04104-5037 / / FIRST UNUM / / LLANY
1-800-893-7166 -------------------------
/ / New Enrollment
/ / Check here to receive a Statement / / Change (Please indicate what type
of Additional Information which of change with a checkmark)
provides financial information not Address/Telephone __ Beneficiary __
included in the prospectus. Name __ Allocation Mix __
ON THIS FORM THE WORDS 'THE COMPANY' REFER TO YOUR INSURER (LINCOLN LIFE &
ANNUITY COMPANY OF NEW YORK (LLANY) OR FIRST UNUM LIFE INSURANCE COMPANY).
YOUR COMPANY IS IDENTIFIED ON YOUR ACTIVE LIFE CERTIFICATE.
- -------------------------------------------------------------------------------
I. PARTICIPANT INFORMATION (PLEASE PRINT)
- -------------------------------------------------------------------------------
Name of Employer GP/ER ID Number Group Annuity Contract Numbers
- -------------------------------------------------------------------------------
Name of Employee: Marital Status Social Security Number
Last, First, MI
- -------------------------------------------------------------------------------
Home Address (Street, City, State, Zip Code)
- -------------------------------------------------------------------------------
Telephone Number Date of Birth Sex Date of Hire
Daytime ( )
Evening ( )
- -------------------------------------------------------------------------------
II. SALARY REDUCTION AGREEMENT (ANNUAL)
- -------------------------------------------------------------------------------
Effective Date of Reduction ___________________. Please check with your payroll
department to determine which option they are equipped to handle per pay
period: Percentage of pay ____________ or Specific dollar amount $____________.
My employer and I hereby agree as follows: My employer shall reduce my salary
by the indicated amount/percentage per pay period. My employer shall forward
such amounts to an account with the Company in order to fund contributions
toward a 403(b) annuity. Reductions shall commence on the date indicated
above. Reductions shall only be made against sums earned by me subsequent to
the date of this agreement. Once made, this agreement cannot be changed for
the rest of the current tax year, although it may be canceled at any time. By
signing below, both my employer and I agree to be bound by the terms of this
Salary Reduction Agreement.
__________________________________ _______________________________
Participant's Signature Employer's Authorized
Representative Signature
COMPLETE THE FOLLOWING IN 1% INCREMENTS:
<TABLE>
<CAPTION>
Fund Quar. Int.
VA Product Asset Mgr. Social Res Balanced Equity Inc Index Acct. Growth I Growth II InCap Small Cap
---------- ---------- ---------- -------- ---------- ----------- -------- --------- ----- ---------
QA AM SR BL EQ IX GR GT IN SC Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Must
---------- ---------- ---------- -------- ---------- ----------- -------- --------- ----- --------- Equal
Allocation
Mix + + + + + + + + + =
---------- ---------- ---------- -------- ---------- ----------- ------- -------- ----- --------- 100%
</TABLE>
Any change in allocation mix will be effective with the next deposit after
receipt of this form in the Portland, Maine office.
I am aware that the returns on the Variable Accounts will be based upon the
investment experience of the Company's Separate Account. These amounts will
fluctuate and are not guaranteed as to the dollar amount.
- -------------------------------------------------------------------------------
III. BENEFICIARY DESIGNATION
- -------------------------------------------------------------------------------
If I am married or am subsequently married in the future and if my TDA Plan
provides, my spouse shall be my beneficiary unless I complete a waiver with
my spouse's written consent. I also understand that if I do not select a
beneficiary or if I am not survived by any beneficiary that all death
benefits will be paid in accordance with the Plan or contract provisions
governing such situations. Subject to the provisions of the above contract
and any applicable TDA Plan, I designate the following beneficiary(ies), such
designation to supersede any prior designation(s) which I may have made with
respect to my coverage under the above contract. (Prim. - Primary Cont. -
Contingent)
<TABLE>
<CAPTION>
Beneficiary Name Address Relationship Percent
<S> <C> <C> <C> <C> <C>
Prim. Cont.
/ / / / _____________________ _________________________ ____________________ _______
/ / / / _____________________ _________________________ ____________________ _______
/ / / / _____________________ _________________________ ____________________ _______
/ / / / _____________________ _________________________ ____________________ _______
</TABLE>
If I am a participant in a UNUM contract, LLANY is acting as the administrative
agent for UNUM. UNUM remains as the insurer and is responsible for payment of
all benefits. Questions can be directed to UNUM at 1-800-893-0944 or 2211
Congress St., Portland, ME 04104-5037.
I acknowledge receipt of the Company's Separate Account prospectus and
prospectuses for the underlying funds and an Active Life Certificate. By
completing and signing this form, I also acknowledge that I have read and
understand the information on the front and back of this form.
Participant's Signature ______________________________________ Date ___________
I hereby certify that the above referenced participant's beneficiary
designation is in compliance with all provisions of the Retirement Equity Act
of 1984 and the Tax Deferred Annuity Plan referenced above.
Plan Administrator's Signature (if ERISA) ___________________ Date ___________
_______________________________________________________________________________
<PAGE>
FORM OF
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 17th day of September, 1996, between
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, a life insurance company organized
under the laws of the State of New York ("Insurance Company"), and each of
DREYFUS VARIABLE INVESTMENT FUND, THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC. and DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d/b/a DREYFUS
STOCK INDEX FUND) (each a "Fund").
ARTICLE I 1.
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as the case may
be, of a Fund, which has the responsibility for management and control
of the Fund.
1.3 "Business Day" shall mean any day for which a Fund calculates net asset
value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean a variable annuity or life insurance contract
that uses any Participating Fund (as defined below) as an underlying
investment medium. Individuals who participate under a group Contract
are "Participants."
1.6 "Contractholder" shall mean any entity that is a party to a Contract
with a Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of the Board of
a Fund that are not deemed to be "interested persons" of the Fund, as
defined by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates,
including Dreyfus Service Corporation.
<PAGE>
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company) that offers variable annuity and/or variable life
insurance contracts to the public and that has entered into an agreement
with one or more of the Funds.
1.10 "Participating Fund" shall mean each Fund, including, as applicable,
any series thereof, specified in Exhibit A, as such Exhibit may be
amended from time to time by agreement of the parties hereto, the
shares of which are available to serve as the underlying investment
medium for the aforesaid Contracts.
1.11 "Prospectus" shall mean the current prospectus and statement of
additional information of a Fund, as most recently filed with the
Commission.
1.12 "Separate Account" shall mean Lincoln Life Annuity & Variable Annuity
Separate Account L, a separate account established by Insurance
Company in accordance with the laws of the State of New York.
1.13 "Software Program" shall mean the software program used by a Fund for
providing Fund and account balance information including net asset
value per share. Such Program may include the Lion System. In situations
where the Lion System or any other Software Program used by a Fund is
not available, such information will be provided in writing. The Lion
System shall be provided to Insurance Company at no charge.
1.14 "Insurance Company's General Account(s)" shall mean the general
account(s) of Insurance Company and its affiliates that invest in a Fund.
ARTICLE II 2.
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and validly existing under applicable law; (b)
it has legally and validly established the Separate Account pursuant to
the New York Insurance Law for the purpose of offering to the public
certain individual and group variable annuity and life insurance
contracts; (c) it has registered the Separate Account as a unit
investment trust
-2-
<PAGE>
under the Act to serve as the segregated investment account for the
Contracts; and (d) the Separate Account is eligible to invest in shares
of each Participating Fund without such investment disqualifying any
Participating Fund Participating Fund as an investment medium for
insurance company separate accounts supporting variable annuity
contracts or variable life insurance contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will be
described in a registrations statement filed under the Securities Act of
1933, as amended ("1933 Act"); (b) the Contracts will be issued and sold
in compliance in all material respects with all applicable federal and
state laws; and (c) the sale of the Contracts shall comply in all
material respects with state insurance law requirements. Insurance
Company agrees to notify each Participating Fund promptly of any
investment restrictions imposed by state insurance law and applicable to
the Participating Fund.
2.3 Insurance Company represents and warrants hat the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be credited
to or charged against such Separate Account without regard to other
income, gains or losses from assets allocated to any other accounts of
Insurance Company. Insurance Company represents and warrants that the
assets of the Separate Account are and will be kept separate from
Insurance Company's General Account and any other separate accounts
Insurance Company may have, and will not be charged with liabilities
from any business that Insurance Company may conduct or the liabilities
of any companies affiliated with Insurance Company.
2.4 Each Participating Fund represents and warrants that it is registered
with the Commission under the Act as an open-end, management investment
company and possesses, and shall maintain, all legal and regulatory
licenses, approvals, consents and/or exemptions required for the
Participating Fund to operate and offer its shares as an underlying
investment medium for Participating Companies. Each Participating Fund
represents and warrants that shares sold pursuant to this Agreement
shall be registered under the 1933 Act ad duly authorized for issuance
in accordance with applicable law.
-3-
<PAGE>
2.5 Each Participating Fund represents and warrants that it is currently
qualified as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and that it
will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provision) and that it will
notify Insurance 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.
2.6 Insurance Company represents and agrees that the Contracts are
currently, and at the time of issuance will be, treated as life insurance
policies or annuity contracts, whichever is appropriate, under applicable
provisions of the Code, and that it will make every effort to maintain
such treatment and that it will notify each Participating Fund and
Dreyfus 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. Insurance Company agrees that any prospectus
offering a Contract that is a "modified endowment contract," as that
term is defined in Section 7702A of the Code, will identify such Contract
as a modified endowment contract (or policy).
2.7 Each Participating Fund represents and warrants that its assets shall
be managed and invested in a manner that complies with the requirements
of Section 817(h) of the Code and the regulations thereunder.
2.8 Insurance Company agrees that each Participating Fund shall be permitted
(subject to the other terms of this Agreement) to make its shares
available to other Participating Companies and Contractholders.
2.9 Insurance Company and each Participating Fund agree that Insurance
Company shall be permitted (subject to the other terms of this Agreement)
to utilize and employ other management investment companies as underlying
investment media for the Separate Account.
2.10 Each Participating Fund represents and warrants that any of its
directors, trustees, officers, employees, investment advisers, and
other individuals/entities who deal with the money and/or
securities of the Participating Fund are and shall continue to be
at all times covered by a blanket
-4-
<PAGE>
fidelity bond or similar coverage for the benefit of the
Participating Fund in an amount not less than that required by Rule
17g-1 under the Act. The aforesaid Bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company.
2.11 Insurance Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Participating
Fund are and shall continue to be at all times covered by a blanket
fidelity bond or similar coverage in an amount not less than the
coverage required to be maintained by the Participating Fund. The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.12 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights
conferred by virtue of this Agreement.
ARTICLE III 3.
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
option to invest in shares of each Participating Fund.
3.2 Each Participating Fund agrees to make its shares available for
purchase at the then applicable net asset value per share by Insurance
Company and the Separate Account on each Business Day pursuant to rules
of the Commission. Notwithstanding the foregoing, each Participating
Fund may refused to sell its shares to any person, or suspend or
terminate the offering of its shares, if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole
discretion of its Board, acting in good faith and in light of its
fiduciary duties under federal and any applicable state laws, necessary
and in the best interests of the Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the Participating Fund
will be sold only to (a) Participating Companies and their separate
accounts or (b) "qualified pension or retirement plans" as determined
under Section 817(h)(4) of the Code. Except as otherwise set forth in
this Section 3.3, no shares of any Participating Fund will be sold to
the general public.
-5-
<PAGE>
3.4 Each Participating Fund shall use its best efforts to provide closing
net asset value, dividend and capital gain information on a per-share
basis to Insurance Company by 6:00 p.m. Eastern time on each Business
Day. Any material errors in the calculation of net asset value,
dividend and capital gain information shall be reported to Insurance
Company immediately upon discovery. Non-material errors will be
corrected in the next Business Day's net asset value per share.
Promptly upon execution of the Agreement, the parties will establish a
protocol for determining what constitutes a material error.
3.5 At the end of each Business Day, Insurance Company will use the
information described in Sections 3.2 and 3.4 to calculate the unit
values of the Separate Account for the day. Using this unit value,
Insurance Company will process the day's Separate Account transactions
received by it by the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m. Eastern time) to determine the net
dollar amount of each Participating Fund's shares that will be
purchased or redeemed at that day's closing net asset value per share.
The net purchase or redemption orders will be transmitted to each
Participating Fund by Insurance Company by 11:00 a.m. Eastern time on
the Business Day next following Insurance Company's receipt of that
information. Subject to Sections 3.6 and 3.8, all purchase and
redemption orders for Insurance Company's General Accounts shall be
effected at the net asset value per share of each Participating Fund
next calculated after receipt of the order by the Participating Fund or
its Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its agent for the
limited purpose of accepting orders for the purchase and redemption of
Participating Fund shares for the Separate Account. Each Participating
Fund will execute orders at the applicable net asset value per share
determined as of the close of trading on the day of receipt of such
orders by Insurance Company acting as agent ("effective trade date"),
provided that the Participating Fund receives notice of such orders by
11:00 a.m. Eastern time on the next following Business Day and, if such
orders request the purchase of Participating Fund shares, the
conditions specified in Section 3.8, as applicable, are satisfied. A
redemption or purchase request that does not satisfy the conditions
specified above and in Section 3.8, as applicable, will be effected at
the net asset value per share computed on the
-6-
<PAGE>
Business Day immediately preceding the next following Business Day upon
which such conditions have been satisfied in accordance with the
requirements of this Section and Section 3.8.
3.7 Insurance Company will, when possible, notify each applicable
Participating Fund in advance of any unusually large purchase or
redemption orders.
3.8 If Insurance Company's order requests the purchase of a Participating
Fund's shares, Insurance Company will pay for such purchases by wiring
Federal Funds to the Participating Fund or its designated custodial
account on the day the order is transmitted. Insurance Company shall
make all reasonable efforts to transmit to the applicable Participating
Fund payment in Federal Funds by 12:00 noon Eastern time on the
Business Day the Participating Fund receives the notice of the order
pursuant to Section 3.5. Each applicable Participating Fund will
execute such orders at the applicable net asset value per share
determined as of the close of trading on the effective trade date if
the Participating Fund receives payment in Federal Funds by 12:00
midnight Eastern time on the Business Day the Participating Fund
receives the notice of the order pursuant to Section 3.5. If payment in
Federal Funds for any purchase is not received or is received by a
Participating Fund after 12:00 noon Eastern time on such Business Day,
Insurance Company shall promptly, upon each applicable Participating
Fund's request, reimburse the respective Participating Fund for any
charges, costs, fees, interest or other expenses incurred by the
Participating Fund in connection with any advances to, or borrowings or
overdrafts by, the Participating Fund, or any similar expenses incurred
by the Participating Fund, as a result of portfolio transactions
effected by the Participating Fund based upon such purchase request. If
Insurance Company's order requests the redemption of any Participating
Fund's shares valued at or greater than $1 million dollars, the
Participating Fund will wire such amount to Insurance Company within
seven days of the order.
3.9 Each Participating Fund has the obligation to ensure that its shares
are registered with applicable federal agencies at all times.
-7-
<PAGE>
3.10 Each Participating Fund will confirm each purchase or redemption order
made by Insurance Company. Transfer of Participating Fund shares will
be by book entry only. No share certificates will be issued to
Insurance Company. Insurance Company will record shares ordered from a
Participating Fund in an appropriate title for the corresponding
account.
3.11 Each Participating Fund shall credit Insurance Company with the
appropriate number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not a Business
Day, on the first Business Day thereafter, each Participating Fund
shall communicate to Insurance Company the amount of dividend and
capital gain, if any, per share. All dividends and capital gains shall
be automatically reinvested in additional shares of the applicable
Participating Fund at the net asset value per share on the ex-dividend
date. Each Participating Fund shall, on the day after the ex-dividend
date or, if not a Business Day, on the first Business Day thereafter,
notify Insurance company of the number of shares so issued.
ARTICLE IV 4.
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of account as
of the end of each month for all of Insurance Company's accounts by the
fifteenth (15th) Business Day of the following month.
4.2 Each Participating Fund shall distribute to Insurance Company copies of
the Participating Fund's Prospectuses, proxy materials, notices,
periodic reports and other printed materials (which the Participating
Fund customarily provides to its shareholders) in quantities as
Insurance Company may reasonably request for distribution to each
Contractholder and Participant.
4.3 Each Participating Fund will provide to Insurance Company at least one
complete copy of all registration statements, Prospectuses, annual and
semi-annual 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
-8-
<PAGE>
Participating Fund or its shares, as soon as possible after the filing
of such document with the Commission or other regulatory authorities.
4.4 Insurance Company will provide to each Participating Fund at least one
copy of all registration statements, Prospectuses, annual and
semi-annual 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
BOTH to the Contracts or the Separate Account and a Participating Fund,
as soon as possible after the filing of such document with the
Commission or other regulatory authorities.
ARTICLE V 5.
EXPENSES
5.1 The charge to each Participating Fund for all expenses and costs of the
Participating Fund, including but not limited to management fees,
administrative expenses and legal and regulatory costs, will be made in
the determination of the Participating Fund's daily net asset value per
share so as to accumulate to an annual charge at the rate set forth in
the Participating Fund's Prospectus. Excluded from the expense
limitation described herein shall be brokerage commissions and
transaction fees and extraordinary expenses.
5.2 Each Participating Fund, at its expense, shall provide to Insurance
Company a camera-ready copy of the Fund's shareholder reports and other
communications to shareholders (except proxy material), in each case in
a form suitable for printing. The Fund shall be responsible for the
reasonable costs of printing and distributing these materials to
Contractholders.
All expenses incident to performance by each Participating Fund under
this Agreement (including expenses expressly assumed by the
Participating Fund pursuant to this Agreement) shall be paid by such
Participating Fund to the extent permitted by law. Insurance Company
shall not bear any of the expenses for the cost of registration and
qualification of Participating Fund Shares under Federal and any state
securities law, preparation and filing of each Participating Fund's
Registration Statement, the preparation of all statements and notices
required by any Federal or state
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securities law, all taxes on the issuance or transfer of Participating
Fund shares, and any expenses permitted to be paid or assumed by the
Participating Fund pursuant to a plan, if any, under Rule 12b-1 under the
1940 Act.
Each Participating Fund is responsible for the reasonable cost of
printing and distributing its Prospectuses and Statements of Additional
Information to existing Contractholders. (If for this purpose Insurance
Company prints Participating Fund Prospectuses and Statements of
Additional Information in a booklet containing disclosure for the
Contracts and for underlying funds other than those of the
Participating Fund, then the Participating Fund shall pay only its
proportionate share of the total cost to distribute the booklet to
existing Contractholders.)
Insurance Company is responsible for the cost of printing and
distributing Participating Fund and Separate Account Prospectuses and
Statements of Additional Information for new sales; and Separate
Account Prospectuses and Statements of Additional Information for
existing Contractholders. Insurance Company shall have the final
decision on choice of printer for all Prospectuses and Statements of
Additional Information relating to the Contracts.
ARTICLE VI
6. EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated December 23,
1987 of the Securities and Exchange Commission under Section 6(c) of
the Act with respect to Dreyfus Variable Investment Fund and a copy of
the order dated August 23, 1989 of the Securities and Exchange
Commission under Section 6(c) of the Act with respect to Dreyfus Life
and Annuity Index Fund, Inc. and, in particular, has reviewed the
conditions to the relief set forth in each related Notice. As set forth
therein, if Dreyfus Variable Investment Fund or Dreyfus Life and
Annuity Index Fund, Inc. is a Participating Fund, Insurance Company
agrees, as applicable, to report any potential or existing conflicts
promptly to the respective Board of Dreyfus Variable Investment Fund
and/or Dreyfus Life and Annuity Index Fund, Inc. and, in particular,
whenever contract voting instructions are disregarded, and recognizes
that it will be responsible for assisting each applicable
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Board in carrying out its responsibilities under such application.
Insurance Company agrees to carry out such responsibilities with a view
to the interests of existing Contractholders.
The Dreyfus Socially Responsible Growth Fund, Inc., if it is a
Participating Fund, shall furnish Insurance Company with a copy of its
application for an order of the Securities and Exchange Commission
under Section 6(c) of the Act for mixed and shared funding relief, and
the notice of such application and order when issued by the SEC.
Insurance Company agrees to comply with the conditions on which such
order is issued, including reporting any potential or existing
conflicts promptly to the Board of The Dreyfus Socially Responsible
Growth Fund, Inc., and in particular whenever Contractholder voting
instructions are disregarded, to the extent such conditions are not
materially different from the conditions of the mixed and shared
funding relief obtained by Dreyfus Variable Investment Fund and Dreyfus
Life and Annuity Index Fund, Inc., respectively; and recognizes that it
shall be responsible for assisting the Board of The Dreyfus Socially
Responsible Growth Fund, Inc. in carrying out its responsibilities in
connection with such order. Insurance Company agrees to carry out such
responsibilities with a view to the interests of existing
Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists with
regard to Contractholder investments in a Participating Fund, the Board
shall give prompt notice to all Participating Companies and any other
Participating Fund. If the Board determines that Insurance Company is
responsible for causing or creating said conflict, Insurance Company
shall at its sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the Disinterested Board
Members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include,
but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account from the
Participating Fund and reinvesting such assets in another
Participating Fund (if applicable) or a different investment
medium, or submitting the question
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of whether such segregation should be implemented to a vote of all
affected Contractholders; and/or
b. Establishing, with the concurrence of Insurance Company, a new
registered management investment company.
If any such action should be taken pursuant to this Section 6.2,
Insurance Company and each applicable Participating Fund shall fully
cooperate so as to minimize any disruptions to Contractholders.
6.3 If a material irreconcilable conflict arises as a result of a decision
by Insurance Company to disregard Contractholder voting instructions
and said decision represents a minority position or would preclude a
majority vote by all Contractholders having an interest in a
Participating Fund, Insurance Company may be required, at the Board's
election, to withdraw the investments of the Separate Account in that
Participating Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will any
Participating Fund be required to bear the expense of establishing a
new funding medium for any Contract. Insurance Company shall not be
required by this Article to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority
of the Contractholders materially adversely affected by the
irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or any Participating Fund taken or omitted as a result
of any act or failure to act by Insurance Company pursuant to this
Article VI, shall relieve Insurance Company and each Participating Fund
of its respective obligations under, or otherwise affect the operation
of, Article V.
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<PAGE>
ARTICLE VII 7.
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with copies, at
no cost to Insurance Company, of the Participating Fund's proxy
material, reports to shareholders and other communications to
shareholders in such quantity as Insurance Company shall reasonably
require for distributing to Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or Participants
on a timely basis and in accordance with applicable law;
(b) vote the Participating Fund shares in accordance with instructions
received from Contractholders or Participants; and
(c) vote the Participating Fund shares for which no instructions have
been received in the same proportion as Participating Fund shares
for which instructions have been received.
