<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON April 14, 2000
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 I,II, & III)
Pre-Effective Amendment No.
Post-Effective Amendment No. 7 [X]
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 18 [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, Suite 1700
Syracuse, New York 13202
(Address of Depositor's Principal Executive Offices)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-893-7168
Robert O. Sheppard, Esquire
Lincoln Life & Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, New York 13202
(Name and Complete Address of Agent for Service)
Copy to:
Kimberly J. Smith, Esquire
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000, pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[_] on pursuant to paragraph (a)(1) of Rule 485
----------
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of securities being registered:
Interests in a separate account under group variable annuity contracts.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus and statement of additional information included herein also relate
to the registrant's registration statements on Form N-4 (File No. 333-10863 and
File No. 333-10861).
<PAGE>
Lincoln Life & Annuity
Variable Annuity Account L
Group Variable Annuity Contracts I, II, & III
Home Office and Servicing Office:
Lincoln Life & Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
(800) 893-7168
www.LincolnLife-NY.com
This Prospectus describes group annuity contracts and
individual certificates issued by Lincoln Life & Annuity Company of New York
(LNY), a subsidiary of The Lincoln National Life Insurance Company (Lincoln
Life). They are for use with qualified and non-qualified retirement plans. Gen-
erally, neither the contractowner nor the individual participant pays federal
income tax on the contract's growth until it is paid out. The contract is de-
signed to accumulate account value and, as permitted by the plan for which the
contractowner purchases the contract, to provide retirement income that a par-
ticipant cannot outlive or for an agreed upon time. These benefits may be a
variable or fixed amount or a combination of both. If a participant dies before
the annuity commencement date, we pay the beneficiary or the plan a death bene-
fit.
If the contractowner gives certain rights to plan participants, we issue active
life certificates to them. Participants choose whether account value accumu-
lates on a variable or a fixed (guaranteed) basis or both. If a participant al-
locates contributions to the fixed account, we guarantee principal and a mini-
mum interest rate.
All contributions for benefits on a variable basis will be placed in Lincoln
Life & Annuity Variable Annuity Account L (variable annuity account [VAA]). The
VAA is a segregated investment account of LNY. If a participant puts all or
some contributions into one or more of the contract's subaccounts, the partici-
pant takes all the investment risk on the account value and the retirement in-
come. If the selected subaccounts make money, account value goes up; if they
lose money, it goes down. How much it goes up or down depends on the perfor-
mance of the selected subaccounts. We do not guarantee how any of the
subaccounts or their funds will perform. Also, neither the U.S. Government nor
any federal agency insures or guarantees investment in the contract.
The available subaccounts, and the funds in which they invest, are listed be-
low. The contractowner decides which of these subaccounts are available under
the contract for participant allocations. For more information about the in-
vestment objectives, policies and risks of the funds please refer to the Pro-
spectuses for the funds.
Balanced Account -- American Century Variable
Portfolios, Inc.: VP Balanced
Small Cap Growth Account -- Baron Capital
Funds Trust: Baron Capital Asset Fund Insurance Shares
Index Account -- Dreyfus Stock Index Fund
Small Cap Account -- Dreyfus Variable Investment Fund: Small Cap Portfolio
Growth I Account -- Fidelity Variable Insurance
Products Fund: Growth Portfolio Initial Class
Equity-Income Account -- Fidelity Variable Insurance Products Fund: Equity-In-
come Portfolio Initial Class
Asset Manager Account -- Fidelity Variable
Insurance Products Fund II: Asset Manager Portfolio Initial Class
Global Growth Account -- Janus Aspen Series:
Worldwide Growth Portfolio
Mid Cap Growth I Account -- Lincoln National Aggressive Growth Fund, Inc.
Social Awareness Account -- Lincoln National Social Awareness Fund, Inc.
Mid Cap Value Account -- Neuberger Berman Advisers Management Trust: Partners
Portfolio
International Stock Account -- T. Rowe Price International Series, Inc.
This Prospectus gives you information about the contracts and certificates that
contractowners and participants should know before investing. Please review the
Prospectuses for the funds, and keep them for reference.
Neither the SEC nor any state securities commission has approved the contracts
or determined that this Prospectus is accurate and complete. Any representation
to the contrary is a criminal offense.
A Statement of Additional Information (SAI), dated the same date as this Pro-
spectus, has more information about the contracts and certificates. Its terms
are made part of this Prospectus. For a free copy, write: Lincoln Life & Annu-
ity Company of New York, TDA Client Services, P.O. Box 1337, Syracuse, NY
13201-1337, or call 1-800-893-7168. The SAI and other information about LNY and
Account L are also available on the SEC's web site (http://www.sec.gov). There
is a table of contents for the SAI on the last page of this Prospectus.
May 1, 2000
1
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
- ---------------------------------------
<S> <C>
Special Terms 2
- ---------------------------------------
Expense Tables 3
- ---------------------------------------
Summary 5
- ---------------------------------------
Condensed Financial Information 7
- ---------------------------------------
Investment Results 7
- ---------------------------------------
Financial Statements 7
- ---------------------------------------
Lincoln Life & Annuity Company of
New York 7
- ---------------------------------------
Fixed Side of the Contract 7
- ---------------------------------------
Variable Annuity Account (VAA) 8
- ---------------------------------------
Investments of the VAA 8
- ---------------------------------------
Description of the Funds 8
- ---------------------------------------
Charges and Other Deductions 10
- ---------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Page
- -----------------------------------------
<S> <C>
The Contracts 12
- -----------------------------------------
Annuity Payouts 16
- -----------------------------------------
Federal Tax Matters 17
- -----------------------------------------
Voting Rights 21
- -----------------------------------------
Distribution of the Contracts 21
- -----------------------------------------
Return Privilege 21
- -----------------------------------------
State Regulation 21
- -----------------------------------------
Records and Reports 21
- -----------------------------------------
Other Information 21
- -----------------------------------------
Group Variable Annuity Contracts I, II,
& III
Statement of Additional Information
Table of Contents 22
- -----------------------------------------
</TABLE>
Special Terms
Account or variable annuity account (VAA) -- The segregated investment ac-
count, Account L, into which LNY sets aside and invests the assets for the
variable side of the contracts offered in this Prospectus.
Account value -- At a given time before the annuity commencement date, the
value of all accumulation units for a contract plus the value of the fixed
side of the contract.
Accumulation unit -- A measure used to calculate account value for the vari-
able side of the contract.
Annuitant -- The person on whose life the annuity benefit payments made after
an annuity commencement date are based.
Annuity commencement date -- The date on which Lincoln Life makes the first
annuity payout to the annuitant.
Annuity payout -- An amount paid at regular intervals after the annuity com-
mencement date under one of several options available to the annuitant and/or
any other payee. This amount may be paid on a variable or fixed basis, or a
combination of both.
Annuity unit -- A measure used to calculate the amount of each annuity payout
for the variable side of the contract after an annuity commencement date.
Beneficiary -- The person the participant chooses to receive any death benefit
paid if the participant dies before the annuity commencement date.
Contractowner -- The party named on the group annuity contract (for example,
an employer, a retirement plan trust, an association, or other entity allowed
by law).
Contributions -- Amounts paid into the contract.
Death benefit -- An amount payable to a designated beneficiary if a partici-
pant dies before his or her annuity commencement date.
LNY (we, us, our) -- Lincoln Life & Annuity Company of New York.
Participant -- An employee or other person affiliated with the contractowner
on whose behalf we maintain an account under the 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.
Plan -- The retirement program that an employer offers to its employees for
which a contract is used to accumulate funds.
Subaccount -- The portion of the VAA that reflects investments in accumulation
and annuity units of a class of a particular fund available under the con-
tracts. There is a separate subaccount which corresponds to each fund.
Valuation date -- Each day the New York Stock Exchange (NYSE) is open for
trading.
Valuation period -- The period starting at the close of trading (currently
normally 4:00 p.m. New York time) on each day that the NYSE is open for trad-
ing (valuation date) and ending at the close of such trading on the next valu-
ation date.
2
<PAGE>
Expense Tables
Contractowner transaction expenses for GVA I, II, & III
<TABLE>
<S> <C> <C> <C>
The maximum surrender charge (contingent deferred sales charge) GVA I GVA II GVA III
as a percentage of the gross withdrawal amount: ----- ------ -------
5% 6% None
</TABLE>
For all GVA I contracts, and for GVA II contracts that are subject to
ERISA, the surrender charge percentage is reduced over time. The later the
redemption occurs, the lower the surrender charge with respect to that sur-
render or withdrawal.
Contract fees for GVA I, II, & III
Annual administration charge (per participant): $25
Systematic withdrawal option fee: $30
The annual administration charge may be paid by an employer on behalf of par-
ticipants. It is not charged during the annuity period.
We may reduce or waive these charges in certain situations. See Charges and
Other Deductions and Systematic withdrawal options.
- --------------------------------------------------------------------------------
Account L annual expenses for GVA I, II, & III subaccounts:
(as a percentage of daily net asset value):
<TABLE>
<S> <C>
Mortality and expense risk
charge: 1.00%
</TABLE>
Annual expenses of the funds for the year ended December 31, 1999:
(as a percentage of each fund's average net assets):
<TABLE>
<CAPTION>
Management 12b-1 Other Total
fee + fees + expenses = expenses
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. American Century--VP Balanced 0.90% 0.00% 0.00% 0.90%
- ----------------------------------------------------------------------------------------
2. Baron Capital Funds Trust:
Baron Capital Asset Fund Insurance
Shares/1/ 0.62 0.25 0.63 1.50
- ----------------------------------------------------------------------------------------
3. Dreyfus Stock Index Fund 0.25 0.00 0.01 0.26
- ----------------------------------------------------------------------------------------
4. Dreyfus VIF: Small Cap Portfolio 0.75 0.00 0.03 0.78
- ----------------------------------------------------------------------------------------
5. Fidelity VIP--Growth Portfolio
Initial Class 0.58 0.00 0.08 0.66
- ----------------------------------------------------------------------------------------
6. Fidelity VIP--
Equity-Income Portfolio Initial Class 0.48 0.00 0.09 0.57
- ----------------------------------------------------------------------------------------
7. Fidelity VIP II--
Asset Manager Initial Class 0.53 0.00 0.10 0.63
- ----------------------------------------------------------------------------------------
8. Janus Aspen Series: Worldwide
Growth Portfolio Institutional
Shares/2/ 0.65 0.00 0.02 0.67
- ----------------------------------------------------------------------------------------
9. Lincoln National Aggressive Growth
Fund 0.73 0.00 0.14 0.87
- ----------------------------------------------------------------------------------------
10. Lincoln National Social Awareness
Fund 0.33 0.00 0.05 0.38
- ----------------------------------------------------------------------------------------
11. Neuberger & Berman AMT: Partners
Portfolio 0.80 0.00 0.07 0.87
- ----------------------------------------------------------------------------------------
12. T. Rowe Price International Series 1.05 0.00 0.00 1.05
- ----------------------------------------------------------------------------------------
</TABLE>
/1/The Adviser is contractually obligated to reduce its fee to the extent re-
quired to limit Baron Capital Asset Fund's total operating expenses to 1.5%
for the first $250 million of assets in the Fund, 1.35% for Fund assets over
$250 million and 1.25% for Fund assets over $500 million. Without the expense
limitations, total operating expenses for the Fund for the period January 1,
1999 through December 31, 1999 would have been 1.88%.
/2/Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for the Worldwide
Growth Portfolio. All expenses are shown without the effect of expense offset
arrangements.
3
<PAGE>
*Examples shown may be less for GVA
II Contracts subject to ERISA.
EXAMPLES
(expenses of the subaccounts and the funds):
If you surrender your contract at the end of the time period shown, you would
pay the following expenses on a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
GVA I GVA II* GVA III
------------------------------- ----------------------------------- -----------------------------------
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------- -------- -------- --------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. American
Century--VP
Balanced $71 $116 $164 $242 $82 $129 $179 $316 $29 $ 88 $149 $316
- -------------------------------------------------------------------------------------------------------------------------
2. Baron
Capital Funds
Trust: Baron
Capital Asset
Fund Insurance
Shares 77 134 193 303 88 146 207 372 35 105 179 372
- -------------------------------------------------------------------------------------------------------------------------
3. Dreyfus
Stock Index
Fund 65 98 132 174 76 111 148 252 22 68 117 252
- -------------------------------------------------------------------------------------------------------------------------
4. Dreyfus VIF:
Small Cap
Portfolio 70 113 158 230 81 126 173 304 27 84 144 304
- -------------------------------------------------------------------------------------------------------------------------
5. Fidelity
VIP--Growth
Portfolio
Initial Class 69 109 152 217 80 122 167 292 26 81 138 292
- -------------------------------------------------------------------------------------------------------------------------
6. Fidelity
VIP--Equity
Income
Portfolio
Initial Class 68 107 148 208 79 120 163 284 25 78 133 284
- -------------------------------------------------------------------------------------------------------------------------
7. Fidelity VIP
II--Asset
Manager
Initial Class 69 109 151 214 80 121 166 290 26 80 136 289
- -------------------------------------------------------------------------------------------------------------------------
8. Janus Aspen
Series:
Worldwide
Growth
Portfolio 70 111 154 222 81 123 169 296 27 82 140 296
- -------------------------------------------------------------------------------------------------------------------------
9. Lincoln
National
Aggressive
Growth Fund 71 116 163 239 82 128 177 313 28 87 148 313
- -------------------------------------------------------------------------------------------------------------------------
10. Lincoln
National
Social
Awareness Fund 67 101 138 187 77 114 153 264 23 72 123 264
- -------------------------------------------------------------------------------------------------------------------------
11. Neuberger
Berman AMT:
Partners
Portfolio 71 116 163 239 82 128 177 313 28 87 148 313
- -------------------------------------------------------------------------------------------------------------------------
12. T. Rowe
Price
International
Series 73 121 171 258 84 133 186 330 30 92 157 330
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
If you do not surrender your contract, you would pay the following expenses on
a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
GVA I GVA II* GVA III
------------------------------- ----------------------------------- -----------------------------------
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------- -------- -------- --------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. American
Century--VP
Balanced $20 $62 $106 $229 $21 $64 $109 $235 $29 $ 88 $149 $316
- --------------------------------------------------------------------------------------------------------------------------------
2. Baron Capital Funds
Trust: Baron
Capital Asset
Fund Insurance
Shares 26 80 136 290 27 82 139 296 35 105 179 372
- --------------------------------------------------------------------------------------------------------------------------------
3. Dreyfus
Stock Index
Fund 13 42 73 159 14 44 76 166 22 68 117 252
- --------------------------------------------------------------------------------------------------------------------------------
4. Dreyfus VIF:
Small Cap
Portfolio 19 58 100 216 19 60 103 223 27 84 144 304
- --------------------------------------------------------------------------------------------------------------------------------
5. Fidelity
VIP--Growth
Portfolio
Initial Class 18 54 94 203 18 56 97 210 26 81 138 292
- --------------------------------------------------------------------------------------------------------------------------------
6. Fidelity
VIP--Equity
Income
Portfolio
Initial Class 17 52 85 194 17 53 92 200 25 78 133 284
- --------------------------------------------------------------------------------------------------------------------------------
7. Fidelity VIP
II--Asset
Manager
Initial Class 17 53 92 200 18 55 95 207 26 80 136 289
- --------------------------------------------------------------------------------------------------------------------------------
8. Janus Aspen
Series:
Worldwide
Growth
Portfolio 18 56 96 208 19 57 99 214 27 82 140 296
- --------------------------------------------------------------------------------------------------------------------------------
9. Lincoln
National
Aggressive
Growth Fund 20 61 104 226 20 63 108 232 28 87 148 313
- --------------------------------------------------------------------------------------------------------------------------------
10. Lincoln
National
Social
Awareness Fund 15 46 79 173 15 48 82 180 23 72 123 264
- --------------------------------------------------------------------------------------------------------------------------------
11. Neuberger
Berman AMT:
Partners
Portfolio 20 61 104 226 20 63 108 232 28 87 148 213
- --------------------------------------------------------------------------------------------------------------------------------
12. T. Rowe
Price
International
Series 21 66 114 245 22 68 117 251 30 92 157 330
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
We provide these examples, which are unaudited, to show the direct and indirect
costs and expenses of the contract.
For more information, see Charges and Other Deductions in this Prospectus, and
in the Prospectuses for the funds. Premium taxes may also apply, although they
do not appear in the examples. These examples should not be considered a repre-
sentation of past or future expenses. Actual expenses may be more or less than
those shown.
4
<PAGE>
Summary
What kind of contracts are these? They are group variable annuity contracts be-
tween the contractowner and LNY. They may provide for a fixed annuity and/or a
variable annuity. This Prospectus describes the variable side of the contract.
See The Contracts.
What is the variable annuity account (VAA)? It is a separate account we estab-
lished under New York insurance law, and registered with the SEC as a unit in-
vestment trust. VAA assets are allocated to one or more subaccounts, according
to your investment choices. VAA assets are not chargeable with liabilities
arising out of any other business which LNY may conduct. See the Variable Annu-
ity Account.
What are the contract's investment choices? Based on instructions, the VAA ap-
plies contributions to buy fund shares in one or more of the investment funds
of the subaccounts: American Century Variable Portfolios, Inc.: VP Balanced;
Baron Capital Funds Trust: Baron Capital Asset Fund; Dreyfus Stock Index Fund;
Dreyfus Variable Investment Fund: Small Cap Portfolio; Fidelity Variable Insur-
ance Products Fund: Growth Portfolio; Fidelity Variable Insurance Products
Fund: Equity-Income Portfolio; Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio; Janus Aspen Series: Worldwide Growth Portfolio; Lin-
coln National Aggressive Growth Fund, Inc.; Lincoln National Social Awareness
Fund, Inc.; Neuberger Berman Advisers Management Trust: Partners Portfolio; and
T. Rowe Price International Series, Inc. In turn, each fund holds a portfolio
of securities consistent with its investment policy. See the Variable Annuity
Account and Description of the funds for a description of the subaccounts.
Who advises the funds? American Century Investment Management, Inc. is the in-
vestment advisor of American Century VP Balanced. BAMCO, Inc. is advisor to the
Baron fund. The investment advisor of the Dreyfus funds is The Dreyfus Corpora-
tion, New York, NY. The investment advisor of the Fidelity funds is Fidelity
Management & Research Company, Boston, MA. Janus Capital Corporation is the ad-
visor to the Janus fund. Lincoln Investments, Inc. is the investment advisor of
the Lincoln funds; Neuberger Berman Management Incorporated is the investment
advisor to the Neuberger Berman Fund. Putnam Investments is sub-advisor to the
Lincoln National Aggressive Growth Fund and Vantage Investment Advisers is sub-
advisor to the Lincoln National Social Awareness Fund. Rowe Price-Fleming In-
ternational, Inc. is investment advisor of the Rowe Price International Series.
See Description of the Funds.
How do the contracts work? If we approve the application, we will send the
contractowner a contract. When participants make contributions, they buy accu-
mulation units. If the participant decides to purchase retirement income pay-
ments, we convert accumulation units to annuity units. Retirement income pay-
ments will be based on the number of annuity units received and the value of
each annuity unit on payout days. See The Contracts.
What charges do I pay under the contract? If participants in GVA I or GVA II
withdraw account value, a surrender charge applies of 0-5% of the gross with-
drawal amount for all GVA I contracts and for GVA II contracts issued to plans
subject to ERISA, depending on how many participation years the participant has
been in the contract. For GVA II contracts issued to plans that are not subject
to ERISA, a surrender charge of 6% applies regardless of the number of partici-
pation years. We may reduce or waive surrender charges in certain situations.
See Surrender charge for GVA I and GVA II.
There is no surrender charge for GVA III.
We charge an annual administration charge of $25 per participant account.
We will deduct any applicable premium tax from contributions or account value
at the time the tax is incurred or at another time we choose.
We apply an annual charge totaling 1.00% to the daily net asset value of the
VAA. See Charges and Other Deductions.
We may charge $30 to establish a systematic withdrawal option.
We may waive these charges in certain situations.
The funds' investment management fees, 12b-1 fees, expenses and expense limita-
tions, if applicable, are more fully described in the Prospectuses for the
funds.
What contributions are necessary, and how often? Contributions made on behalf
of participants may be in any amount unless the contractowner or the plan has a
minimum amount. See The Contracts--Contributions.
How will annuity payouts be calculated? If a participant decides to annuitize,
they select an annuity option and start receiving retirement income payments
from the contract as a fixed option or variable option or a combination of
both. See Annuity payout options. Remember that participants in the VAA benefit
from any gain, and take a risk of any loss, in the value of the securities in
the funds' portfolios.
What happens if a participant dies before he or she annuitizes? The beneficiary
has options as to how any death benefit is paid. See The Contracts--Death bene-
fit before the annuity commencement date.
May participants transfer account value between subaccounts, and between the
VAA and the fixed account? Before the annuity commencement date, yes, subject
to the terms of the plan. See The Contracts--Transfers on or before the annuity
commencement date.
May a participant withdraw account value? Yes, during the accumulation period,
subject to contract require-
5
<PAGE>
ments, to the restrictions of any plan, and to certain restrictions under GVA
III. See Charges and Other Deductions. Under GVA III, a participant may not
transfer more than 20% of his or her fixed account holdings to the VAA each
year, unless the participant intends to liquidate their fixed account value.
Under GVA III, liquidation of the entire fixed account value must be over 5
annual installments. See Fixed account withdrawal/ transfer limits for GVA
III. The contractowner must also approve participant withdrawals under Section
401(a) plans and plans subject to Title I of ERISA. Certain charges may apply.
See Charges and Other Deductions. A portion of withdrawal proceeds may be tax-
able. In addition, a 10% Internal Revenue Service (IRS) tax penalty may apply
to distributions before age 59 1/2. A withdrawal also may be subject to 20%
withholding. See Federal Tax Matters.
Do participants get a free look at their certificates? A participant under a
Section 403(b) or 408 plan and certain non-qualified plans can cancel the ac-
tive life certificate within ten days (in some states longer) of the date the
participant receives the certificate. The participant needs to give notice to
our servicing office. We will refund the participant's contributions less
withdrawals, or for the variable side of the contract if greater, the partici-
pant's account balance on the day we receive the written notice. See Return
Privilege.
6
<PAGE>
Condensed Financial Information
The financial data included below should be read along with the financial
statements of the VAA and the related data included in the SAI.
Accumulation unit values
(For an accumulation unit outstanding throughout the period)
<TABLE>
<CAPTION>
1997 1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Manager Account*
. Beginning of period unit value......................... $17.769 20.583 23.445
. End of period unit value............................... $20.583 23.445 25.787
. End of period number of units (000's omitted).......... 1,420 1,535 1,489
- --------------------------------------------------------------------------------
Balanced Account*
. Beginning of period unit value......................... $16.989 18.551 21.263
. End of period unit value............................... $18.551 21.263 23.168
. End of period number of units (000's omitted).......... 439 510 502
- --------------------------------------------------------------------------------
Equity-Income Account*
. Beginning of period unit value......................... $16.389 19.985 22.087
. End of period unit value............................... $19.985 22.087 23.252
. End of period number of units (000's omitted).......... 889 1,176 1,172
- --------------------------------------------------------------------------------
Global Growth Account**
. Beginning of period unit value......................... $10.000 12.520
. End of period unit value............................... $12.520 20.385
. End of period number of units (000's omitted).......... 25 470
- --------------------------------------------------------------------------------
Growth I Account*
. Beginning of period unit value......................... $24.529 28.328 39.122
. End of period unit value............................... $28.328 39.122 53.234
. End of period number of units (000's omitted).......... 1,819 2,095 2,439
- --------------------------------------------------------------------------------
Index Account*
. Beginning of period unit value......................... $24.091 29.827 37.861
. End of period unit value............................... $29.827 37.861 45.208
. End of period number of units (000's omitted).......... 814 1,129 1,319
- --------------------------------------------------------------------------------
International Stock Account*
. Beginning of period unit value ........................ $12.108 12.504 14.342
. End of period unit value............................... $12.504 14.342 18.931
. End of period number of units (000's omitted).......... 475 546 519
- --------------------------------------------------------------------------------
Mid Cap Growth I Account**
. Beginning of period unit value......................... $10.000 12.455
. End of period unit value............................... $12.455 17.563
. End of period number of units (000's omitted).......... 6 642
- --------------------------------------------------------------------------------
Mid Cap Value Account**
. Beginning of period unit value......................... $10.000 11.861
. End of period unit value............................... $11.861 12.609
. End of period number of units (000's omitted).......... 10 64
- --------------------------------------------------------------------------------
Small Cap Account*
. Beginning of period unit value......................... $15.523 17.632 16.856
. End of period unit value .............................. $17.632 16.856 20.552
. End of period number of units (000's omitted).......... 966 1,187 1,081
- --------------------------------------------------------------------------------
Small Cap Growth Account**
. Beginning of period unit value......................... $10.000 13.217
. End of period unit value .............................. $13.217 17.775
. End of period number of units (000's omitted).......... 25 192
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1997 1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Social Awareness Account**
. Beginning of period unit value......................... $10.000 12.791
. End of period unit value .............................. $12.791 14.618
. End of period number of units (000's omitted).......... 14 206
- --------------------------------------------------------------------------------
Pending Allocation Account*
. Beginning of period unit value......................... $11.328 11.894 12.545
. End of period unit value............................... $11.894 12.545 13.191
. End of period number of units (000's omitted).......... 2 3 11
- --------------------------------------------------------------------------------
</TABLE>
*The Sub-Account indicated commenced operations on January 31, 1997.
**The Sub-Account indicated commenced operations on October 1, 1998.
Investment Results
At times, the VAA may compare its investment results to various unmanaged indi-
ces or other variable annuities in reports to shareholders, sales literature
and advertisements. The results will be calculated on a total return basis for
various periods, with or without surrender charges. Results calculated without
surrender charges will be higher. Total returns include the reinvestment of all
distributions, which are reflected in changes in unit value. See the SAI for
further information.
Financial Statements
The financial statements for the VAA and the statutory-basis financial state-
ments of LNY are located in the SAI. For a free copy of the SAI, complete and
mail the enclosed form, or call 1-800-893-7168, or visit www.lincolnlife-
ny.com.
Lincoln Life & Annuity Company of New York
LNY is a life insurance company founded in New York on June 6, 1996. LNY is a
subsidiary of Lincoln Life. Lincoln Life is one of the largest stock life in-
surance companies in the United States. Lincoln Life is owned by Lincoln Na-
tional Corp. (LNC) which is also organized under Indiana law. LNC's primary
businesses are insurance and financial services.
Fixed Side of the Contract
Contributions allocated to the fixed account become part of LNY's general ac-
count, and do not participate in the investment experience of the VAA. The gen-
eral 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.
7
<PAGE>
In reliance on certain exemptions, exclusions and rules, LNY has not regis-
tered interests in the general account as a security under the Securities Act
of 1933 (1933 Act) and has not registered the general account as an investment
company under the Investment Company Act of 1940 (1940 Act). Accordingly, nei-
ther the general account nor any interests in it are subject to regulation un-
der the 1933 Act or the 1940 Act. LNY has been advised that the staff of the
SEC has not made a review of the disclosures which are included in this Pro-
spectus which relate to our general account and to the fixed side of the con-
tract. These disclosures, however, may be subject to certain provisions of the
federal securities laws relating to the accuracy and completeness of state-
ments made in the Prospectus. This Prospectus is generally intended to serve
as a disclosure document only for aspects of the contract involving the VAA,
and therefore contains only selected information regarding the fixed side of
the contract. Complete details regarding the fixed side of the contract can be
found in the contract.
Contributions allocated to the fixed account are guaranteed to be credited
with a minimum interest rate, specified in the contract, of at least 3.0%. A
contribution allocated to the fixed side of the contract is credited with in-
terest beginning on the next calendar day following the date of receipt if all
participant data is complete. LNY may vary the way in which it credits inter-
est to the fixed side of the contract from time to time.
ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN ADVANCE IN LNY'S SOLE DIS-
CRETION. PARTICIPANTS BEAR THE RISK THAT NO INTEREST IN EXCESS OF 3.0% WILL BE
DECLARED.
Under GVA III, special limits apply to transfers and withdrawals from the
fixed account. See Fixed account withdrawal/transfer limits for GVA III.
If the Plan permits loans, then during the participant's accumulation period,
the participant may apply for a loan by completing a loan application that we
provide. The participant's account balance in the fixed account secures the
loan. Loans are subject to restrictions imposed by the IRC, Title I of the Em-
ployee Retirement Income Security Act of 1974 (ERISA), and the participant's
plan. For plans subject to Title I of ERISA, the initial amount of a partici-
pant loan cannot exceed the lesser of 50% of the participant's vested account
balance in the fixed account or $50,000 and must be at least $1,000. For plans
not subject to Title I of ERISA, a participant may borrow up to $10,000 of his
or her vested account balance. A participant may have only one loan outstand-
ing at a time and may not take more than one loan in any six-month period.
Amounts serving as collateral for the loan are not subject to the minimum in-
terest rate under the contract and will accrue interest at a rate below the
loan interest rate provided in the contract. More information about loans and
loan interest rates is in the contract, the active life certificates, the an-
nuity loan agreement and is available from us.
Variable Annuity Account (VAA)
On July 24, 1996, the VAA was established as an insurance company separate ac-
count under New York law. It is registered with the SEC as a unit investment
trust under the provisions of the 1940 Act. The SEC does not supervise the VAA
or LNY. The VAA is a segregated investment account, meaning that its assets
may not be charged with liabilities resulting from any other business that we
may conduct. Income, gains and losses, whether realized or not, from assets
allocated to the VAA are, in accordance with the applicable annuity contracts,
credited to or charged against the VAA. They are credited or charged without
regard to any other income, gains or losses of LNY. The VAA satisfies the def-
inition of separate account under the federal securities laws. We do not guar-
antee the investment performance of the VAA. Any investment gain or loss de-
pends on the investment performance of the funds. You assume the full invest-
ment risk for all amounts placed in the VAA.
Investments of the VAA
The contractowner decides which of the subaccounts available under the con-
tract will be available for participant allocations. There is a separate
subaccount which corresponds to each fund. Participant allocations may be
changed without penalty or charges. Shares of the funds will be sold at net
asset value with no initial sales charge to the VAA in order to fund the con-
tracts. The funds are required to redeem fund shares at net asset value on our
request. We reserve the right to add, delete, or substitute funds.
Each fund, described below, is an investment vehicle for insurance company
separate accounts. Certain funds offered as part of this contract have similar
investment objectives and policies to other portfolios managed by the fund's
advisor. The investment results of the funds, however, may be higher or lower
than the results of other portfolios that are managed by the advisor. There
can be no assurance, and no representation is made, that the investment re-
sults of any of the funds will be comparable to the investment results of any
other portfolio managed by the advisor.
Description of the Funds
Following are brief summaries of the investment objectives and policies of the
funds, and a description of their managers. Each fund is subject to certain
investment policies and restrictions which may not be changed without a major-
ity vote of shareholders of that fund. More detailed information can be ob-
tained
8
<PAGE>
from the current Prospectus for the fund, which is included in this booklet.
There is not assurance that any of the funds will achieve its stated objective.
1. American Century Variable Portfolios, Inc.--American Century VP Balanced
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 ap-
preciation and the balance in bonds and other fixed income securities. Amer-
ican Century Investment Management, Inc. is the investment manager of this
portfolio.
2. Baron Capital Funds Trust--Baron Capital Asset Fund. The investment objec-
tive is to purchase stocks, judged by the advisor, to have the potential of
increasing their value at least 50% over two subsequent years, although that
goal may not be achieved. BAMCO, Inc. serves as the Fund's investment advi-
sor.
3. Dreyfus Stock Index Fund. The Dreyfus Stock Index Fund is a non-diversified
index fund that seeks to match the total return of the Standard & Poor's 500
Composite Stock Price Index. The Fund is neither sponsored by nor affiliated
with Standard & Poor's Corporation. The Dreyfus Corporation acts as the Fund
manager and Mellon Equity Associates, an affiliate of Dreyfus, is the Fund
index manager.
4. Dreyfus Variable Investment Fund--Small Cap Portfolio. Seeks to maximize
capital appreciation by investing primarily in common stocks of domestic and
foreign issuers with market capitalizations of less than $1.5 billion at the
time of purchase. The portfolio manager seeks companies believed to be char-
acterized by new or innovative products or services which should enhance
prospects for growth in future earnings. The Portfolio may also invest in
special situations such as corporate restructurings, mergers or acquisi-
tions. The Dreyfus Corporation serves as the Portfolio's investment adviser.
The Portfolio may also invest in special situations such as corporate
restructurings, mergers or acquisitions. The Dreyfus Corporation serves as
the Portfolio's investment adviser.
5. Fidelity Variable Insurance Products Fund (VIP)--Growth Portfolio seeks
long-term capital appreciation. The Portfolio normally purchases common
stocks. Fidelity Management & Research Company ("FMR") is the manager this
portfolio.
6. Fidelity Variable Insurance Products Fund (VIP)--Equity-Income Portfolio
seeks reasonable income by investing primarily in income-producing equity
securities, with some potential for capital appreciation, seeking a yield
that exceeds the composite yield on the securities comprising the Standard
and Poor's 500 Index (S&P 500). FMR is the investment manager of this port-
folio.
7. Fidelity Variable Insurance Products Fund II (VIP II)--Asset Manager Portfo-
lio seeks high total return with reduced risk over the long-term by allocat-
ing its assets among domestic and foreign stocks, bonds and short-term money
market instruments. FMR is the investment manager of this portfolio.
8. Janus Aspen Series--Worldwide Growth Portfolio. seeks long-term growth of
capital in a manner consistent with the preservation of capital. Pursues ob-
jective by investing primarily in common stocks of companies of any size
throughout the world. The Portfolio normally invests in issuers from at
least 5 different countries, including the U.S. The Portfolio may at times
invest in fewer than five countries or even a single country. Janus Capital
Corporation serves as the Portfolio's investment advisor.
9. Lincoln National Aggressive Growth Fund, Inc. seeks to maximize capital ap-
preciation. The fund invests in stocks of small, lesser known companies
which have a chance to grow significantly in a short time. Lincoln Invest-
ment Management, Inc. (Lincoln Investment*) is the fund's investment advi-
sor, and Putnam Investments is the fund's investment sub-advisor.
10. Lincoln National Social Awareness Fund, Inc. seeks long-term capital appre-
ciation. The fund buys stocks of established companies which adhere to cer-
tain specific social criteria. Lincoln Investment* is the fund's investment
advisor and Vantage Investment Advisors is the fund's investment sub-advi-
sor.
11. Neuberger Berman Advisers Management Trust--Partners Portfolio seeks capi-
tal growth by investing mainly in common stocks of mid- to large-capital-
ization established companies using the value-oriented investment approach.
Neuberger Berman Management Incorporated serves as the Portfolio's invest-
ment adviser. Neuberger Berman, LLC serves as the Fund's investment sub-ad-
visor.
12. T. Rowe Price International Series, Inc.--T. Rowe Price International Stock
Portfolio seeks long-term growth of capital through investments primarily
in common stocks of established, non-U.S. companies. Rowe Price-Fleming In-
ternational, Inc. is the investment manager of this portfolio.
Fidelity VIP--Money Market Portfolio seeks to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity. For
more information about the Portfolio, into which initial contributions are in-
vested pending LNY's receipt of a complete order, see The Contracts.
*Lincoln Investments has informed the funds to which it provides advisory serv-
ices that it intends to merge into a newly created series of its affiliate,
Delaware Management Business Trust, during the second or third quarter of 2000.
Lincoln Investments does not expect the merger to result in any change in the
level of
9
<PAGE>
advisory services that it currently provides to these funds, although there
may be some changes in, and additions to, personnel. See the prospectuses of
these funds for more information.
As compensation for their services to the fund, the investment advisors re-
ceive a fee from the fund, which is accrued daily and paid monthly or quarter-
ly. This fee is based on the net assets of each fund, defined under Purchase
and Redemption of Shares, in the Prospectus for the fund.
With respect to a fund, the advisor and/or distributor, or an affiliate there-
of, may compensate LNY (or an affiliate) for administrative, distribution, or
other services. Some funds may compensate us more than other funds. It is an-
ticipated that such compensation will be based on assets of the particular
fund attributable to the contracts along with certain other variable contracts
issued or administered by LNY (or an affiliate).
Sale of shares by the funds
We will purchase shares of the funds at net asset value and direct them to the
appropriate subaccounts of the VAA. We will redeem shares of the appropriate
funds to pay annuity payouts, death benefits, surrender/ withdrawal proceeds
or for other purposes described in the contract. If a participant wants to
transfer all or part of his or her account balance from one subaccount to an-
other, we redeem shares held in the first and purchase shares of the other.
The shares are retired, but they may be reissued later.
Shares of the funds are not sold directly to the general public. They are sold
to LNY and may be sold to other insurance companies for investment of assets
of the subaccounts established by those insurance companies to fund variable
annuity and variable life insurance contracts.
When a fund sells shares both to variable annuity and to variable life insur-
ance separate accounts, it is engaging in mixed funding. When a fund sells
shares to separate accounts of unaffiliated life insurance companies, it is
engaging in shared funding.
The funds may engage in mixed and shared funding. Due to differences in re-
demption rates or tax treatment, or other considerations, the interests of
various contractowners participating in a fund could conflict. The funds' Di-
rectors or Trustees will monitor for the existence of any material conflicts,
and determine what action, if any, should be taken. See the Prospectuses for
the funds.
Reinvestment of dividends and capital gain distributions
All dividend and capital gain distributions of the funds are automatically re-
invested in shares of the distributing funds at their net asset value on the
date of distribution. Dividends are not paid out to contractowners as addi-
tional units, but are reflected as changes in unit values.
Addition, deletion or substitution of investments
We reserve the right, within the law, to make additions, deletions and substi-
tutions for the funds in which the VAA participates. (We may substitute shares
of other funds for shares already purchased, or to be purchased in the future,
under the contract. This substitution might occur if shares of a fund should
no longer be available, or if investment in any fund's shares should become
inappropriate, in the judgment of our management, for the purposes of the con-
tract.) We cannot substitute shares without approval by the SEC. We will also
notify contractowners and participants.
Charges and Other Deductions
We will deduct the charges described below to cover our costs and expenses,
services provided, and risks assumed under the contracts. We will incur cer-
tain costs and expenses for distribution and administration of the contracts
and for providing the benefits payable thereunder. More particularly, our ad-
ministrative services include: processing applications and enrollment forms
and issuing the contracts and active life certificates, processing purchases
and redemptions of fund shares as required, maintaining records, administering
annuity payout options, furnishing accounting and valuation services (includ-
ing the calculation and monitoring of daily subaccount values), reconciling
and depositing cash receipts, providing contract confirmations, providing
toll-free inquiry services and furnishing telephone fund transfer services.
The risks we assume include: the risk that annuitants receiving annuity
payouts under the contract will live longer than we assumed when we calculated
our guaranteed rates (these rates cannot be changed); the risk that death ben-
efits paid will exceed actual participant account balances (less outstanding
loans); the risk that more participants than expected will qualify for waiver
of the surrender charge under GVA I or GVA II and the risk that our costs in
providing the services will exceed our revenues from contract charges which we
cannot change. The amount of a charge may not necessarily correspond to the
costs associated with providing the services or benefits indicated by the de-
scription of the charge. For example, the surrender charge collected under GVA
I or GVA II may not fully cover all of the sales and distribution expenses ac-
tually incurred by us.
Deductions from the VAA for GVA I, II, & III
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 1.00% of the daily
10
<PAGE>
net asset value. The charge is a mortality and expense risk charge. It is as-
sessed during the accumulation period and during the annuity period, even
though during the annuity period, we bear no mortality risk on annuity options
that do not have life contingencies.
Annual administration charge
During the accumulation period, we currently deduct $25 (or the balance of the
participant's account, if less) per year from each participant's account bal-
ance on the last business day of the month in which a participant anniversary
occurs. We also deduct the charge from a participant's account balance if the
participant's account is totally withdrawn. The charge may be increased or
decreased.
Surrender charge for GVA I and GVA II*
Under GVA I and GVA II, a surrender charge applies (except as described below)
to total or partial withdrawals of a participant's account balance during the
accumulation period as follows:
<TABLE>
<CAPTION>
GVA II
GVA II NON-
During Participation Year GVA I ERISA ERISA
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-6...................................................... 5% 5% 6%
7........................................................ 4% 4% 6%
8........................................................ 3% 3% 6%
9........................................................ 2% 2% 6%
10....................................................... 1% 1% 6%
11 and later............................................. 0% 0% 6%
</TABLE>
*There is no surrender charge taken on withdrawals from GVA III.
The surrender charge is imposed on the gross withdrawal amount, and is de-
ducted from the subaccounts and the fixed account in proportion to the amount
withdrawn from each. We do not impose a surrender charge on death benefits, or
on account balances converted to an annuity payout option. For any partici-
pant, the surrender charge will never exceed 8.5% of the cumulative contribu-
tions to the participant's account.
We impose the surrender charge on GVA I and GVA II to compensate us for the
loss we experience on our distribution costs when a participant withdraws ac-
count value before distribution costs have been recovered. We may also recover
distribution costs from other contract charges, including the mortality and
expense risk charge.