Insurance Company agrees at all times to vote its General Account
shares in the same proportion as the Participating Fund shares for
which instructions have been received from Contractholders or
Participants. Insurance Company further agrees to be responsible for
assuring that voting the Participating Fund shares for the Separate
Account is conducted in a manner consistent with other Participating
Companies. Each Participating Fund shall reimburse Insurance Company
for the reasonable costs of soliciting voting instructions from
Contractholders in accordance with this Section.
7.2 Insurance Company agrees that it shall not, without notice to each
applicable Participating Fund and Dreyfus, solicit, induce or encourage
Contractholders to (a) change or supplement the Participating Fund's
current investment adviser.
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<PAGE>
ARTICLE VIII 8.
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall periodically furnish
Insurance Company with the following documents, in quantities as
Insurance Company may reasonably request:
a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne in
accordance with Article V of this Agreement.
8.2 Insurance Company shall designate certain persons or entities that
shall have the requisite licenses to solicit applications for the sale
of Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company
shall make reasonable efforts to market the Contracts and shall comply
with all applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to
each applicable Participating Fund or its designee, each piece of sales
literature or other promotional material in which the Participating
Fund, its investment adviser or the administrator is named, at least
ten Business Days prior to its use. No such material shall be used
unless the Participating Fund or its designee approves such material.
Such approval (if given) must be in writing and shall be presumed given
if not received within ten Business Days after receipt of such
material. Each applicable Participating Fund or its designee, as the
case may be, shall use all reasonable efforts to respond within ten
days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund or
concerning a Participating Fund in connection with the sale of the
Contracts other than the information or representations contained in
the registration statement or Prospectus of the applicable
Participating Fund, as may be amended or supplemented from time to
time, or in reports or
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<PAGE>
proxy statements for, the applicable Participating Fund, or in the
public domain, or in sales literature or other promotional material
approved by the applicable Participating Fund except with the prior
written permission of the Fund. Such approval (if given) must be in
writing and shall be presumed given if not received within ten Business
Days after receipt of such material. Each Participating Fund agrees to
respond to any request for permission on a prompt and timely basis.
8.5 Each Participating Fund shall furnish, or shall cause to be furnished,
to Insurance Company, each piece of the Participating Fund's sales
literature or other promotional material in which Insurance Company or
the Separate Account is named, at least ten Business Days prior to its
use. No such material shall be used unless Insurance Company approves
such material. Such approval (if given) must be in writing and shall be
presumed given if not received within ten Business Days after receipt
of such material. Insurance Company shall use all reasonable efforts to
respond within ten days of receipt.
8.6 Each Participating Fund shall not, in connection with the sale of
Participating Fund shares, given any information or make any
representations on behalf of Insurance Company or concerning Insurance
Company, the Separate Account, or the Contracts other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as may be amended or supplemented from
time to time, or in published reports for the Separate Account that are
in the public domain or approved by Insurance Company for distribution
to Contractholders or Participants, or in sales literature or other
promotional material approved by Insurance Company except with the
prior written permission of Insurance Company. Such approval (if given)
must be in writing and shall be presumed given if not received within
ten Business Days after receipt of such material. Insurance Company
agrees to respond to any request for permission on a prompt and timely
basis.
8.7 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
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<PAGE>
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, include 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. rules, the Act or the 1933 Act.
ARTICLE IX 9.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each
Participating Fund, Dreyfus, each respective Participating Fund's
investment adviser and sub-investment adviser (if applicable), each
respective Participating Fund's distributor, and their respective
affiliates, and each of their directors, trustees, officers, employees,
agents and each person, if any, who controls or is associated with any
of the foregoing entities or persons within the meaning of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of Section 9.1),
against any and all losses, claims, damages or liabilities joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted)
for which the Indemnified Parties may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect to thereof) (i) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in information furnished by Insurance Company
for use in the registration statement or Prospectus or sales literature
or advertisements of the respective Participating Fund or with respect
to the Separate Account or Contracts, 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
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<PAGE>
therein not misleading; (ii) arise out of or as a result of wrongful
conduct, statements or representations (other than statements or
representations contained in the Prospectus and sales literature or
advertisements of the respective Participating Fund) of Insurance
Company or its agents, with respect to the sale and distribution of
Contracts for which the respective Participating Fund's shares are an
underlying investment; (iii) arise out of the wrongful conduct of
Insurance Company or persons under its control with respect to the sale
or distribution of the Contracts or the respective Participating Fund's
shares; (iv) arise out of Insurance Company's incorrect calculation
and/or untimely reporting of net purchase or redemption orders; or (v)
arise out of any breach by Insurance Company of a material term of this
Agreement or as a result of any failure by Insurance Company to provide
the services and furnish the materials or to make any payments provided
for in this Agreement. Insurance Company will reimburse any Indemnified
Party in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that with
respect to clauses (i) and (ii) above Insurance Company will not be
liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any untrue statement or
omission or alleged omission made in such registration statement,
prospectus, sales literature, or advertisement in conformity with
written information furnished to Insurance Company by the respective
Participating Fund specifically for use therein. This indemnity
agreement will be in addition to any liability which Insurance Company
may otherwise have.
9.2 Each Participating Fund severally agrees to indemnify and hold harmless
Insurance Company and each of its directors, officers, employees,
agents and each person, if any, who controls Insurance Company within
the meaning of the 1933 Act against any losses, claims, damages or
liabilities to which Insurance Company or any such director, officer,
employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (1) 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 or advertisements
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<PAGE>
of the respective Participating Fund; (2) arise out of or are based
upon the omission to state in the registration statement or Prospectus
or sales literature or advertisements of the respective Participating
Fund any material fact required to be stated therein or necessary to
make the statement's therein not misleading; or (3) 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 or advertisements with respect to the Separate Account
or the Contracts and such statements were based on information provided
to Insurance Company by the respective Participating Fund; and the
respective Participating Fund will reimburse any legal or other
expenses reasonably incurred by Insurance Company or any such director,
officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the respective Participating Fund will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or omission or alleged omission made in such registration statement,
Prospectus, sales literature or advertisements in conformity with
written information furnished to the respective Participating Fund by
Insurance Company specifically for use therein. This indemnity
agreement will be in addition to any liability which the respective
Participating Fund may otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold Insurance
Company harmless against any and all liability, loss, damages, and
reasonable costs or expenses which Insurance Company may incur, suffer
or be required to pay due to the respective Participating Fund's (1)
incorrect calculation of the daily net asset value, dividend rate or
capital gain distribution rate; (2) incorrect reporting of the daily
net asset value, dividend rate or capital gain distribution rate; and
(3) untimely reporting of the net asset value, dividend rate or capital
gain distribution rate; provided that the respective Participating Fund
shall have no obligation to indemnify and hold harmless Insurance
Company if the incorrect calculation or incorrect or untimely
reporting was the result of incorrect information furnished by
Insurance Company or information furnished untimely by Insurance Company
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<PAGE>
or otherwise as a result of or relating to a breach of this Agreement
by Insurance Company.
9.4 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Article, notify the indemnifying party of the
commencement thereof. The omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability under this
Article IX, except to the extent that the omission results in a failure
of actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of the failure to give such notice. 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, and to the extent that the
indemnifying party has given notice that it will assume the defense of
the action to the indemnified party and is performing its obligations
under this Article, the indemnifying party shall not be liable for any
legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof, other than reasonable costs of
investigation. Notwithstanding the foregoing, in any such proceeding,
any indemnified party shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel or (ii) 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 shall not be liable for
any settlement of any proceeding effected without its written consent.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in
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<PAGE>
this Article IX. The provisions of this Article IX shall survive
termination of this Agreement.
9.5 Insurance Company shall indemnify and hold each respective
Participating Fund, Dreyfus and sub-investment adviser of the
Participating Fund harmless against any tax liability incurred by the
Participating Fund under Section 851 of the Code arising from purchases
or redemptions by Insurance Company's General Account or the account of
its affiliates.
9.6 Each Participating Fund severally shall indemnify and hold Insurance
Company harmless against any and all liability, loss, damages, and
reasonable costs or expenses which Insurance Company may incur, suffer
or be required to pay due to the respective Participating Fund's
failure to comply with Section 817(h) of the Code and the regulations
thereunder.
ARTICLE X 10.
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance Company or
the Participating Fund at any time from the date hereof upon 180
days' advance notice, unless a shorter time is agreed to by the
respective Participating Fund and Insurance Company;
b. As to any Participating Fund, at the option of Insurance Company,
if shares of that Participating Fund are not reasonably available
to meet the requirements of the Contracts as determined by
Insurance Company. Prompt notice of election to terminate shall be
furnished by Insurance Company, said termination to be effective
ten days after receipt of notice unless the Participating Fund
makes available a sufficient number of shares to meet the
requirements of the Contracts within said ten-day period;
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c. As to a Participating Fund, at the option of Insurance Company,
upon the institution of formal proceedings against that
Participating Fund, or the investment adviser or sub-investment
adviser thereof, by the Commission, National Association of
Securities Dealers or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in
Insurance Company's reasonable judgment, materially impair that
Participating Fund's ability to meet and perform the Participating
Fund's obligations and duties hereunder. Prompt notice of election
to terminate shall be furnished by Insurance Company with said
termination to be effective upon receipt of notice;
d. As to a Participating Fund, at the option of each Participating
Fund, upon the institution of formal proceedings against Insurance
Company by the Commission, National Association of Securities
Dealers or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in the Participating
Fund's reasonable judgment, materially impair Insurance Company's
ability to meet and perform Insurance Company's obligations and
duties hereunder. Prompt notice of election to terminate shall be
furnished by such Participating Fund with said termination to be
effective upon receipt of notice;
e. As to a Participating Fund, at the option of that Participating
Fund, if the Participating Fund shall determine, in its sole
judgment reasonably exercised in good faith, that Insurance Company
has suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and such
material adverse change or material adverse publicity is likely to
have a material adverse impact upon the business and operation of
that Participating Fund or Dreyfus, such Participating Fund shall
notify Insurance Company in writing of such determination and its
intent to terminate this Agreement, and after considering the
actions taken by Insurance Company and any other changes in
circumstances since the giving of such notice, such determination
of the Participating Fund
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<PAGE>
shall continue to apply on the sixtieth (60th) day following the
giving of such notice, which sixtieth day shall be the effective
date of termination;
f. As to a Participating Fund, upon termination of the Investment
Advisory Agreement between that Participating Fund and Dreyfus or
its successors unless Insurance Company specifically approves the
selection of a new Participating Fund investment adviser. Such
Participating Fund shall promptly, and in no case later than the
effective date of the termination, furnish notice of such
termination to Insurance Company;
g. As to a Participating Fund, in the event that Participating Fund's
shares are not registered, issued or sold in accordance with
applicable federal law, or such law precludes the use of such
shares as the underlying investment medium of Contracts issued or
to be issued by Insurance Company. Termination shall be effective
immediately without notice as to that Participating Fund but only
upon such occurrence;
h. At the option of a Participating Fund upon a determination by its
Board in good faith that it is no longer advisable and in the best
interests of shareholders of that Participating Fund to continue to
operate pursuant to this Agreement. Termination pursuant to this
Subsection (h) shall be effective upon notice by such Participating
Fund to Insurance Company of such termination;
i. At the option of a Participating Fund if the Contracts cease to
qualify as annuity contracts or life insurance policies, as
applicable, under the Code, or if such Participating Fund
reasonably believes that the Contracts may fail to so qualify;
j. At the option of any party to this Agreement, upon another party's
breach of any material provision of this Agreement;
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k. At the option of a Participating Fund, if the Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law;
l. Upon assignment of this Agreement, unless made with the written
consent of every other non-assigning party;
m. Upon requisite vote of the Contractholders having an interest in
the Participating Fund (unless otherwise required by applicable
law) and written approval of Insurance Company to substitute shares
of another investment company for corresponding shares of such
Participating Fund in accordance with the terms of the Contracts
and the requirements of applicable law;
n. At the option of Insurance Company if the respective Participating
Fund ceases to qualify as a regulated investment company under
Subchapter M of the Code, or any successor or similar provision, or
if Insurance Company reasonably believes, based on an opinion of
its counsel, the Participating Fund may fail to so qualify;
o. At the option of Insurance Company if the Participating Fund fails
to qualify under Section 817(h) of the Code or the regulations
thereunder; or
p. At the option of Insurance Company if Insurance Company shall
determine in good faith that either (i) the Participating Fund has
suffered a material adverse change in its respective business or
financial condition; or (ii) the Participating Fund has been the
subject of material adverse publicity that Insurance Company
determines in good faith is reasonably likely to have a material
adverse impact upon the business and operations of Insurance
Company.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this
Agreement. Any termination of this Agreement shall not affect the
operation of Article IX of this Agreement.
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10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, each Participating Fund and Dreyfus may, at the option of
the Participating Fund, continue to make available additional shares of
that Participating Fund for as long as the Participating Fund desires
pursuant to the terms and conditions of this Agreement as provided
below, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if that Participating Fund and
Dreyfus so elect to make additional Participating Fund shares
available, the owners of the Existing Contracts or Insurance Company,
whichever shall have legal authority to do so, shall be permitted to
reallocate investments in that Participating Fund, redeem investments
in that Participating Fund and/or invest in that Participating Fund
upon the making of additional purchase payments under the Existing
Contracts. In the event of a termination of this Agreement pursuant to
Section 10.2 hereof, such Participating Fund and Dreyfus, as promptly
as is practicable under the circumstances, shall notify Insurance
Company whether Dreyfus and that Participating Fund will continue to
make that Participating Fund's shares available after such termination.
If such Participating Fund shares continue to be made available after
such termination, the provisions of this Agreement shall remain in
effect and thereafter either of that Participating Fund or Insurance
Company may terminate the Agreement as to that Participating Fund, as
so continued pursuant to this Section 10.3, upon prior written notice
to the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Participating Fund, need
not be for more than six months.
10.4 Termination of this Agreement as to any one Participating Fund shall
not be deemed a termination as to any other Participating Fund unless
Insurance Company or such other Participating Fund, as the case may be,
terminates this Agreement as to such other Participating Fund in
accordance with this Article X.
<PAGE>
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for the
addition or deletion of any Participating Fund as specified in
Exhibit A, shall be made by agreement in writing between Insurance
Company and each respective Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified
mail, return receipt requested, to the appropriate parties at the
following addresses:
Insurance Company: Lincoln Life & Annuity Company of New York
120 Madison Street, 17th Floor
Syrscuse, NY 13202
Attn: Philip Holstein
Participating Funds: [Name of Fund]
c/o Premier Mutual Fund Services, Inc.
200 Park Avenue, 6th Floor West
New York, New York 10166
Attn: Elizabeth A. Bachman, Esq.
with copies to: [Name of Fund]
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Attn: Mark N. Jacobs, Esq.
Lawrence B. Stoller, Esq
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Attn: Lewis G. Cole, Esq.
Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
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ARTICLE XIII 12.
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each Fund by the
undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any
director, trustee, officer or shareholder of the Fund individually. It
is agreed that the obligations of the Funds are several and not joint,
that no Fund shall be liable for any amount owing by another Fund and
that the Funds have executed one instrument for convenience only.
13.2 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including the SEC, 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.
ARTICLE XIV 13.
LAW
14.1 This Agreement shall be construed in accordance with the internal laws
of the State of New York, without giving effect to principles of
conflict of laws.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
duly executed and attested as of the date first above written.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By: _________________________________
Its: _________________________________
Attest: ____________________________
DREYFUS LIFE AND ANNUITY INDEX FUND, INC.
(d/b/a DREYFUS STOCK INDEX FUND)
By: _________________________________
Its: _________________________________
Attest: ____________________________
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC.
By: _________________________________
Its: _________________________________
Attest: ____________________________
DREYFUS VARIABLE INVESTMENT FUND
By: _________________________________
Its: _________________________________
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Attest: _____________________________
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EXHIBIT A
LIST OF PARTICIPATING FUNDS
Dreyfus Variable Investment Fund -- Small Cap Portfolio
Dreyfus Stock Index Fund
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<PAGE>
FORM OF
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the 1st day of September,
1996, by and among LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, (hereinafter
the "Company"), a New York corporation, on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto
as may be amended from time to time (each such account hereinafter referred
to as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND,an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriters"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and
variable annuity contracts (collectively, the "Variable Insurance Products")
to be offered by insurance companies which have entered into participation
agreements with the Fund and the Underwriter (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be
made available under this Agreement, as may be amended from time to time by
mutual agreement of the parties hereto (each such series hereinafter referred
to as a "Portfolio"); and
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WHEREAS, the Fund filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form N-1A and the SEC has declared
effective said registration statement; and
WHEREAS, the Fund has obtained as order from the SEC, dated October 15,
1985 (File No. 812-6102), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions
from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (hereinafter the "Shared Funding Exemptive Order");
and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act
of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers,Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund
2
<PAGE>
certain of the aforesaid variable life and variable annuity contracts and
the Underwriter is authorized to sell such shares to unit investment trusts
such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such order from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time
on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rulers of the Securities and
Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund
shall use reasonable efforts to calculate such net asset value on each day
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may
refuse to sell shares of any Portfolio to any person, or suspend or terminate
the offerings of shares of any Portfolio if such action is required by law or
by regulatory authorities having jurisdiction or is, in the 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
interest of the shareholders of such Portfolio.
1.2. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5
of Article II of this Agreement is in effect to govern such sales.
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<PAGE>
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt
by the Fund or its designee of the request for redemption. For purposes of
this Section 1.5, the Company shall be the designee of the Fund for receipt
of requests for redemption from each Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice
of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, (as such Schedule A may be amended from time to
time hereafter by mutual written agreement of all the parties hereto), (the
"Contracts") shall be invested in the Fund, in such other Funds advised by
the Adviser as may be mutually agreed to in writing by the parties hereto,
or in the Company's general account, provided that such amounts may also be
invested in investment companies other than the Fund. The Company shall
notify the Fund as to which other investment companies are available as
investment options under the Contract not later than the time such investment
companies are made available to owners of the Contracts. The investment
companies available to Contract owners as of the date of this Agreement are
as shown on Schedule C.
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 Accounts.
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 distribution 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.
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<PAGE>
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
(normally by 6:30 p.m Boston time) and shall use its best efforts to make
such net asset value per share available by 7 p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
state laws and that the Company will require of every person distributing the
Contracts that the Contracts be offered and sold in compliance in all
material respects with all applicable Federal and State laws. The Company
further represents and warrants that it is an insurance company duly
organized and validly existing 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 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 1993 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and
all applicable federal and state securities laws and that the Fund is and
shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code
of 1986, as amended, (the "Code") and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4. The Company represents that the Contracts are currently treated
as life insurance policies or annuity insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and the
5
<PAGE>
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.5. The Fund currently does not intend to make any payments
to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the
laws of the State of New York and the Fund and the Underwriter represent that
their respective operations are and shall at all times remain in material
compliance with the laws of the State of New York to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of New York and all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws
of the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other individuals/
entities dealing with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and
6
<PAGE>
embezzlement and shall be issued by a reputable bonding company. The Fund and
the Underwriter agree to make all reasonable efforts to see that this bond or
another bond containing these provisions is always in effect, and agree to
notify the Company immediately in the event that such coverage no longer
applies.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund, and that said
bond is issued by a reputable bonding company, includes coverage for larceny
and embezzlement, and is in an amount not less than $5 million. The Company
agrees to make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to notify the
Fund and the Underwriter in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS VOTING
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the
Company in lieu thereof, the Fund shall provide camera-ready film containing
the Fund's prospectus and Statement of Additional Information, and such other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus
for the Contracts and the Fund's prospectus printed together in one document,
and to have the Statement of Additional Information for the Fund and the
Statement of Additional Information for the Contracts printed together in one
document. Alternatively, the Company may print the Fund's prospectus and/or
its Statement of Additional Information in combination with other fund
companies' prospectuses and statements of additional information. Except as
provided in the following three sentences, all expenses of printing and
distributing Fund prospectuses and Statements of Additional Information shall
be the expense of the Company. For prospectuses and Statements of Additional
Information provided by the Company to its existing owners of Contracts in
order to update disclosure as required by the 1933 Act and/or the 1940 Act,
the cost of printing shall be borne by the Fund. If the Company chooses to
receive camera-ready film in lieu of receiving printed copies of the Fund's
prospectus, the Fund will reimburse the Company in an amount equal to the
product of A and B where A is the number of such prospectus distributed to
owners of the Contracts, and B is the Fund's per unit cost of typesetting and
printing the Fund's prospectus. The same procedures shall be followed with
respect to the Fund's Statement of Additional Information.
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<PAGE>
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the
Fund's expenses do not include the cost of printing any prospectuses or
Statements of Additional Information other than those actually distributed to
existing owners of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account;
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law, Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set
forth on Schedule B attached hereto and incorporated herein by this
reference, which standards will also be provided to the other Participating
Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by the shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect
to periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
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<PAGE>
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least 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.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in reports or proxy statements for the Fund, or in
sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least 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.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from
time to time, or in published reports for each Account which are in the
public domain or approved by the Company for distribution to Contract owners,
or in sales literature or other promotional material approved by the Company
or its designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, within 30 days of the filing of such document with the Securities
and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations
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<PAGE>
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
and their investment in the Fund, within 30 days of the filing of such
document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (I.E., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and registration statements, prospectuses, Statements of Additional
Information, shareholder reports, and proxy material and any other material
constituting sales literature or advertising under NASD rules, the 1940 Act
or the 1933 Act.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter
in writing and such payments will be made out of existing fees otherwise
payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made
directly by the Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required by
any federal or state law, and all taxes on the issuance or transfer of the
Fund's shares.
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5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulations. In the event of a breach of this Article VI by the
Fund, it will take all reasonable steps (a) to notify Company of such breach
and (b) to adequately diversify the Fund so as to achieve compliance within
the grace period afforded by Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
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7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested trustees), take whatever steps are necessary to remedy
or eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (I.E., annuity contract
owners, life insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of making
such a change; and (2), establishing a new registered management investment
company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Underwriter and
Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board
informs the Company in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately
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<PAGE>
remedies any irreconcilable material conflict, but in no event will the Fund
be required to establish a new funding medium for the Contracts. The Company
shall not be required by Section 7.3 to establish a new funding medium for
the Contracts if an offer to do so has been declined by vote of a majority of
Contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed action
does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the
Shares Funding Exemptive Order, then (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable; and (b) Sections 3.4,
3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect
only to the extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including 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 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
13
<PAGE>
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 any untrue
statements or representations (other than statements or representations
contained in the Registration Statement, prospectus or sales literature
of the Fund not supplied by the Company, or persons under its control)
or willful misfeasance, bad faith, or gross negligence of the Company
or persons under its control, with respect to the sale or distribution
of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information furnished
to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Company, as limited by and in accordance with the
provisions of sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the
14
<PAGE>
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company
of any such claim shall not relieve the Company from any liability which it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at its own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1993 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or litigation
(including reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
the Fund's shares or the Contracts and:
15
<PAGE>
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the Fund
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of any untrue statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its control)
or willful misfeasance, bad faith, or gross negligence of the Fund,
Adviser or Underwriter or persons under their control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement
16
<PAGE>
by the Underwriter, as limited by and in accordance with the provisions
of Section 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the
Underwriter of any such claim shall not relieve the Underwriter from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Underwriter will be entitled to participate, at its own expense, in the
defense thereof. The Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Underwriter to such party of the Underwriter's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Underwriter will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including
reasonable 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
17
<PAGE>
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Board or any member thereof, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Fund, the Underwriter or each
Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Fund of
any such claim shall not relieve the Fund from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Fund to such party of the
Fund's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Fund will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or
18
<PAGE>
directors in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of either Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to,
the Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by six months
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of
such shares as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of
19
<PAGE>
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or is
the subject of material adverse publicity;
(h) the requisite vote of the Contract owners having an interest
in a Portfolio (unless otherwise required by applicable law) and
written approval of the Company, to substitute the shares of another
investment company for the corresponding shares of a Portfolio in
accordance with the terms of the Contracts; or
(i) at the option of the Fund, 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 operation of the Account, the administration of the
Contracts or the purchase of Fund shares, or an expected or anticipated
ruling, judgment or outcome which would, in the Fund's reasonable
judgment, materially impair the Company's ability to perform the
Company's obligations and duties hereunder; or
(j) at the option of the Company, upon institution of formal
proceedings against the Fund, the Underwriter, the Fund's investment
adviser or any sub-adviser, by the NASD, the SEC, or any state
securities or insurance
20
<PAGE>
commission or any other regulatory body regarding the duties of the
Fund or the Underwriter under this Agreement, or an expected or
anticipated ruling, judgment or outcome which would, in the Company's
reasonable judgment, materially impair the Fund's or the Underwriter's
ability to perform the Fund's or the Underwriter's obligations and
duties hereunder; or
(k) at the option of the Company, upon institution of formal
proceedings against the Fund's investment adviser of any sub-adviser by
the NASD, the SEC, or any state securities or insurance commission or
any other regulatory body which would, in the good faith opinion of the
Company, result in material harm to the Accounts, the Company or
Contract owners.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.2 shall not apply to any terminations under Article VII
and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption") or
(iii) as permitted by an order of the SEC pursuant to Section 26(b) of the
1940 Act. Upon request, the Company will promptly furnish to the Fund and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund and the Underwriter) to the effect that
any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of
the Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
10.4 Notwithstanding any other provision of this Agreement, each
party's obligation under Article VII to indemnify the other parties shall
survive termination of this Agreement, to the extent that the events giving
rise to the obligation to indemnify the other party occurred prior to the
date of termination.
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<PAGE>
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison St., 17th Floor
Syracuse, NY 13202
Attention: Philip Holstein
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent of
the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
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<PAGE>
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each
party hereto further agrees to furnish the Indiana Insurance Commissioner
with any non-privileged 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 Indiana Insurance Regulations and any other
applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies
and obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or
company under common control with the Underwriter, if such assignee is duly
licensed and registered to perform the obligations of the Underwriter under
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
23
<PAGE>
VARIABLE INSURANCE PRODUCTS FUND
By:
------------------------------------
J. Gary Burkhead
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By:
------------------------------------
Neal Litvack
President
24
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
- --------------------------------------- --------------------------------
Lincoln Life & Annuity Variable Annuity GAC96-111
Separate Account L GAC91-101
25
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for
the handling of proxies relating to the Fund by the Underwriter, the Fund and
the Company. The defined terms herein shall have the meanings assigned in
the Participation Agreement except that the term "Company" shall also include
the department or third party assigned by the Insurance Company to perform
the steps delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the
shareholder meeting to facilitate the establishment of tabulation
procedures. At this time the Underwriter will inform the Company of the
Record, Mailing and Meeting dates. This will be done in writing
approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than
two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer
by the Company either before or together with the Customers' receipt
of a proxy statement. Underwriter will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the
Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Legal Department of the Underwriter or its affiliate ("Fidelity
Legal") must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
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d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is important.
One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately
3-5 business days before mail date. Individual in charge at Company
reviews and approves the contents of the mailing package to ensure
correctness and completeness. Copy of this approval sent to Fidelity
Legal.
7. Package mailed by the Company.
- The Fund MUST allow at least a 15-day solicitation time to
the Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar
days from (but NOT including) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by
proposal into vote categories of all yes, no, or mixed replies,
and to begin data entry.
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<PAGE>
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed
on the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are considered to be NOT RECEIVED for purposes
of vote tabulation. Any Cards that have "kicked out" (e.g.
mutilated, illegible) of the procedure are "hand verified," i.e.,
examined as to why they did not complete the system. Any questions
on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the vote
is progressing may then be calculated. If the initial estimates
and the actual vote do not coincide, then an internal audit of that
vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Fund receives
the tabulations stated in terms of a percentage and the number of
SHARES.) Fidelity Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to
Fidelity Legal on the morning of the meeting not later than 10:00 a.m.
Boston time. Fidelity Legal may reasonably request an earlier deadline
if required to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received
from the Customers. In the event that any vote is challenged or if
otherwise necessary for
28
<PAGE>
legal, regulatory, or accounting purposes, Fidelity Legal will be
permitted reasonable access to such Cards.
16. All arrangements, approvals and "signing-off" may be done orally, but
must always be followed up in writing.
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SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
T. Rowe Price International Series, Inc.
Calvert Responsibly Invested Balanced Portfolio
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EXHIBIT 99.8(c)
FORM OF
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the 1st day of September,
1996, by and among LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may
be amended from time to time (each such account hereinafter referred to as
the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and
variable annuity contracts (collectively, the "Variable Insurance Products")
to be offered by insurance companies which have entered into participation
agreements with the Fund and the Underwriter (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each 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
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WHEREAS, the Fund filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form N-1A and the SEC has declared
effective said registration statement; and
WHEREAS, the Fund has obtained an order from the SEC, dated September 17,
1986 (File No. 812-6422), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions
from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (hereinafter the "Shared Funding Exemptive Order");
and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act
of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund
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certain of the aforesaid variable life and variable annuity contracts and the
Underwriter is authorized to sell such shares to unit investment trusts such
as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from
each Account and receipt by such designee shall constitute receipt by the
Fund; provided that the Fund receives notice of such order by 9:30 a.m.
Boston time on the next following Business Day. "Business Day" shall mean any
day on which the New York Stock Exchange is open for trading and on which the
Fund calculates its net asset value pursuant to the rules of the Securities
and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund
shall use reasonable efforts to calculate such net asset value on each day
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may
refuse to sell shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio if such action is required by law or
by regulatory authorities having jurisdiction or is, in the sole discretion
of the Board acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, necessary in the best interests
of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5
of Article II of this Agreement is in effect to govern such sales.
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1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt
by the Fund or its designee of the request for redemption. For purposes of
this Section 1.5, the Company shall be the designee of the Fund for receipt
of requests for redemption from each Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice
of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, (as such Schedule A may be amended from time to
time hereafter by mutual written agreement of all the parties hereto), (the
"Contracts") shall be invested in the Fund, in such other Funds advised by
the Adviser as may be mutually agreed to in writing by the parties hereto, or
in the Company's general account, provided that such amounts may also be
invested in investment companies other than the Fund. The Company shall
notify the Fund as to which other investment companies are available as
investment options under the Contract not later than the time such investment
companies are made available to owners of the Contracts. The investment
companies available to Contract owners as of the date of this Agreement are
as shown on Schedule C.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for
each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio.
The Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. The Fund shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
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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 (normally by
6:30 p.m. Boston time) and shall use its best efforts to make such net asset
value per share available by 7 p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold
in compliance in all material respects with all applicable Federal and state
laws and that the Company will require of every person distributing the
Contracts that the Contracts be offered and sold in compliance in all
material respects with all applicable Federal and state laws. The Company
further represents and warrants that it is an insurance company duly
organized and validly existing 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 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 New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of its shares. The
Fund shall register and qualify the shares for sale in accordance with the
laws of the various states only if and to the extent deemed advisable by the
Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not so
qualify in the future.
2.4. The Company represents that the Contracts are currently treated as
life insurance policies or annuity insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and the
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Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the
laws of the State of New York and the Fund and the Underwriter represent that
their respective operations are and shall at all times remain in material
compliance with the laws of the State of New York to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of New York and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the
laws of the State of New York and any applicable state and federal securities
laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund
are and shall continue to be at all times covered by a blanket fidelity bond
or similar coverage of 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 may be promulgated from time to time. The aforesaid
Bond shall include coverage for larceny and
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embezzlement and shall be issued by a reputable bonding company. The Fund and
the Underwriter agree to make all reasonable efforts to see that this bond or
another bond containing these provisions is always in effect, and agree to
notify the Company immediately in the event that such coverage no longer
applies.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund, and that
said bond is issued by a reputable bonding company, includes coverage
for larceny and embezzlement, and is in an amount not less than $5 million.
The Company agrees to make all reasonable efforts to see that this bond or
another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the
Company in lieu thereof, the Fund shall provide camera-ready film containing
the Fund's prospectus and Statement of Additional Information, and such other
assistance as is reasonably necessary in order for the Company once each
year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus
for the Contracts and the Fund's prospectus printed together in one document,
and to have the Statement of Additional Information for the Fund and the
Statement of Additional Information for the Contracts printed together in one
document. Alternatively, the Company may print the Fund's prospectus and/or
its Statement of Additional Information in combination with other fund
companies' prospectuses and statements of additional information. Except as
provided in the following three sentences, all expenses of printing and
distributing Fund prospectuses and Statements of Additional Information
shall be the expense of the Company. For prospectuses and Statements of
Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or
the 1940 Act, the cost of printing shall be borne by the Fund. If the Company
chooses to receive camera-ready film in lieu of receiving printed copies of
the Fund's prospectus, the Fund will reimburse the Company in an amount
equal to the product of A and B where A is the number of such prospectuses
distributed to owners of the Contracts, and B is the Fund's per unit cost
of typesetting and printing the Fund's prospectus. The same procedures shall be
followed with respect to the Fund's Statement of Additional Information.
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The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the
Fund's expenses do not include the cost of printing any prospectuses or
Statements of Additional Information other than those actually distributed to
existing owners of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or
in the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3.1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received
in a particular separate account in the same proportion as Fund shares of such
portfolio for which instructions have been received in that separate
account, so long as and to the extent that the Securities and Exchange
Commission continues to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves the right to vote
Fund shares held in any segregated asset account in its own right, to the
extent permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts participating
in the Fund calculates voting privileges in a manner consistent with the
standards set forth on Schedule B attached hereto and incorporated herein
by this reference, which standards will also be provided to the other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect
to periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least 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.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other promotional material approved by the
Fund or its designee or by the Underwriter, except with the permission of the
Fund or the Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least 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.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in published reports for each Account which are in the
public domain or approved by the Company for distribution to Contract owners,
or in sales literature or other promotional material approved by the Company
or its designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, within 30 days of the filing of such document with the Securities
and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations
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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
and their investment in the Fund, within 30 days of the filing of such
document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (I.E., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and registration statements, prospectuses, Statements of Additional
Information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under NASD rules, the 1940 Act
or the 1933 Act.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter
in writing and such payments will be made out of existing fees otherwise
payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made
directly by the Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required by
any federal or state law, and all taxes on the issuance or transfer of the
Fund's shares.
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5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such Section
or Regulations. In the event of a breach of this Article VI by the Fund, it
will take all reasonable steps (a) to notify Company of such breach and (b)
to adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
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7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested trustees), take whatever steps are necessary to remedy
or eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (I.E., annuity contract
owners, life insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of making
such a change; and (2), establishing a new registered management investment
company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Underwriter and
Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company
in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately
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remedies any irreconcilable material conflict, but in no event will the Fund
be required to establish a new funding medium for the Contracts. The Company
shall not be required by Section 7.3 to establish a new funding medium for
the Contracts if an offer to do so has been declined by vote of a majority of
Contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed action
does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2,
7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION.
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Company) or litigation (including 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 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
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<PAGE>
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 any untrue statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its control) or willful
misfeasance, bad faith, or gross negligence of the Company or persons
under its control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus, or
sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such indemnified Party's willfull misfeasance, bad faith, or gross
negligence in the
14
<PAGE>
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company
to such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of
the Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or litigation
(including reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
the Fund's shares of the Contracts and:
15
<PAGE>
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Underwriter or
Fund by or on behalf of the Company for use in the Registration
Statement or prospectus for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of any untrue statements
or representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature for the Contracts not supplied by the Underwriter or
persons under its control) or willful misfeasance, bad faith, or
gross negligence of the Fund, Adviser or Underwriter or persons
under their control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the Contracts,
or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf
of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach
of this Agreement
16
<PAGE>
by the Underwriter; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties under
this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the
Underwriter of any such claim shall not relieve the Underwriter from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Underwriter will be entitled to participate, at its own expense,
in the defense thereof. The Underwriter also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Underwriter to such party of the Underwriter's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Underwriter will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Fund) or litigation (including reasonable
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
17
<PAGE>
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Board or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under the terms
of this Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Fund, the Underwriter or each
Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Fund of
any such claim shall not relieve the Fund from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Fund to such party of the
Fund's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Fund will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or
18
<PAGE>
directors in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of either Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to,
the Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by six months
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered, issued
or sold in accordance with applicable state and/or federal law
or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by the
Company; or
(d) termination by the Company by written notice to the
Fund and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of
19
<PAGE>
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgement
exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in its sole
judgement exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(h) the requisite vote of the Contract owners having an
interest in a Portfolio (unless otherwise required by applicable law)
and written approval of the Company, to substitute the shares of another
investment company for the corresponding shares of a Portfolio in
accordance with the terms of the Contracts; or
(i) at the option of the Fund, 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 operation of the Account, the administration of the
Contracts or the purchase of Fund shares, or an expected or anticipated
ruling, judgement or outcome which would, in the Fund's reasonable
judgment, materially impair the Company's ability to perform the
Company's obligations and duties hereunder; or
(j) at the option of the Company, upon institution of formal
proceedings against the Fund, the Underwriter, the Fund's investment
adviser or any sub-adviser, by the NASD, the SEC, or any state
securities or insurance
20
<PAGE>
commission or any other regulatory body regarding the duties of the Fund
or the Underwriter under this Agreement, or an expected or anticipated
ruling, judgment or outcome which would, in the Company's reasonable
judgment, materially impair the Fund's or the Underwriter's ability to
perform the Fund's or the Underwriter's obligations and duties
hereunder; or
(k) at the option of the Company, upon institution of formal
proceedings against the Fund's investment adviser of any sub-adviser by
the NASD, the SEC, or any state securities or insurance commission or
any other regulatory body which would, in the good faith opinion of the
Company, result in material harm to the Accounts, the Company or
Contract owners.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the
Company, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts
shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 shall not apply to any terminations under
Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's
assets held in the Account) except (i) as necessary to implement
Contract Owner initiated or approved transactions, or (ii) as required
by state and/or federal laws or regulations or judicial or other legal
precedent of general application (hereinafter referred to as a "Legally
Required Redemption") or (iii) as permitted by and order of the SEC
pursuant to Section 26(b) of the 1940 Act. Upon request, the Company
will promptly furnish to the Fund and the Underwriter the opinion of
counsel for the Company (which counsel shall be reasonably satisfactory
to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
10.4 Notwithstanding any other provision of this Agreement, each
party's obligation under Article VII to indemnify the other parties
shall survive termination of this Agreement, to the extent that the
events giving rise to the obligation to indemnify the other party
occurred prior to the date of termination.
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<PAGE>
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time
specify in writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street, 17th Floor
Syracuse, NY 13202
Attention: Philip Holstein
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund
as neither the Board, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement, shall not disclose, disseminate
or utilize such names and addresses and other confidential information
until such time as it may come into the public domain without the
express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
22
<PAGE>
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 and all
appropriate governmental authorities (including without limitation the
SEC, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish the Indiana
Insurance Commissioner with any non-privileged 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 Indiana Insurance Regulations and any other applicable law or
regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written
consent of all parties hereto; provided, however, that the Underwriter
may assign this Agreement or any rights or obligations hereunder to any
affiliate of or company under common control with the Underwriter, if
such assignee is duly licensed and registered to perform the obligations
of the Underwriter under this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed hereto as
of the date specified below.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
23
<PAGE>
VARIABLE INSURANCE PRODUCTS FUND II
By:
----------------------------
J. Gary Burkhead
Senior Vice President
By:
---------------------------
Neal Litvack
President
24
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account
- ---------------------------------------- --------------------------------
Lincoln Life & Annuity Variable Annuity GAC96-111
Separate Account L GAC91-101
25
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for
the handling of proxies relating to the Fund by the Underwriter, the Fund and
the Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include
the department or third party assigned by the Insurance Company to perform
the steps delineated below.
1. The number of proxy proposals is given to the Company by the
Underwriter as early as possible before the date set by the Fund for
the shareholder meeting to facilitate the establishment of tabulation
procedures. At this time the Underwriter will inform the Company of
the Record, Mailing and Meeting dates. This will be done in writing
approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and
number of units which are attributed to each contractowner/policyholder
(the "Customer") as of the Record Date. Allowance should be made for
account adjustments made after this date that could affect the status
of the Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer
by the Company either before or together with the Customers' receipt
of a proxy statement. Underwriter will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the
Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
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<PAGE>
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is important.
One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately
3-5 business days before mail date. Individual in charge at Company
reviews and approves the contents of the mailing package to ensure
correctness and completeness. Copy of this approval sent to Fidelity
Legal.
7. Package mailed by the Company.
- The Fund MUST allow at least a 15-day solicitation time to
the Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar
days from (but NOT including) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by
proposal into vote categories of all yes, no, or mixed replies,
and to begin data entry.
27
<PAGE>
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed
on the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are considered to be NOT RECEIVED for purposes
of vote tabulation. Any Cards that have "kicked out" (e.g.
mutilated, illegible) of the procedure are "hand verified," i.e.,
examined as to why they did not complete the system. Any questions
on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into
categories depending upon their vote; an estimate of how the vote
is progressing may then be calculated. If the initial estimates
and the actual vote do not coincide, then an internal audit of that
vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Fund receives
the tabulations stated in terms of a percentage and the number of
SHARES.) Fidelity Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to
Fidelity Legal on the morning of the meeting not later than 10:00 a.m.
Boston time. Fidelity Legal may reasonably request an earlier deadline
if required to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received
from the Customers. In the event that any vote is challenged or if
otherwise necessary for
28
<PAGE>
legal, regulatory, or accounting purposes, Fidelity Legal will be
permitted reasonable access to such Cards.
16. All arrangements, approvals and "signing-off" may be done orally, but
must always be followed up in writing.
29
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SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
T. Rowe Price International Series, Inc.
Calvert Responsibly Invested Balanced Portfolio
30
<PAGE>
EXHIBIT 99.8(d)
FORM OF
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT is made and entered into as of
September , 1996 by and between LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(the "Company") and TWENTIETH CENTURY SECURITIES, INC. (the "Distributor").
WHEREAS, the Company offers to the public certain group variable
annuity contracts and group variable life insurance contracts (the
"Contracts"); and
WHEREAS, the Company wishes to offer as investment options under
the Contracts, TCI Balanced and TCI Growth (the "Funds"), both of which
are a series of mutual fund shares registered under the Investment Company
Act of 1940, as amended, and issued by TCI Portfolios, Inc. (the "Issuer");
and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
and the Issuer desire to make shares of the Funds available as investment
options under the Contracts and to retain the Company to perform certain
administrative services on behalf of the Funds;
WHEREAS, the Funds are open-end management investment companies that
were established for the purpose of serving as the investment vehicles for
separate accounts established for variable life insurance policies and
variable annuity contracts (collectively referred to as "Variable Insurance
Products", the owners of such products being referred to as "Product
Owners") to be offered by insurance companies which have entered into
participation agreements with the Fund ("Participating Insurance Companies");
and
WHEREAS, the Issuer filed with the Securities and Exchange Commission
(the "SEC") and the SEC has declared effective a registration statement
(referred to herein as the "Fund Registration Statement" and the prospectus
contained therein, or filed pursuant to Rule 497 under the 1933 Act,
referred to herein as the "Fund Prospectus") on Form N-1A to register itself
as an open-end management investment company (File No. 40-811-5188) under
the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Fund shares (File No. 33-14567) under the Securities Act of 1933, as
amended (the "1933 Act"); and
WHEREAS, the Company has filed a registration statement with the SEC to
register under the 1933 Act certain variable annuity contracts described in
Schedule A to this Agreement as in effect at the time this Agreement is
executed and such other variable annuity contracts and variable life
insurance policies which may be added to Schedule A from time to time (such
policies and contracts shall be referred to herein collectively as the
"Contracts," each such registration statement for a class or classes of
contracts listed on Schedule A being referred to as the "Contracts
Registration Statement" and the prospectus for each such class or classes
being referred to herein as the "Contracts Prospectus; and
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WHEREAS, each Account (defined in SECTION 7(a) below), a validly
existing separate account, duly authorized by resolution of the Board of
Directors of the Company, set forth on Schedule B sets aside and invests
assets attributable to the Contracts; and
WHEREAS, the Company has registered or will have registered each Account
with the SEC as a unit investment trust under the 1940 Act before any
Contracts are issued by that Account; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
is a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Distributor and the Issuer have entered into an agreement
(the "Distribution Agreement") pursuant to which the Distributor will
distribute Fund shares; and
WHEREAS, Investors Research Corporation (the "Investment Advisor") is
registered as an investment adviser under the 1940 Act and any applicable
state securities laws and serves as an investment manager to the Issuer and
the Funds pursuant to an agreement; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Fund shares on behalf of each
Account to fund its Contracts and the Distributor is authorized to sell such
Fund shares to purchasers such as the Accounts at net asset value;
NOW, THEREFORE, the Company and Distributor agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of
this Agreement, the Distributor will cause the Issuer to make shares of the
Funds available to be purchased, exchanged, or redeemed, by the Company on
behalf of the Accounts through a single account per Fund at the net asset
value applicable to each order. The Funds' shares shall be purchased and
redeemed on a net basis in such quantity and at such time as determined by
the Company to satisfy the requirements of the Contracts for which the Funds
serve as underlying investment media. Dividends and capital gains
distributions will be automatically reinvested in full and fractional shares
of the Funds.