Fixed account withdrawal/transfer limits for GVA III
GVA III has no surrender charges, but under GVA III, special limits apply to
withdrawals and transfers from the fixed account. During any one calendar year
a participant may make one withdrawal from the fixed account, OR one transfer
to the VAA from the fixed account, of up to 20% of their fixed account bal-
ance.
Participants who want to liquidate their entire fixed account balance or
transfer it to the VAA, however, may make one withdrawal or transfer request
from their fixed account in each of five consecutive calendar years according
to the following percentages:
<TABLE>
<CAPTION>
Year Request Received Percentage of Fixed Account
By LNY Available Under GVA III
- --------------------------------------------------------------------------------
<S> <C>
1................................................ 20%
2................................................ 25%
3................................................ 33.33%
4................................................ 50%
5................................................ 100%
</TABLE>
Each consecutive withdrawal or transfer may not be made more frequently than
twelve months apart. This liquidation schedule is also subject to the same
conditions as other withdrawals and transfers. We reserve the right to pro-
hibit any additional contributions by a participant that notifies us their in-
tention to liquidate their fixed account balance and stop contributions to the
contract.
Fixed account waiver of surrender charges and withdrawal/transfer limits
Under certain conditions, a participant may withdraw part or all of his or her
fixed account balance without incurring a surrender charge under GVA I or GVA
II, or without being subject to the fixed account withdrawal/transfer limits
under GVA III. We must receive reasonable proof of the condition with the
withdrawal request. The chart below shows the standard conditions provided by
GVA I, GVA II, and GVA III, as well as optional conditions the contractowner
may or may not make available under the contracts:
Standard con- Optional con-
ditions ditions
- -------------------------------------------------------------------------------
. the partici- . the partici-
pant has at- pant has
tained age separated
59 1/2 from service
GVA I with their
employer and
is at least
55 years of
. the partici- age
pant has
died
. the partici-
pant has in-
curred a . the partici-
disability pant is ex-
(as defined periencing
under the financial
contract) hardship
. the partici-
pant has
separated
from service
with their
employer
. the partici- . the partici-
pant has at- pant has
tained age separated
59 1/2 from service
GVA II with their
employer
. the partici-
pant has
died . the partici-
. the partici- pant is ex-
pant has in- periencing
curred a financial
disability hardship
(as defined
under the
contract)
. the partici-
pant has
separated
from service
with their
employer and
is at least
55 years of
age
11
<PAGE>
. the partici- . the partici-
pant has at- pant has
tained age separated
59 1/2 from service
GVA III with their
employer and
is at least
55 years of
. the partici- age
pant has
died
. the partici-
pant has in-
curred a
disability
(as defined
under the
contract)
. the partici-
pant has
separated
from service
with their
employer
. the partici-
pant is ex-
periencing
financial
hardship*
* A GVA III contractowner has the option not to include the financial hardship
condition.
Under GVA I and GVA II, a contractowner may also elect an optional contract
provision that permits participants to make a withdrawal once each contract
year of up to 20% of the participant's account balance without a surrender
charge.
A contractowner choosing one or more of the optional provisions may receive a
different declared interest rate on the fixed account than will holders of
contracts without these provisions.
Deductions for premium taxes
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the contracts or the VAA will be deducted from account value
when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. The tax ranges from 0.0%
to 5.0%. Currently, there is no premium tax imposed for New York residents.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the under-
lying funds that are more fully described in the Prospectuses for the funds.
Loans are subject to loan interest charges. In addition, we may impose a $30
fee to set up a systematic withdrawal option for a participant.
Additional information
The annual administration charge and surrender charge described previously may
be reduced or eliminated under a particular contract. However, these charges
will be reduced only to the extent that we anticipate lower distribution
and/or administrative expenses, or that we perform fewer sales or administra-
tive services than those originally contemplated in establishing the levels of
those charges. Lower distribution and/or administrative expenses may be the
result of economies associated with (i) the size of a particular group; (ii)
an existing relationship with the contractowner or employer; (iii) the use of
mass enrollment procedures; (iv) the performance of administrative or sales
functions by the employer; or (v) the use by an employer of automated tech-
niques in submitting contributions or information relating to contributions on
behalf of its employees. In addition, an employer may pay the annual adminis-
tration charge on behalf of participants under a contract, or by election im-
pose this charge only on participants with account balances in the VAA.
The Contracts
Purchase of the Contracts
We designed the Contracts for employers and other entities to enable partici-
pants and employers to accumulate funds for retirement programs meeting the
requirements of the following Sections of the Internal Revenue Code of 1986,
as amended (tax code): 401(a), 403(b), 408 and other related sections, as well
as for programs offering non-qualified annuities. An employer, association or
trustee in some circumstances may apply for a contract by completing an appli-
cation and returning it to us. If we accept the application, the contractowner
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, we will issue to each participant a separate active
life certificate that describes the basic provisions of the contract to each
participant.
Contributions
Contractowners generally forward contributions to us 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 as se-
lected from those subaccounts made available by the contractowner.
Contributions made on behalf of participants may be in any amount unless there
is a minimum amount set by the contractowner or plan. A contract may require
the contractowner to contribute a minimum annual amount on behalf of all par-
ticipants. Annual contributions under qualified plans may be subject to maxi-
mum limits imposed by the tax code. Annual contributions under non-qualified
plans may be limited by the terms of the contract.
Subject to any restrictions imposed by the plan or the tax code, we will ac-
cept transfers from other contracts and qualified rollover contributions.
Contributions must be in U.S. funds, and all withdrawals and distributions un-
der the contract will be in U.S. funds. If a bank or other financial institu-
tion does not honor the check or other payment method used for a contribution,
we will treat the contribution as invalid. All allocation and subsequent
transfers resulting from the invalid contributions will be reversed and the
party re-
12
<PAGE>
sponsible for the invalid contribution must reimburse us for any losses or ex-
penses resulting from the invalid contribution.
Initial contributions
When we receive a completed enrollment form and all other information neces-
sary for processing a contribution, we will price the initial contribution for
a participant to his or her account no later than two business days after we
receive the contribution.
If we receive contributions without a properly completed enrollment form, we
will notify the contractowner and deposit the contributions to the pending al-
location account. Within two business days of receipt of a properly completed
enrollment form, we will transfer the participant's account balance in the
pending allocation account in accordance with the allocation percentages
elected on the enrollment form. We will allocate all future contributions in
accordance with these percentages until the participant notifies us of a
change. If we do not receive a properly completed enrollment form after we
send three monthly notices, then we will refund the participant's account bal-
ance in the pending allocation account within 105 days of the date of the ini-
tial contribution. The pending allocation account invests in Fidelity VIP--
Money Market Portfolio, which is not available as an investment option under
the contract. We do not impose the mortality and expense risk charges or the
annual administration charge on the pending allocation account. We begin im-
posing these charges when we receive a properly completed enrollment form. The
participant's participation date will be the date we deposited the partici-
pant's contribution into the pending allocation account.
Valuation date
Accumulation units and annuity units will be valued once daily at the close of
trading (currently normally 4:00 p.m., New York time) on each day the New York
Stock Exchange is open (valuation date). On any date other than a valuation
date, the accumulation unit value and the annuity unit value will not change.
Allocation of contributions
The contractowner forwards contributions to us, specifying the amount being
contributed on behalf of each participant and allocation information in accor-
dance with our procedures. Contributions are placed into the VAA's
subaccounts, each of which invests in shares of a fund, and/or the fixed ac-
count, according to written participant instructions and subject to the plan.
The contribution allocation percentage to the subaccounts or the fixed account
can be in any whole percent. A participant may allocate contributions to a
maximum of ten subaccounts, or to a maximum of nine subaccounts and the fixed
account.
Upon allocation to the appropriate subaccount, contributions are converted to
accumulation units. The number of accumulation units credited is determined by
dividing the amount allocated to each subaccount by the value of an accumula-
tion unit for that subaccount on the valuation date on which the contribution
is received by us if received before the end of the valuation date (normally
4:00 p.m., New York time). If the contribution is received at or after the end
of the valuation date, we will use the accumulation unit value computed on the
next valuation date. The number of accumulation units determined in this way
is not changed by any subsequent change in the value of an accumulation unit.
However, the dollar value of an accumulation unit will vary depending not only
upon how well the underlying fund's investments perform, but also upon the ex-
penses of the VAA and the underlying funds.
Subject to the terms of the plan, a participant may change the allocation of
contributions by notifying us in writing or by telephone in accordance with
our published procedures. The change is effective for all contributions re-
ceived concurrently with the allocation change form and for all future contri-
butions, unless the participant specifies a later date. Changes in the alloca-
tion of future contributions have no effect on amounts a participant may have
already contributed. Such amounts, however, may be transferred between
subaccounts and the fixed account pursuant to the requirements described in
Transfers on or before the annuity commencement date. Allocations of employer
contributions may be restricted by the applicable plan.
Valuation of accumulation units
Contributions allocated to the VAA are converted into accumulation units. This
is done by dividing each contribution by the value of an accumulation unit for
the valuation period during which the contribution is allocated to the VAA.
The accumulation unit value for each subaccount was or will be established at
the inception of the subaccount. It may increase or decrease from valuation
period to valuation period. The accumulation unit value for a subaccount for a
later valuation period is determined as follows:
(1) The total value of the fund shares held in the subaccount is calculated by
multiplying the number of fund shares owned by the subaccount at the be-
ginning of the valuation period by the net asset value per share of the
fund at end of the valuation period, and adding any dividend or other dis-
tribution of the fund if an ex-dividend date occurs during the valuation
period; minus
(2) The liabilities of the subaccount at the end of the valuation period;
these liabilities include daily charges imposed on the subaccount, and may
include a charge or credit with respect to any taxes paid or reserved for
by us that we determine result from the operations of the VAA; and
(3) The result of (2) is divided by the number of subaccount units outstanding
at the beginning of the valuation period.
13
<PAGE>
The daily charges imposed on a subaccount for any valuation period are equal
to the mortality and expense risk charge multiplied by the number of calendar
days in the valuation period.
Transfers on or before the annuity commencement date
Subject to the terms of a plan, a participant may transfer all or a portion of
the participant's account balance from one subaccount to another, and between
the VAA and the fixed account.
Under GVA III transfers from the fixed account are subject to special limits.
See Fixed account withdrawals/ transfer limits for GVA III.
A transfer from a subaccount involves the surrender of accumulation units in
that subaccount, and a transfer to a subaccount involves the purchase of accu-
mulation units in the that subaccount. Subaccount transfers will be done using
accumulation unit values determined at the end of the valuation date on which
we receive the transfer request. There is no charge for a transfer. We do not
require any minimum transfer amount, and do not limit the number of transfers
other than for transfers from the fixed account under GVA III.
A transfer may be made by writing to us or, if a Telephone Exchange Authoriza-
tion form (available from us) is on file with us, by a toll-free telephone
call. In most instances, a transfer between subaccounts can also be made
through the Internet Service Center or Voice Response Unit. In order to pre-
vent unauthorized or fraudulent telephone transfers, we may require the caller
to provide certain identifying information before we will act upon their in-
structions. We may also assign the participant a Personal Identification Num-
ber (PIN) to serve as identification. We will not be liable for following tel-
ephone instructions we reasonably believe are genuine. Telephone requests may
be recorded and written confirmation of all transfer requests will be mailed
to the participant on the next valuation date. If the participant or
contractowner determines that a transfer was made in error, the contractowner
or participant must notify us within 30 days of the confirmation date. Tele-
phone transfers will be processed on the valuation date that they are received
when they are received by us before the end of the valuation date (normally
4:00 p.m. New York time).
When thinking about a transfer of account value, the participant should con-
sider the inherent risk involved. Frequent transfers based on short-term ex-
pectations may increase the risk that a transfer will be made at an inoppor-
tune time.
Transfers after the annuity commencement date
We do not permit transfers of a participant's account balance after the annu-
ity commencement date.
Death benefit before the annuity commencement date
The payment of death benefits is governed by the applicable plan and the tax
code. The participant may designate a beneficiary during the participant's
lifetime and change the beneficiary by filing a written request with us. Each
change of beneficiary revokes any previous designation.
If the participant dies before the annuity commencement date, the death bene-
fit paid to the participant's designated beneficiary will be the greater of:
(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 we are not notified of the participant's death within six months of
such death, we pay the beneficiary the amount in (2).
We determine the value of the death benefit as of the date on which the death
claim is approved for payment. This payment will occur when we receive (1)
proof, satisfactory to us, of the death of the participant; (2) written autho-
rization for payment; and (3) all required claim forms, fully completed.
If a death benefit is payable, the beneficiary may elect to receive payment of
the death benefit in either the form of a lump sum settlement or an annuity
payout, or as a combination of these two. If a lump sum settlement is request-
ed, the proceeds will be mailed within seven days of receipt of satisfactory
claim documentation as discussed previously, subject to the laws and regula-
tions governing payment of death benefits. If no election is made within 60
days after we receive satisfactory notice of the participant's death, we will
pay a lump sum settlement to the beneficiary at that time. This payment may be
postponed as permitted by the 1940 Act.
Payment will be made in accordance with applicable laws and regulations gov-
erning payment of death benefits.
Under qualified contracts, if the beneficiary is someone other than the spouse
of the deceased participant, the tax code provides that the beneficiary may
not elect an annuity which would commence later than December 31st of the cal-
endar 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 tax
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, dis-
tributions generally are not required under the tax code to begin earlier than
December 31st of the calendar year in which the participant would have at-
tained age 70 1/2. If the surviving spouse dies before the date distributions
commence, then, for purposes of determining the date distributions to the ben-
eficiary must commence, the date of death of the surviving spouse is substi-
tuted for the date of death of the participant.
14
<PAGE>
Other rules apply to non-qualified annuities. See Federal Tax Matters.
If there is no living named beneficiary on file with us at the time of a par-
ticipant's death and unless the plan directs otherwise, we 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 we re-
ceive proof of death no later than the end of the fourth calendar year follow-
ing the year of the participant's death. In such case, the value of the death
benefit will be determined as of the end of the valuation period during which
we receive due proof of death, and the lump sum death benefit generally will
be paid within seven days of that date.
Withdrawals
Before the annuity commencement date and subject to the terms of the plan,
withdrawals may be made from the subaccounts or the fixed account of all or
part of the participant's account balance remaining after deductions for any
applicable (1) surrender charge; (2) annual administration charge (imposed on
total withdrawals), (3) premium taxes, and (4) outstanding loan.
Converting all or part of the account balance or death benefit to an annuity
payout is not considered a withdrawal.
Under GVA III, special limits apply to withdrawals from the fixed account. See
Fixed account withdrawal/ transfer limits for GVA III.
The account balance available for withdrawal is determined at the end of the
valuation period during which we receive the written withdrawal request. Un-
less a request for withdrawal specifies otherwise, withdrawals will be made
from all subaccounts within the VAA and from the fixed account in the same
proportion that the amount of withdrawal bears to the total participant ac-
count balance. Unless prohibited, withdrawal payments will be mailed within
seven days after we receive a valid written request. The payment may be post-
poned as permitted by the 1940 Act.
There are charges associated with withdrawals of account value. See Charges
and Other Deductions.
The tax consequences of a withdrawal are discussed later in this booklet. See
Federal Tax Matters.
Total withdrawals. Only participants with no outstanding loans can make a to-
tal withdrawal. A total withdrawal of a participant's account will occur when
(a) the participant or contractowner requests the liquidation of the partici-
pant's entire account balance, or (b) the amount requested plus any surrender
charge results in a remaining participant account balance of an amount less
than or equal to the annual administration charge, in which case we treat the
request as a request for liquidation of the participant's entire account
balance.
Any active life certificate must be surrendered to us when a total withdrawal
occurs. If the contractowner resumes contributions on behalf of a participant
after a total withdrawal, the participant will receive a new participation
date and active life certificate.
Partial withdrawals. A partial withdrawal of a participant's account balance
will occur when less than a total withdrawal is made from a participant's ac-
count.
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 eli-
gible for a Systematic Withdrawal Option ("SWO") under the contract. Payments
are made only from the fixed account. 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 with-
drawn on a periodic basis. A participant must have a vested pre-tax account
balance of at least $10,000 in the fixed account in order to select the SWO. A
participant may transfer amounts from the VAA to the fixed account in order to
support SWO payments. These transfers, however, are subject to the transfer
restrictions 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 ap-
plicable fees and charges, is available in the contracts and active life cer-
tificates and from us.
Required minimum distribution program (formerly known as maximum conservation
option). Under certain contracts participants who are at least age 70 1/2 may
ask us to calculate and pay to them the minimum annual distribution required
by Sections 401(a)(9), 403(b)(10), or 408 of the tax code. The participant
must complete the forms we require to elect this option. We will base our cal-
culation solely on the participant's account value with us. Participants who
select this option are responsible for determining the minimum distributions
amount applicable to their non-LNY contracts.
Withdrawal restrictions. Withdrawals under Section 403(b) contracts are sub-
ject to the limitations under Section 403(b)(11) of the tax code and regula-
tions thereof and in any applicable plan document. That section provides that
withdrawals of salary reduction contributions deposited and earnings credited
on any salary reduction contributions after December 31, 1988 can only be made
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, these
amounts will be subject to the same withdrawal restrictions as are applicable
to post-1988
15
<PAGE>
salary reduction contributions under the contracts. For more information on
these provisions see Federal Tax Matters.
Withdrawal requests for a participant under Section 401(a) plans and plans sub-
ject to Title I of ERISA must be authorized by the contractowner on behalf of a
participant. All withdrawal requests will require the contractowner's written
authorization and written documentation specifying the portion of the partici-
pant's account balance which is available for distribution to the participant.
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,
the participant must certify to us that one of the permitted distribution
events listed in the tax code has occurred (and provide supporting information,
if requested) and that we may rely on this representation in granting the with-
drawal request. See Federal Tax Matters. A participant should consult his or
her tax adviser as well as review the provisions of their plan before request-
ing a withdrawal.
A plan and applicable law may contain additional withdrawal or transfer re-
strictions.
Withdrawals may have Federal tax consequences. In addition, early withdrawals,
as defined under Section 72(q) and 72(t) of the tax code, may be subject to a
10% excise tax.
Amendment of the contract
We reserve the right to amend the contract to meet the requirements of the 1940
Act or other applicable federal or state laws or regulations. The contractowner
will be notified in writing of any changes, modifications or waivers.
Commissions
We pay commissions of up to 3.5% of contributions to dealers. In some instanc-
es, we may lower commissions on contributions by as much as 3.5% and include a
commission of up to .50% of annual contract values (or an equivalent schedule).
These commissions are not deducted from contributions or account value; they
are paid by us.
Ownership
Contractowners have all rights under the contract except those allocated to
participants. According to New York law, the assets of the VAA are held for the
exclusive benefit of all contractowners, participants, and their designated
beneficiaries; and the assets of the VAA are not chargeable with liabilities
arising from any other business that we may conduct. Qualified contracts and
active life certificates may not be assigned or transferred except as permitted
by ERISA and on written notification to us. In addition, a participant, benefi-
ciary, or annuitant may not, unless permitted by law, assign or encumber any
payment due under the contract.
Contractowner questions
The obligations to purchasers under the contracts are those of LNY. Questions
about the contract should be directed to us at 1-800-893-7168 or visit
www.lincolnlife-NY.com.
Annuity Payouts
As 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 bal-
ance or the death benefit to an annuity payout. The contract provides optional
forms of annuity payouts (annuity payout options), each of which is payable on
a variable basis, a fixed basis or a combination of both as specified. If the
contractowner does not give us instructions, we will apply the participant's
account balance in the fixed account to a fixed annuity, and account balance in
the VAA to a variable annuity.
If the participant's account balance or the beneficiary's death benefit is less
than $2,000 or if the amount of the first payout is less than $20, we have the
right to cancel the annuity and pay the participant or beneficiary the entire
amount in a lump sum.
We may maintain variable annuity payouts in the VAA, or in another separate ac-
count of LNY (variable payout division). We do not impose a charge when the an-
nuity conversion amount is applied to a variable payout division to provide an
annuity payout option. The contract benefits and charges for an annuity payout
option, whether maintained in the VAA or in a variable payout division, are as
described in this Prospectus. The selection of funds available through a vari-
able payout division may be different from the funds available through the VAA.
If we will maintain a participant's variable annuity payout in a variable pay-
out division, we will provide a Prospectus for the variable payout division be-
fore the annuity commencement date.
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 benefi-
ciary. If the beneficiary is not the participant's spouse, the present value of
payouts to be made to the participant must be more than 50% of the present
value of the total payouts to be made to the participant and the beneficiary.
If an annuitant dies before the end of a guaranteed annuity period, the benefi-
ciary, if any, or the annuitant's estate will receive any remaining payouts due
under the annuity option in effect.