2. ADMINISTRATIVE SERVICES. The Company shall be solely responsible
for providing all administrative services for the Contract owners. The
Company agrees that it will maintain and preserve all records as required by
law to be maintained and preserved, and will otherwise comply with all laws,
rules and regulations applicable to the marketing of the Contracts and the
provision of administrative services to the Contract owners.
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<PAGE>
3. TIMING OF TRANSACTIONS.
Distributor hereby appoints the Company as its agent and/or agent for
the Funds for the limited purpose of accepting purchase and redemption orders
for Fund shares from the Accounts and/or Contract Owners, as applicable. On
each day the New York Stock Exchange (the "Exchange") is open for trading
(each, a "Business Day"), the Company may receive instructions from the
Accounts and/or Contract Owners for the purchase or redemption of shares of
the Funds ("Orders"). Orders received and accepted by the Company prior to
the close of regular trading on the Exchange (the "Close of Trading") on any
given Business Day (currently, 4:00 p.m. Eastern time) and transmitted to the
Issuers by 10:00 a.m. Eastern time on the next following Business Day will be
executed at the net asset value determined as of the Close of Trading on the
previous Business Day. Any Orders received by the Company after the Close of
Trading, and all Orders that are transmitted to the Issuers after 10:00 a.m.
Eastern time on the next following Business Day, will be executed by the
Issuers at the net asset value next determined following receipt of such
Order. The day as of which an Order is executed by the Issuers pursuant to
the provisions set forth above is referred to herein as the "Trade Date".
4. PROCESSING OF TRANSACTIONS.
(a) By 7:00 p.m. Eastern time on each Business Day, Distributor will
provide to the Company, via facsimile or other electronic transmission
acceptable to the Company, the Funds' net asset value, dividend and capital
gain information and, in the case of income funds, the daily accrual for
interest rate factor (mil rate), determined at the Close of Trading.
(b) By 10:00 a.m. Eastern time on each Business Day, the Company will
provide to Distributor via facsimile or other electronic transmission
acceptable to Distributor a report stating whether the Orders received by the
Company from Contract Owners by the Close of Trading on the preceding
Business Day resulted in the Accounts being a net purchaser or net seller of
shares of the Funds. As used in this Agreement, the phrase "other electronic
transmission acceptable to Distributor" includes the use of remote computer
terminals located at the premises of the Company, its agents or affiliates,
which terminals may be linked electronically to the computer system of
Distributor, its agents or affiliates (hereinafter, "Remote Computer
Terminals").
(c) Upon the timely receipt from the Company of the report described in
(b) above, the Funds' transfer agent will execute the purchase or redemption
transactions (as the case may be) at the net asset value computed as of the
Close of Trading on the Trade Date. Payment for net purchase transactions
shall be made by wire transfer to the applicable Fund custodial account
designated by the Distributor on the Business Day next following the Trade
Date. Such wire transfers shall be initiated by the Company's bank prior to
4:00 p.m. Eastern time and received by the Funds prior to 6:00 p.m. Eastern
time on the Business Day next following the Trade Date ("T + 1"). If payments
for a purchase Order is not timely received, such Order will be executed at
the net asset value next computed following receipt of payment. Payments for
net redemption transactions shall be made by wire transfer by the Issuers to
the account designated by the Company on T + 1;
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<PAGE>
PROVIDED, HOWEVER, the Issuer reserves the right to settle redemptions
transactions within the time period set forth in the applicable Fund's
then-current prospectus. On any Business Day when the Federal Reserve Wire
Transfer System is closed, all communication and processing rules will be
suspended for the settlement of Orders. Orders will be settled on the next
Business Day on which the Federal Reserve Wire Transfer System is open and
the original Trade Date will apply.
5. PROSPECTUS, PROXY MATERIALS AND OTHER INFORMATION
(a) Distributor shall provide the Company with copies of the Issuer's
proxy materials, periodic fund reports to shareholders and other materials
that are required by law to be sent to the Issuer's shareholders. In
addition, Distributor shall provide the Company with a sufficient quantity of
prospectuses and Statements of Additional Information of the Funds to be used
in conjunction with the transactions contemplated by this Agreement, together
with such additional copies of the Issuer's prospectuses and Statements of
Additional Information as may be reasonably requested by Company. If the
Company provides for pass-through voting by the Contract owners, Distributor
will provide the Company with a sufficient quantity of proxy materials for
each Contract owner.
(b) The cost of preparing, printing and shipping of the prospectuses,
proxy materials, periodic fund reports and other materials of the Issuer to
the Company shall be paid by Distributor or its agents or affiliates;
PROVIDED, HOWEVER, that if at any time Distributor or its agent reasonably
deems the usage by the Company of such items to be excessive, it may, prior
to the delivery of any quantity of materials in excess of what is deemed
reasonable, request that the Company demonstrate the reasonableness of such
usage. If the Distributor believes the reasonableness of such usage has not
been adequately demonstrated, it may request that the Company pay the cost of
printing (including press time) and delivery of any excess copies of such
materials. Unless the Company agrees to make such payments, Distributor may
refuse to supply such additional materials and Distributor shall be deemed in
compliance with this SECTION 5 if it delivers to the Company at least the
number of prospectuses and other materials as may be required by the Issuers
under applicable law.
(c) The cost of distribution, if any, of any prospectuses, proxy
materials, periodic fund reports and other materials of the Issuer to the
Contract owners shall be paid by the Company and shall not be the
responsibility of Distributor or the Issuer.
(d) The Fund shall not give any information or make any representations
on behalf of the Company or concerning the Company, the Account or the
Contracts other than the information or representations contained in the
Contracts Registration Statement or Contracts Prospectus, as such
Registration Statement and Prospectus may be amended or supplemented from
time to time, or in published reports of the Account which are in the public
domain or approved in writing by the Company for distribution to Contract
owners, or in sales literature or other promotional material, except with the
prior written permission of the Company. The Company agrees to respond to any
request for permission on a prompt and timely basis. If the Company fails to
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<PAGE>
respond within 10 days of a request by the Fund or the Distributor, then the
Fund is relieved of the obligation to obtain the prior written permission of
the Company.
(e) For purposes of this SECTION 5, 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, computer net site, 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, in print or
electronically, including brochures, circular, 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 NASD rules, the 1940 Act or the 1933 Act.
6. COMPENSATION AND EXPENSES.
(a) The Accounts shall be the sole shareholder of Fund shares purchased
for the Contract owners pursuant to this Agreement (the "Record Owners"). The
Company and the Record Owners shall properly complete any applications or
other forms required by Distributor or the Issuer from time to time.
(b) Distributor acknowledges that it will derive a substantial savings
in administrative expenses, such as a reduction in expenses related to
postage, shareholder communications and recordkeeping, by virtue of having a
single shareholder account per Fund for the Accounts rather than having each
Contract owner as a shareholder. In consideration of the Administrative
Services and performance of all other obligations under this Agreement by the
Company, Distributor will pay the Company a fee (the "Administrative Services
fee") equal to 20 basis points (0.20%) per annum of the average aggregate
amount invested by the Company under this Agreement. Distributor's obligation
shall be suspended with respect to any month during which the Company's
average aggregate investment in the Funds drops below $10 million.
Notwithstanding the above, if the Company's average investment in a single
Fund during a month exceeds $5 million, Distributor will pay the Company the
Administrative Services Fee with respect to all amounts invested in such
Fund. If the Company's investment in such Fund drops below $5 million, the
Distributor's obligation to pay the Administrative Services Fee shall be
suspended until the Company's average investment in the Fund exceeds $5
million or average aggregate investment in the Funds exceeds $10 million. For
purposes of Section 6(b), First UNUM/UNUM assets in the Fund will be included
in determining the threshold.
(c) The payments received by the Company under this Agreement are for
administrative and shareholder services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution.
5
<PAGE>
(d) For the purposes of computing the payment to the Company
contemplated by this SECTION 6, the average aggregate amount invested by the
Accounts in the Funds over a one month period shall be computed by totaling
the Company's aggregate investment (share net asset value multiplied by total
number of shares of the Funds held by the Company) on each Business Day
during the month and dividing by the total number of Business Days during
such month.
(e) Distributor will calculate the amount of the payment to be made
pursuant to this SECTION 6 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by Distributor for the relevant months and such other
supporting data as may be requested by the Company and shall be mailed to:
Lincoln Life & Annuity Company of New York
120 Madison St, 17th Floor
Syracuse, NY 13202
Attention: Philip Holstein
(f) In the event Distributor reduces its management fee with respect to
any Fund after the date hereof, Distributor may amend the Administrative
Services fee payable with regard to such Fund by providing the Company 30
days' advance written notice of any such adjustment. The revised
Administrative Services fee shall become effective as of the latter of 30
days from the date of delivery of the notice or the date prescribed in the
notice.
7. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants that: (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established
the Separate Accounts listed on Schedule B (the "Accounts"), each of which is
a separate account under the Indiana Insurance law, and has registered each
Account as a unit investment trust under the Investment Company Act of 1940
(the "1940 Act") to serve as an investment vehicle for the Contracts;
(iii) each Contract provides for the allocation of net amounts received by
the Company to an Account for investment in the shares of one of more
specified investment companies selected among those companies available
through the Account to act as underlying investment media; (iv) selection of
a particular investment company is made by the Contract owner under a
particular Contract, who may change such selection from time to time in
accordance with the terms of the applicable Contract; and (v) the activities
of the Company contemplated by this Agreement comply with all provisions of
federal and state insurance, securities, and tax laws applicable to such
activities.
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<PAGE>
(b) Distributor represents and warrants that: (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of
Distributor, enforceable in accordance with its terms; and (ii) the
investments of the Funds will at all times be adequately diversified within
the meaning of Section 817(h) of the Internal Revenue Service Code of 1986,
as amended (the "Code"), and the regulations thereunder, and that at all
times while this Agreement is in effect, all beneficial interests in each of
the Funds will be owned by one or more insurance companies or by any other
party permitted under Section 1.817-5(f)(3) of the Regulations promulgated
under the Code; and (iii) each Fund currently qualifies as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"). The Distributor further represents and warrants that
it will cause the Funds to continue to qualify and to maintain such
qualification (under Subchapter M or any successor or similar provision), and
that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so
qualify in the future and (iv) that Distributor is registered as a
Broker/Dealer under the Securities and Exchange Act of 1934.
(c) [The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and duly authorized
for issuance in accordance with applicable law and that the Fund is and shall
remain registered under the 1940 Act for so long as the Fund shares are sold.
The Fund further represents and warrants that it is a corporation duly
organized and in good standing under the laws of Maryland.]
(d) [The Fund represents and warrants that the Fund's investment
policies, fees and expenses, and 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.]
(e) [The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund
will immediately notify the Company in the event the fidelity bond coverage
should lapse at any time.]
8. ADDITIONAL COVENANTS AND AGREEMENTS
(a) Each party shall comply with all provisions of federal and state
laws applicable to its respective activities under this Agreement. All
obligations of each party under this Agreement are subject to compliance with
applicable federal and state laws.
(b) Each party shall promptly notify the other parties in the event that
it is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners in
proper form prior to the Close of Trading of the Exchange
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<PAGE>
on that Business Day. The Company shall time stamp all Orders or otherwise
maintain records that will enable the Company to demonstrate compliance with
SECTION 8(c) hereof.
(d) The Company covenants and agrees that all Orders transmitted to the
Issuers, whether by telephone, telecopy, or other electronic transmission
acceptable to Distributor, shall be sent by or under the authority and
direction of a person designated by the Company as being duly authorized to
act on behalf of the owner of the Accounts. Absent actual knowledge to the
contrary, Distributor shall be entitled to rely on the existence of such
authority and to assume that any person transmitting Orders for the purchase,
redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-308 and 8-404 of the Uniform
Commercial Code with respect to the transmission of instructions regarding
Fund shares on behalf of the owner of such Fund shares. The Company shall
maintain the confidentiality of all passwords and security procedures issued,
installed or otherwise put in place with respect to the use of Remote
Computer Terminals and assumes full responsibility for the security therefor.
The Company further agrees to be responsible for the accuracy, propriety and
consequences of all data transmitted to Distributor by the Company by
telephone, telecopy or other electronic transmission acceptable to
Distributor.
(e) The Company agrees to make every reasonable effort to market its
Contracts. It will use its best efforts to give equal emphasis and promotion
to shares of the Funds as is given to other underlying investments of the
Accounts.
(f) The Company shall not, without the written consent of Distributor,
make representations concerning the Issuer or the shares of the Funds except
those contained in the then-current prospectus and in current printed sales
literature approved by Distributor or the Issuer.
(g) Advertising and sales literature with respect to the Issuer or the
Funds prepared by the Company or its agents, if any, for use in marketing
shares of the Funds as underlying investment media to Contract owners shall
be submitted to Distributor for review and approval before such material is
used. Failure by Distributor to respond within 10 Business Days of the
request by the Company shall relieve the Company of the obligation to obtain
prior approval of Distributor.
(h) The Company will provide to Distributor at least one complete copy of
all registration statements, prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, and all
amendments or supplements to any of the above that include a description of
or information regarding the Funds promptly after the filing of such document
with the SEC or other regulatory authority.
(i) Each party will comply with reasonable requests for information and
documents regarding the Funds or the other party's compliance with its
obligations under this Agreement made by the other party, by the Fund's Board
of Directors or by any appropriate governmental entity or self regulatory
organization.
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<PAGE>
9. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither Distributor nor the Funds shall use any trademark, trade
name, service mark or logo of the Company, or any variation of any such
trademark, trade name, service mark or logo, without the Company's prior
written consent, the granting of which shall be at the Company's sole option.
Except as otherwise expressly provided for in this Agreement, the Company
shall not use any trademark, trade name, service mark or logo of the Issuer
or Distributor, or any variation of any such trademarks, trade names, service
marks, or logos, without the prior written consent of either the Issuer or
Distributor, as appropriate, the granting of which shall be at the sole
option of Distributor and/or the Issuer.
10. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in SECTION 12(a) below) participating in any Fund calculate
voting privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy material
furnished by Distributor and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for
which no instructions have been received in the same proportion as shares for
which such instructions have been received. The Company shall not oppose or
interfere with the solicitation of proxies for Fund shares held for such
Contract owners.
11. INDEMNITY.
11.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Fund, the Distributor and each person who controls or
is associated with the Fund (other than another Participating Insurance
Company) or the Distributor within the meaning of such terms under the
federal securities laws and any officer, trustee, director, employee or agent
of the foregoing, against any and all losses, claims, expenses, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation,
at common law or otherwise, insofar as such losses, claims, expenses, damages
or liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts
Registration Statement, Contracts Prospectus, sales literature or other
promotional material for the Contracts or the Contracts themselves (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 in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or
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<PAGE>
omission or such alleged statement or alleged omission was made in
reliance upon and in conformity with information furnished in
writing to the Company by the Distributor (or a person authorized
in writing to do so on behalf of the Fund or the Distributor) for
use in the Contracts Registration Statement, Contracts Prospectus
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
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact by or on behalf of the Company
(other than statements or representations contained in the Fund
Registration Statement, Fund Prospectus or sales literature or other
promotional material of the Fund not supplied by the Company or persons
under its control) or wrongful conduct of the Company or persons
under its control with respect to the sale or distribution of the
Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Fund Registration Statement, Fund
Prospectus or sales literature or other promotional material of the
Fund or any amendment thereof or supplement thereto, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made, if
such 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
(d) arise as a result of any failure by the Company to provide
the services and furnish the materials or to make any payments under the
terms of this Agreement; or
(e) arise out of any material breach by the Company of this
Agreement, including but not limited to any failure to transmit a request
for redemption or purchase of Fund shares on a timely basis in accordance
with the procedures set forth in SECTION 3; or
(f) arise as a result of the Company's providing the Fund with
inaccurate information, which causes the Fund to calculate its Net Asset
Values incorrectly.
This indemnification will be in addition to any liability which the
Company may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due
to the willful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the party seeking indemnification.
11.2. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor agrees to
indemnify and hold harmless the Company and each person who controls or is
associated with the Company within the meaning of such terms under the federal
securities laws and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, expenses, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or
10
<PAGE>
regulation, at common law or otherwise, insofar as such losses, claims,
expenses, damages or liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund
Registration Statement, Fund Prospectus (or any amendment or supplement
thereto) or sales literature or other promotional material of the Fund,
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 in light of
the circumstances in which they were made; provided that this obligation
to indemnify shall not apply if such statement or omission or alleged
statement or alleged omission was made in reliance upon and in
conformity with information furnished in writing by the Company to the
Distributor or its affiliates for use in the Fund Registration Statement,
Fund Prospectus (or any amendment or supplement thereto) or sales
literature for the Fund or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact made by the Distributor (other than
statements or representations contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other promotional
material of the Fund not supplied by the Fund or persons under their
control) or gross negligence, willful misfeasance or bad faith of the
Distributor or persons under its control with respect to the sale or
distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Contract's Registration Statement,
Contract's Prospectus or sales literature or other promotional material
for the Contracts (or any amendment 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 in light of the circumstances in which they were made, if such
statement or omission was made in reliance upon information furnished in
writing by the Distributor to the Company (or a person authorized in
writing to do so on behalf of the Fund or the Distributor); or
(d) arise as a result of any failure by the Distributor to provide
the services and furnish the materials under the terms of this Agreement
(including, but not by way of limitation, a failure, whether
unintentional or in good faith or otherwise; (i) to comply with the
diversification requirements specified in SECTION 7(b) of this Agreement;
and (ii) to provide the Company with accurate information sufficient
for it to calculate its accumulation and/or annuity unit values in timely
fashion as required by law and by the this Agreement); or
(e) arise out of any material breach by the Distributor of this
Agreement.
This indemnification will be in addition to any liability which the Fund
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage
11
<PAGE>
or liability is due to the wilful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the party seeking indemnification.
11.3. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("indemnified party") under this SECTION 11 of notice of the
commencement of any action, if a claim in respect thereof is to be made by
the indemnified party against any person obligated to provide indemnification
under this SECTION 11 ("indemnifying party"), such indemnified party will
notify the indemnifying party in writing of the commencement thereof as soon
as practicable thereafter, provided that the omission to so notify the
indemnifying party will not relieve it from any liability under this SECTION
11, except to the extent that the omission results in a failure of actual
notice to the indemnifying party and such indemnifying party is damaged
solely as a result of the failure to give such notice. The indemnifying
party, upon the request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention
of such counsel or (ii) 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 shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be 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 shall be entitled to
the benefits of the indemnification contained in this SECTION 11. The
indemnification provisions contained in this SECTION 11 shall survive any
termination of this Agreement.
12. POTENTIAL CONFLICTS.
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by Investors Research on December 12, 1987, with
the SEC and the order issued by the SEC in response thereto (the "Shared
Funding Exemptive Order"). The Company has reviewed the conditions to the
requested relief set forth in such application for exemptive relief. As
set forth in such application, the Board of Directors of the Issuer (the
"Board") will monitor the Issuer for the existence of any material
irreconcilable conflict between the interests of the contract owners of
all separate accounts ("Participating Companies") investing in funds of
the Issuer. An irreconcilable material conflict may arise for a variety
of reasons, including: (i) an action by any state insurance regulatory
authority; (ii) a change in applicable federal or state insurance, tax,
or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative
12
<PAGE>
letter, or any similar actions by insurance, tax or securities regulatory
authorities; (iii) an administrative or judicial decision in any relevant
proceeding; (iv) the manner in which the investments of any portfolio are
being managed; (v) a difference in voting instructions given by variable
annuity contract owners and variable life insurance contract owners; or (vi)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out
its responsibilities under the Shared Funding Exemptive Order by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the
Company is responsible for causing or creating said conflict, the Company
shall at its sole cost and expense, and to the extent reasonably practicable
(as determined by a majority of the disinterested Board members), take such
action as is necessary to remedy or eliminate the irreconcilable material
conflict. Such necessary action may include but shall not be limited to (i)
withdrawing the assets allocable to the Accounts from the fund and
reinvesting such assets in a different investment medium or submitting the
question of whether such segregation should be implemented to a vote of all
affected contract owners and as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Companies)
that votes in favor of such segregation, or offering to the affected contract
owners the option of making such a change [and (ii) establishing a new
registered management investment company or managed separate account.]
Nothing in this paragraph (c) shall be construed to waive any cause of
action which may be available to Company against any other Participating
Insurance Company or Companies, or against any other person or entity, in the
event Company determines in good faith that it (Company) is not responsible
(or is not solely responsible) for the material irreconcilable conflict.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions
and said decision represents a minority position or would preclude a majority
vote by all of its contract owners having an interest in the Issuer, the
Company at its sole cost, may be required, at the Board's election, to
withdraw an Account's investment in the Issuer and terminate this Agreement;
provided, however, that such withdrawal and termination shall be limited to
the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
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(e) For the purpose of this SECTION 12, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the
Issuer be required to establish a new funding medium for any Contract. The
Company shall not be required by this SECTION 12 to establish a new funding
medium for any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners materially adversely affected by the
irreconcilable material conflict.
13. APPLICABLE LAW. This Agreement shall be subject to the provisions
of all applicable securities law, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant, and the terms hereof shall be limited,
interpreted and construed in accordance therewith.
14. TERMINATION. This agreement shall terminate as to the sale and
issuance of new Contracts:
(a) at the option of either the Company, Distributor or the Issuer
upon six months' advance written notice to the other;
(b) at the option of the Company if the Fund's shares are not
available for any reason to meet the requirement of Contracts as
determined by the Company. Reasonable advance notice of election to
terminate shall be furnished by Company;
(c) at the option of either party upon institution of formal
proceedings against the other party or the Investment Advisor or and
Sub-Investment Advisor by the National Association of Securities
Dealers, Inc. (the "NASD"), the SEC or any other regulatory body
which the terminating party reasonably believes will result in a
material harm to the terminating party or the Funds, the Accounts
or the Contract owners;
(d) upon termination of the Management Agreement between the
Issuer and Investment Advisor or the Distribution Agreement between
the Issuer and the Distributor. Notice of such termination shall be
promptly furnished to the Company. This subsection (e) shall not
be deemed to apply if contemporaneously with such termination a
new contract of substantially similar terms is entered into between
the Issuer and the Investment Advisor or between the Issuer and
Distributor;
(e) upon the requisite vote of Contract owners having an
interest in the Issuer to substitute for the Issuer's shares the
shares of another investment company in accordance with the terms of
Contracts for which the Issuer's shares had been selected to serve
as the underlying investment medium. The Company will give 60 days'
written notice to the Issuer and Distributor of any proposed vote
to replace the Funds' shares;
(f) upon assignment of this Agreement unless made with the
written consent of all other parties hereto;
(g) if the Issuer's shares are not registered, issued or sold
in conformance with Federal law or such law precludes the use of
Fund shares as an underlying investment medium of Contracts issued
or
14
<PAGE>
to be issued by the Company. Prompt notice shall be given by either
party should such situation occur;
(h) at the option of the Issuer, if the Issuer reasonably determines
in good faith that the Company is not offering shares of the Fund in
conformity with the terms of this Agreement or applicable law;
(i) at the option of any party hereto upon a determination that
continuing to perform under this Agreement would, in the reasonable
opinion of the terminating party's counsel, violate any applicable
federal or state law, rule, regulation or judicial order;
(j) at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of disinterested Fund
Board members, that an irreconcilable material conflict exists among
the interests of (i) any Product owners or (ii) the interests of the
Participating Insurance Companies investing in the Fund;
(k) at the option of the Company if the Fund ceases to qualify as
a Regulated Investment Company under Subchapter M of the Code, or under
any successor or similar provision, or if the Company reasonably
believes, based on an opinion of its counsel, that the Fund may fail to
so qualify;
(l) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Section 817(h) of the Code and
any regulations thereunder;
(m) at the option of either the Fund or the Distributor if the Fund
or the Distributor, respectively, shall determine, in their sole
judgment exercised in good faith, that either (1) the Company shall have
suffered a material adverse change in its business or financial
condition; or (2) the Company shall have been the subject of material
adverse publicity which is likely to have a material adverse impact
upon the business and operations of either the Fund or the Distributor;
or
(n) at the option of the Company, if the Company shall determine, in
its sole judgment exercised in good faith, that either; (1) the
Investment Advisor or Distributor shall have suffered a material adverse
change in their respective businesses or financial condition; or (2) the
Investment Advisor or Distributor shall have been the subject of
material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Company.
15. CONTINUATION OF AGREEMENT.
(a) Termination as the result of any cause listed in SECTION 14 shall not
affect the Issuer's obligation to furnish its shares to Contracts then in
force for which its shares serve or may serve as the underlying medium (unless
such further sale of Fund shares is proscribed by law or the SEC or other
regulatory body). Following termination, Distributor shall not have any
15
<PAGE>
Administrative Services payment obligation to the Company (except for payment
obligations accrued but not yet paid as of the termination date).
(b) Notwithstanding any termination of this Agreement pursuant to
SECTION 14 of this Agreement, the Fund will, at the option of the Company,
continued to make available additional Fund shares for so long after the
termination of this Agreement as the Company desires, pursuant to the terms
and conditions of this Agreement as provided in paragraph (b) below, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if the Company so elects to make additional Fund shares
available, the owners of the Existing Contracts or the Company, whichever
shall have legal authority to do so, shall be permitted to redeem investments
in the Fund and/or invest in the Fund.
(c) If Fund shares continue to be made available after such termination,
the provisions of this Agreement shall remain in effect except as set forth
in SECTION 14(a) and thereafter either the Fund or the Company may terminate
the Agreement, as so continued pursuant to this SECTION 15, upon prior
written notice to the other party, such notice to be for a period that is
reasonable under the circumstances but, if given by the Fund, need not be for
more than six months.
(d) The parties agree that this SECTION 15 shall not apply to any
termination made pursuant to SECTION 12 or any conditions or undertakings
incorporated by reference in SECTION 12, and the effect of such SECTION 12
termination shall be governed by the provisions set forth or incorporated by
reference therein.
16. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that
this Agreement and the arrangement described herein are intended to be
non-exclusive and that each of the parties is free to enter into similar
agreements and arrangements with other entities.
17. SURVIVAL. The provisions of SECTION 9 (use of names) and SECTION 11
(indemnity) of this Agreement shall survive termination of this Agreement.
18. AMENDMENT. Neither this Agreement, nor any provision hereof, may
be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all of the parties hereto.
19. NOTICES. All notices and other communications hereunder shall be
given or made in writing, and shall be delivered personally, or sent by
telex, telecopier, express delivery or registered or certified mail,
postage prepaid, return receipt requested, to the party or parties to whom
they are directed at the following addresses, or at such other addresses
as may be designated by notice from such party to all other parties.
16
<PAGE>
To the Company:
Lincoln Life & Annuity Company of New York
120 Madison St, 17th Floor
Syracuse, NY 13202
Attention: Philip Holstein
To the Issuer or Distributor:
Twentieth Century Mutual Funds
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4051 (office number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed
in this SECTION 19 shall be deemed to have been delivered on receipt.
20. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without
the written consent of all parties to the Agreement at the time of such
assignment. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
and any party hereto may execute this Agreement by signing any such
counterpart.
22. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
23. ENTIRE AGREEMENT. This Agreement, including the Attachments
hereto, constitutes the entire agreement between the parties with respect
to the matters dealt with herein, and supersedes all previous agreements,
written or oral, with respect to such matter.
17
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date set forth above.
TWENTIETH CENTURY SECURITIES, INC. LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK
By: By:
-------------------------------- ------------------------------------
William M. Lyons Philip Holstein
Executive Vice President President
18
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS OF LINCOLN NATIONAL LIFE INSURANCE COMPANY
INVESTING IN THE FUND
Lincoln Life & Annuity Variable Annuity Account L
19
<PAGE>
SCHEDULE B
VARIABLE ANNUITY CONTRACTS
AND VARIABLE LIFE INSURANCE POLICIES
SUPPORTED BY SEPARATE ACCOUNTS
LISTED ON SCHEDULE A
Group Variable Annuity I Contracts
Group Variable Annuity II Contracts
Group Variable Annuity III Contracts
20
<PAGE>
FORM OF
PARTICIPATION AGREEMENT
AMONG
ACACIA CAPITAL CORPORATION
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
AND
CALVERT DISTRIBUTORS, INC.
THIS AGREEMENT, made and entered into this 6th day of September, 1996, by and
between ACACIA CAPITAL CORPORATION ("ACC"), a corporation organized under the
laws of Maryland (the "Fund"), and LINCOLN LIFE & ANNUITY COMPANY OF NEW
YORK, a New York insurance 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 in effect at the time this Agreement is executed and such other
separate accounts that may be added to Schedule 1 from time to time in
accordance with the provisions of Article XI of this Agreement (each such
account referred to as the "Account"), ACC, and Calvert Distributors, Inc.
(the "Distributor").
WHEREAS, the Fund is engaged 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 policies and variable annuity contracts (collectively referred to
as "Variable Insurance Products," the owners of such products being referred
to as "Product owners") to be offered by insurance companies which have
entered into participation agreements with the Fund ("Participating Insurance
Companies"); and
WHEREAS, the common stock of the Fund (the "Fund shares") consists of
separate series ("Series") issuing separate classes of shares ("Series
shares"), each such class representing an interest in a particular managed
portfolio of securities and other assets; and
WHEREAS, the Fund filed with the Securities and Exchange Commission (the
"SEC") and the SEC has declared effective a registration statement (referred
to herein as the "Fund Registration Statement" and the prospectus contained
therein, or filed pursuant to Rule 497 under the 1933 Act, referred to herein
as the "Fund Prospectus") on Form N-1A to register itself as an open-end
management investment company (File No. _____) under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the Fund shares (File No. _____)
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has filed a registration statement with the SEC to
register under the 1933 Act certain variable annuity contracts described in
Schedule 2 to this Agreement as in effect at the time this Agreement is
executed and such other variable annuity contracts and variable life
insurance policies which may be added to Schedule 2 from time to time in
accordance with Article XI of this Agreement (such policies and contracts
shall be referred to herein collectively as the "Contracts," each such
registration statement for a class or classes of contracts listed on Schedule
2
1
<PAGE>
being referred to as the "Contracts Registration Statement" and the
prospectus for each such class or classes being referred to herein as the
"Contracts Prospectus," and the owners of the such contracts, as
distinguished from all Product Owners, being referred to as "Contract
Owners"); and
WHEREAS, each Account, a validly existing separate account, duly
authorized by resolution of the Board of Directors of the Company on the date
set forth on Schedule 1, sets aside and invests assets attributable to the
Contracts; and
WHEREAS, the Company has registered or will have registered each Account
with the SEC as a unit investment trust under the 1940 Act before any
Contracts are issued by that Account; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD"); and
WHEREAS, the Distributor and the Fund have entered into an agreement (the
"Fund Distribution Agreement") pursuant to which the Distributor will
distribute Fund shares; and
WHEREAS, Calvert Asset Management Company ("CAMCO"), (the "Investment
Manager") is registered as an investment adviser under the 1940 Act and any
applicable state securities laws and serves as an investment manager to the
Fund pursuant to an agreement; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Series shares on behalf of each
Account to fund its Contracts and the Distributor is authorized to sell such
Series shares to unit investment trusts such as the Accounts at net asset
value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Distributor agree as follows:
ARTICLE 1. SALE OF FUND SHARES
1.1. The Distributor agrees to sell to the Company those Series shares
which the Company orders on behalf of the Account, executing such orders on
a daily basis in accordance with Section 1.4 of this Agreement.
1.2. The Fund agrees to make the shares of its Series available for
purchase by the Company on behalf of the Account at the then applicable net
asset value per share on Business Days as defined in Section 1.4 of this
Agreement, and the Fund shall use its best efforts to calculate such net
asset value by 6:00 p.m., E.S.T., on each such Business Day. Notwithstanding
any other provision in this Agreement to the contrary, the Board of Directors
of the Fund (the "Fund Board") may suspend or terminate the offering of Fund
shares of any Series, if such action is required by law or by regulatory
2
<PAGE>
authorities having jurisdiction or if, in the sole discretion of the Fund
Board acting in good faith and in light of its fiduciary duties under Federal
and any applicable state laws, suspension or termination is necessary and in
the best interests of the shareholders of any Series (it being understood
that "shareholders" for this purpose shall mean Product owners).
1.3. The Fund agrees to redeem, at the Company's request, any full or
fractional shares of the Fund held by the Account or the Company, executing
such requests at the net asset value on a daily basis in accordance with
Section 1.4 of this Agreement, the applicable provisions of the 1940 Act and
the then currently effective Fund Prospectus. Notwithstanding the foregoing,
the Fund may delay redemption of Fund shares of any Series to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or
the then currently effective Fund Prospectus.
1.4.
(a) For purposes of Sections 1.1, 1.2 and 1.3, the Company shall be
the agent of the Fund for the limited purpose of receiving redemption
and purchase requests from the Account (but not from the general
account of the Company), and receipt on any Business Day by the
Company as such limited agent of the Fund prior to the time prescribed
in the current Fund Prospectus (which as of the date of execution of
this Agreement is 4 p.m., E.S.T.) shall constitute receipt by the Fund
on that same Business Day, provided that the Fund receives notice of
such redemption or purchase request by 11:00 a.m., E.S.T. on the next
following Business Day. For purposes of this Agreement, "Business
Day" shall mean any day on which the New York Stock exchange is
open for trading.
(b) The Company shall pay for shares of each Series on the same day
that it places an order with the Fund to purchase those Series shares
for an Account. Payment for Series shares will be made by the
Account or the Company in Federal Funds transmitted to the Fund by
wire to be received by the close of the Business Day on the day the
Fund is properly notified of the purchase order for Series shares.
If Federal Funds are not received on time, such funds will be
invested, and Series shares purchased thereby will be issued, as soon
as practicable.
(c) Payment for Series shares redeemed by the Account or the
Company will be made in Federal Funds transmitted to the Company by
wire on the day the Fund is notified of the redemption order of
Series shares, except that 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 under Section 22(e) of the
1940 Act. Neither the Fund nor the Distributor shall bear any
responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds; the Company alone shall be responsible for
such action.
3
<PAGE>
1.5. Issuance and transfer of Fund shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Fund shares will be recorded in an appropriate
ledger for the Account or the appropriate subaccount of the Account.
1.6. The Fund shall furnish notice to the Company on or before the 'X'
dividend date of any income dividends or capital gain distributions payable
on any Series shares. The Company, on its behalf and on behalf of the
Account, hereby elects to receive all such dividends and distributions as are
payable on any Series shares in the form of additional shares of that Series.
The Company reserves the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends in cash. The Fund
shall notify the Company of the number of Series shares (and the amount of
dividends per share) so issued as payment of such dividends and distributions.
1.7. The Fund shall use its best efforts to make the net asset value
per share for each Series available to the Company by 6 p.m., E.S.T. each
Business Day, and in any event, as soon as reasonably practicable after the
net asset value per share for such Series is calculated, and shall calculate
such net asset value in accordance with the then currently effective Fund
Prospectus. Neither the Fund, any Series, the Distributor, nor the Investment
Manager nor any of their affiliates shall be liable for any information
provided to the Company pursuant to this Agreement which information is based
on incorrect information supplied by the Company to the Fund, the Distributor
or the Investment Manager.
1.8.
(a) The Company may withdraw the Account's investment in the
Fund or a Series only: (i) as necessary to facilitate Contract owner
requests; (ii) upon a determination by a majority of the Fund Board, or a
majority of disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of (x) any Product Owners
or (y) the interests of the Participating Insurance Companies investing
in the Fund; (iii) upon requisite vote of the Contractowners having an
interest in the affected Series to substitute the shares of another
investment company for Series shares in accordance with the terms of the
Contracts; (iv) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application; or (v) at the
Company's sole discretion, pursuant to an order of the SEC under Sect-
ion 26(b) of the 1940 Act.
(b) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive and that the Fund shares
may be sold to other insurance companies (subject to Section 1.9 hereof)
and the cash value of the Contracts may be invested in other investment
companies.
(c) The Company shall not, without prior notice to the
Distributor (unless otherwise required by applicable law), take any action
to operate the Account as a management investment company under the 1940
Act.
4
<PAGE>
1.9. The Fund and the Distributor agree that Fund shares will be sold
only to Participating Insurance Companies and their separate accounts. The
Fund and the Distributor will not sell Fund shares to any insurance company or
separate account unless an agreement complying with Article VII of this
Agreement is in effect to govern such sales. No Fund shares of any Series will
be sold to the general public.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants (a) that the Contracts are
registered under the 1933 Act or will be so registered before the issuance
thereof, (b) that the Contracts will be issued in compliance in all material
respects with all applicable Federal and state laws and (c) that the Company
will require of every person distributing the Contracts that the Contracts be
offered and sold in compliance in all material respects with all applicable
Federal and state laws. The Company further represents and warrants that it
is an insurance company duly organized and validly existing under applicable
law and that it has legally and validly authorized each Account as a separate
account under New York Insurance Law, and has registered or, prior to the
issuance of any Contracts, will register each Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a
separate account for its Contracts, and that it will maintain such
registrations for so long as any Contracts issued under them are outstanding.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and duly authorized
for issuance in accordance with applicable law and that the Fund is and shall
remain registered under the 1940 Act for so long as the Fund shares are
sold. The Fund further represents and warrants that it is a corporation duly
organized and in good standing under the laws of Maryland.
2.3. The Fund represents and warrants that it currently qualifies as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). The Fund further represents and warrants
that it will make every effort to continue to qualify and to maintain such
qualification (under Subchapter M or any successor or similar provision), and
that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so
qualify in the future.
2.4. The Fund represents and warrants that it will comply with Section
817(h) of the Code, and all regulations issued thereunder.
2.5. The Company represents that the Contracts are currently and at the
time of issuance will be treated as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code.
The Company shall make every effort to maintain such treatment and shall
notify the Fund and the Distributor 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.
5
<PAGE>
2.6. The Fund represents that the Fund's investment policies, fees and
expenses, and 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; and with any state-mandated investment restrictions
set forth on Schedule 3, as amended from time to time by the Company in
accordance with Section 6.6. The Fund, however, makes no representation as to
whether any aspect of its operations (including, but not limited to, fees
and expenses and investment policies) otherwise complies with the insurance
laws or regulations of any state. The Company alone shall be responsible for
informing the Fund of any investment restrictions imposed by state insurance
law and applicable to the Fund.
2.7. The Distributor represents and warrants that it is duly registered
as a broker-dealer under the 1934 Act, a member in good standing of the NASD,
and duly registered as a broker-dealer under applicable state securities
laws; its operations are in compliance with applicable law, and it will
distribute the Fund shares according to applicable law.
2.8. The Distributor, on behalf of the Investment Manager, represents
and warrants that the Investment Manager is registered as an investment
adviser under the Investment Advisers Act of 1940 and is in compliance with
applicable federal and state securities laws.
2.9. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The Distributor shall provide the Company with as many copies of the
current Fund Prospectus as the Company may reasonably request. If requested
by the Company in lieu thereof, the Fund at its expense shall provide to the
Company a camera-ready copy of the current Fund Prospectus suitable for
printing and other assistance as is reasonably necessary in order for the
Company to have a new Contracts Prospectus printed together with the Fund
Prospectus in one document. See Article V for a detailed explanation of the
responsibility for the cost of printing and distributing Fund prospectuses.
3.2. The Fund Prospectus shall state that the Statement of Additional
Information for the Fund is available from the Distributor (or, in the
Fund's discretion, the Fund Prospectus shall state that such Statement is
available from the Fund), and the Distributor (or the Fund) shall provide
such Statement free of charge to the Company and to any outstanding or
prospective Contract owner who requests such Statement.
3.3 (a)The Fund at its expense shall provide to the Company a
camera-ready copy of the Fund's shareholder reports and other communications to
shareholders (except proxy material), in each case in a form suitable for
printing. The Fund shall be responsible for the costs of printing and
distributing these materials to Contract owners.
6
<PAGE>
(b) The Fund at its expense shall be responsible for
preparing, printing and distributing its proxy material. The
Company will provide the appropriate Contractowner names and
addresses to the Fund for this purpose.
3.4. The Company shall furnish each piece of sales literature or
other promotional material in which the Fund or the Investment Manager is
named to the Fund or the Distributor prior to its use. No such material shall
be used, except with the prior written permission of the Fund or the
Distributor. The Fund and the Distributor agree to respond to any request for
approval on a prompt and timely basis. If the Fund fails to respond within 10
days of the request by the Company, the Company shall so notify the
Distributor immediately. The Distributor shall have one business day
thereafter to respond to the Company. If the Company receives no response
thereafter, it shall be relieved of the obligation to obtain the prior
written permission of the Fund or the Distributor for that specific piece of
sales literature.
3.5. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
other than the information or representations contained in the Fund
Registration Statement or Fund Prospectus, 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 by the Distributor, except with the prior
written permission of the Fund or the Distributor. The Fund agrees to respond
to any request for permission on a prompt and timely basis. If neither the
Fund nor the Distributor responds within 10 days of a request by the Company,
the Company shall so notify the Distributor immediately. The Distributor
shall have one business day thereafter to respond to the Company. If the
Company receives no response thereafter, it shall be relieved of the
obligation to obtain the prior written permission of the Fund or the
Distributor for that specific piece of sales literature.
3.6. The Fund and the Distributor shall not give any information or
make any representations on behalf of the Company or concerning the Company,
the Account or the Contracts other than the information or representations
contained in the Contracts Registration Statement or Contracts Prospectus, as
such Registration Statement and Prospectus may be amended or supplemented
from time to time, or in published reports of the Account which are in the
public domain or approved in writing by the Company for distribution to
Contract owners, or in sales literature or other promotional material
approved in writing by the Company, except with the prior written permission
of the Company. The Company agrees to respond to any request for permission
on a prompt and timely basis. If the Company fails to respond within 10 days
of a request by the Fund or the Distributor, the Fund and the Distributor
shall so notify the Company immediately. The Company shall have one business
day thereafter to respond to the Fund or Distributor. If the Fund or
Distributor receives no response thereafter, it shall be relieved of the
obligation to obtain the prior written permission of the Company for that
specific piece of sales literature.
3.7. The Fund will provide to the Company at least one complete copy
of all Fund Registration Statements, Fund Prospectuses, Statements of
Additional Information, annual and semi-
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annual reports and other reports, proxy statements, sales literature and
other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above,
that relate to the Fund or Fund shares, promptly after the filing of such
document with the SEC or other regulatory authorities after August 1, 1996.
3.8. The Company will provide to the Fund at least one complete
copy of all Contracts Registration Statements, Contracts Prospectuses,
Statements of Additional Information, Annual and Semi-annual Reports, sales
literature and other promotional materials, and all amendments or supplements
to any of the above, that relate to the Contracts, promptly after the filing
of such document with the SEC or other regulatory authorities.
3.9. Each party will provide to the other party copies of draft
versions of any registration statements, prospectuses, statements of
additional information, reports, proxy statements, solicitations for voting
instructions, sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all amendments or
supplements to any of the above, to the extent that the other party
reasonably needs such information for purposes of preparing a report or other
filing to be filed with or submitted to a regulatory agency. If a party
requests any such information before it has been filed, the other party will
provide the requested information if then available and in the version then
available at the time of such request. If neither the Fund nor the
Distributor responds within 10 days of a request by the Company, the Company
shall notify the Distributor immediately. The Distributor shall have one
business day thereafter to respond to the Company.
3.10. For purposes of this Article III, 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, computer net site, 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, in print or electronically, 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 NASD rules, the 1940 Act or the 1933 Act.
ARTICLE IV. Voting
4.1 Subject to applicable law and the order referred to in Article
VII, the Fund shall: solicit voting instructions from Contract owners;
4.2 Subject to applicable law and the order referred to in Article
VII, the Company shall:
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(a) vote Fund shares of each Series attributable to Contract
owners in accordance with instructions or proxies received in timely
fashion from such Contract owners;
(b) vote Fund shares of each Series attributable to Contract
owners for which no instructions have been received in the same
proportion as Fund shares of such Series for which instructions have
been received in timely fashion; and
(c) vote Fund shares of each Series held by the Company on its
own behalf or on behalf of the Account that are not attributable
to Contract owners in the same proportion as Fund shares of such
Series for which instructions have been received in timely fashion.
The Company shall be responsible for assuring that voting privileges for the
Accounts are calculated in a manner consistent with the provisions set forth
above.
ARTICLE V. FEES AND EXPENSES
All expenses incident to performance by the Fund under this
Agreement (including expenses expressly assumed by the Fund pursuant to this
Agreement) shall be paid by the Fund to the extent permitted by law. Except
as may otherwise be provided in Section 1.4 and Article VII of this
Agreement, the Company shall not bear any of the expenses for the cost of
registration and qualification of the Fund shares under Federal and any state
securities law, preparation and filing of the Fund Prospectus and Fund
Registration Statement, the preparation of all statements and notices
required by any Federal or state securities law, all taxes on the issuance or
transfer of Fund shares, and 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.
The Fund is responsible for the cost of printing and distributing
Fund Prospectuses and SAIs to existing Contract owners. (If for this purpose
the Company prints the Fund Prospectuses and SAIs in a booklet containing
disclosure for the Contracts and for underlying funds other than those of the
Fund, then the Fund shall pay only its proportionate share of the total cost
to distribute the booklet to existing Contract owners.)