Annuity payout options
Note Carefully: Under the Single Life Annuity and Joint Life Annuity options it
would be possible for only one annuity payout to be made if the annuitant(s)
were to die before the due date of the second annuity payout; only two annuity
payouts if the annuitant(s) were to die before the due date of the third annu-
ity payout; and so forth.
16
<PAGE>
Single Life Annuity. Payouts are made monthly during the lifetime of the annu-
itant, and the annuity terminates with the last payout preceding death.
Life Annuity With Guaranteed Period of 10, 15 or 20 Years. Payouts are made
monthly during the lifetime of the annuitant with a monthly payout guaranteed
to the beneficiary for the remainder of the selected number of years, if the
annuitant dies before the end of the period selected. Payouts under this annu-
ity option are smaller than a single life annuity without a guaranteed payout
period.
Joint Life Annuity. Payouts are made monthly during the joint lifetime of the
annuitant and a designated second person.
Non-Life Annuities. Annuity payouts are guaranteed monthly for the selected
number of years. While there is no right to make any total or partial with-
drawals during the annuity period, an annuitant or beneficiary who has se-
lected this annuity option as a variable annuity may request at any time dur-
ing the payout period that the present value of any remaining installments be
paid in one lump sum. This lump sum payout will be treated as a total with-
drawal during the accumulation period and may be subject to a surrender
charge. See Charges and Other Deductions and Federal Tax Matters.
Additional information
Annuity payout options are only available if consistent with the contract, the
plan, the tax code, and ERISA.
The annuity commencement date is the date on which we make the first annuity
payout to an annuitant. For plans subject to Section 401(a)(9)(B) of the tax
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
contractowner may select an annuity commencement date for the annuitant, which
is shown in the retired life certificate. Selection of an annuity commencement
date may be affected by the distribution restrictions under the tax code and
the minimum distribution requirements under Section 401(a)(9) of the tax code.
See Federal Tax Matters.
You must send us written notice of the selected annuity commencement date, the
annuity payout option (including whether fixed or variable), and the annuity
conversion amount to be converted on behalf of a participant or beneficiary,
at least 30 days before the selected annuity commencement date. If proceeds
become available to a beneficiary in a lump sum, the beneficiary may choose
any annuity payout option.
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 payout
calculation date. For a fixed annuity, the annuity commencement date is usu-
ally one month after the annuity payout calculation date; subsequent annuity
payouts are at one-month intervals from the annuity commencement date. For a
variable annuity, the annuity commencement date is ten business days after the
initial annuity payout calculation date; subsequent monthly payouts have annu-
ity payout calculation dates which are ten business days prior.
Annuity payout calculation
Fixed annuity payouts are determined by dividing the participant's annuity
conversion amount in the fixed account as of the initial annuity payout calcu-
lation date by the applicable annuity conversion factor (in the contract) for
the annuity payout option selected.
Variable annuity payouts will be determined using:
1. The participant's annuity conversion amount in the VAA as of the initial
annuity payout calculation date;
2. The annuity conversion factor in the contract;
3. The annuity payout option selected; and
4. The investment performance of the funds selected.
To determine the amount of annuity payouts, we make this calculation:
1. Determine the dollar amount of the first payout; then
2. Credit the retired life certificate with a specific number of annuity units
equal to the first payout divided by the annuity unit value; and
3. Calculate the value of the annuity units each period thereafter.
We assume an investment return of a specified percentage per year, as applied
to the applicable mortality table. The amount of each annuity payout after the
initial payout will depend upon how the underlying fund(s) perform, relative
to the assumed rate. If the actual net investment rate (annualized) exceeds
the assumed rate, the payment will increase at a rate proportional to the
amount of such excess. Conversely, if the actual rate is less than the assumed
rate, annuity payouts will decrease. There is a more complete explanation of
this calculation in the SAI.
Federal Tax Matters
Introduction
The Federal income tax treatment of the contract is complex and sometimes un-
certain. The Federal income tax rules may vary with your particular circum-
stances. This discussion does not include all the Federal income tax rules
that may affect the contractowner, participant and contract. This discussion
also does not address other Federal tax consequences, or state or local tax
consequences, associated with the contract. As a result, contractowner and
participant should always consult a tax adviser about the application of tax
rules to their individual situation.
17
<PAGE>
Taxation of nonqualified annuities
This part of the discussion describes some of the Federal income tax rules ap-
plicable to nonqualified annuities. A nonqualified annuity is a contract not
issued in connection with a qualified retirement plan, such as an IRA or a
section 403(b) plan, receiving special tax treatment under the tax code.
Tax deferral on earnings
The Federal income tax law generally does not tax any increase in the contract
value until the contractowner or participant receives a contract distribution.
However, for this general rule to apply, certain requirement must be
satisfied:
. An individual must own the contract (or the tax law must treat the contract
as owned by an individual).
. The investments of the VAA must be "adequately diversified" in accordance
with IRS regulations.
. The right to choose particular investments for a contract must be limited.
. The annuity commencement date must not occur near the end of the annuitant's
life expectancy.
Contracts not owned by the individual
If a contract is owned by an entity (rather than an individual) the tax code
generally does not treat it as an annuity contract for Federal income tax pur-
poses. This means that the entity owning the contract pays tax currently on
the excess of the contract value over the contributions for the contract. Ex-
amples of contracts where the owner pays current tax on the contract's earn-
ings are contracts issued to a corporation or a trust. Exceptions to this rule
exist. For example, the tax code treats a contract as owned by an individual
if the named owner is a trust or other entity that holds the contract as an
agent for an individual. However, this exception does not apply in the case of
any employer that owns a contract to provide deferred compensation for its
employees.
Investments in the VAA must be diversified
For a contract to be treated as an annuity for Federal income tax purposes,
the investments of the VAA must be "adequately diversified." IRS regulations
define standards for determining whether the investments of the VAA are ade-
quately diversified. If the VAA fails to comply with these diversification
standards, the participant could be required to pay tax currently on the ex-
cess of the contract value over the contract contributions. Although we do not
control the investments of the underlying investment options, we expect that
the underlying investment options will comply with the IRS regulations so that
the VAA will be considered "adequately diversified."
Restrictions
Federal income tax law limits the contractowner's and the participant's right
to choose particular investments for the contract. Because the IRS has not is-
sued guidance specifying those limits, the limits are uncertain and your right
to allocate contract values among the subaccounts may exceed those limits. If
so, the contractowner and/or participant would be treated as the owner of the
assets of the VAA and thus subject to current taxation on the income and gains
from those assets. We do not know what limits may be set by the IRS in any
guidance that it may issue and whether any such limits will apply to existing
contracts. We reserve the right to modify the contract without the
contractowner's or participant's consent to try to prevent the tax law from
considering them as the owner of the assets of the VAA.
Age at which annuity payouts begin
Federal income tax rules do not expressly identify a particular age by which
annuity payouts must begin. However, those rules do require that an annuity
contract provide for amortization, through annuity payouts, of the contract's
contributions and earnings. If annuity payouts under the contract begin or are
scheduled to begin on a date past the annuitant's 85th birthday, it is possi-
ble that the tax law will not treat the contract as an annuity for Federal in-
come tax purposes. In that event, the contractowner and/or participant would
be currently taxable on the excess of the contract value over the contribu-
tions of the contract.
Tax treatment of payments
We make no guarantees regarding the tax treatment of any contract or of any
transaction involving a contract. However, the rest of this discussion assumes
that the contract will be treated as an annuity for Federal income tax pur-
poses and that the tax law will not tax any increase in the contract value un-
til there is a distribution from your contract.
Taxation of withdrawals and surrenders
The contractowner and/or participant will pay tax on withdrawals to the extent
your contract value exceeds your contributions in the contract. This income
(and all other income from your contract) is considered ordinary income. A
higher rate of tax is paid on ordinary income than on capital gains. The
contractowner and/or participant will pay tax on a surrender to the extent the
amount you receive exceeds contributions. In certain circumstances contribu-
tions are reduced by amounts received from the contract that were not included
in income.
Taxation of annuity payouts
The tax code imposes tax on a portion of each annuity payout (at ordinary in-
come tax rates) and treats a portion as a nontaxable return of contributions
in the con-
18
<PAGE>
tract. We will notify you annually of the taxable amount of your annuity pay-
out. Once you have recovered the total amount of the purchase payment in the
contract, you will pay tax on the full amount of your annuity payouts. If annu-
ity payouts end because of the annuitant's death and before the total amount of
the contributions in the contract has been received, the amount not received
generally will be deductible.
Taxation of death benefits
We may distribute amounts from the contract because of the death of a partici-
pant. The tax treatment of these amounts depends on whether the participant or
the annuitant dies before or after the annuity commencement date.
. Death prior to the annuity commencement date--
. If the beneficiary receives death benefits under an annuity payout option,
they are taxed in the same manner as annuity payouts.
. If the beneficiary does not receive death benefits under an annuity payout
option, they are taxed in the same manner as a withdrawal.
. Death after the annuity commencement date--
. If death benefits are received in accordance with the existing annuity
payout option, they are excludible from income if they do not exceed the
contributions not yet distributed from the contract. All annuity payouts
in excess of the contributions not previously received are includible in
income.
. If death benefits are received in a lump sum, the tax law imposes tax on
the amount of death benefits which exceeds the amount of purchase not pre-
viously received.
Penalty taxes payable on withdrawals, surrenders, or annuity payouts
The tax code may impose a 10% penalty tax on any distribution from the contract
which the contractowner and/or participant must include in gross income. The
10% penalty tax does not apply if one of several exceptions exists. These ex-
ceptions include withdrawals, surrenders, or annuity payouts that:
. participant receives on or after they reach age 59 1/2,
. participant receives because they became disabled (as defined in the tax
law),
. a beneficiary receives on or after participant's death, or
. participant receives as a series of substantially equal periodic payments for
their life (or life expectancy).
Special rules if you own more than one annuity contract
In certain circumstances, we must combine some or all of the nonqualified annu-
ity contracts a participant owns in order to determine the amount of an annuity
payout, a surrender or a withdrawal that a participant must include in income.
For example, if a contractowner and/or participant purchase two or more de-
ferred annuity contracts from the same life insurance company (or its affili-
ates) during any calendar year, the tax code treats all such contracts as one
contract. Treating two or more contracts as one contract could affect the
amount of a surrender, a withdrawal or an annuity payout that the participant
must include in income and the amount that might be subject to the penalty tax
described above.
Loans and assignments
Except for certain qualified contracts, the tax code treats any amount received
as a loan under a contract, and any assignment or pledge (or agreement to as-
sign or pledge) any portion of a participant's contract value, as a withdrawal
of such amount or portion.
Gifting a contract
If the contractowner and/or participant transfer ownership of the contract to a
person other than the participant's spouse (or to the participant's former
spouse incident to divorce), and receive a payment less than the contract's
value, the participant will pay tax on their contract value to the extent that
it exceeds the contractowner's and/or participant's contributions not previ-
ously received. The new owner's contributions in the contract would then be in-
creased to reflect the amount included in the contractowner's and/or partici-
pant's income.
Loss of interest deduction
After June 8, 1997, if a contract is issued to a taxpayer that is not an indi-
vidual, or if a contract is held for the benefit of an entity, the entity will
lose a portion of its deduction for otherwise deductible interest expenses.
This disallowance does not apply if you pay tax on the annual increase in the
contract value. Entities that are considering purchasing a contract, or enti-
ties that will benefit from someone else's ownership of a contract, should con-
sult a tax advisor.
Qualified retirement plans
We also designed the contracts for use in connection with certain types of re-
tirement plans that receive favorable treatment under the tax code. Contracts
issued to or in connection with a qualified retirement plan are called "quali-
fied contracts". We issue contracts for use with different types of qualified
plans. The Federal income tax rules applicable to those plans are complex and
varied. As a result, this Prospectus does not attempt to provide more than gen-
eral information about use of the contract with the various types of qualified
plans. Persons planning to use the contract in connection with a qualified plan
should obtain advice from a competent tax advisor.
19
<PAGE>
Types of qualified contracts and terms of contracts
Currently, we issue contracts in connection with the following types of quali-
fied plans:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified employee pension and profit sharing plans ("401(a)") and qualified
annuity plans ("403(a) plans")
We may issue a contract for use with other types of qualified plans in the fu-
ture.
We will amend contracts to be used with a qualified plan as generally neces-
sary to conform to tax law requirements for the type of plan. However, the
rights of a person to any qualified plan benefits may be subject to the plan's
terms and conditions, regardless of the contract's terms and conditions. In
addition, we are not bound by the terms and conditions of qualified plans to
the extent such terms and conditions contradict the contract, unless we con-
sent.
Tax treatment of qualified contracts
The Federal income tax rules applicable to qualified plans and qualified con-
tracts vary with the type of plan and contract. For example,
. Federal tax rules limit the amount of contributions that can be made and the
tax deduction or exclusion that may be allowed for the contributions. These
limits vary depending on the type of qualified plan and the plan partici-
pant's specific circumstances, e.g., the participant's compensation.
. Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the
participant must begin receiving payments from the contract in certain mini-
mum amounts by a certain age, typically age 70 1/2. However, these "minimum
distribution rules" do not apply to a Roth IRA.
. Loans are allowed under certain types of qualified plans, but Federal income
tax rules permit loans under other types of qualified plans. For example,
Federal income tax rules permit loans under some section 403(b) plans, but
prohibit loans under Traditional and Roth IRAs. If allowed, loans are sub-
ject to a variety of limitations, including restrictions as to the loan
amount, the loan duration, and the manner of repayment. Your contract or
plan may not permit loans.
Tax treatment of payments
Federal income tax rules generally include distributions from a qualified con-
tract in the recipient's income as ordinary income. These taxable distribu-
tions will include contributions that were deductible or excludible from in-
come. Thus, under many qualified contracts, the total amount received is in-
cluded in income since a deduction or exclusion from income was taken for con-
tributions. There are exceptions. For example, participant does not include
amounts received from a Roth IRA in income if certain conditions are satis-
fied.
Failure to comply with the minimum distribution rules applicable to certain
qualified plans, such as Traditional IRAs, will result in the imposition of an
excise tax. This excise tax generally equals 50% of the amount by which a min-
imum required distribution exceeds the actual distribution from the qualified
plan.
Federal penalty taxes payable on distributions
The tax code may impose a 10% penalty tax on the amount received from the
qualified contract that must be included in income. The tax code does not im-
pose the penalty tax if one of several exceptions applies. The exceptions vary
depending on the type of qualified contract purchased. For example, in the
case of an IRA, exceptions provide that the penalty tax does not apply to a
withdrawal, surrender or annuity payout:
. received on or after the participant reaches age 59 1/2,
. received on or after the participant's death or because of the participant's
disability (as defined in the tax law),
. received as a series of substantially equal periodic payments for the par-
ticipant's life or (life expectancy), or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally ap-
ply to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
Transfers and direct rollovers
In many circumstances, money may be moved between qualified contracts and
qualified plans by means of a rollover or a transfer. Special rules apply to
such rollovers and transfers. If the applicable rules are not followed, par-
ticipant may suffer adverse Federal income tax consequences, including paying
taxes which might not otherwise have had to be paid. A qualified advisor
should always be consulted before contractowner or participant move or attempt
to move funds between any qualified plan or contract and another qualified
plan or contract.
The direct rollover rules apply to certain payments (called "eligible rollover
distributions") from section 401(a) plans, section 403(a) or (b) plans, H.R.
10 plans, and contracts used in connection with these types of plans. (The di-
rect rollover rules do not apply to distributions from IRAs). The direct
rollover rules require that we withhold Federal income tax equal to 20% of the
eligible rollover distribution from the distribution
20
<PAGE>
amount unless participant elects to have the amount directly transferred to
certain qualified plans or contracts.
Before we send a rollover distribution, we will provide the participant with a
notice explaining these requirements and how the 20% withholding can be
avoided by electing a direct rollover.
Federal income tax withholding
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a contract unless the participant notifies us at or
before the time of distribution that tax is not to be withheld. In certain
circumstances, Federal income tax rules may require us to withhold tax. At the
time a withdrawal, surrender or annuity payout is requested, we will give the
participant an explanation of the withholding requirements.
Tax status of LNY
Under existing Federal income tax laws, LNY does not pay tax on investment in-
come and realized gains of the VAA. LNY does not expect that it will incur any
Federal income tax liability on the income and gains earned by the VAA. We,
therefore, do not impose a charge for Federal income taxes. If Federal income
tax law changes and we must pay tax on some or all of the income and gains
earned by the VAA, we may impose a charge against the VAA to pay the taxes.
Changes in the law
The above discussion is based on the tax code, IRS regulations, and interpre-
tations existing on the date of this Prospectus. However, Congress, the IRS
and the courts may modify these authorities, sometimes retroactively.
Voting Rights
As required by law, we will vote the fund shares held in the VAA at meetings
of shareholders of the funds. The voting will done according to the instruc-
tions of participants that have interests in any subaccounts which invest in
the funds. If the 1940 Act or any regulation under it should be amended or if
present interpretations should change, and if as a result we determine that we
are permitted to vote the fund shares in our own right, we may elect to do so.
The number of votes which the participant has the right to cast will be deter-
mined by applying the participant's percentage interest in a subaccount to the
total number of votes attributable to the subaccount. In determining the num-
ber of votes, fractional shares will be recognized.
Shares held in a subaccount for which no timely instructions are received will
be voted by us in proportion to the voting instructions which are received for
all contracts participating in that subaccount. Voting instructions to abstain
on any item to be voted on will be applied on a pro-rata basis to reduce the
number of votes eligible to be cast.
Whenever a shareholders meeting is called, we will furnish participants with a
voting interest in a subaccount with proxy voting materials, reports, and vot-
ing instruction forms for all participants who have voting rights under the
contract. Since the funds engage in shared funding, other persons or entities
besides LNY may vote fund shares. See Description of the Funds--Sale of shares
by the funds.
Distribution of the Contracts
Lincoln Financial Advisors Corporation (LFA), 1300 South Clinton Street, Fort
Wayne, Indiana 46802, is the distributor and principal underwriter of the con-
tracts. The contracts will be sold by properly licensed registered representa-
tives of independent broker-dealers which in turn have selling agreements with
LFA and have been licensed by state insurance departments to represent us. LFA
is registered with the SEC under the Securities Exchange Act of 1934 as a bro-
ker-dealer and is a member of the National Association of Securities Dealers
(NASD). LNY will offer contracts in New York.
Return Privilege
Participants under Sections 403(b), 408 and certain non-qualified plans will
receive an active life certificate. Within the free-look period (ten days) af-
ter the participant receives the active life certificate, the participant may
cancel it for any reason by giving us written notice. The postmark date of the
notice is the date of notice for these purposes. An active life certificate
canceled under this provision will be void. With respect to the fixed side of
the contract, we will return the participant's contributions less withdrawals
made on behalf of the participant. With respect to the VAA, we will return the
greater of the participant's contributions less withdrawals made on behalf of
the participant, or the participant's account balance in the VAA on the date
we receive the written notice. No surrender charge applies.
State Regulation
As a life insurance company organized and operated under New York law, we are
subject to provisions governing life insurers and to regulation by the New
York Commissioner of Insurance.
Our books and accounts are subject to review and examination by the New York
Insurance Department at all times. A full examination of our operations is
conducted by that department at least every five years.
21
<PAGE>
Records and Reports
As presently required by the 1940 Act and applicable regulations, we are re-
sponsible for maintaining all records and accounts relating to the VAA. We
have entered into an agreement with Lincoln Life, 1300 South Clinton Street,
Fort Wayne, IN 46802, to provide accounting services to the VAA. The account-
ing services for Lincoln Life are in turn provided by Delaware Management Com-
pany, 2005 Market Street, Philadelphia, PA 19203, through Lincoln Life's serv-
ice agreement with Delaware. We will mail to the contractowner, at its last
known address of record at our offices, at least semiannually after the first
contract year, reports containing information required by that Act or any
other applicable law or regulation.
Other Information
Contract deactivation. Under certain contracts, we may deactivate a contract
by prohibiting new contributions and/or new participants after the date of de-
activation. We will give the contractowner and participants at least ninety
days notice of the deactivation date.
Delay in payments. We may delay payments from the fixed account for up to six
months. During this period, we will continue to credit the current declared
interest rate to a participant's account in the fixed account. Contract pro-
ceeds from the VAA will be paid within seven days, except (i) when the NYSE is
closed (except weekends and holidays); (ii) times when market trading is re-
stricted or the SEC declares an emergency, and we cannot value units or the
funds cannot redeem shares; or (iii) when the SEC so orders to protect
contractowners.
IMSA. We are a member of the Insurance Marketplace Standards Association
("IMSA") and may include the IMSA logo and information about IMSA membership
in our advertisements. Companies that belong to IMSA subscribe to a set of
ethical standards covering the various aspects of sales and services for indi-
vidually sold life insurance and annuities.
Legal proceedings. LNY may be involved in various pending or threatened legal
proceedings arising from the conduct of its business. Most of these proceed-
ings are routine and in the ordinary course of business.
Group Variable Annuity Contracts I, II, III
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
DEFINITIONS 2
DETERMINATION OF VARIABLE ANNUITY PAYMENTS 2
PERFORMANCE CALCULATIONS 3
DISTRIBUTION OF CONTRACTS 6
INDEPENDENT AUDITORS 6
ADVERTISING AND SALES LITERATURE 6
FINANCIAL STATEMENTS 9
</TABLE>
22
<PAGE>
................................................................................
Please send me a free copy of the current Statement of Additional Information
for Lincoln Life & Annuity Co. of New York Variable Annuity Account L:
(Please Print)
Name: ________________________________ Social Security No.: ___________________
Address: _______________________________________________________________________
City _________________________________ State ____________
Zip ________________
Mail to Lincoln Life & Annuity Co. of New York, P.O. Box 1337, Syracuse NY
13201-1337
23
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
GROUP VARIABLE ANNUITY CONTRACTS I, II & III
FUNDED THROUGH THE SUB-ACCOUNTS OF
LINCOLN LIFE & ANNUITY
VARIABLE ANNUITY ACCOUNT L
OF
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Definitions................................................................ 2
Determination of Variable Annuity Payments................................. 2
Performance Calculations................................................... 3
Distribution of Contracts.................................................. 6
Independent Auditors....................................................... 6
Advertising and Sales Literature........................................... 6
Financial Statements....................................................... 9
</TABLE>
This Statement of Additional Information (SAI) is not a prospectus. It should
be read in conjunction with the prospectus for the Group Variable Annuity Con-
tracts (the "Contracts"), dated May 1, 2000.
A copy of the prospectus to which this SAI relates is available at no charge by
writing to Lincoln Life & Annuity Company of New York, TDA Client Services,
P.O. Box 1337, Syracuse, New York 13201-1337, calling LNY at 1-800-893-7168, or
visiting www.lincolnlife-NY.com.
NY90022
<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 Guar-
anteed 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 VARIABLE ANNUITY PAYMENTS
As stated in the prospectus, the amount of each Variable Annuity payment will
vary depending on investment experience. 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 pay-
ments are based on the 1983 Individual Annuity Mortality Table, and an inter-
est 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 subsequent Annuity Unit Value for a Sub-Account for an interest rate op-
tion 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>
<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>
2
<PAGE>
Illustration of Annuity Payments
1.Annuity Conversion Amount as of Participant's initial Annuity Payment
CalculationDate................................................ $100,000.00
2.Assumed Annuity Conversion Factor per $1 of Monthly Income for an individual
age 65selecting a Single 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
CalculationDate.................................................... $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
CalculationDate.................................................... $11.9000
7.Participant's second Annuity Payment = 5 times 6...................... $744.90
PERFORMANCE CALCULATIONS
CALCULATION OF INVESTMENT RESULTS
Standard investment results:
Standard performance is based on a formula to calculate performance that is
prescribed by the SEC. Under rules issued by the SEC, standard performance must
be included in any marketing material that discusses the performance of the VAA
and the subaccounts. This information represents past performance and does not
indicate or represent future performance.
Average annual return for each period is determined by finding the average an-
nual compounded rate of return over each period that would equate the initial
amount invested to the ending redeemable value for that period, according to
the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial purchase payment of $1,000
T = average annual total return for the period in question
N = number of years
ERV = ending redeemable value (as of the end of the period in question)
of a hypothetical $1,000 purchase payment made at the beginning of the
1-year, 5-year, or 10-year period in question (or fractional period
thereof)
The formula assumes that: (1) all recurring fees have been charged to
the contractowner accounts; (2) all applicable non-recurring charges
(including any surrender charges) are deducted at the end of the period
in question; and (3) there will be a complete redemption upon the anni-
versary of the 1-year, 5-year, or 10-year period in question.
In accordance with SEC guidelines, we will report standard performance back to
the first date that the Fund became available in the VAA. Because standard per-
formance reporting periods of less than one year could be misleading, we may
report "N/A's" for standard performance until one year after the option became
available in the Separate Account.
3
<PAGE>
Standard performance data for the period ending December 31, 1999:
<TABLE>
<CAPTION>
SUB- 10 YEARS/
ACCOUNT SINCE
INCEPTION INCEPTION
SUBACCOUNTS (FUND NAMES) DATE 1 YEAR 5 YEARS DATE
- ------------------------ --------- ------ ------- ---------
<S> <C> <C> <C> <C>
Asset Manager Account 01/31/97 3.38% N/A 5.72%
(Fidelity VIP II-Asset Manager)
Balanced Account 01/31/97 2.42 N/A 5.61
(American Century VP Balanced)
Equity-Income Account 01/31/97 -1.05 N/A 3.07
(Fidelity VIP Equity-Income Portfolio)
Global Growth Account 10/01/98 53.04 N/A 68.28
(Janus Aspen Series Worldwide Growth
Portfolio)
Growth I Account 01/31/97 27.90 N/A 21.50
(Fidelity VIP Growth Portfolio)
Index Account 01/31/97 12.23 N/A 12.86
(Dreyfus Stock Index Fund)
International Stock Account 01/31/97 24.07 N/A 12.82
(T Rowe Price International Series)
Mid Cap Growth I Account 10/01/98 32.54 N/A 49.36
(Lincoln National Aggressive Growth Fund)
Mid Cap Value Account 10/01/98 -0.08 N/A 14.56
(Neuberger Berman AMT Partners Portfolio)
Small Cap Account 01/31/97 14.60 N/A 3.13
(Dreyfus VIF Small Cap Portfolio)
Small Cap Growth Account 10/01/98 26.41 N/A 50.80
(Baron Capital Asset Fund)
Social Awareness Account 10/01/98 7.42 N/A 28.95
(Lincoln National Social Awareness Fund)
</TABLE>
The tables provide performance information for GVA II contracts not subject to
ERISA for each Sub-Account for specified periods ending December 31, 1999.
This information does not indicate or represent future performance.
Performance information for GVA I and GVA III and GVA II contracts subject to
ERISA is not shown.
Non-standard investment results:
The VAA may report its results over various periods--daily, monthly, three-
month, six-month, year-to-date, yearly (fiscal year), three, five, ten years
or more and lifetime--and compare its results to indices and other variable
annuities in sales materials including advertisements, brochures and reports.
Performance information for the periods prior to the date that a Fund became
available in the VAA will be calculated based on (1) the performance of the
Fund adjusted for contract charges (ie: mortality and expense risk fees, any
applicable administrative charges, and the management and other expenses of
the fund) and (2) the assumption that the subaccounts were in existence for
the same periods as indicated for the Fund. It may or may not reflect charges
for any riders that were in effect during the time periods shown. This perfor-
mance is referred to as non-standardized performance data. Such results may be
computed on a cumulative and/or annualized basis. We may also report perfor-
mance assuming that you deposited $10,000 into a subaccount at inception of
the underlying fund or 10 years ago (whichever is less). This non-standard
performance may be shown as a graph illustrating how that deposit would have
increased or decreased in value over time based on the performance of the un-
derlying fund adjusted for Contract charges. This information represents past
performance and does
4
<PAGE>
not indicate or represent future performance. The investment return and value
of a contract will fluctuate so that contractowner's investment may be worth
more or less than the original investment. Cumulative quotations are arrived
at by calculating the change in accumulation unit value between the first and
last day of the base period being measured, and expressing the difference as a
percentage of the unit value at the beginning of the base period. Annualized
quotations are arrived at by applying a formula which reflects the level rate
of return, which if earned over the entire base period, would produce the cu-
mulative return.
Non-standard performance data for the period ending December 31, 1999 (Ad-
justed for Contract Expense Charges):
<TABLE>
<CAPTION>
FUND
INCEPTION SINCE
SUBACCOUNTS (FUND NAMES) DATE YTD 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
- ------------------------ --------- ----- ------ ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset Manager Account 9/6/89 9.99% 9.99% 14.30% 14.33% 11.79% 11.44%
(Fidelity VIP II-Asset
Manager)
Balanced Account 5/1/91 8.96 8.96 12.64 13.64 N/A 10.17
(American Century VP
Balanced)
Equity-Income Account 10/9/86 5.27 5.27 13.77 17.28 13.16 12.45
(Fidelity VIP Equity-
Income Portfolio)
Global Growth Account 9/13/93 62.82 62.82 35.87 32.11 N/A 28.22
(Janus Aspen Series
Worldwide Growth
Portfolio)
Growth I Account 10/9/86 36.07 36.07 31.86 28.29 18.55 17.37
(Fidelity VIP Growth
Portfolio)
Index Account 9/29/89 19.41 19.41 25.80 26.64 16.33 16.04
(Dreyfus Stock Index
Fund)
International Stock
Account 3/31/94 32.00 32.00 15.53 13.93 N/A 12.17
(T Rowe Price
International Series)
Mid Cap Growth I Account 2/3/94 41.01 41.01 16.78 19.63 N/A 13.67
(Lincoln National
Aggressive Growth
Fund)
Mid Cap Value Account 3/22/94 6.30 6.30 12.46 19.67 N/A 16.15
(Neuberger Berman AMT
Partners Portfolio)
Small Cap Account 8/31/90 21.93 21.93 10.37 14.63 N/A 34.08
(Dreyfus VIF Small Cap
Portfolio)
Small Cap Growth Account 10/1/98 34.48 34.48 N/A N/A N/A 58.47
(Baron Capital Asset
Fund)
Social Awareness Account 5/2/88 14.29 14.29 22.58 27.20 17.15 17.53
(Lincoln National
Social Awareness Fund)
</TABLE>
The tables provide performance information for GVA II contracts not subject to
ERISA for each Sub-Account for specified periods ending December 31, 1999.
This information does not indicate or represent future performance.
Performance information for GVA I and GVA III and GVA II contracts subject to
ERISA is not shown.
5
<PAGE>
DISTRIBUTION OF CONTRACTS
Lincoln Financial Advisors Corporation ("LFA"), an indirect subsidiary of Lin-
coln National Corporation, is registered with the Securities and Exchange Com-
mission as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. LFA is the Vari-
able Investment Division's principal underwriter and also enters into selling
agreements with other unaffiliated broker-dealers authorizing them to offer the
Contracts.
INDEPENDENT AUDITORS
The financial statements of the Variable Annuity Account and the statutory-ba-
sis financial statements of LNY appearing in this SAI and Registration State-
ment have been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports also appearing elsewhere in this document and in the Registra-
tion Statement. The financial statements audited by Ernst & Young LLP have been
included in this document in reliance on their reports given on their authority
as experts in accounting and auditing.
ADVERTISING AND SALES LITERATURE
As set forth in the Prospectus, LNY may refer to the following organizations
(and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM evaluates the various factors affecting the overall
performance of an insurance company in order to provide an opinion as to an in-
surance company's relative financial strength and ability to meet its contrac-
tual obligations. The procedure includes both a quantitative and qualitative
review of each company.
DUFF & PHELPS insurance company claims paying ability (CPA) service provides
purchasers of insurance company policies and contracts with analytical and sta-
tistical information on the solvency and liquidity of major U.S. licensed in-
surance companies, both mutual and stock.
EAFE Index is prepared by Morgan Stanley Capital International (MSCI). It mea-
sures performance of securities in Europe, Australia and the Far East. The in-
dex reflects the movements of world stock markets by representing the evolution
of an unmanaged portfolio. The EAFE Index offers international diversification
with over 1,000 companies across 20 different countries.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher
of statistical data covering the investment company industry in the United
States and overseas. Lipper is recognized as the leading source of data on
open-end and closed-end funds. Lipper currently tracks the performance of over
5,000 investment companies and publishes numerous specialized reports, includ-
ing reports on performance and portfolio analysis, fee and expense analysis.
MOODY'S insurance claims-paying rating is a system of rating insurance
company's financial strength, market leadership and ability to meet financial
obligations. The purpose of Moody's ratings is to provide investors with a sim-
ple system of gradation by which the relative quality of insurance companies
may be noted.
MORNINGSTAR is an independent financial publisher offering comprehensive sta-
tistical and analytical coverage of open-end and closed-end funds and variable
annuity contracts.
STANDARD & POOR'S CORP. insurance claims-paying ability rating is an assessment
of an operating insurance company's financial capacity to meet obligations un-
der an insurance policy in accordance with the terms. The likelihood of a
timely flow of funds from the insurer to the trustee for the bondholders is a
key element in the rating determination for such debt issues.
6
<PAGE>
VARDS (Variable Annuity Research Data Service) provides a comprehensive guide
to variable annuity contract features and historical fund performance. The
service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds inclusive in variable con-
tracts.
STANDARD & POOR'S 500 INDEX (S&P 500)--broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks; commonly known as the S&P 500. The selection of stocks, their
relative weightings to reflect differences in the number of outstanding shares
and publication of the index itself are services of Standard & Poor's Corp., a
financial advisory, securities rating and publishing firm.
NASDAQ-OTC Price Index--This index is based on the National Association of Se-
curities Dealers Automated Quotations (NASDAQ) and represents all domestic
over-the-counter stocks except those traded on exchanges and those having only
one market maker, a total of some 3,500 stocks. It is market value-weighted
and was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA)--Price-weighted average of 30 actively
traded blue chip stocks, primarily industrials but including American Express
Co. and American Telephone and Telegraph Co. Prepared and published by Dow
Jones & Co., it is the oldest and most widely quoted of all the market indica-
tors. The average is quoted in points, not dollars.
RUSSELL 1000 INDEX--Measures the performance of the 1,000 largest companies in
the Russell 3000 Index, which represents approximately 90% of the total market
capitalization of the Russell 3000 that measures 3,000 of the largest US com-
panies.
RUSSELL 2000 INDEX--Measures the performance of the 2,000 smallest companies
in the Russell 3000 Index, which represents approximately 10% of the total
market capitalization of the Russell 3000 that measures 3,000 of the largest
US companies.
LEHMAN BROTHERS AGGREGATE BOND INDEX--Composed of securities from Lehman
Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index,
and the Asset-Backed Securities Index. Indexes are rebalanced monthly by mar-
ket capitalization.
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX--Composed of all bonds that
are investment grade (rated Baa or higher by Moody's or BBB or higher by S&P,
if unrated by Moody's). Issues must have at least one year to maturity.
LEHMAN BROTHERS GOVERNMENT INTERMEDIATE BOND INDEX--Composed of all bonds cov-
ered by the Lehman Brothers Government Bond Index (all publicly issued, non-
convertible, domestic debt of the US government or any agency thereof, quasi-
federal corporations, or corporate debt guaranteed by the US government) with
maturities between one and 9.99 years.
MERRILL LYNCH HIGH YIELD MASTER INDEX--This is an index of high yield debt se-
curities. High yield securities are those below the top four quality rating
categories and are considered more risky than investment grade. Issues must be
rated by Standard & Poor's or by Moody's Investors Service as less than in-
vestment grade (i.e., BBB or Baa) but not in default (i.e. DDD1 or less). Is-
sues must be in the form of publicly placed nonconvertible, coupon-bearing US
domestic debt and must carry a term to maturity of at least one year.
MORGAN STANLEY EMERGING MARKETS FREE INDEX--A market capitalization weighted
index composed of companies representative of the market structure of 22
Emerging Market countries in Europe, Latin America, and the Pacific Basin.
This index excludes closed markets and those shares in otherwise free markets,
which are not purchasable by foreigners.
MORGAN STANLEY WORLD CAPITAL INTERNATIONAL WORLD INDEX--A market capitaliza-
tion weighted index composed of companies representative of the market struc-
ture of 22 Developed Market countries in North America, Europe and the
Asia/Pacific Region.
7
<PAGE>
MORGAN STANLEY PACIFIC BASIN (EX-JAPAN) INDEX--An arithmetic, market value-
weighted average of the performance of securities listed on the stock ex-
changes of the following Pacific Basin Countries: Australia, Hong Kong, Malay-
sia, New Zealand and Singapore.
NAREIT EQUITY REIT INDEX--All of the data is based on the last closing price
of the month for all tax-qualified REITs listed on the New York Stock Ex-
change, American Stock Exchange, and the NASDAQ National Market System. The
data is market weighted.
SALOMON BROTHERS WORLD GOVERNMENT BOND (NON US) INDEX--A market capitalization
weighted index consisting of government bond markets of the following 13 coun-
tries: Australia, Austria, Belgium, Canada, Denmark, France, Germany, Italy,
Japan, The Netherlands, Spain, Sweden, and The United Kingdom.
SALOMON BROTHERS 90 DAY TREASURY-BILL INDEX--Equal dollar amounts of three-
month Treasury bills are purchased at the beginning of each of three consecu-
tive months. As each bill matures, all proceeds are rolled over or reinvested
in a new three-month bill.
STANDARD AND POOR'S INDEX (S&P 400)--Consists of 400 domestic stocks chosen
for market size, liquidity, and industry group representations.
STANDARD AND POOR'S UTILITIES INDEX--The utility index is one of several in-
dustry groups within the broader S&P 500. Utility stocks include electric,
natural gas, and telephone companies included in the S&P 500.
Internet--As an electronic communications network Internet may be used to pro-
vide information regarding "LNY" performance of the subaccounts and advertise-
ment literature.
In its advertisements and other sales literature for the VAA and the eligible
funds, LNY intends to illustrate the advantages of the contracts in a number
of ways:
Compound interest illustrations. These will emphasize several advantages of
the variable annuity contract. For example, but not by way of limitation, the
literature may emphasize the potential savings through tax deferral; the po-
tential advantage of the variable account over the fixed side; and the com-
pounding effect when a client makes regular contributions to his or her ac-
count.
Dollar-cost averaging illustrations. These illustrations will generally dis-
cuss the price-leveling effect of making regular purchases in the same
subaccounts over a period of time, to take advantage of the trends in market
prices of the portfolio securities purchased for those subaccounts.
Lincoln Financial Group. is the marketing name for Lincoln National Corpora-
tion (NYSE:LNC) and its affiliates. With headquarters in Philadelphia, Lincoln
Financial Group has consolidated assets of over $103 billion and annual con-
solidated revenues of $6.8 billion. Through its wealth accumulation and pro-
tection businesses, the company provides annuities, life insurance, 401(k)
plans, life-health reinsurance, mutual funds, institutional investment manage-
ment and financial planning and advisory services.
LNY's customers. Sales literature for the VAA, the funds and series may refer
to the number of employers and the number of individual annuity clients which
LNY serves. As of the date of this prospectus LNY was serving over 400 em-
ployer contracts employers and had more than 149,000 individuals.
LNY's assets, size. LNY may discuss its general financial condition (see, for
example, the reference to A.M. Best Co., above), it may refer to its assets;
it may also discuss its relative size and/or ranking among companies in the
industry or among any subclassification of those companies, based upon recog-
nized evaluation criteria. (See Reference to A.M. Best Company above.) For ex-
ample, at year-end 1999, LNY had statutory admitted assets of over $2 billion.
Sales literature may reference the Group Variable Annuity newsletter which is
a newsletter distributed quarterly to clients of the VAA. The contents of the
newsletter will be a commentary on general economic conditions and, on some
occasions, referencing matters in connection with the Group Variable Annuity.
Sales literature and advertisements may reference these and other similar re-
ports from Best's or other similar publications which report on the insurance
and financial services industries.
8
<PAGE>
FINANCIAL STATEMENTS
Financial statements of the VAA and the statutory-basis financial statements of
LNY appear on the following pages.
9
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Statement of assets and liability
December 31, 1999
<TABLE>
<CAPTION>
Dreyfus Dreyfus
Stock Index Small Cap
Combined Subaccount Subaccount
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments at Market--Affiliated
(Cost $10,520,410) $ 14,289,998 $ -- $ --
Investments at Market--Unaffiliated
(Cost $235,839,967) 312,724,054 59,641,003 22,216,803
- ------------------------------------ ------------ ----------- -----------
Total Assets 327,014,052 59,641,003 22,216,803
- ------------------------------------
Liability--Payable to Lincoln Life &
Annuity Company of New York 8,888 1,616 596
- ------------------------------------ ------------ ----------- -----------
Net Assets $327,005,164 $59,639,387 $22,216,207
- ------------------------------------ ============ =========== ===========
Percent of net assets 100.00% 18.24% 6.79%
- ------------------------------------ ============ =========== ===========
Net assets are represented by:
. Units in accumulation period 1,319,216 1,080,983
-----------------------------------
. Unit value $ 45.208 $ 20.552
- ------------------------------------ ----------- -----------
Net Assets $59,639,387 $22,216,207
- ------------------------------------ =========== ===========
<CAPTION>
Calvert Fidelity
Social T. Rowe Price VIP Money
Balanced International Market
Subaccount Subaccount Subaccount
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments at Market--Affiliated
(Cost $10,520,410) $ -- $ -- $ --
Investments at Market--Unaffiliated
(Cost $235,839,967) -- 9,821,276 142,141
- ------------------------------------ ------------ ----------- -----------
Total Assets -- 9,821,276 142,141
- ------------------------------------
Liability--Payable to Lincoln Life &
Annuity Company of New York -- 268 --
- ------------------------------------ ------------ ----------- -----------
Net Assets $ -- $ 9,821,008 $ 142,141
- ------------------------------------ ============ =========== ===========
Percent of net assets 0.00% 3.00% 0.04%
- ------------------------------------ ============ =========== ===========
Net assets are represented by:
. Units in accumulation period -- 518,774 10,776
-----------------------------------
. Unit value $ -- $ 18.931 $ 13.191
- ------------------------------------ ------------ ----------- -----------
Net Assets $ -- $ 9,821,008 $ 142,141
- ------------------------------------ ============ =========== ===========
</TABLE>
See accompanying notes.