The Company is responsible for the cost of printing and distributing
Fund prospectuses and SAIs for new sales; and Account Prospectuses and SAIs
for existing Contract owners. The Company shall have the final decision on
choice of printer for all Prospectuses and SAIs.
ARTICLE VI. COMPLIANCE UNDERTAKINGS
6.1. The Fund undertakes to comply with Subchapter M and Section
817(h) of the Code, and all regulations issued thereunder.
6.2. The Company shall amend the Contracts Registration Statements
under the 1933 Act and the Account's Registration Statement under the 1940
Act from time to time as required in order
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<PAGE>
to effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company shall register and qualify the
Contracts for sale to the extent required by applicable securities laws of
the various states.
6.3. The Fund shall amend the Fund Registration Statement under the 1933
Act and the 1940 Act from time to time as required in order to effect for so
long as Fund shares are sold the continuous offering of Fund shares as
described in the then currently effective Fund Prospectus. The Fund shall
register and qualify Fund shares for sale to the extent required by
applicable securities laws of the various states.
6.4. The Company shall be responsible for assuring that any prospectus
offering a Contract that is a life insurance contract where it is reasonably
possible that such Contract would be deemed a "modified endowment contract,"
as that term is defined in Section 7702A of the Code, will describe the
circumstances under which a Contract could be treated as a modified endowment
contract (or policy).
6.5. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Fund 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.
6.6. (a) The Company shall amend Schedule 3 when appropriate in order to
inform the Fund of any applicable state-mandated investment restrictions
with which the Fund must comply.
(b) Should the Fund or the Distributor become aware of any
restrictions which may be appropriate for inclusion in Schedule 3, the
Company shall be informed immediately of the substance of those
restrictions.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Company has reviewed a copy of the order (the "Mixed and
Shared Funding Order") dated ________________ of the Securities and Exchange
Commission under Section 6(c) of the Act and, in particular, has reviewed the
conditions to the relief set forth in the related Notice. As set forth
therein, the Company agrees to report to the Board of Directors of the Fund
(the "Board") any potential or existing conflicts between the interests of
Product Owners of all separate accounts investing in the Fund, and to assist
the Board in carrying out its responsibilities under the conditions of the
Mixed and Shared Funding Order by providing all information reasonably
necessary for the Board to consider any issues raised, including information
as to a decision to disregard voting instructions of variable contract owners.
7.2. If a majority of the Board, or a majority of disinterested Board
Members, determines that a material irreconcilable conflict exists, the Board
shall give prompt notice to all Participating Insurance Companies.
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(a) If a majority of the whole Board, after notice to the Company and
a reasonable opportunity for the Company to appear before it and present its
case, determines that the Company is responsible for said conflict, and if
the Company agrees with that determination, the Company shall, at its sole
cost and expense, take whatever steps are necessary to remedy the
irreconcilable material conflict. These steps could include: (a) withdrawing
the assets allocable to some or all of the affected Accounts from the Fund
or any Series and reinvesting such assets in a different investment vehicle,
including another Series of the Fund, or submitting the question of whether
such segregation should be implemented to a vote of all affected
Contractowners and, as appropriate, segregating the assets of any particular
group (i.e., variable annuity Contractowners, variable life insurance
policyowners, or variable 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 mutual fund or management separate account, or
taking such other action as is necessary to remedy or eliminate the
irreconcilable material conflict.
(b) If the Company disagrees with the Board's determination, the
Company shall file a written protest with the Board, reserving its right to
dispute the determination as between just the Company and the Fund. After
reserving that right the Company, although disagreeing with the Board that
it (the Company) was responsible for the conflict, shall take the necessary
steps, under protest, to remedy the conflict, substantially in accordance
with paragraph (a) just above, for the protection of Contractowners.
(c) As between the Company and the Fund, if within 45 days after the
Board's determination the Company elects to press the dispute, it shall so
notify the Board in writing. The parties shall then attempt to resolve the
matter amicably through negotiation by individuals from each party who are
authorized to settle the controversy.
If the matter has not been amicably resolved within 60 days from the date
of the Company's notice of its intent to press the dispute, then before
either party shall undertake to litigate the dispute it shall be submitted to
non-binding arbitration conducted expeditiously in accordance with the CPR
Rules for Non-Administered Arbitration of Business Disputes, by a sole
arbitrator; PROVIDED, HOWEVER, that if one party has requested the other
party to seek an amicable resolution and the other party has failed to
participate, the requesting party may initiate arbitration before expiration
of the 60-day period set out just above.
If within 45 days of the commencement of the process to select an
arbitrator the parties cannot agree upon the arbitrator, then he or she will
be selected from the CPR Panels of Neutrals. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place
of arbitration shall be Fort Wayne, Indiana. The Arbitrator is not empowered
to award damages in excess of compensatory damages.
(d) If the Board shall determine that the Fund or another insurer was
responsible for the conflict, then the Board shall notify the Company
immediately of that determination. The Fund
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<PAGE>
shall assure the Company that it (the Fund) or that other insurer, as
applicable, shall, at its sole cost and expense, take whatever steps are
necessary to eliminate the conflict.
7.3. If a material irreconcilable conflict arises because of the
Company's decision to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company shall withdraw (without charge or penalty) the Account's
investment in the Fund, if the Fund so elects.
7.4. Subject to the terms of Section 7.2 above, the Company shall carry
out the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict with a view only to the
interests of Contract Owners.
7.5. For purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable conflict, but in no event will the
Fund be required to establish a new funding medium for any variable contract,
nor will the Company be required to establish a new funding medium for any
Contract if an offer to do so has been declined by a vote of a majority of
affected Contractowners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Fund, the Distributor and each person who controls or
is associated with the Fund (other than another Participating Insurance
Company) or the Distributor within the meaning of such terms under the
federal securities laws and any officer, trustee, director, employee or agent
of the foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they or
any of them may become subject under any statute or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts Registration
Statement, Contracts Prospectus, sales literature or other promotional
material for the Contracts or the Contracts themselves (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
in light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission or such
alleged statement or alleged omission was made in reliance upon and in
conformity with information furnished in writing to the Company by the Fund
or the Distributor (or a person authorized in writing to do so on behalf of
the Fund or the Distributor) for use in the Contracts Registration Statement,
Contracts Prospectus 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
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<PAGE>
(b) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact by or on behalf of the
Company (other than statements or representations contained in the
Fund Registration Statement, Fund Prospectus or sales literature or
other promotional material of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or
persons under its control with respect to the sale or distribution of
the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other promotional
material of the Fund or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they
were made, if such 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
(d) arise as a result of any failure by the Company to provide
the services and furnish the materials or to make any payments under
the terms of this Agreement; or
(e) arise out of any material breach by the Company of this
Agreement, including but not limited to any failure to transmit a
request for redemption or purchase of Fund shares on a timely basis in
accordance with the procedures set forth in Article 1; or
(f) arise as a result of the Company's providing the Fund with
inaccurate information, which causes the Fund to calculate its Net
Asset Values incorrectly. This indemnification will be in addition to
any liability which the Company may otherwise have; provided, however,
that no party shall be entitled to indemnification if such loss,
claim, damage or liability is due to the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party
seeking indemnification.
8.2 INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor agrees to
indemnify and hold harmless the Company and each person who controls or is
associated with the Company within the meaning of such terms under the
federal securities laws and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint
or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they or any of
them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Fund
Registration Statement, Fund Prospectus (or any amendment or
supplement thereto) or sales literature or other promotional material
of the Fund, 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
13
<PAGE>
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission or alleged statement or alleged omission was
made in reliance upon and in conformity with information furnished in
writing by the Company to the Fund or the Distributor for use in the
Fund Registration Statement, Fund Prospectus (or any amendment or
supplement thereto) or sales literature for the Fund or otherwise for
use in connection with the sale of the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact made by the Distributor or
the Fund (other than statements or representations contained in the
Fund Registration Statement, Fund Prospectus or sales literature or
other promotional material of the Fund not supplied by the Distributor
or the Fund or persons under their control) or wrongful conduct of the
Distributor or persons under its control with respect to the sale or
distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Contract's
Registration Statement, Contracts Prospectus or sales literature
or other promotional material for the Contracts (or any amendment 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 in light of the
circumstances in which they were made, if such statement or omission
was made in reliance upon information furnished in writing by the
Distributor or the Fund to the Company (or a person authorized in
writing to do so on behalf of the Fund or the Distributor); or
(d) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including, but not by way of limitation, a failure, whether
unintentional or in good faith or otherwise; (i) to comply with the
diversification requirements specified in Article VI of this
Agreement; and (ii) to provide the Company with accurate information
sufficient for it to calculate its accumulation and/or annuity unit
values in timely fashion as required by law and by the Contracts
Prospectuses); or
(e) arise out of any material breach by the Distributor or the
Fund of this Agreement.
This indemnification will be in addition to any liability which the Distributor
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3 INDEMNIFICATION BY THE FUND. The Fund agrees to indemnify and
hold harmless the Company and each person who controls or is associated with the
Company within the meaning of such terms under the federal securities laws and
any officer, director, employee or agent of the foregoing, against any and all
losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they or any of them may become subject
14
<PAGE>
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Fund
Registration Statement, Fund Prospectus (or any amendment or
supplement thereto) or sales literature or other promotional material
of the Fund, 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 in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission or alleged statement or alleged omission was
made in reliance upon and in conformity with information furnished in
writing by the Company to the Fund or the Distributor for use in the
Fund Registration Statement, Fund Prospectus (or any amendment or
supplement thereto) or sales literature for the Fund or otherwise for
use in connection with the sale of the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact made by the Distributor
or the Fund (other than statements or representations contained in
the Fund Registration Statement, Fund Prospectus or sales literature
or other promotional material of the Fund not supplied by the
Distributor or the Fund or persons under their control) or wrongful
conduct of the Fund or persons under its control with respect to the
sale or distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Contract's Registration
Statement, Contracts Prospectus or sales literature or other
promotional material for the Contracts (or any amendment 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 in light of the circumstances in
which they were made, if such statement or omission was made in
reliance upon information furnished in writing by the Distributor or
the Fund to the Company (or a person authorized in writing to do so
on behalf of the Fund or the Distributor); or
(d) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including, but not by way of limitation, a failure, whether
unintentional or in good faith or otherwise: (i) to comply with the
diversification requirements specified in Article VI of this
Agreement; and (ii) to provide the Company with accurate information
sufficient for it to calculate its accumulation and/or annuity unit
values in timely fashion as required by law and by the Contracts
Prospectuses); or
(e) arise out of any material breach by the Distributor or the
Fund of this Agreement.
This indemnification will be in addition to any liability which the Fund may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due
15
<PAGE>
to the wilful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
8.4. INDEMNIFICATION PROCEDURES. After receipt by a party
entitled to indemnification ("indemnified party") under this Article VIII of
notice of the commencement of any action, if a claim in respect thereof is to
be made by the indemnified party against any person obligated to provide
indemnification under this Article VIII ("indemnifying party"), such
indemnified party will notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, provided that the
omission to so notify the indemnifying party will not relieve it from any
liability under this Article VIII, except to the extent that the omission
results in a failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to give such
notice. The indemnifying party, upon the request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified part
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) 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 shall not be liable
for any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be 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 shall be entitled
to the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
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
without giving effect to the principles of conflicts of laws.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant, and the terms hereof shall be limited, interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
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(a) at the option of any party upon six months advance written
notice to the other parties; or
(b) at the option of the Company if shares of any Series are
not available to meet the requirements of the Contracts as determined by the
Company. Prompt notice of the election to terminate for such cause shall be
furnished by the Company. Termination shall be effective ten days after the
giving of notice by the Company; or
(c) at the option of the Fund 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 operation of the
Account, the administration of the Contracts or the purchase of Fund shares, or
an expected or anticipated ruling, judgment or outcome which would, in the
Fund's reasonable judgment, materially impair the Company's ability to perform
the Company's obligations and duties hereunder; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund, the Distributor, the Investment Manager or any
Sub-Investment Manager, by the NASD, the SEC, or any state securities or
insurance commission or any other regulatory body regarding the duties of the
Fund or the Distributor under this Agreement, or an expected or anticipated
ruling, judgment or outcome which would, in the Company's reasonable judgment,
materially impair the Fund's or the Distributor's ability to perform Fund's or
Distributor's obligations and duties hereunder; or
(e) at the option of the Company upon institution of formal
proceedings against the Investment Manager or Sub-investment Manager by the
NASD, the SEC, or any state securities or insurance commission or any other
regulatory body which would, in the good faith opinion of the Company, result in
material harm to the Accounts, the Company, or Contractowners.
(f) upon requisite vote of the Contract owners having an
interest in the affected Series (unless otherwise required by applicable law)
and written approval of the Company, to substitute the shares of another
investment company for the corresponding Series shares of the Fund in accordance
with the terms of the Contracts; or
(g) at the option of the Fund in the event any of the Contracts
are not registered, issued or sold in accordance with applicable Federal and/or
state law; or
(h) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of disinterested
Fund Board members, that an irreconcilable material conflict exists among the
interests of (i) any Product owners or (ii) the interests of the Participating
Insurance Companies investing in the Fund; or
17
<PAGE>
(i) at the option of the Company if the Fund ceases to qualify
as a Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or if the Company reasonably
believes, based on an opinion of its counsel, that the Fund may fail
to so qualify; or
(j) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Section 817(h) of the
Code and any regulations thereunder; or
(k) at the option of the Fund if the Contracts cease to
qualify as annuity contracts or life insurance policies, as
applicable, under the Code, or if the Fund reasonably believes that
the Contracts may fail to so qualify; or
(l) at the option of either the Fund or the Distributor if the
Fund or the Distributor, respectively, shall determine, in their sole
judgment exercised in good faith, that either (1) the Company shall
have suffered a material adverse change in its business or financial
condition; or (2) the Company shall have been the subject of material
adverse publicity which is likely to have a material adverse impact
upon the business and operations of either the Fund or the
Distributor; or
(m) at the option of the Company, if the Company shall
determine, in its sole judgment exercised in good faith, that either:
(1) the Fund and the Distributor, or either of them, shall have
suffered a material adverse change in their respective businesses or
financial condition; or (2) the Fund or the Distributor, or both of
them, shall have been the subject of material adverse publicity which
is likely to have a material adverse impact upon the business and
operations of the Company; or
(n) upon the assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Accounts to another
insurance company pursuant to an assumption reinsurance agreement)
unless the non-assigning party consents thereto or unless this
Agreement is assigned to an affiliate of the Distributor.
10.2 NOTICE REQUIREMENT. Except as otherwise provided in Section
10.1, no termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other parties
to this Agreement of its intent to terminate which notice shall set forth the
basis for such termination. Furthermore:
(a) In the event that any termination is based upon the
provisions of Article VII or the provisions of Section 10.1(a) of
this Agreement, such prior written notice shall be given in advance
of the effective date of termination as required by such provisions;
and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, such
prior written notice shall be given at least ninety (90) days
before the effective date of termination, or sooner if required by
law or regulation.
18
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(c) in the event that any termination is based upon the provisions of
Section 10.1(e) of this Agreement, such prior written notice shall be given at
least sixty (60) days before the date of any proposed vote to replace the Fund's
shares.
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement, the Fund and the Distributor will, at the option
of the Company, continue to make available additional Fund shares for so long
after the termination of this Agreement as the Company desires, pursuant to the
terms and conditions of this Agreement as provided in paragraph (b) below, for
all Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if the Company so elects to make additional Fund shares available,
the owners of the Existing Contracts or the Company, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts.
(b) In the event of a termination of this Agreement pursuant to
Section 10.1 of this Agreement, the Fund and the Distributor shall promptly
notify the Company whether the Distributor and the Fund will continue to make
Fund shares available after such termination. If Fund shares continue to be
made available after such termination, the provisions of this Agreement shall
remain in effect except for Section 10.1(a) and thereafter either the Fund or
the Company may terminate the Agreement, as so continued pursuant to this
Section 10.3, upon prior written notice to the other party, such notice to be
for a period that is reasonable under the circumstances but, if given by the
Fund, need not be for more than six months.
(c) The parties agree that this Section 10.3 shall not apply to any
termination made pursuant to Article VII or any conditions or undertakings
incorporated by reference in Article VII, and the effect of such Article VII
termination shall be governed by the provisions set forth or incorporated by
reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTACTS
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 and to add
new classes of variable annuity contracts and variable life insurance policies
to be issued by the Company through a Separate Account investing in the Fund.
The provisions of this Agreement shall be equally applicable to each such class
of contracts or policies, unless the context otherwise requires.
19
<PAGE>
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party(ies) at the address of such party(ies) set forth below
or at such other address as such party(ies) may from time to time specify in
writing to the other party.
If to the Fund:
Acacia Capital Corporation
c/o Calvert Group-Legal Department
4550 Montgomery Avenue, 10th Floor
Bethesda, MD 20814
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison St. 17th Floor
Syracuse, NY 13202
Attn: Philip Holstein
If to the Distributor
-------------------
ARTICLE XIII. MISCELLANEOUS
13.1. 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.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. 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.
13.4. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
20
<PAGE>
13.5. 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 trust 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.
21
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
ACACIA CAPITAL CORPORATION
Date: By:
Name:____________________________________________
Title:___________________________________________
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(Company)
Date: By:
Name:____________________________________________
Title:___________________________________________
Date: By:
Name:____________________________________________
Title:___________________________________________
22
<PAGE>
Schedule 1
----------
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
Lincoln Life & Annuity Variable Annuity Account L
23
<PAGE>
Schedule 2
----------
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
Group Variable Annuity I Contracts
Group Variable Annuity II Contracts
Group Variable Annuity III Contracts
24
<PAGE>
Schedule 3
----------
State-mandated Investment Restrictions
Applicable to the Fund
The California Department of Insurance has established the following Guidelines
for an underlying portfolio of a Separate Account:
BORROWING. Borrowing limits for any variable contract separate account portfolio
are (1) 10% of net asset value when borrowing for any general purpose; and (2)
25% of net asset value when borrowing as a temporary measure to facilitate
redemptions. Net asset value of a portfolio is the market value of all
investments or assets owned less outstanding liabilities of the portfolio at the
time that any new or additional borrowing is undertaken.
FOREIGN INVESTMENTS - DIVERSIFICATION.
1. A portfolio will be invested in a minimum of five different foreign countries
at all times. However, this minimum is reduced to four when foreign investments
comprise less than 80% of the portfolio's net asset value; to three when less
than 60% of that value; to two when less than 40%; and to one when less than
20%.
2. Except as set forth in items 3 and 4 below, a Portfolio will have no more
than 20% of its net asset value invested in securities of issuers located in any
one country.
3. A Portfolio may have an additional 15% of its net asset value invested in
securities of issuers located in any one of the following countries: Australia,
Canada, France, Japan, the United Kingdom or Germany.
4. A Portfolio's investments in United States issuers are not subject to the
foreign country diversification guidelines.
25
<PAGE>
FORM OF
PARTICIPATION AGREEMENT
AMONG
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. ROWE PRICE INVESTMENT SERVICES, INC.
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of this 27th day of September,
1996 by and among Lincoln Life & Annuity Company of New York (hereinafter, the
"Company"), a New York life insurance company, on its own behalf and on behalf
of each segregated asset account of the Company set forth on Schedule A hereto
as may be amended from time to time (each account hereinafter referred to as the
"Account"), and the T. Rowe Price International Series, Inc., a corporation
organized under the laws of Maryland (hereinafter referred to as the "Fund") and
T. Rowe Price Investment Services, Inc. (hereinafter the "Underwriter"), a
Maryland corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is or will be available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T) (b)(15) thereunder, if and to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
<PAGE>
-2-
WHEREAS, Rowe Price-Fleming International, Inc. (hereinafter referred to as
the "Adviser") is duly registered as an investment adviser under the federal
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts supported wholly or partially by the
Account (the "Contracts") under the 1933 Act, and said Contracts are listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios which the Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of the Designated Portfolios available
for purchase at the applicable net asset value per share by the Company and the
Account on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission, and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees or Directors of the Fund (hereinafter the "Board") may refuse
to sell shares of any Designated Portfolio to any person, or suspend or
terminate the offering of shares of any Designated Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Designated Portfolio.
<PAGE>
-3-
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Designated Portfolios will be sold to the general public. The
Fund and the Underwriter will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I, III and VII of this Agreement is in effect to govern such
sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption, except that
the Fund reserves the right to suspend the right of redemption or postpone the
date of payment or satisfaction upon redemption consistent with Section 22(e) of
the 1940 Act and any sales thereunder, and in accordance with the procedures and
policies of the Fund as described in the then current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Account, and receipt by such designee shall constitute receipt by the Fund;
provided that the Company receives the order by 4:00 p.m. Baltimore time and the
Fund receives notice of such order by 9:30 a.m. Baltimore time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of each
Designated Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus.
1.7 The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.5 hereof. Payment shall be in federal funds transmitted by wire by
4:00 p.m. Baltimore time. If payment in Federal Funds for any purchase is not
received or is received by the Fund after 4:00 p.m. Baltimore time on such
Business Day, the Company shall promptly, upon the Fund's request, reimburse the
Fund for any charges, costs, fees, interest or other expenses incurred by the
Fund in connection with any advances to, or borrowings or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. For
purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Designated Portfolios' shares. The Company hereby
elects to receive all such income, dividends, and capital gain distributions as
are payable on Designated Portfolio shares in additional shares of that
Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number
<PAGE>
-4-
of shares so issued as payment of such dividends and distributions. The Fund
shall use its best efforts to furnish advance notice of the day such dividends
and distributions are expected to be paid.
1.10 The Fund shall 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 (normally by 6:30
p.m. Baltimore time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Baltimore time.
1.11 The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.3 and Article VI hereof) and the cash
value of the Contracts may be invested in other investment companies.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued in compliance
in all material respects with all applicable federal and state laws and that the
Company will require of every person distributing the Contract that the Contract
be sold in compliance in all material respects 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 validly existing under applicable law and that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account under the New York insurance laws and has registered or, prior to
any issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may
make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have a
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4 The Fund makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the laws
of the State of New York to the extent required to perform this Agreement.
<PAGE>
-5-
2.5 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in all
material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Indiana and any applicable state and
federal securities laws.
2.7 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered under all applicable federal and state securities laws
and that the Adviser shall perform its obligations for the Fund in compliance in
all material respects with the laws of the State of Indiana and any applicable
state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimum
coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
employed or controlled by the Company dealing with the money and/or securities
of the Fund are covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund, in an amount not less than $5 million. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company. The Company agrees to make all reasonable efforts to see that
this bond or another bond containing these provisions is always in effect, and
agrees to notify the Fund and the Underwriter in the event that such coverage no
longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 The Underwriter shall provide the Company (at __________________'s or
Fund's expense) with as many copies of the Fund's current prospectus as the
Company may reasonably request. If requested by the Company in lieu thereof,
the Fund shall provide such documentation (including a camera ready final copy
of the new prospectus at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is amended) to have the prospectus for the
Contracts and the Fund's prospectus printed together in one document (such
printing to be at the _______________'s expense).