L-2
<PAGE>
<TABLE>
<CAPTION>
American Fidelity
Century American Fidelity VIP II
VP Capital Century VP Fidelity VIP VIP Equity- Asset
Appreciation Balanced Growth Income Manager
Subaccount Subaccount Subaccount Subaccount Subaccount
- -----------------------------------------------------------------------
<C> <C> <C> <C> <C> <S>
$ -- $ -- $ -- $ -- $ --
-- 11,637,326 129,828,390 27,245,994 38,400,830
-------- ----------- ------------ ----------- -----------
-- 11,637,326 129,828,390 27,245,994 38,400,830
-- 318 3,533 744 1,050
-------- ----------- ------------ ----------- -----------
$ -- $11,637,008 $129,824,857 $27,245,250 $38,399,780
======== =========== ============ =========== ===========
0.00% 3.56% 39.71% 8.33% 11.74%
======== =========== ============ =========== ===========
-- 502,280 2,438,762 1,171,752 1,489,145
$ -- $ 23.168 $ 53.234 $ 23.252 $ 25.786
-------- ----------- ------------ ----------- -----------
$ -- $11,637,008 $129,824,857 $27,245,250 $38,399,780
======== =========== ============ =========== ===========
<CAPTION>
Lincoln Lincoln
Janus Aspen National National
AMT Baron Series Social Aggressive
Partners Capital Asset WorldWide Awareness Growth
Subaccount Subaccount Subaccount Subaccount Subaccount
- -----------------------------------------------------------------------
<C> <C> <C> <C> <C> <S>
$ -- $ -- $ -- $ 3,016,397 $11,273,601
809,176 3,405,943 9,575,172 -- --
-------- ----------- ------------ ----------- -----------
809,176 3,405,943 9,575,172 3,016,397 11,273,601
22 95 260 82 304
-------- ----------- ------------ ----------- -----------
$809,154 $ 3,405,848 $ 9,574,912 $ 3,016,315 $11,273,297
======== =========== ============ =========== ===========
0.25% 1.04% 2.93% 0.92% 3.45%
======== =========== ============ =========== ===========
64,174 191,615 469,701 206,340 641,895
$ 12.609 $ 17.774 $ 20.385 $ 14.618 $ 17.563
-------- ----------- ------------ ----------- -----------
$809,154 $ 3,405,848 $ 9,574,912 $ 3,016,315 $11,273,297
======== =========== ============ =========== ===========
</TABLE>
L-3
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Statement of operations
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Dreyfus Stock Dreyfus
Index Small Cap
Combined Subaccount Subaccount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Investment Income (Loss):
. Dividends from investment income $ 2,563,078 $ 564,838 $ 14,620
---------------------------------------
. Dividends from net realized gains on
investments 13,738,515 484,926 --
- ----------------------------------------
Mortality and expense guarantees (2,725,196) (514,553) (199,491)
- ---------------------------------------- ----------- ---------- ----------
Net Investment Income (Loss) 13,576,397 535,211 (184,871)
- ----------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments:
. Net realized gain (loss) on
investments 4,047,339 1,296,418 209,965
---------------------------------------
. Net change in unrealized appreciation
or depreciation on investments 44,693,942 7,429,226 4,062,999
- ---------------------------------------- ----------- ---------- ----------
Net Realized and Unrealized Gain (Loss)
on Investments 48,741,281 8,725,644 4,272,964
- ---------------------------------------- ----------- ---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $62,317,678 $9,260,855 $4,088,093
- ---------------------------------------- =========== ========== ==========
<CAPTION>
Calvert
Social T. Rowe Price Fidelity VIP
Balanced International Money Market
Subaccount Subaccount Subaccount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Investment Income (Loss):
. Dividends from investment income $ -- $ 35,519 $ 3,177
---------------------------------------
. Dividends from net realized gains on
investments -- 111,631 --
- ----------------------------------------
Mortality and expense guarantees (12,095) (80,921) --
- ---------------------------------------- ----------- ---------- ----------
Net Investment Income (Loss) (12,095) 66,229 3,177
- ----------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments:
. Net realized gain (loss) on
investments 160,853 259,381 --
---------------------------------------
. Net change in unrealized appreciation
or depreciation on investments (125,920) 2,091,927 --
- ---------------------------------------- ----------- ---------- ----------
Net Realized and Unrealized Gain (Loss)
on Investments 34,933 2,351,308 --
- ---------------------------------------- ----------- ---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 22,838 $2,417,537 $ 3,177
- ---------------------------------------- =========== ========== ==========
</TABLE>
See accompanying notes.
L-4
<PAGE>
<TABLE>
<CAPTION>
American
Century VP American
Capital Century VP Fidelity VIP Fidelity VIP Fidelity VIP II
Appreciation Balanced Growth Equity-Income Asset Manager
Subaccount Subaccount Subaccount Subaccount Subaccount
- --------------------------------------------------------------------------
<C> <C> <C> <C> <C> <S>
$ -- $ 206,820 $ 148,319 $ 383,467 $1,180,645
-- 1,427,055 9,325,587 847,664 1,495,484
(49,607) (110,925) (1,010,714) (274,588) (366,515)
--------- ---------- ----------- ---------- ----------
(49,607) 1,522,950 8,463,192 956,543 2,309,614
(292,971) (34,838) 1,640,862 408,379 164,351
1,097,125 (515,632) 22,798,147 (57,149) 1,074,307
--------- ---------- ----------- ---------- ----------
804,154 (550,470) 24,439,009 351,230 1,238,658
--------- ---------- ----------- ---------- ----------
$ 754,547 $ 972,480 $32,902,201 $1,307,773 $3,548,272
========= ========== =========== ========== ==========
<CAPTION>
Lincoln Lincoln
Janus National National
Baron Aspen Series Social Aggressive
AMT Partners Capital Asset WorldWide Awareness Growth
Subaccount Subaccount Subaccount Subaccount Subaccount
- --------------------------------------------------------------------------
<C> <C> <C> <C> <C> <S>
$ 2,430 $ 451 $ 6,212 $ 16,562 $ 18
4,225 17,239 -- 24,704 --
(5,436) (14,748) (35,696) (13,898) (36,009)
--------- ---------- ----------- ---------- ----------
1,219 2,942 (29,484) 27,368 (35,991)
(11,114) 34,101 97,891 15,380 98,681
6,805 494,084 2,590,413 318,357 3,429,253
--------- ---------- ----------- ---------- ----------
(4,309) 528,185 2,688,304 333,737 3,527,934
--------- ---------- ----------- ---------- ----------
$ (3,090) $ 531,127 $ 2,658,820 $ 361,105 $3,491,943
========= ========== =========== ========== ==========
</TABLE>
L-5
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Statements of changes in net assets
Years Ended December 31, 1998 and 1999
<TABLE>
<CAPTION>
Dreyfus Dreyfus
Stock Index Small Cap
Combined Subaccount Subaccount
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets at January 1, 1998 $164,715,623 $ 24,281,125 $ 17,038,914
Changes From Operations:
. Net investment income (loss) 12,895,833 207,008 182,869
--------------------------------------------
. Net realized gain (loss) on investments 356,404 350,089 (51,346)
--------------------------------------------
. Net change in unrealized appreciation or
depreciation on investments 23,679,166 7,387,011 (1,060,607)
- --------------------------------------------- ------------ ------------ ------------
Net increase (decrease) in net assets result-
ing from operations 36,931,403 7,944,108 (929,084)
- ---------------------------------------------
Change From Unit Transactions:
. Contract purchases 73,993,989 17,158,221 8,267,555
--------------------------------------------
. Terminated contracts (38,785,682) (6,625,073) (4,375,024)
- --------------------------------------------- ------------ ------------ ------------
Net increase (decrease) in net assets result-
ing from unit
transactions 35,208,307 10,533,148 3,892,531
- --------------------------------------------- ------------ ------------ ------------
Total increase (decrease) in net assets 72,139,710 18,477,256 2,963,447
- --------------------------------------------- ------------ ------------ ------------
Net assets at December 31, 1998 $236,855,333 $ 42,758,381 $ 20,002,361
- ---------------------------------------------
Changes From Operations:
. Net investment income (loss) $ 13,576,397 $ 535,211 $ (184,871)
--------------------------------------------
. Net realized gain (loss) on investments 4,047,339 1,296,418 209,965
--------------------------------------------
. Net change in unrealized appreciation or
depreciation on investments 44,693,942 7,429,226 4,062,999
- --------------------------------------------- ------------ ------------ ------------
Net increase (decrease) in net assets result-
ing from operations 62,317,678 9,260,855 4,088,093
- ---------------------------------------------
Change From Unit Transactions:
. Contract purchases 108,543,350 19,576,561 6,116,660
--------------------------------------------
. Terminated contracts (80,711,197) (11,956,410) (7,990,907)
- --------------------------------------------- ------------ ------------ ------------
Net increase (decrease) in net assets result-
ing from unit
transactions 27,832,153 7,620,151 (1,874,247)
- --------------------------------------------- ------------ ------------ ------------
Total increase (decrease) in net assets 90,149,831 16,881,006 2,213,846
- --------------------------------------------- ------------ ------------ ------------
Net assets at December 31, 1999 $327,005,164 $ 59,639,387 $ 22,216,207
- --------------------------------------------- ============ ============ ============
</TABLE>
See accompanying notes.
L-6
<PAGE>
<TABLE>
<CAPTION>
American Fidelity Fidelity
Century American VIP VIP II
VP Capital Century Fidelity Equity- Asset
Appreciation VP Balanced VIP Growth Income Manager
Subaccount Subaccount Subaccount Subaccount Subaccount
- -----------------------------------------------------------------------
<C> <C> <C> <C> <C> <S>
$ 9,603,182 $ 8,139,800 $ 51,533,234 $17,762,833 $29,231,161
371,217 1,005,380 6,596,005 952,615 3,398,796
(390,660) 8,742 279,881 88,474 4,036
(223,168) 250,001 14,528,043 1,005,317 833,429
------------ ----------- ------------ ----------- -----------
(242,611) 1,264,123 21,403,929 2,046,406 4,236,261
2,493,757 3,500,681 19,090,328 10,514,344 7,458,317
(3,436,318) (2,055,736) (10,054,565) (4,346,815) (4,939,787)
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
(942,561) 1,444,945 9,035,763 6,167,529 2,518,530
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
(1,185,172) 2,709,068 30,439,692 8,213,935 6,754,791
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
$ 8,418,010 $10,848,868 $ 81,972,926 $25,976,768 $35,985,952
$ (49,607) $ 1,522,950 $ 8,463,192 $ 956,543 $ 2,309,614
(292,971) (34,838) 1,640,862 408,379 164,351
1,097,125 (515,632) 22,798,147 (57,149) 1,074,307
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
754,547 972,480 32,902,201 1,307,773 3,548,272
971,562 2,392,649 35,947,901 7,354,432 6,748,510
(10,144,119) (2,576,989) (20,998,171) (7,393,723) (7,882,954)
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
(9,172,557) (184,340) 14,949,730 (39,291) (1,134,444)
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
(8,418,010) 788,140 47,851,931 1,268,482 2,413,828
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
$ -- $11,637,008 $129,824,857 $27,245,250 $38,399,780
------------ ----------- ------------ ----------- -----------
============ =========== ============ =========== ===========
</TABLE>
L-7
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Statements of changes in net assets (continued)
Years Ended December 31, 1998 and 1999
<TABLE>
<CAPTION>
Calvert Fidelity
Social T. Rowe Price VIP Money
Balanced International Market
Subaccount Subaccount Subaccount
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets at January 1, 1998 $ 1,162,046 $ 5,937,942 $ 25,386
Changes From Operations:
. Net investment income (loss) 128,354 51,872 1,835
--------------------------------------------
. Net realized gain (loss) on investments 26,823 39,225 --
--------------------------------------------
. Net change in unrealized appreciation or
depreciation on investments 74,980 810,790 --
- --------------------------------------------- ----------- ----------- ----------
Net increase (decrease) in net assets result-
ing from operations 230,157 901,887 1,835
- ---------------------------------------------
Change From Unit Transactions:
. Contract purchases 1,051,972 2,849,094 215,066
--------------------------------------------
. Terminated contracts (437,617) (1,860,545) (204,056)
- --------------------------------------------- ----------- ----------- ----------
Net increase (decrease) in net assets result-
ing from unit
transactions 614,355 988,549 11,010
- --------------------------------------------- ----------- ----------- ----------
Total increase (decrease) in net assets 844,512 1,890,436 12,845
- --------------------------------------------- ----------- ----------- ----------
Net assets at December 31, 1998 $ 2,006,558 $ 7,828,378 $ 38,231
Changes From Operations:
. Net investment income (loss) $ (12,095) $ 66,229 $ 3,177
--------------------------------------------
. Net realized gain (loss) on investments 160,853 259,381 --
--------------------------------------------
. Net change in unrealized appreciation or
depreciation on investments (125,920) 2,091,927 --
- --------------------------------------------- ----------- ----------- ----------
Net increase (decrease) in net assets result-
ing from operations 22,838 2,417,537 3,177
- ---------------------------------------------
Change From Unit Transactions:
. Contract purchases 353,635 2,284,928 321,919
--------------------------------------------
. Terminated contracts (2,383,031) (2,709,835) (221,186)
- --------------------------------------------- ----------- ----------- ----------
Net increase (decrease) in net assets result-
ing from unit
transactions (2,029,396) (424,907) 100,733
- --------------------------------------------- ----------- ----------- ----------
Total increase (decrease) in net assets (2,006,558) 1,992,630 103,910
- --------------------------------------------- ----------- ----------- ----------
Net assets at December 31, 1999 $ -- $ 9,821,008 $ 142,141
- --------------------------------------------- =========== =========== ==========
</TABLE>
See accompanying notes.
L-8
<PAGE>
<TABLE>
<CAPTION>
Janus Lincoln Lincoln
Baron Aspen National National
AMT Capital Series Social Aggressive
Partners Asset WorldWide Awareness Growth
Subaccount Subaccount Subaccount Subaccount Subaccount
- -----------------------------------------------------------------
<C> <C> <C> <C> <C> <S>
$ -- $ -- $ -- $ -- $ --
(117) (272) 157 223 (109)
391 2,070 39 789 (2,149)
4,250 23,118 24,024 15,551 6,427
---------- ---------- ---------- ---------- -----------
4,524 24,916 24,220 16,563 4,169
121,748 368,344 297,700 178,746 428,116
(12,218) (58,333) (14,552) (12,867) (352,176)
---------- ---------- ---------- ---------- -----------
109,530 310,011 283,148 165,879 75,940
---------- ---------- ---------- ---------- -----------
114,054 334,927 307,368 182,442 80,109
---------- ---------- ---------- ---------- -----------
$ 114,054 $ 334,927 $ 307,368 $ 182,442 $ 80,109
$ 1,219 $ 2,942 $ (29,484) $ 27,368 $ (35,991)
(11,114) 34,101 97,891 15,380 98,681
6,805 494,084 2,590,413 318,357 3,429,253
---------- ---------- ---------- ---------- -----------
(3,090) 531,127 2,658,820 361,105 3,491,943
1,017,652 3,900,676 8,299,080 3,185,868 10,071,317
(319,462) (1,360,882) (1,690,356) (713,100) (2,370,072)
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
698,190 2,539,794 6,608,724 2,472,768 7,701,245
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
695,100 3,070,921 9,267,544 2,833,873 11,193,188
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
$ 809,154 $3,405,848 $9,574,912 $3,016,315 $11,273,297
---------- ---------- ---------- ---------- -----------
========== ========== ========== ========== ===========
</TABLE>
L-9
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Notes to financial statements
1. Accounting policies and account information
The Variable Account: Lincoln Life & Annuity Variable Annuity Account L (Vari-
able Account) is a segregated investment account of Lincoln Life & Annuity
Company of New York (the Company) and is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, as a
unit investment trust.
On October 1, 1996, UNUM Life Insurance Company of America (UNUM America) and
First Unum Life Insurance Company (First UNUM) completed the sale of their
tax-qualified annuity business to the Company and The Lincoln National Life
Insurance Company (Lincoln Life), the parent of the Company. The contracts of
participants in the variable accounts of UNUM America and First UNUM with re-
spect to which consent is obtained from the contractholders and/or partici-
pants will be reinsured pursuant to an assumption reinsurance agreement. As-
sets attributable to such participants' contracts have been transferred to the
Variable Account and the variable accounts of Lincoln Life. Assets attribut-
able to contracts of participants with respect to which such consent is not
obtained will remain in the variable accounts of UNUM America and First Unum.
During 1998, the net assets of the Variable Accounts increased by approxi-
mately $2,169,612 from novations of assets from the variable accounts of UNUM
America and First Unum.
The assets of the Variable Account are owned by the Company. The portion of
the Variable Account's assets supporting the annuity contracts may not be used
to satisfy liabilities arising from any other business of the Company.
Basis of Presentation: The accompanying financial statements have been pre-
pared in accordance with accounting principles generally accepted in the
United States for unit investment trusts.
Investments: The assets of the Variable Account are divided into variable sub-
accounts each of which is invested in shares of thirteen portfolios (the
Funds) of nine diversified open-end management investment
companies, each portfolio with its own investment objective. The Funds are:
Dreyfus Variable Investment Fund:
. Dreyfus Small Cap Portfolio
. Dreyfus Stock Index Fund
American Century Variable Portfolios, Inc.:
. American Century VP Balanced Portfolio
Fidelity Variable Insurance Products Fund:
. Fidelity VIP Equity Income Portfolio
. Fidelity VIP Growth Portfolio
. Fidelity VIP Money Market Portfolio
Fidelity Variable Insurance Products Fund II:
. Fidelity VIP II Asset Manager Portfolio
T. Rowe Price International Series, Inc.:
. T. Rowe Price International Stock Portfolio
Neuberger Berman Advisors Management Trust (AMT)
. AMT Partners Fund
Baron Capital Asset Fund Trust
Janus Aspen Series, Worldwide Growth Fund
Lincoln National:
. Lincoln National Social Awareness Fund
. Lincoln National Aggressive Growth Fund
The Fidelity VIP Money Market Portfolio is used only for investments of ini-
tial contributions for which the Company has not received complete order in-
structions. Upon receipt of complete order instructions, the payments trans-
ferred to the Fidelity VIP Money Market Portfolio are allocated to purchase
shares of one of the above Funds.
Investments in the Funds are stated at the closing net asset value per share
on December 31, 1999, which approximates fair value. The difference between
cost and fair value is reflected as unrealized appreciation and depreciation
of investments.
Investment transactions are accounted for on a trade date basis. The cost of
investments sold is determined by the average cost method.
Dividends: Dividends paid to the Variable Account are automatically reinvested
in shares of the Funds on the payable date with the exception of Fidelity VIP
Money Market Portfolio which is invested monthly. Dividend income is recorded
on the ex-dividend date.
Federal Income Taxes: Operations of the Variable Account form a part of and
are taxed with operations of the Company, which is taxed as a "life insurance
company" under the Internal Revenue Code. The Variable Account will not be
taxed as a regulated investment company under Subchapter M of the Internal
Revenue Code. Using current federal income tax law, no federal
L-10
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Notes to financial statements (continued)
1. Accounting policies and account information (continued)
income taxes are payable with respect to the Variable Account's net investment
income and the net realized gain on investments.
2. Mortality and expense guarantees
Amounts are paid to the Company for mortality and expense guarantees at an ef-
fective annual rate of 1.00% of each portfolio's average daily net assets
within the Variable Account with the exception of Fidelity VIP Money Market
Portfolio.
Accordingly, the Company is responsible for all sales, general, and administra-
tive expenses applicable to the Variable Accounts.
L-11
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Notes to financial statements (continued)
3. Net assets
The following is a summary of net assets owned at December 31, 1999.
<TABLE>
<CAPTION>
Dreyfus Dreyfus
Stock Index Small Cap
Combined Subaccount Subaccount
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Unit Transactions:
Accumulation units $209,650,360 $38,509,425 $17,387,894
- ------------------------------------
Accumulated net investment income
(loss) 32,467,810 1,521,395 826,682
- ------------------------------------
Accumulated net realized gain (loss)
on investments 4,233,319 1,740,634 158,712
- ------------------------------------
Net unrealized appreciation on
investments 80,653,675 17,867,933 3,842,919
- ------------------------------------ ------------ ----------- -----------
$327,005,164 $59,639,387 $22,216,207
============ =========== ===========
<CAPTION>
Fidelity
Calvert T. Rowe VIP
Social Price Money
Balanced International Market
Subaccount Subaccount Subaccount
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Unit Transactions:
Accumulation units $ (378,445) $ 6,454,475 $ 135,926
- ------------------------------------
Accumulated net investment income
(loss) 187,326 192,277 6,215
- ------------------------------------
Accumulated net realized gain (loss)
on investments 191,119 313,422 --
- ------------------------------------
Net unrealized appreciation on
investments -- 2,860,834 --
- ------------------------------------ ------------ ----------- -----------
$ -- $ 9,821,008 $ 142,141
============ =========== ===========
</TABLE>
L-12
<PAGE>
<TABLE>
<CAPTION>
American Fidelity Fidelity
Century American Fidelity VIP VIP II
VP Capital Century VIP Equity- Asset
Appreciation VP Balanced Growth Income Manager
Subaccount Subaccount Subaccount Subaccount Subaccount
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$477,832 $ 8,756,837 $ 69,210,678 $21,235,365 $26,895,144
412,469 2,758,954 15,855,090 2,737,224 8,004,242
(890,301) (26,396) 1,933,146 465,582 111,322
-- 147,613 42,825,943 2,807,079 3,389,072
-------- ----------- ------------ ----------- -----------
$ -- $11,637,008 $129,824,857 $27,245,250 $38,399,780
======== =========== ============ =========== ===========
<CAPTION>
Lincoln Lincoln
Baron Janus Aspen National National
AMT Capital Series Social Aggressive
Partners Asset WorldWide Awareness Growth
Subaccount Subaccount Subaccount Subaccount Subaccount
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$807,720 $ 2,849,805 $ 6,891,872 $ 2,638,647 $ 7,777,185
1,102 2,670 (29,327) 27,591 (36,100)
(10,723) 36,171 97,930 16,169 96,532
11,055 517,202 2,614,437 333,908 3,435,680
-------- ----------- ------------ ----------- -----------
$809,154 $ 3,405,848 $ 9,574,912 $ 3,016,315 $11,273,297
======== =========== ============ =========== ===========
</TABLE>
L-13
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Notes to financial statements (continued)
4. Purchases and sales of investments
The aggregate cost of investments purchased and the aggregate proceeds from in-
vestments sold were as follows for 1999.
<TABLE>
<CAPTION>
Aggregate Aggregate
Cost of Proceeds
Purchases from Sales
- ---------------------------------------------------------------------------
<S> <C> <C>
Dreyfus Stock Index Fund $13,130,754 $ 4,974,949
Dreyfus Small Cap Portfolio 2,652,059 4,711,113
American Century VP Capital Appreciation Portfolio 242,196 9,464,584
American Century VP Balanced Portfolio 2,909,987 1,571,356
Fidelity VIP Growth Portfolio 31,656,851 8,242,631
Fidelity VIP Equity Income Portfolio 4,684,285 3,766,998
Fidelity VIP II Asset Manager Portfolio 5,416,108 4,240,869
Calvert Social Balanced Portfolio 194,672 2,236,218
T. Rowe Price International Series 1,306,457 1,665,081
Fidelity VIP Money Market Portfolio 265,075 161,165
AMT Partners Fund 966,337 266,909
Baron Capital Asset Fund 3,559,088 1,016,266
Janus Aspen Series Worldwide Fund 7,090,464 510,973
Lincoln National Social Awareness Fund 3,104,404 604,191
Lincoln National Aggressive Growth Fund 9,458,973 1,793,417
- --------------------------------------------------
----------- -----------
$86,637,710 $45,226,720
=========== ===========
</TABLE>
5. Investments
The following is a summary of investments owned at December 31, 1999.
<TABLE>
<CAPTION>
Net
Shares Asset Value of Cost of
Outstanding Value Shares Shares
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dreyfus Stock Index Fund 1,551,131 $38.45 $ 59,641,003 $ 41,773,070
Dreyfus Small Cap Portfolio 334,893 66.34 22,216,803 18,373,884
American Century VP Balanced
Portfolio 1,493,880 7.79 11,637,326 11,489,713
Fidelity VIP Growth Portfolio 2,363,524 54.93 129,828,390 87,002,447
Fidelity VIP Equity Income
Portfolio 1,059,743 25.71 27,245,994 24,438,915
Fidelity VIP II Asset Manager
Portfolio 2,056,820 18.67 38,400,830 35,011,758
T. Rowe Price International
Series 515,823 19.04 9,821,276 6,960,442
Fidelity VIP Money Market
Portfolio 142,142 1.00 142,141 142,141
AMT Partners Fund 41,200 19.64 809,176 798,121
Baron Capital Asset Fund 191,668 17.77 3,405,943 2,888,741
Janus Aspen Series Worldwide Fund 200,527 47.75 9,575,172 6,960,735
Lincoln National Social Awareness
Fund 68,103 44.29 3,016,397 2,682,489
Lincoln National Aggressive
Growth Fund 592,141 19.04 11,273,601 7,837,921
------------ ------------
$327,014,052 $246,360,377
============ ============
</TABLE>
L-14
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Notes to financial statements (continued)
6. New investment funds
Effective October 1, 1998, the AMT Partners Fund, Baron Capital Asset Fund, Ja-
nus Aspen Series Worldwide Fund, Lincoln National Social Awareness Fund and
Lincoln National Aggressive Growth Fund became available as investment options
for Variable Account contract owners.
7. Fund substitution
On or about September 30, 1998, the Company and the Variable Account filed an
application with the Securities and Exchange Commission (the "SEC") seeking an
order approving the substitution of shares of the Lincoln National Social
Awareness Fund for shares of the Calvert Social Balanced Portfolio and shares
of the Lincoln National Aggressive Growth Fund for shares of the American Cen-
tury VP Capital Appreciation Portfolio. In December 1998, the SEC approved the
above application.
In August of 1999 the share substitution replaced the Calvert Social Balanced
Portfolio with the Lincoln National Social Awareness Fund, and the American
Century VP Capital Appreciation Portfolio with the Lincoln National Aggressive
Growth Fund, as investment options under the variable annuity contracts. The
substitution resulted in the involuntary reinvestment of participants cash
value in the Calvert Social Balanced Portfolio and the American Century VP Cap-
ital Appreciation Portfolio.
L-15
<PAGE>
Report of Ernst & Young LLP,
Independent Auditors
Board of Directors of Lincoln Life & Annuity Company of New York
and
Contract Owners of Lincoln Life & Annuity Variable Annuity Account L
We have audited the accompanying statement of assets and liability of Lincoln
National Variable Annuity Account L ("Variable Account") (comprised of the
Dreyfus Stock Index, Dreyfus Small Cap, American Century VP Capital Apprecia-
tion, American Century VP Balanced, Fidelity VIP Growth, Fidelity VIP Equity-
Income, Fidelity VIP II Asset Manager, Calvert Social Balanced, T. Rowe Price
International, Fidelity VIP Money Market, Neuberger Berman Advisers Management
Trust (AMT) Partners, Baron Capital Asset, Janus Aspen Series Worldwide, Lin-
coln National Social Awareness and Lincoln National Aggressive Growth
subaccounts) as of December 31, 1999, and the related statement of operations
for the year then ended and the statements of changes in net assets for each of
the two years in the period then ended. These financial statements are the re-
sponsibility of the Variable Account's management. Our responsibility is to ex-
press an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally ac-
cepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test ba-
sis, evidence supporting the amounts and disclosures in the financial state-
ments. Our procedures included confirmation of investments owned as of December
31, 1999, by correspondence with the custodian. An audit also includes assess-
ing the accounting principles used and significant estimates made by manage-
ment, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting the Lincoln Life & Annuity Variable Annuity Account L
at December 31, 1999, the results of their operations for the year then ended,
and the changes in their net assets for each of the two years in the period
then ended in conformity with accounting principles generally accepted in the
United States.
Fort Wayne, Indiana
March 24, 2000
L-16
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
BALANCE SHEETS -- STATUTORY BASIS
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
-------------- --------------
<S> <C> <C>
ADMITTED ASSETS
CASH AND INVESTED ASSETS:
Bonds $1,482,592,831 $1,435,882,019
- ------------------------------------------------------------
Unaffiliated common stocks 161,005 155,039
- ------------------------------------------------------------
Mortgage loans on real estate 197,425,386 184,503,805
- ------------------------------------------------------------
Policy loans 177,437,149 170,372,567
- ------------------------------------------------------------
Cash and short-term investments 29,467,267 143,546,873
- ------------------------------------------------------------
Other invested assets 223,126 60,000
- ------------------------------------------------------------
Receivable for securities 1,313,866 3,477,120
- ------------------------------------------------------------ -------------- --------------
Total cash and invested assets 1,888,620,630 1,937,997,423
- ------------------------------------------------------------
Premiums and fees in course of collection 6,578,363 6,959,116
- ------------------------------------------------------------
Accrued investment income 29,296,814 25,925,055
- ------------------------------------------------------------
Other admitted assets 38,442,338 438,335
- ------------------------------------------------------------
Separate account assets 328,767,871 236,861,781
- ------------------------------------------------------------ -------------- --------------
Total admitted assets $2,291,706,016 $2,208,181,710
- ------------------------------------------------------------ ============== ==============
LIABILITIES AND CAPITAL AND SURPLUS
LIABILITIES:
Future policy benefits and claims $ 853,572,463 $ 851,746,596
- ------------------------------------------------------------
Other policyholder funds 951,347,964 962,725,311
- ------------------------------------------------------------
Other liabilities 25,045,378 44,824,520
- ------------------------------------------------------------
Federal income taxes recoverable -- (3,206,611)
- ------------------------------------------------------------
Asset valuation reserve 7,884,503 5,374,594
- ------------------------------------------------------------
Interest maintenance reserve 956,570 5,051,304
- ------------------------------------------------------------
Net transfers due from separate accounts (8,262,299) (6,915,063)
- ------------------------------------------------------------
Separate account liabilities 328,767,871 236,861,781
- ------------------------------------------------------------ -------------- --------------
Total liabilities 2,159,312,450 2,096,462,432
- ------------------------------------------------------------
CAPITAL AND SURPLUS:
Common stock, $100 par value:
Authorized, issued and outstanding -- 20,000 shares (owned
by The Lincoln National Life Insurance Company) 2,000,000 2,000,000
- ------------------------------------------------------------
Paid-in surplus 384,128,481 384,128,481
- ------------------------------------------------------------
Unassigned surplus -- deficit (253,734,915) (274,409,203)
- ------------------------------------------------------------ -------------- --------------
Total capital and surplus 132,393,566 111,719,278
- ------------------------------------------------------------ -------------- --------------
Total liabilities and capital and surplus $2,291,706,016 $2,208,181,710
- ------------------------------------------------------------ ============== ==============
</TABLE>
See accompanying notes. S-1
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS -- STATUTORY BASIS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------ -------------- ------------
<S> <C> <C> <C>
PREMIUMS AND OTHER REVENUES:
Premiums and deposits $172,708,594 $1,291,566,984 $184,112,330
- ------------------------------------------------------------
Net investment income 132,213,228 105,083,579 43,953,796
- ------------------------------------------------------------
Surrender and administrative charges 2,401,973 2,834,073 1,334,705
- ------------------------------------------------------------
Mortality and expense charges on deposit funds 2,937,632 1,980,728 1,548,722
- ------------------------------------------------------------
Amortization of the interest maintenance reserve 925,547 579,137 370,129
- ------------------------------------------------------------
Other revenues 2,127,634 536,698 183,048
- ------------------------------------------------------------ ------------ -------------- ------------
Total revenues 313,314,608 1,402,581,199 231,502,730
- ------------------------------------------------------------
BENEFITS AND EXPENSES:
Benefits and settlement expenses 207,985,159 1,320,787,190 72,475,389
- ------------------------------------------------------------
Commissions 17,665,459 274,529,390 2,459,308
- ------------------------------------------------------------
Underwriting, insurance and other expenses 32,297,064 28,064,172 8,012,925
- ------------------------------------------------------------
Net transfers to separate accounts 28,255,807 33,875,951 141,027,195
- ------------------------------------------------------------ ------------ -------------- ------------
Total benefits and expenses 286,203,489 1,657,256,703 223,974,817
- ------------------------------------------------------------ ------------ -------------- ------------
Gain (loss) from operations before dividends to
policyholders, federal income taxes (benefit) and net
realized loss on investments 27,111,119 (254,675,504) 7,527,913
- ------------------------------------------------------------
Dividends to policyholders 5,624,728 3,375,629 --
- ------------------------------------------------------------ ------------ -------------- ------------
Gain (loss) from operations before federal income taxes
(benefit) and net realized loss on investments 21,486,391 (258,051,133) 7,527,913
- ------------------------------------------------------------
Federal income taxes (benefit) (427,033) (4,561,826) 1,942,625
- ------------------------------------------------------------ ------------ -------------- ------------
Gain (loss) from operations before net realized loss on
investments 21,913,424 (253,489,307) 5,585,288
- ------------------------------------------------------------
Net realized loss on investments (2,012,331) (721,449) (73,398)
- ------------------------------------------------------------ ------------ -------------- ------------
Net income (loss) $ 19,901,093 $ (254,210,756) $ 5,511,890
- ------------------------------------------------------------ ============ ============== ============
</TABLE>
See accompanying notes.
S-2
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS -- STATUTORY BASIS
<TABLE>
<CAPTION>
UNASSIGNED TOTAL
COMMON PAID-IN SURPLUS -- CAPITAL AND
STOCK SURPLUS DEFICIT SURPLUS
---------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Balances at January 1, 1997 $2,000,000 $ 69,000,000 $ (20,824,003) $ 50,175,997
Add (deduct):
Surplus paid-in -- 158,407,481 -- 158,407,481
- -------------------------------------------------
Net income -- -- 5,511,890 5,511,890
- -------------------------------------------------
Increase in nonadmitted assets -- -- (21,278) (21,278)
- -------------------------------------------------
Increase in asset valuation service -- -- (1,221,863) (1,221,863)
- ------------------------------------------------- ---------- ------------ ------------- -------------
Balances at December 31, 1997 2,000,000 227,407,481 (16,555,254) 212,852,227
Add (deduct):
Surplus paid-in -- 156,721,000 -- 156,721,000
- -------------------------------------------------
Net loss -- -- (254,210,756) (254,210,756)
- -------------------------------------------------
Increase in unrealized capital losses -- -- (178,648) (178,648)
- -------------------------------------------------
Decrease in nonadmitted assets -- -- 241,698 241,698
- -------------------------------------------------
Increase in asset valuation reserve -- -- (3,024,183) (3,024,183)
- -------------------------------------------------
Increase in liability for reinsurance in
unauthorized companies -- -- (682,060) (682,060)
- ------------------------------------------------- ---------- ------------ ------------- -------------
Balances at December 31, 1998 2,000,000 384,128,481 (274,409,203) 111,719,278
Add (deduct):
Net income -- -- 19,901,093 19,901,093
- -------------------------------------------------
Increase in unrealized capital losses -- -- (939,080) (939,080)
- -------------------------------------------------
Decrease in nonadmitted assets -- -- 187,322 187,322
- -------------------------------------------------
Increase in asset valuation reserve -- -- (2,509,909) (2,509,909)
- -------------------------------------------------
Increase in liability for reinsurance in
unauthorized companies -- -- (605,340) (605,340)
- -------------------------------------------------
Gain on reinsurance transaction -- -- 4,640,202 4,640,202
- ------------------------------------------------- ---------- ------------ ------------- -------------
Balances at December 31, 1999 $2,000,000 $384,128,481 $(253,734,915) $ 132,393,566
- ------------------------------------------------- ========== ============ ============= =============
</TABLE>
See accompanying notes. S-3
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS -- STATUTORY BASIS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------- -------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums, policy proceeds and other considerations received $ 172,535,360 $1,284,669,810 $184,112,330
- ------------------------------------------------------------
Investment income received 138,850,106 96,331,551 43,781,378
- ------------------------------------------------------------
Benefits paid (204,263,171) (83,399,329) (85,008,691)
- ------------------------------------------------------------
Insurance expenses paid (96,041,640) (351,272,500) (154,355,904)
- ------------------------------------------------------------
Federal income taxes received (paid) (656,134) 1,703,193 (1,893,859)
- ------------------------------------------------------------
Dividends paid to policyholders (5,921,665) 2,651,237 --
- ------------------------------------------------------------
Other income received, less other expenses paid 1,653,592 39,064,672 1,613,631
- ------------------------------------------------------------ ------------- -------------- ------------
Net cash provided by (used in) operating activities 6,156,448 989,748,634 (11,751,115)
- ------------------------------------------------------------
INVESTING ACTIVITIES
Sale, maturity or repayment of investments 294,554,595 249,409,117 272,961,178
- ------------------------------------------------------------
Purchase of investments (369,356,711) (1,280,892,696) (265,700,363)
- ------------------------------------------------------------
Net decrease (increase) in policy loans (7,064,582) (131,317,640) 1,554,149
- ------------------------------------------------------------ ------------- -------------- ------------
Net cash provided by (used in) investing activities (81,866,698) (1,162,801,219) 8,814,964
- ------------------------------------------------------------
FINANCING AND MISCELLANEOUS ACTIVITIES
Capital and surplus paid-in -- 156,721,000 158,407,481
- ------------------------------------------------------------
Other (38,369,356) (3,895,136) (11,032,743)
- ------------------------------------------------------------ ------------- -------------- ------------
Net cash provided by financing activities (38,369,356) 152,825,864 147,374,738
- ------------------------------------------------------------ ------------- -------------- ------------
Net increase (decrease) in cash and short-term investments (114,079,606) (20,226,721) 144,438,587
- ------------------------------------------------------------
Total cash and short-term investments at beginning of year 143,546,873 163,773,594 19,335,007
- ------------------------------------------------------------ ------------- -------------- ------------
Total cash and short-term investments at end of year $ 29,467,267 $ 143,546,873 $163,773,594
- ------------------------------------------------------------ ============= ============== ============
</TABLE>
See accompanying notes.
S-4
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS
1. ORGANIZATION AND OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
ORGANIZATION AND OPERATIONS
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 ("LNC").
In 1996, the Company was organized under the laws of the state of New York
as a life insurance company and received approval from the New York
Insurance Department (the "Department") to operate as a licensed insurance
company in the State of New York.
The Company's principal business consists of underwriting annuities,
deposit-type contracts and life insurance sold through multiple distribution
channels. The Company conducts business only in the State of New York.
USE OF ESTIMATES
The nature of the insurance business requires management to make estimates
and assumptions that affect amounts reported in the statutory-basis
financial statements and accompanying notes. Actual results could differ
from these estimates.
BASIS OF PRESENTATION
The accompanying statutory-basis financial statements have been prepared in
conformity with accounting practices prescribed or permitted by the
Department. "Prescribed" statutory accounting practices include state laws,
regulations and general administrative rules, as well as a variety of
publications of the National Association of Insurance Commissioners
("NAIC"). "Permitted" statutory accounting practices encompass all
accounting practices that are not prescribed; such practices may differ from
state to state, may differ from company to company within a state and may
change in the future.
In 1998, the NAIC adopted codified statutory accounting principles
("Codification") effective January 1, 2001. Codification will likely change,
to some extent, prescribed statutory accounting practices and may result in
changes to the accounting practices that the Company uses to prepare its
statutory-basis financial statements. Codification will require adoption by
the various states before it becomes the prescribed statutory-basis of
accounting for insurance companies domesticated within those states.
Accordingly, before Codification becomes effective for the Company, the
state of New York must adopt Codification as the prescribed basis of
accounting on which domestic insurers must report their statutory-basis
results to the Department. At this time, it is anticipated that New York
will adopt Codification, however, based on current guidance, management
believes that the impact of Codification will not be material to the
Company's statutory-basis financial statements.
Existing statutory accounting practices differ from accounting principles
generally accepted in the United States ("GAAP"). The more significant
variances from GAAP are as follows:
INVESTMENTS
Bonds are reported at cost or amortized cost or fair value based on their
NAIC rating. For GAAP, the Company's bonds are classified as
available-for-sale and, accordingly, are reported at fair value with changes
in the fair values reported directly in shareholder's equity after
adjustments for related amortization of deferred acquisition costs,
additional policyholder commitments and deferred income taxes.