3.2 The Fund's prospectus shall state that the Statement of Additional
Information ("SAI") for the Fund is available from the Company, and the
Underwriter (or the Fund), at its expense, shall print and provide a copy of
such SAI free of charge to the Company for itself and for any owner of a
Contract who requests such SAI.
<PAGE>
-6-
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law.
3.5 Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act
in accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors or trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material
that the Company develops or uses and in which the Fund (or a Portfolio thereof)
or the Adviser or the Underwriter is named, at least ten calendar days prior to
its use. No such material shall be used if the Fund or its designee reasonably
object to such use within ten calendar days after receipt of such material. The
Fund or its designee reserves the right to reasonably object to the continued
use of such material, and no such material shall be used if the Fund or its
designee so object.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus or SAI for the Fund
shares, as such registration statement and prospectus or SAI may be amended
<PAGE>
-7-
or supplemented from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other promotional material approved by the Fund
or its designee or by the Underwriter, except with the permission of the Fund or
the Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company, each piece of sales literature or other
promotional material in which the Company, and/or its Account, is named at least
ten calendar days prior to its use. No such material shall be used if the
Company reasonably objects to such use within ten calendar days after receipt of
such material. The Company reserves the right to reasonably object to the
continued use of such material and no such material shall be used if the Company
so objects.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus, or SAI for the Contracts,
as such registration statement, prospectus or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, within a reasonable
time after the filing of such document(s) with the SEC or other regulatory
authorities.
4.6 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, SAIs, reports, and solicitations for
voting instructions for the Fund. The Company will also provide applications
for exemptions and requests for no-action letters, and all amendments to any of
the above, that relate to the Contracts or the Account and their investment in
the Fund within a reasonable time after the filing of such document(s) with the
SEC or other regulatory authorities.
4.7 The Fund will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation for any Designated Portfolio, and of any
material change in the Fund's registration statement, particularly any change
resulting in change to the registration statement or prospectus for any Account.
The Fund will work with the Company so as to enable the Company to solicit
proxies from Contract Owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
4.8 For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
<PAGE>
-8-
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, SAIs, shareholder reports, proxy materials, and any other
communications distributed or made generally available with regard to the Funds.
ARTICLE V. FEES AND EXPENSES
5.1 The Fund and the Underwriter shall pay no fee or other compensation to
the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing, and such payments will be made out of existing fees otherwise payable
to the Underwriter, past profits of the Underwriter, or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund. Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION AND QUALIFICATION
6.1 The Fund will invest its assets in such a manner as to ensure that the
Contracts will be treated as annuity or life insurance contracts, whichever is
appropriate, under the Internal Revenue Code of 1986, as amended (the "Code")
and the regulations issued thereunder (or any successor provisions). Without
limiting the scope of the foregoing, the Fund will comply with Section 817(h) of
the Code and Treasury Regulation Section 1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments or
other modifications or successor provisions to such Section or Regulations. In
the event of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation 817.5.
6.2 The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provisions) and that it will notify the Company
<PAGE>
-9-
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
6.3 The Company represents that the Contracts are currently, and at the
time of issuance shall be, treated as life insurance or annuity insurance
contracts, under applicable provisions of the Code, and that it will make every
effort to maintain such treatment, and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be so treated in
the future. The Company agrees that any prospectus offering a contract that is
a "modified endowment contract" as that term is defined in Section 7702A of the
Code (or any successor or similar provision), shall identify such contract as a
modified endowment contract.
ARTICLE VII. POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
<PAGE>
-10-
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 Account's investment in
the Fund and terminate this Agreement with respect to each Account provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Fund shall continue to
accept and implement orders by the company for the purchase (and redemption) of
shares of the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contract if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7 If and to the extent 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, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
<PAGE>
-11-
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and the Underwriter and each of their officers and directors and each person, if
any, who controls the Fund or the Underwriter within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement, prospectus, or statement of
additional information 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, 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
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of
the Fund not supplied by the Company or persons under its
control) or wrongful conduct of the Company or persons under
its authorization or control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or
any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the
terms of this Agreement (including a
<PAGE>
-12-
failure, whether unintentional or in good faith or
otherwise, to comply with the qualification requirements
specified in Section 6.3 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,
all as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such Indemnified 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 Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Party will promptly notify the Company of the
commencement of any litigation or proceedings against the Indemnified Party in
connection with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including reasonable legal and other expenses) to which the Indemnified Parties
may become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts; and
<PAGE>
-13-
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the Registration Statement or prospectus or SAI or
sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to the Underwriter or Fund
by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund or
Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund;
or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification and other qualification
requirements specified in Sections 6.1 and 6.2 of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any
other material breach of this Agreement by the
Underwriter;
all as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross
<PAGE>
-14-
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). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Party, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the Indemnified Party named in the action. After notice from the Underwriter to
such Indemnified Party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not be liable to
such Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3 INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may be
required to pay or may become subject under any statute or regulation, at common
law or otherwise, insofar as such losses, claims, expenses, damages, liabilities
or expenses (or actions in respect thereof) or settlements, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
and other qualification requirements specified in Article VI
of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
<PAGE>
-15-
all as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the expense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Fund to such Indemnified 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 Indemnified Party under this Agreement for any
legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, any Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1 This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party, for any reason with respect to some or
all Designated Portfolios, by six (6) months' advance written
notice delivered to the other parties; or
<PAGE>
-16-
(b) termination by the Company by written notice to the Fund and the
Underwriter based upon the Company's determination that shares of
the Fund are not reasonably available to meet the requirements of
the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter 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 Fund or Underwriter in the event that formal
administrative proceedings are instituted against the Company by
the NASD, the SEC, the Insurance Commissioner or like official of
any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that the Fund or Underwriter
determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse
effect upon the ability of the Company to perform its obligations
under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund,
Underwriter, or Adviser (or Sub-Adviser, if any), by the NASD,
the SEC, or any state securities or insurance department or any
other regulatory body, provided, however, that the Company
determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse
effect upon the ability of the Fund or Underwriter to perform its
obligations under this Agreement; or
(f) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio in the event
that such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M or fails to comply with the Section
817(h) diversification requirements specified in Article VI
hereof, or if the Company reasonably believes that such Portfolio
may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice to the
Company in the event that the Contracts fail to meet the
qualifications specified in Article VI hereof; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, financial condition,
or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
<PAGE>
-17-
(i) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
(j) upon requisite vote of the Contract owners having an interest in
the Designated Portfolio (unless otherwise required by applicable
law) and written approval of the Company, to substitute shares of
another investment company for shares of the corresponding
Designated Portfolio in accordance with the terms of the
Contract.
10.2 EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, the owners of the Existing Contracts may be
permitted to reallocate investments in the Fund, redeem investments in the Fund
and/or invest in the Fund upon the making of additional purchase payments under
the Existing Contracts. The parties agree that this Section 10.2 shall not
apply to any termination under Article VII and the effect of such Article VII
termination shall be governed by Article VII of this Agreement. The parties
further agree that this Section 10.2 shall not apply to any termination under
Section 10.1(g) of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act.
Upon request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
10.4 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
<PAGE>
-18-
If to the Fund:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison St., 17th Floor
Syracuse, NY 13202
Attention: Philip Holstein
If to Underwriter:
T. Rowe Price Investment Services
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of
such Fund, and in the case of a series company, the respective Designated
Portfolio listed on Schedule A hereto as though such Designated Portfolio had
separately contracted with the Company and the Underwriter for the enforcement
of any claims against the Fund. The parties agree that neither the Board,
officers, agents or shareholders assume any personal liability or responsibility
for obligations entered into by or on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
<PAGE>
-19-
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any non-privileged
information or reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the variable
annuity operations of the Company are being conducted in a manner consistent
with the Indiana variable annuity laws and regulations and any other applicable
law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
COMPANY: LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
By its authorized officer
By:____________________________________
Title:_________________________________
Date:__________________________________
FUND: T. ROWE PRICE INTERNATIONAL SERIES, INC.
By its authorized officer
By:____________________________________
Title:_________________________________
Date:__________________________________
<PAGE>
-20-
UNDERWRITER: T. ROWE PRICE INVESTMENT SERVICES, INC.
By its authorized officer
By:____________________________________
Title:_________________________________
Date:__________________________________
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Name of Separate Account and Contracts Funded by
Date Established by Board of Directors Separate Account Designated Portfolios
- -------------------------------------- -------------------------- -----------------------
<S> <C> <C>
Lincoln Life & Annuity Variable Group Variable Annuity I T. Rowe Price International Series, Inc.
----------------------------------------
Annuity Account L Group Variable Annuity II * T. Rowe Price International Stock
(7/24/96) Group Variable Annuity III Portfolio
</TABLE>
<PAGE>
[LETTERHEAD]
219-455-3018
September 26, 1996
Lincoln Life & Annuity Comapny of New York
120 Madison Ave.
Syracuse NY 13202
RE: LINCOLN LIFE & ANNUITY VARIABLE ANNUITY ACCOUNT L
Group Variable Annuity I (File Nos. 811-07789; 333-10863)
Group Variable Annuity II (File Nos. 811-07789; 333-10805)
Group Variable Annuity III (File Nos. 811-07789; 333-10861)
---------------------------------------------------------------------------
Ladies and Gentlemen:
I have made such examination of law and have examined such records and documents
as I have deemed necessary to render the opinion expressed below.
I am of the opinion that upon acceptance by Lincoln Life & Annuity Variable
Annuity Account L (the "Account"), a segregated account of Lincoln Life &
Annuity Company of New York (Lincoln Life), of contributions from a person
pursuant to an insurance policy issued in accordance with the prospectus
contained in the registration statement on Form N-4, and upon compliance with
applicable law, such person will have a legally issued interest in his or her
individual account with the Account, and the securities issued will represent
binding obligations of LNL.
This opinion relates only to the applicability of the federal securities laws to
Lincoln Life and to the Account. I express no opinion as to the laws of the
State of New York.
I consent to the filing of this Opinion as an exhibit to the Account's Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-4.
Very truly yours,
/s/ Jeremy Sachs
Jeremy Sachs
Senior Counsel
<PAGE>
[Rogers & Wells Letterhead]
September 27, 1996
Lincoln Life & Annuity Company of New York
120 Madison Avenue
Syracuse, New York 13202
Ladies and Gentlemen:
We have acted as special counsel to the Lincoln Life & Annuity Company
of New York (the "Company") in connection with the establishment by the
Company of Lincoln Life & Annuity Variable Account L ("Account L") and in
that connection we have reviewed Pre-Effective Amendment No. 1 to the
Registration Statement under the Securities Act of 1933 (Group Variable
Annuity I) and Amendment No. 3 to the Registration Statement under the
Investment Company Act of 1940 on Form N-4 (the "Registration Statement")
filed with the Securities and Exchange Commission by the Company with respect
to Account L covering group variable annuity contracts (the "Contracts").
In rendering the opinions expressed herein, we have examined originals
or copies, certified or otherwise identified to our satisfaction, of the
certificate of authority to do an insurance business issued to the Company by
the New York State Insurance Department (the "Department"), the Plan of
Operations for Account L, related documents filed with the Department
pursuant to the relevant provisions of the New York Insurance Law and the
rules and regulations promulgated thereunder, corporate records, certificates
of public officials, written correspondence from the Superintendent of
Insurance of the State of New York, and other documents as we have deemed
necessary or appropriate for purposes of rendering this opinion, including
the charter and the by-laws of the Company and the corporate proceedings of
the Company relating to the establishment of Account L and the issuance of
the Contracts. In all such examinations, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents submitted to
us as certified, conformed, facsimile or photostatic copies. As to questions
of fact material to this opinion we have, with your approval, where relevant
facts were not independently established, relied upon, among other things,
certificates of officers of the Company.
Based upon and subject to the foregoing and the qualifications discussed
below, as well as such examination of law as we have deemed necessary, it is
our opinion that the Contracts, when issued as contemplated by the Prospectus
included in the Registration Statement, will constitute legal, validly issued
and binding obligations of the Company.
<PAGE>
We express no opinion as to any laws other than the laws of the State of
New York.
This letter is furnished by us as counsel for the Company and is solely
for the benefit of the Company and may not be disclosed to or relied upon by
anyone else without our prior written consent in each instance. We do,
however, hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Rogers & Wells
<PAGE>
Exhibit 10(a)
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Independent
Auditors" in the Pre-Effective Amendment No. 1 to the Registration Statement
(Form N-4, No. 333-10805) pertaining to the Lincoln Life & Annuity Variable
Annuity Account L (Group Variable Annuity II) and to the use therein of our
report dated September 24,1996 with respect to the statutory-basis balance
sheet of Lincoln Life & Annuity Company of New York.
/s/ Ernst & Young LLP
Fort Wayne, Indiana
September 24, 1996
<PAGE>
EXHIBIT 13
<PAGE>
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
LINCOLN LIFE GROUP VARIABLE ANNUITY II
Initial Investment . . . . . . . . . . . . . . . . . . . . . . . .$1000
Annual Mortality & Expense Risk Charge . . . . . . . . . . . . . . 1.20%
VIP Equity-Income Life of Fund Average Annual
Total Return as of 12/31/95 . . . . . . . . . . . . . . . . . . .13.33%
(84/365)
9
1 + 13.33
$1000 ( ----------------) = $2,843.11
1 + 1.20
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$2,843.11
Minus Pro rated Administration Charge. . . . . . . . . . . . . ..$11.11
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$2,832.00
Minus 1% CDSC. . . . . . . . . . . . . . . . . . . . . . . . . ..$28.32
End of Period Value. . . . . . . . . . . . . . . . . . . . . $2,803.68
Standard Life of Fund Total Return
with Mortality & Expense Risk Charge, pro rated
portion of the Annual Administration Charge and CDSC.
End of Period Value . . . . . . . . . . . . . . . . . . . .$2,803.68
Life of Fund Average Annual Total Return. . . . . . . . . . . 11.82%
Life of Fund Cumulative Total Return. . . . . . . . . . . . . 180.37%
Non-Standard Life of Fund Total Return
with Mortality & Expense Risk Charge and pro rated
portion of the Annual Administration Charge
End of Period Value . . . . . . . . . . . . . . . . . . . .$2,832.00
Life of Fund Average Annual Total Return. . . . . . . . . . . 11.94%
Life of Fund Cumulative Total Return. . . . . . . . . . . . ..183.20%
Non-Standard Life of Fund Total Return
with Mortality & Expense Risk Charge.
End of Period Value . . . . . . . . . . . . . . . . . . . .$2,843.11
Life of Fund Average Annual Total Return. . . . . . . . . . . 11.99%
4/22/96
<PAGE>
Life of Fund Cumulative Total Return. . . . . . . . . . . . . 184.31%
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
LINCOLN LIFE GROUP VARIABLE ANNUITY II
Initial Investment . . . . . . . . . . . . . . . . . . . . . . . .$1000
Annual Mortality & Expense Risk Charge . . . . . . . . . . . . . . 1.20%
VIP Equity-Income 5 yr. Average Annual
Total Return as of 12/31/95 . . . . . . . . . . . . . . . . . . .21.32%
5
1 + 21.32
$1000 ( ----------------) = $2,476.05
1 + 1.20
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$2,476.05
Minus Pro rated Administration Charge. . . . . . . . . . . . . .$ 5.56
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$2,470.49
Minus 5% CDSC. . . . . . . . . . . . . . . . . . . . . . . . . .$123.52
End of Period Value. . . . . . . . . . . . . . . . . . . . . .$2,346.97
Standard 5 yr. Total Return
with Mortality & Expense Risk Charge, pro rated
portion of the Annual Administration Charge and CDSC.
End of Period Value . . . . . . . . . . . . . . . . . . . .$2,346.97
5 yr. Average Annual Total Return . . . . . . . . . . . . . . 18.60%
5 yr. Cumulative Total Return . . . . . . . . . . . . . . . ..134.70%
Non-Standard 5 yr. Total Return
with Mortality & Expense Risk Charge and pro rated
portion of the Annual Administration Charge
End of Period Value . . . . . . . . . . . . . . . . . . . .$2,470.49
5 yr. Average Annual Total Return . . . . . . . . . . . . . . 19.83%
5 yr. Cumulative Total Return . . . . . . . . . . . . . . . . 147.05%
Non-Standard 5 yr. Total Return
with Mortality & Expense Risk Charge.
End of Period Value . . . . . . . . . . . . . . . . . . . .$2,476.05
4/22/96
<PAGE>
5 yr. Average Annual Total Return . . . . . . . . . . . . . . 19.88%
5 yr. Cumulative Total Return . . . . . . . . . . . . . . . . 147.61%
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
LINCOLN LIFE GROUP VARIABLE ANNUITY II
Initial Investment . . . . . . . . . . . . . . . . . . . . . . . .$1000
Annual Mortality & Expense Risk Charge . . . . . . . . . . . . . . 1.20%
VIP Equity-Income 3 yr. Average Annual
Total Return as of 12/31/95 . . . . . . . . . . . . . . . . . . .19.60%
3
1 + 19.60
$1000 ( ----------------) = $1,650.64
1 + 1.20
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$1,650.64
Minus Pro rated Administration Charge. . . . . . . . . . . . . .$ 3.33
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$1,647.31
Minus 5% CDSC. . . . . . . . . . . . . . . . . . . . . . . . . . $82.37
End of Period Value. . . . . . . . . . . . . . . . . . . . . .$1,564.94
Standard 3 yr. Total Return
with Mortality & Expense Risk Charge, pro rated
portion of the Annual Administration Charge and CDSC.
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,564.94
3 yr. Average Annual Total Return . . . . . . . . . . . . . . 16.10%
3 yr. Cumulative Total Return . . . . . . . . . . . . . . . . 56.49%
Non-Standard 3 yr. Total Return
with Mortality & Expense Risk Charge and pro rated
portion of the Annual Administration Charge
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,647.31
3 yr. Average Annual Total Return . . . . . . . . . . . . . . 18.10%
3 yr. Cumulative Total Return . . . . . . . . . . . . . . . . 64.73%
Non-Standard 3 yr. Total Return
with Mortality & Expense Risk Charge.
4/22/96
<PAGE>
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,650.64
3 yr. Average Annual Total Return . . . . . . . . . . . . . . 18.18%
3 yr. Cumulative Total Return . . . . . . . . . . . . . . . . 65.06%
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
LINCOLN LIFE GROUP VARIABLE ANNUITY II
Initial Investment . . . . . . . . . . . . . . . . . . . . . . . .$1000
Annual Mortality & Expense Risk Charge . . . . . . . . . . . . . . 1.20%
VIP Equity-Income 1 yr. Average Annual
Total Return as of 12/31/95. . . . . . . . . . . . . . . . . . . .35.09%
1 + 35.09
$1000 ( ----------------) = $1,334.88
1 + 1.20
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$1,334.88
Minus Pro rated Administration Charge. . . . . . . . . . . . . .$ 1.11
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$1,333.77
Minus 5% CDSC. . . . . . . . . . . . . . . . . . . . . . . . . ..$66.69
End of Period Value. . . . . . . . . . . . . . . . . . . . . .$1,267.08
Standard 1 yr. Total Return
with Mortality & Expense Risk Charge, pro rated
portion of the Annual Administration Charge and CDSC.
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,267.08
1 yr. Average Annual Total Return . . . . . . . . . . . . . . 26.71%
Non-Standard 1 yr. Total Return
with Mortality & Expense Risk Charge and pro rated
portion of the Annual Administration Charge
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,333.77
1 yr. Average Annual Total Return . . . . . . . . . . . . . . 33.38%
Non-Standard 1 yr. Total Return
with Mortality & Expense Risk Charge.
4/22/96
<PAGE>
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,334.88
1 yr. Average Annual Total Return . . . . . . . . . . . . . . 33.49%
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
LINCOLN LIFE GROUP VARIABLE ANNUITY II
Initial Investment . . . . . . . . . . . . . . . . . . . . . . . .$1000
Annual Mortality & Expense Risk Charge . . . . . . . . . . . . . . 1.20%
VIP Equity-Income Quarterly
Total Return as of 12/31/95. . . . . . . . . . . . . . . . . . . ..6.14%
1 + 6.14
$1000 (----------------------------) = $1,058.21
(92/365)
1 + 1.20
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$1,058.21
Minus Pro rated Administration Charge. . . . . . . . . . . . . .$ 1.11
Resulting Value. . . . . . . . . . . . . . . . . . . . . . . .$1,057.10
Minus 5% CDSC. . . . . . . . . . . . . . . . . . . . . . . . . ..$52.85
End of Period Value. . . . . . . . . . . . . . . . . . . . . .$1,004.25
Standard Quarter Total Return
with Mortality & Expense Risk Charge, pro rated
portion of the Annual Administration Charge and CDSC.
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,004.25
Quarterly Total Return. . . . . . . . . . . . . . . . . . . . . 0.42%
Non-Standard Quarterly Total Return
with Mortality & Expense Risk Charge and pro rated
portion of the Annual Administration Charge
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,057.10
Quarterly Total Return. . . . . . . . . . . . . . . . . . . . ..5.71%
Non-Standard Quarterly Total Return
4/22/96
<PAGE>
with Mortality & Expense Risk Charge.
End of Period Value . . . . . . . . . . . . . . . . . . . .$1,058.21
Quarterly Total Return. . . . . . . . . . . . . . . . . . . . . 5.82%
4/22/96
<PAGE>
EXHIBIT A
ORGANIZATIONAL CHART OF THE
LINCOLN NATIONAL INSURANCE HOLDING COMPANY SYSTEM
All the members of the holding company system are corporations, with the
exception of American States Lloyds Insurance Company, Delaware Distributors,
L.P., Founders CBO, L.P., and Lincoln National Mezzanine Fund, L.P.
------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| ------------------------
|--| American States Financial Corporation |
| | 83.3% - Indiana - Holding Company |
| ------------------------------------------
| -----------------------
| |__| American States Insurance Company |
| | 100% - Indiana - Property/Casualty |
| -------------------------------------
| | ---------------------
| |--| American Economy Insurance Company |
| | | 100% - Indiana - Property/Casualty |
| | --------------------------------------
| | ----------------------------
| | |--| American States Insurance Company of Texas |
| | | 100% - Texas - Property/Casualty |
| | ----------------------------------------------
| | ----------------------------
| |--| American States Life Insurance Company |
| | | 100% - Indiana - Life/Health |
| | ------------------------------------------
| | ------------------------------
| |--| American States Lloyds Insurance Company |
| | | Lloyds Plan - * - Texas - Property/Casualty |
| | -----------------------------------------------
| | -----------------------------
| |--| American States Preferred Insurance Company |
| | | 100% - Indiana - Property/Casualty |
| | -----------------------------------------------
| | --------------------
| |--| City Insurance Agency, Inc. |
| | | 100% - Indiana |
| -------------------------------
| | --------------------------
| |--| Insurance Company of Illinois |
| | 100% - Illinois - Fire & Casualty Insurance |
| -----------------------------------------------
|
| --------------------------------
| | Aseguradora InverLincoln, S.A. Compania de Seguros y |
|--| Reaseguros, Grupo Financiero InverMexico |
| | 49% - Mexico - Life, Property and Casualty Insurance |
| ------------------------------------------------------
<PAGE>
------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
-------------------------------
|
| -------------------
|--| The Insurers' Fund, Inc. # |
| | 100% - Maryland - Inactive |
| -------------------------------
|
| ----------------------------
|--| LNC Administrative Services Corporation |
| | 100% - Indiana - Third Party Administrator |
| ------------------------------------------------
|
| ---------------------
|--| The Richard Leahy Corporation |
| | 100% - Indiana - Insurance Agency |
| --------------------------------------
| | --------------------
| |--| The Financial Alternative, Inc.|
| | | 100% - Utah- Insurance Agency |
| | ---------------------------------
| | -------------------------
| |--| Financial Alternative Resources, Inc.|
| | | 100% - Kansas - Insurance Agency |
| | ---------------------------------------
| | -------------------------
| |--| Financial Choices, Inc. |
| | | 100% - Pennsylvania - Insurance Agency |
| | -----------------------------------------
| | -----------------------------
| | | Financial Investment Services, Inc. |
| |--| (formerly Financial Services Department, Inc.)|
| | | 100% - Indiana - Insurance Agency |
| | -----------------------------------------------
| | -----------------------
| | | Financial Investments, Inc. |
| |--| (formerly Insurance Alternatives, Inc.) |
| | | 100% - Indiana - Insurance Agency |
| | -----------------------------------------
| | --------------------------
| |--| The Financial Resources Department, Inc. |
| | | 100% - Michigan - Insurance Agency |
| | -------------------------------------------
| | -------------------------
| |--| Investment Alternatives, Inc. |
| | | 100% - Pennsylvania - Insurance Agency |
| | -----------------------------------------
| | -----------------------
| |--| The Investment Center, Inc. |
| | | 100% - Tennessee - Insurance Agency |
| | --------------------------------------
| | ----------------------
| |--| The Investment Group, Inc. |
| | | 100% - New Jersey - Insurance Agency |
| | --------------------------------------
| | ----------------------
| |--| Personal Financial Resources, Inc.|
| | | 100% - Arizona - Insurance Agency |
| | ------------------------------------
<PAGE>
| | ------------------------
| |--| Personal Investment Services, Inc. |
| | 100% - Pennsylvania - Insurance Agency |
| ----------------------------------------
|
| --------------------------
|--| LincAm Properties, Inc. |
| | 50% - Delaware - Real Estate Investment |
| -------------------------------------------
|
|
|
<PAGE>
-------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| ------------------------------
| | Lincoln Financial Group, Inc. |
|--| (formerly Lincoln National Sales Corporation)|
| | 100% - Indiana - Insurance Agency |
| ------------------------------------------
| | -------------------
| |--| LNC Equity Sales Corporation |
| | | 100% - Indiana - Broker-Dealer |
| | ----------------------------------
| | --------------------------------------
| | |Corporate agencies: Lincoln Financial Group, Inc. ("LFG") |
| |--|has subsidiaries of which LFG owns from 80%-100% of the |
| | |common stock (see Attachment #1). These subsidiaries serve |
| | |as the corporate agency offices for the marketing and |
| | |servicing of products of The Lincoln National Life Insurance|
| | |Company. Each subsidiary's assets are less than 1% of the |
| | |total assets of the ultimate controlling person. |
| | -----------------------------------------------------
| | ------------------------------
| |--| Professional Financial Planning, Inc. |
| | 100% - Indiana - Financial Planning Services |
| ------------------------------------------------
|
| -----------------------
|--| Lincoln Life Improved Housing, Inc. |
| | 100% - Indiana |
| ----------------------------
|
| ------------------------------
|--| Lincoln National (China) Inc. |
| | 100% - Indiana - China Representative Office |
| -----------------------------------------------
|
| ---------------------------
|--| Lincoln National Intermediaries, Inc. |
| | 100% - Indiana - Reinsurance Intermediary |
| ---------------------------------------------
|
|
|
<PAGE>
-------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| --------------------------
|__| Lincoln National Investment Companies, Inc. |
| | 100% - Indiana - Holding Company |
| ---------------------------------------------
| | -------------------
| |--| Delaware Management Holdings, Inc. |
| | | 100% - Delaware - Holding Company |
| | ------------------------------------
| | | ---------------------
| | |--| DMH Corp. |
| | | 100% - Delaware - Holding Company |
| | -----------------------------------
| | | ----------------------
| | |--| Delaware Distributors, Inc. |
| | | | 100% - Delaware - General Partner |
| ------------------------------------
| | | | --------------------------------
| | | |--| Delaware Distributors, L.P. |
| | | | 100% - Delaware - Mutual Fund Distributor &
| | | | Broker/Dealer |
| | | ---------------------------------------------
| | | ----------------------------------------
| | |--| Delaware International Advisers Ltd. |
| | | | 81.1% - England - Investment Advisor |
| | | ----------------------------------------
| | | ---------------------------------------
| | |--| Delaware International Holdings Ltd. |
| | | | 100% - Bermuda - Marketing Services |
| | | ---------------------------------------
| | | | -----------------------
| | | |--| Delaware International Advisers Ltd. |
| | | | 18.9% - England - Investment Advisor |
| | | --------------------------------------
| | | ----------------------
| | |--| Delaware Investment Counselors, Inc. |
| | | | 100% - Delaware - Investment Advisor |
| | | --------------------------------------
| | | ----------------------------
| | |__| Delaware Investment & Retirement Services, Inc. |
| | | | 100% - Delaware - Registered Transfer Agent |
| | | ----------------------------------------------
| | | --------------------
| | |--| Delaware Management Company, Inc. |
| | | | 100% - Delaware - Investment Advisor |
| | | --------------------------------------
| | | | ---------------------
| | | |--| Founders Holdings, Inc. |
| | | | 100% - Delaware - General Partner |
| | | ------------------------------------
| | | | ----------------------------
| | | |--| Founders CBO, L.P. |
| | | | 100% - Delaware - Investment Partnership |
| | | -------------------------------------------
| | | | -------------------------------
| | | |--| Founders CBO Corporation |
| | | | 100% - Delaware - Co-Issuer with Founders CBO |
| | | ------------------------------------------------
| | | --------------------
| | |--| Delaware Management Trust Company |
| | | | 100% - Pennsylvania - Trust Service |
| | | --------------------------------------
<PAGE>
| | | -------------------------------
| | |--| Delaware Service Company, Inc. |
| | | 100% - Delaware - Shareholder Services & Transfer Agent |
| | ---------------------------------------------------------
| | ----------------------------------
| | | Lincoln Investment Management, Inc. |
| |--| (formerly Lincoln National Investment Management Company) |
| | | 100% - Illinois - Mutual Fund Manager and |
| | | Registered Investment Adviser |
| | ----------------------------------------------
| | | ----------------------------------
| | | | Lincoln National Mezzanine Corporation |
| | |--| 100% - Indiana - General Partner for Mezzanine Financing |
| | | Limited Partnership |
| | ------------------------------------------
| | | ----------------------------------
| | |--| Lincoln National Mezzanine Fund, L.P. |
| | | 50% - Delaware - Mezzanine Financing Limited |
| | Partnership |
| | -----------------------------------------------
<PAGE>
-------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| --------------------------
|__| Lincoln National Investment Companies, Inc. |
| | 100% - Indiana - Holding Company |
| ---------------------------------------------
| | ------------------------
| |--| Lynch & Mayer, Inc. |
| | | 100% - Indiana - Investment Adviser |
| | ----------------------------------------
| | | ----------------------------
| | |--| Lynch & Mayer Asia, Inc. |
| | | | 100% - Delaware - Investment Management |
| | | -----------------------------------------
| | | -----------------------
| | |--| Lynch & Mayer Securities Corp. |
| | | 100% - Delaware - Securities Broker |
| | ----------------------------------------
| | ----------------------------------
| | | Vantage Global Advisors, Inc. |
| |--| (formerly Modern Portfolio Theory Associates, Inc.)|
| | 100% - Delaware - Investment Adviser |
| -----------------------------------------------
|
| ------------------------------
|--| The Lincoln National Life Insurance Company |
| | 100% - Indiana |
| ----------------------------------
| | -----------------------------
| |--| First Penn-Pacific Life Insurance Company |
| | | 100% - Indiana |
| | ---------------------------------
| | ----------------------------
| |--| Lincoln National Aggressive Growth Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | ------------------------------------------
| | ---------------------
| |--| Lincoln National Bond Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | -----------------------------------
| | -------------------------------
| |--| Lincoln National Capital Appreciation Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | --------------------------------------------------
| | ----------------------------
| |--| Lincoln National Equity-Income Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | --------------------------------------------
| | ----------------------------------
| | | Lincoln National Global Asset Allocation Fund, Inc. |
| |--| (formerly Lincoln National Putnam Master Fund, Inc.) |
| | | 100% - Maryland - Mutual Fund |
| | --------------------------------------------
| | -----------------------------
| | | Lincoln National Growth and Income Fund, Inc. |
| |--| (formerly Lincoln National Growth Fund, Inc.) |
| | | 100% - Maryland - Mutual Fund |
| | ------------------------------------------
| |
<PAGE>
--------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
---------------------------------
|
| ---------------------------
|--| The Lincoln National Life Insurance Company |
| | 100% - Indiana |
| ---------------------------
|
| | ---------------------------
| |--| Lincoln National Health & Casualty Insurance Company |
| | | 100% - Indiana |
| ---------------------------------------
| | ----------------------------
| |--| Lincoln National International Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| ----------------------------------------
| | ---------------------
| |--| Lincoln National Managed Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| -------------------------------------
| | ------------------------- -----
| |--| Lincoln National Money Market Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| ------------------------------------------
| | ----------------------------
| |--| Lincoln National Social Awareness Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| ---------------------------------------------
| | ---------------------------------------
| |--| Lincoln National Special Opportunities Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| ---------------------------------------------------
| | ----------------------------
| |--| Lincoln National Reassurance Company |
| | 100% - Indiana - Life Insurance |
| ---------------------------------------------------
| |
| | --------------------------
| |--| Special Pooled Risk Administrators, Inc. |
| | 100% - New Jersey - Catastrophe Reinsurance |
| | Pool Administrator |
| ---------------------------------------------
|
| -------------------------------
|--| Lincoln National Management Services, Inc. |
| | 100% - Indiana - Underwriting and Management Services |
| ---------------------------------------------------------
| ----------------------
|--| Lincoln National Realty Corporation |
| | 100% - Indiana - Real Estate |
| -------------------------------------
|
| ----------------------------------
|--| Lincoln National Reinsurance Company (Barbados) Limited |
| | 100% - Barbados |
| -----------------------------------------
|
| -----------------------------
|--| Lincoln National Reinsurance Company Limited |
| | (formerly Heritage Reinsurance, Ltd.) |
| | 100% ** - Bermuda |
| ------------------------------------
<PAGE>
| | -----------------------
| |--| Lincoln European Reinsurance Company |
| | | 100% - Belgium |
| | -------------------------------
| |
| | ----------------------------------
| | | Lincoln National Underwriting Services, Ltd. |
| |--| 90% - England/Wales - Life/Accident/Health Underwriter |
| | | (Remaining 10% owned by Old Fort Ins. Co. Ltd.) |
| | ----------------------------------------------------------
| |
| | ----------------------------------
| | | Servicios de Evaluacion de Riesgos, S. de R.L. de C.V. |
| |--| 51% - Mexico - Reinsurance Underwriter |
| | (Remaining 49% owned by Lincoln National Corp.) |
| --------------------------------------------------------
<PAGE>
------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| ---------------------------
|--| Lincoln National Risk Management, Inc. |
| | 100% - Indiana - Risk Management Services |
| ---------------------------------------------
| ---------------------------
|--| Lincoln National Structured Settlement, Inc. |
| | 100% - New Jersey |
| ------------------------------------------------
| ------------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| | ------------------------------
| |--| Allied Westminster & Company Limited |
| | | 100% - England/Wales - Sales Services|
| | --------------------------------------
| | ----------------------
| |--|Cannon Fund Managers Limite |
| | | 100% - England/Wales - Inactive |
| | -----------------------------------
| | -----------------------------------
| |--| Culverin Property Services Limited |
| | | 100% - England/Wales - Property Development Services |
| | --------------------------------------------------------
| | ----------------------------------
| | | HUTM Limited |
| | | 100% - England/Wales - Unit Trust Management (Inactive) |
| | ---------------------------------------------------------
| | -------------------------
| |--| ILI Supplies Limited |
| | | 100% - England/Wales - Computer Leasing |
| | --------------------------------------------
| | ----------------------------
| |--|Laurentian Financial Group PLC |
| | 100% - England/Wales - Holding Company |
| -------------------------------------------------
| | | ---------------------------
| | |--| Lincoln Financial Advisers Limited |
| | | | (formerly: Laurentian Financial Advisers Ltd.)|
| | | | 100% - England/Wales - Sales Company |
| | | ------------------------------------------------
| | |
| | | ----------------------------
| | |--| Lincoln Investment Management Limited |
| | | | | (formerly: Laurentian Fund Management Ltd.) |
| | | | 100% - England/Wales - Investment Management |
| | --------------------------------------------
| | | --------------------------------
| | |--| Lincoln Independent Limited |
| | | | (formerly: Laurentian Independent Financial Planning Ltd.)|
| | | | 100% - England/Wales - Independent Financial Adviser |
-----------------------------------------------------------
<PAGE>
|------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
|--------------------------------
|
| ------------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| |
| | ----------------------------
| |--| Laurentian Financial Group PLC |
| | | 100% - England/Wales - Holding Company|
| ---------------------------------------
| | | --------------------
| | |--| Laurentian Life PLC |
| | | | 100% - England/Wales - Life Insurance|
| | | --------------------------------------
| |
| | | ----------------------
| | |--| Barnwood Property Group Limited |
| | | | 100% - England/Wales - Holding Company|
| | | --------------------------------------
| | | | |
| | | | | ---------------------
| | | | |--| Barnwood Developments Limited |
| | | | | | 100% England/Wales - Property Development|
| | | | | ------------------------------------------
| | | | |
| | | | | --------------------------
| | | | |--| Barnwood Properties Limited |
| | | | | 100% - England/Wales - Property Investment |
| | | | --------------------------------------------
| | | |
| | | | ------------------------------
| | | --| IMPCO Properties Limited |
| | | |100% - England/Wales - Property Investment (Inactive)|
| | | ------------------------------------------------------
| | | ------------------------
| | |--| Laurentian Management Services Limited |
| | | | 100% - England/Wales - Management Services|
| | | -------------------------------------------
| | | |
| | | | ---------------------------
| | | |--|Laurit Limited |
| | | |100% - England/Wales - Data Processing Systems |
| | | ------------------------------------------------
| | | -----------------------
| | |--| Laurentian Milldon Limited |
| | | | 100% - England/Wales - Sales Company |
| | | ---------------------------------------
| | |
| | | -------------------------
| | |--| Laurentian Unit Trust Management Limited |
| | | | 100% - England/Wales - Unit Trust Management |
| | | ----------------------------------------------
| | | |
| | | | --------------------
| | | |--| LUTM Nominees Limited |
| | | 100% - England/Wales - Nominee Services |
| | | -----------------------------------------
| | | ----------------------------------
| | |--| Laurtrust Limited |
| | | 100% - England/Wales - Pension Scheme Trustee (Inactive) |
| |-----------------------------------------------------------
| | |
| | | ------------------------
| | |--| The Money Club Direct Company Limited |
| | | 100% - Dormant |
| | ----------------------------------------
| | ------------------------
| |--| Liberty Life Assurance Limited |
| | | 100% - England/Wales - Inactive |
| | ----------------------------------------
<PAGE>
| | ----------------------------
| |--| Liberty Life Pension Trustee Company Limited |
| | | 100% - England/Wales - Corporate Pension Fund |
| | -----------------------------------------------
| | ----------------------
| |--| Liberty Press Limited |
| | | 100% - England/Wales - Printing Services |
------------------------------------------
<PAGE>
------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| ----------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| |
| | -------------------------
| |--|Lincoln Assurance Limited |
| | | 100% ** - England/Wales - Life Assurance |
| | --------------------------------------------
| |
| | ------------------------------
| |--| Lincoln Fund Managers Limited |
| | | 100% - England/Wales - Unit Trust Management |
| | -------------------------------------------------
| |
| | --------------------------------
| |--| Lincoln Insurance Services Ltd. |
| | | 100% - Holding Company |
| | ----------------------------------------------------
| | |
| | | --------------------
| | |--| British National Life Sales Ltd.|
| | | | 100% - Inactive |
| | | ---------------------------------
| | |
| | | -----------------------------
| | |--| BNL Trustees Limited |
| | | | 100% - England/Wales - Corporate Pension Fund |
| | | -----------------------------------------------
| | |
| | | ---------------------
| | |--| Chapel Ash Financial Services Ltd. |
| | | | 100% - Direct Insurance Sales |
| | | -------------------------------------
| | |
| | | ---------------------------
| | |--| Lincoln General Insurance Co. Ltd. |
| | | | 100% - Accident & Health Insurance |
| | | ----------------------------------------------
| | | --------------
| | |--| P.N. Kemp-Gee & Co. Ltd. |
| | | 100% - Inactive |
| | --------------------------
| | ------------------------------
| |--| Lincoln National Training Services Limited |
| | | 100% - England/Wales - Training Company |
| |
| | ----------------------------
| |--| Lincoln Pension Trustees Limited |
| | | 100% - England/Wales - Corporate Pension Fund |
| | -------------------------------------------------
| |
| | ---------------------------------
| |--| LIV Limited (formerly Lincoln Investment Management Ltd.)|
| | | 100% - England/Wales - Investment Management Services |
| | ----------------------------------------------------------
| | |
| | | --------------------------
| | |--| CL CR Management Ltd. |
| | | 50% - England/Wales - Administrative Services |
| | -----------------------------------------------
| |
| | -------------------------
| |--| LN Management Limited |
| | | 100% - England/Wales - Administrative Services |
| | --------------------------------------------------
| |
| | | -----------------
| | |--| UK Mortgage Securities Limited |
| | | 100% - England/Wales - Inactive |
| | -----------------------------------
<PAGE>
------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| ------------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| |
| | ------------------------------------------
| |--| LN Securities Limited |
| | | 100% - England/Wales - Nominee Company |
| | ------------------------------------------
| |
| | --------------------
| |--| Niloda Limited |
| | 100% - England/Wales - Investment Company |
| ---------------------------------------------
|
| ---------------------------
| | Linsco Reinsurance Company |
|--| (formerly Lincoln National Reinsurance Company) |
| | 100% - Indiana - Property/Casualty |
| -------------------------------------------------
|
| ---------------------
|--| Old Fort Insurance Company, Ltd. |
| | 100% ** - Bermuda |
| ------------------------------------
| |
| | ----------------------------------
| | | Lincoln National Underwriting Services, Ltd. |
| |--| 10% - England/Wales - Life/Accident/Health Underwriter |
| | (Remaining 90% owned by Lincoln Natl. Reinsurance Co.) |
| --------------------------------------------------------
|
| -----------------------------------
| | Servicios de Evaluacion de Riesgos, S. de R.L. de C.V. |
|--| 49% - Mexico - Reinsurance Underwriter |
| | (Remaining 51% owned by Lincoln Natl. Reinsurance Co.) |
| ----------------------------------------------------------
|
| ----------------------
|--| Underwriters & Management Services, Inc. |
| 100% - Indiana - Underwriting Services |
--------------------------------------------
FOOTNOTES:
* The funds contributed by the Underwriters were, and continue to be subject
to trust agreements between American States Insurance Company, the grantor,
and each Underwriter, as trustee.
** Except for director-qualifying shares
# Lincoln National Corporation has subscribed for and paid for 100 shares of
Common Stock (with a par value of $1.00 per share) at a price of $10 per
<PAGE>
share, as part of the organizing of the fund. As such stock is further
sold, the ownership of voting securities by Lincoln National Corporation
will decline and fluctuate.
<PAGE>
ATTACHMENT #1
LINCOLN FINANCIAL GROUP, INC.
CORPORATE AGENCY SUBSIDIARIES
1) Lincoln Financial Group, Inc. (AL)
2) Lincoln Southwest Financial Group, Inc. (Phoenix, AZ)
3) Lincoln Financial and Insurance Services Corporation (Walnut Creek, CA)
3a) California Fringe Benefit and Insurance Marketing Corporation
DBA/California Fringe Benefit Company (Walnut Creek, CA)
4) Colorado-Lincoln Financial Group, Inc. (Denver, CO)
5) Lincoln National Financial Services, Inc. (Lake Worth, FL)
6) CMP Financial Services, Inc. (Chicago, IL)
7) Lincoln Financial Group of Northern Indiana, Inc. (Fort Wayne, IN)
8) The Financial Group, Inc. (Mission, KS)
8a) Financial Planning Partners, Ltd. (Mission, KS)
9) The Lincoln National Financial Group of Louisiana, Inc. (Shreveport,
LA)
10) Benefits Marketing Group, Inc. (D.C. & Chevy Chase, MD)
11) Morgan Financial Group, Inc. (Baltimore, MD)
12) Lincoln Financial Services and Insurance Brokerage of New England, Inc.
(formerly: Lincoln National of New England Insurance Agency, Inc.)
(Worcester, MA)
13) Lincoln Financial Group of Michigan, Inc. (Troy, MI)
13a) Financial Consultants of Michigan, Inc. (Troy, MI)
14) Lincoln Financial Group of Missouri, Inc. (formerly: John J. Moore &
Associates, Inc.) (St. Louis, MO)
15) Beardslee & Associates, Inc. (Clifton, NJ)
16) Lincoln Financial Group, Inc. (formerly: Resources/Financial,
Inc.))(Albuquerque, NM)
17) Lincoln Cascades, Inc. (Portland, OR)
18) Lincoln Financial Services, Inc. (Pittsburgh, PA)
19) Lincoln National Financial Group of Philadelphia, Inc.
(Philadelphia, PA)
20) Lincoln Financial Group, Inc. (Salt Lake City, (UT)