Changes between cost and admitted asset investment amounts are credited or
charged directly to unassigned surplus rather than to a separate surplus
account.
Under a formula prescribed by the NAIC, the Company defers the portion of
realized capital gains and losses on sales of bonds and mortgage loans
attributable to changes in the general level of interest rates and amortizes
those deferrals over the remaining period to maturity of the individual
security sold. The net deferral is reported as the interest maintenance
reserve ("IMR") in the accompanying balance sheets. Realized capital gains
and losses are reported in income net of federal income tax and transfers to
IMR. The asset valuation reserve ("AVR") is determined by a NAIC prescribed
formula and is reported as a liability rather than a reduction to unassigned
surplus. Under GAAP, realized capital gains and losses
S-5
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
1. ORGANIZATION AND OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
are reported in the income statement on a pretax basis in the period that
the asset giving rise to the gain or loss is sold and valuation allowances
are provided when there has been a decline in value deemed other than
temporary, in which case, the provision for such declines are charged to
income.
POLICY ACQUISITION COSTS
The costs of acquiring and renewing business are expensed when incurred.
Under GAAP, acquisition costs related to traditional life insurance, to the
extent recoverable from future policy revenues, are deferred and amortized
over the premium-paying period of the related policies using assumptions
consistent with those used in computing policy benefit reserves. For
universal life insurance, annuity and other investment-type products,
deferred policy acquisition costs, to the extent recoverable from future
gross profits, are amortized generally in proportion to the present value of
expected gross profits from surrender charges and investment, mortality, and
expense margins.
NONADMITTED ASSETS
Certain assets designated as "nonadmitted," principally furniture and
equipment, are excluded from the accompanying balance sheets and are charged
directly to unassigned surplus.
BENEFIT RESERVES
Certain policy reserves are calculated based on statutorily required
interest and mortality assumptions rather than on estimated expected
experience or actual account balances as would be required under GAAP.
PREMIUMS AND DEPOSITS
Premiums and deposits with respect to universal life policies and annuity
and other investment-type contracts consist of the entire premium received
and are reported as premium revenue. Under GAAP, premiums and deposits
received in excess of policy charges would not be recognized as premium
revenue.
BENEFITS AND SETTLEMENT EXPENSES
Death benefits paid, policy and contract withdrawals, and the change in
policy reserves on universal life policies, annuity and other
investment-type contracts are reported as benefits and settlement expenses
in the accompanying statements of operations. Under GAAP, withdrawals are
treated as a reduction of the policy or contract liabilities and benefits
would represent the excess of benefits paid over the policy account value
and interest credited to the account values. For traditional life and
disability income products, benefits and expenses are recognized when
incurred in a manner consistent with the related premium recognition
policies.
REINSURANCE
Commissions on business ceded are reported as income when received rather
than deferred and amortized with deferred policy acquisition costs as
required under GAAP. Business assumed under 100% indemnity and assumption
reinsurance agreements is accounted for as a purchase for GAAP reporting
purposes and the ceding commission represents the purchase price. Under
purchase accounting, assets acquired and liabilities assumed are reported at
fair value at the date of the transaction and the excess of the purchase
price over the sum of the amounts assigned to assets acquired less
liabilities assumed is recorded as goodwill. On a statutory-basis of
accounting, the ceding commission is expensed when paid.
Premiums, benefits and settlement expenses and policy benefits and contract
liabilities are reported in the accompanying financial statements net of
reinsurance amounts. Under GAAP, policy benefits and contract liabilities
are reported on a gross basis.
A liability for reinsurance balances has been provided for unsecured policy
and contract liabilities and unearned premiums ceded to reinsurers not
authorized by the Department to assume such business. Changes to those
amounts are credited or charged directly to unassigned surplus. Under GAAP,
an allowance for amounts deemed uncollectible is established through a
charge to income.
INCOME TAXES
Deferred federal income taxes are not provided for differences between
financial statement amounts and tax bases of assets and liabilities.
S-6
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
1. ORGANIZATION AND OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
POLICYHOLDER DIVIDENDS
Policyholder dividends are recognized when declared rather than over the
term of the related policies.
POSTRETIREMENT BENEFITS
For purposes of calculating the Company's postretirement benefit obligation,
only vested employees and current retirees are included in the actuarial
benefit valuation. Under GAAP, active employees not currently eligible would
also be included.
STATEMENTS OF CASH FLOWS
Cash and short-term investments in the statements of cash flows represent
cash balances and investments with initial maturities of one year or less
from the date of acquisition. Under GAAP, the corresponding captions of cash
and cash equivalents include cash balances and investments with initial
maturities of three months or less from the date of acquisition.
A reconciliation of the Company's capital and surplus and net income (loss)
determined on a statutory accounting basis with amounts determined in
accordance with GAAP is as follows:
<TABLE>
<CAPTION>
CAPITAL AND SURPLUS NET INCOME (LOSS)
----------------------------------------------------------------------------
DECEMBER 31 YEAR ENDED DECEMBER 31
1999 1998 1999 1998 1997
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(IN THOUSANDS)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amounts as reported on a
statutory -- basis
$132,394 $111,719 $ 19,901 $(254,211) $ 5,512
-----------------------------------
GAAP adjustments:
Net unrealized gain (loss) on
investments (74,971) 27,851 -- -- --
-----------------------------------
Interest maintenance reserve (792) 5,051 458 (579) (370)
-----------------------------------
Net realized gain (loss) on
investments (1,951) (990) (6,348) 3,050 (240)
-----------------------------------
Asset valuation reserve 7,885 5,375 -- -- --
-----------------------------------
Policy and contract reserves (72,302) (85,875) 25,985 271,293 (3,667)
-----------------------------------
Present value of future profits,
deferred policy acquisition
costs and goodwill 369,032 336,568 (6,639) 6,091 524
-----------------------------------
Policyholders' share of earnings
and surplus on participating
business (9,325) (9,904) 1,071 (100) --
-----------------------------------
Deferred income taxes 17,505 35,280 (12,159) (12,696) 671
-----------------------------------
Nonadmitted assets 1,685 880 -- -- --
-----------------------------------
Other, net 4,304 (1,705) (2,096) (82) --
----------------------------------- -------- -------- -------- --------- -------
Net increase (decrease) 241,070 312,531 272 266,977 (3,082)
----------------------------------- -------- -------- -------- --------- -------
Amounts on a GAAP -- basis $373,464 $424,250 $ 20,173 $ 12,766 $ 2,430
----------------------------------- ======== ======== ======== ========= =======
</TABLE>
S-7
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
1. ORGANIZATION AND OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Other significant accounting practices are as follows:
INVESTMENTS
Bonds not backed by loans are principally stated at amortized cost and the
discount or premium is amortized using the interest method.
Mortgage-backed bonds are valued at amortized cost and income is recognized
using a constant effective yield based on anticipated prepayments and the
estimated economic life of the securities. When actual prepayments differ
significantly from anticipated prepayments, the effective yield is
recalculated to reflect actual payments to date and anticipated future
payments. The net investment in the securities is adjusted to the amount
that would have existed had the new effective yield been applied since the
acquisition of the securities.
Short-term investments include investments with maturities of less than one
year at the date of acquisition.
Policy loans are reported at unpaid principal balances.
Mortgage loans on real estate are reported at unpaid principal balances,
less allowances for impairments.
Realized investment gains and losses on investments sold are determined
using the specific identification method. Changes in admitted asset carrying
amounts of bonds, mortgage loans, and common stocks are credited or charged
directly in unassigned surplus.
PREMIUMS
Premiums for group tax-qualified annuity business are recognized as revenue
when deposited. Life insurance and individual annuity premiums are
recognized as revenue when due. Accident and health premiums are earned pro
rata over the contract term of the policies.
BENEFIT RESERVES
Life, annuity and accident and health disability benefit reserves are
developed by actuarial methods and are determined based on published tables
using statutorily specified interest rates and valuation methods that will
provide, in the aggregate, reserves that are greater than or equal to the
minimum or guaranteed policy cash values or the amounts required by the
Department. The Company waives deduction of deferred fractional premiums on
the death of life and annuity policy insureds and returns any premium beyond
the date of death, except for policies issued prior to March 1977. Surrender
values on policies do exceed the corresponding benefit reserves. Additional
reserves are established when the results of cash flow testing under various
interest rate scenarios indicate the need for such reserves. If net premiums
exceed the gross premiums on any insurance inforce, additional reserves are
established. Benefit reserves for policies underwritten on a substandard
basis are determined using the multiple table reserve method.
The tabular interest, tabular less actual reserves released and the tabular
cost have been determined by formula or from the basic data for such items.
Tabular interest funds not involving life contingencies were determined
using the actual interest credited to the funds plus the change in accrued
interest.
Liabilities related to policyholders' funds left on deposit with the Company
generally are equal to fund balances less applicable surrender charges.
CLAIMS AND CLAIM ADJUSTMENT EXPENSES
Unpaid claims and claim adjustment expenses on accident and health policies
represent the estimated ultimate net cost of all reported and unreported
claims incurred through December 31. The Company does not discount claims
and claim adjustment expense reserves. The reserves for unpaid claims and
claim adjustment expenses are estimated using individual case-basis
valuations and statistical analyses. Those estimates are subject to the
effects of trends in claim severity and frequency. Although considerable
variability is inherent in such estimates, management believes that reserves
for unpaid claims and claim adjustment
S-8
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
1. ORGANIZATION AND OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
expenses are adequate. The estimates are continually reviewed and adjusted
as necessary as experience develops or new information becomes known; such
adjustments are included in current operations.
REINSURANCE CEDED AND ASSUMED
Reinsurance premiums, benefits and settlement expenses are accounted for on
bases consistent with those used in accounting for the original policies
issued and the terms of the reinsurance contracts.
PENSION BENEFITS
Costs associated with the Company's defined benefit pension plans are
systematically accrued during the expected period of active service of the
covered employees.
ASSETS HELD IN SEPARATE ACCOUNTS AND LIABILITIES RELATED TO SEPARATE
ACCOUNTS
Separate account assets and liabilities reported in the accompanying balance
sheets represent funds that are separately administered for the exclusive
benefit of variable annuity and universal life contractholders and for which
the contractholders, and not the Company, bears the investment risk.
Separate account contractholders have no claim against the assets of the
general account of the Company. Separate account assets are reported at fair
value and consist of unit investments in mutual funds. The detailed
operations of the separate accounts are not included in the accompanying
statutory-basis financial statements. The fees received by the Company for
administrative and contractholder maintenance services performed for these
separate accounts are included in the Company's statements of operations.
2. INVESTMENTS
The cost or amortized cost, gross unrealized gains and
losses and the fair value of investments in bonds are
summarized as follows:
<TABLE>
<CAPTION>
COST OR GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
At December 31, 1999:
Corporate $1,214,312,519 $ 908,731 $(65,599,479) $1,149,621,771
--------------------------------
U.S. government 25,736,299 11,711 (1,900,750) 23,847,260
--------------------------------
Foreign government 17,602,777 362,624 (1,070,496) 16,894,905
--------------------------------
Mortgage-backed 221,570,519 2,732 (9,530,799) 212,042,452
--------------------------------
State and municipal 3,370,717 -- (105,915) 3,264,802
-------------------------------- -------------- ----------- ------------ --------------
$1,482,592,831 $ 1,285,798 $(78,207,439) $1,405,671,190
============== =========== ============ ==============
At December 31, 1998:
Corporate $1,148,083,966 $27,649,036 $ (7,489,560) $1,168,243,442
--------------------------------
U.S. government 39,617,653 564,146 (119,394) 40,062,405
--------------------------------
Foreign government 19,532,744 994,331 (720,250) 19,806,825
--------------------------------
Mortgage-backed 225,005,162 6,239,684 (421,281) 230,823,565
--------------------------------
State and municipal 3,642,494 164,552 -- 3,807,046
-------------------------------- -------------- ----------- ------------ --------------
$1,435,882,019 $35,611,749 $ (8,750,485) $1,462,743,283
============== =========== ============ ==============
</TABLE>
S-9
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
2. INVESTMENTS (CONTINUED)
The carrying amount of investments in bonds in the balance
sheet at December 31, 1999 and 1998 reflects adjustments of
$1,123,693 and $178,648, respectively, to decrease amortized
cost as a result of the Securities Valuation Office of the
NAIC designating certain investments as low or lower
quality.
A summary of the cost or amortized cost and fair value of
investments in bonds at December 31, 1999, by contractual
maturity, is as follows:
<TABLE>
<CAPTION>
COST OR
AMORTIZED FAIR
COST VALUE
-----------------------------------
<S> <C> <C>
Maturity:
In 2000 $ 64,699,324 $ 64,449,287
------------------------------------------------------------
In 2001-2004 360,685,026 351,609,953
------------------------------------------------------------
In 2005-2009 490,969,108 462,139,167
------------------------------------------------------------
After 2009 344,668,854 315,430,331
------------------------------------------------------------
Mortgage-backed securities 221,570,519 212,042,452
------------------------------------------------------------ -------------- --------------
Total $1,482,592,831 $1,405,671,190
------------------------------------------------------------ ============== ==============
</TABLE>
The expected maturities may differ from the contractual
maturities in the foregoing table because certain borrowers
may have the right to call or prepay obligations with or
without call or prepayment penalties.
Proceeds from sales of investments in bonds were $253,876,450, $203,748,028
and $274,742,319 in 1999, 1998 and 1997, respectively. Gross gains of
$842,229, $3,612,434 and $1,533,793, and gross losses of $6,968,975,
$1,529,149 and $1,922,165 during 1999, 1998 and 1997, respectively, were
realized on those sales. Net gains (losses) of ($186), $17,705 and ($26)
were realized on sales of short-term investments in 1999, 1998 and 1997,
respectively.
At December 31, 1999 and 1998, investments in bonds with an admitted asset
value of $500,078 and $500,129, respectively, were on deposit with the
Department to satisfy regulatory requirements.
During 1999, the minimum and maximum lending rates for mortgage loans were
6.62% and 10.29%, respectively. At the issuance of a loan, the percentage of
loan to value on any one loan does not exceed 75%. At December 31, 1999, the
Company did not hold any mortgages with interest overdue beyond one year.
All properties covered by mortgage loans have fire insurance at least equal
to the excess of the loan over the maximum loan that would be allowed on the
land without the building.
S-10
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
2. INVESTMENTS (CONTINUED)
The major categories of net investment income are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Income:
Bonds $106,590,150 $ 78,205,686 $42,237,959
--------------------------------------------------
Mortgage loans on real estate 13,522,104 14,304,385 --
--------------------------------------------------
Policy loans 11,018,423 7,981,377 1,990,613
--------------------------------------------------
Cash and short-term investments 2,391,977 5,893,453 315,328
-------------------------------------------------- ------------ ------------ -----------
Total investment income 133,522,654 106,384,901 44,543,900
----------------------------------------------------
Investment expenses 1,309,426 1,301,322 590,104
---------------------------------------------------- ------------ ------------ -----------
Net investment income $132,213,228 $105,083,579 $43,953,796
---------------------------------------------------- ============ ============ ===========
</TABLE>
Realized capital gains and losses are reported net of federal income taxes
of $437,941, $1,223,897 and $55,541 in 1999, 1998 and 1997, respectively,
and amounts transferred to the interest maintenance reserve of $3,169,187,
$3,035,887 and $239,459 in 1999, 1998 and 1997, respectively.
At December 31, 1999, the Company did not have a material concentration of
financial instruments in a single investee, industry or geographic location.
3. FEDERAL INCOME TAXES
The Company's federal income tax return is not consolidated with any other
entities. The effective federal income tax rate for financial reporting
purposes differs from the prevailing statutory tax rate principally due to
tax-exempt investment income, other pass through tax attributes from
investments, differences in ceding commissions, policy acquisition costs,
and policy and contract liabilities in the tax return versus the financial
statements.
In 1998, a federal income tax net operating loss of $80,156,000 was
incurred. The Company utilized $9,162,000 of the net operating loss to
recover taxes paid in prior years. In 1999, an additional $10,170,000 of net
operating loss was utilized to offset taxable income. The remaining portion
of the net operating loss at December 31, 1999 of $60,824,000 will be
available for use to offset taxable income in future years. The net
operating loss carryforward of $60,824,000 will expire in 2013.
The Company paid $3,675,000 in 1997 for federal income taxes. No federal
income tax payments were made in 1999 or 1998. The Company received a refund
of $3,196,000 in 1999 as a result of the utilization of the net operating
loss.
4. REINSURANCE
The Company cedes insurance to other companies, including affiliated
companies. The portion of risks exceeding the Company's retention limits is
reinsured with Lincoln Life. The Company limits its maximum risk that it
retains on an individual to $500,000. The Company remains obligated for
amounts ceded in the event that the reinsurers do not meet their
obligations. The Company did not cede or assume any business prior to
January 1, 1998.
On January 2, 1998, the Company and Lincoln Life entered into an indemnity
reinsurance transaction whereby the Company and Lincoln Life reinsured 100%
of a block of individual life insurance and annuity business of CIGNA
Corporation ("CIGNA"). The Company paid $149,621,452 to CIGNA on January 2,
1998 under the terms of the reinsurance agreement and recognized a ceding
commission expense of $149,714,239 in 1998, which is included in the
statements of operations line item "Commissions." At the time of closing,
this block of business had statutory liabilities of $779,551,235 which
became the Company's obligations. The Company also received assets, measured
on a historical statutory-basis, equal to the liabilities. Subsequent to the
CIGNA transaction, the
S-11
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
4. REINSURANCE (CONTINUED)
Company and Lincoln Life announced that they had reached an agreement to
sell the administration rights to a variable annuity portfolio that had been
acquired as part of the block of business assumed on January 2, 1998. This
sale closed on October 12, 1998 with an effective date of September 1, 1998.
During 1999, the Company received $5,800,000 from CIGNA as a result of the
final settlement of the statutory-basis values of assets and liabilities for
the reinsured business. The $5,800,000 is included in the statements of
operations line item "Other revenues." Additionally, on November 1, 1999,
the Company and Lincoln Life closed the previously announced agreement to
retrocede virtually 100% of the disability income business assumed from
CIGNA. This retrocession agreement was effective November 1, 1999. A gain on
the transaction of $4.6 million was recorded directly in unassigned surplus,
net of tax.
On October 1, 1998, the Company entered into an indemnity reinsurance
transaction whereby the Company and Lincoln Life reinsured 100% of a block
of individual life insurance business from Aetna, Inc. The Company paid
$143,721,000 to Aetna on October 1, 1998 under the terms of the reinsurance
agreement and recognized a ceding commission expense of $135,374,141 in
1998, which is included in the statements of operations line item
"Commissions." At the time of closing, this block of business had statutory
liabilities of $463,007,132 which became the Company's obligation. The
Company also received assets, measured on a historical statutory-basis,
equal to the liabilities.
Subsequent to the Aetna transaction, the Company and Lincoln Life announced
that they had reached an agreement to retrocede the sponsored life business
assumed for $87,600,000, of which $11,900,000 was received by the Company.
The retrocession agreement was executed on October 14, 1998 with an
effective date of October 1, 1998.
The balance sheet caption, "Future policy benefits and claims" has been
reduced for insurance ceded by $97,457,160 and $54,411,763 at December 31,
1999 and 1998, respectively. The balance sheet caption, "Other policyholder
funds" has been reduced for insurance ceded by $2,290,826 and $2,722,404 at
December 31, 1999 and 1998, respectively.
The caption "Premiums and deposits" in the statements of operations includes
$140,394,771 and $1,276,884,778 of insurance assumed and $44,245,573 and
$52,443,264 of insurance ceded in 1999 and 1998, respectively.
The caption "Benefits and settlement expenses" in the statements of
operations is net of reinsurance recoveries of $71,763,962 and $47,526,681
for 1999 and 1998, respectively.
The regulatory required liability for unsecured reserves ceded to
unauthorized reinsurers was $1,287,400 and $682,060 at December 31, 1999 and
1998, respectively. Amounts payable or recoverable for reinsurance on policy
and contract liabilities are not subject to periodic or maximum limits. At
December 31, 1999, the Company's reinsurance recoverables are not material
and no individual reinsurer owed the Company an amount that was equal to or
greater than 3% of the Company's surplus.
5. LIFE AND ANNUITY RESERVES AND DEPOSIT FUND LIABILITIES
At December 31, 1999 and 1998, the Company had $1,149,964,000 and
$1,092,754,000, respectively, of insurance in force for which the gross
premiums are less than the net premiums according to the standard of
valuation set by the State of New York. Reserves to cover the above
insurance totaled $5,893,549 and $6,937,379 at December 31, 1999 and 1998,
respectively.
At December 31, 1999, the Company's annuity reserves and deposit fund
liabilities, including separate accounts, that are subject to discretionary
withdrawal with adjustment, subject to discretionary withdrawal without
adjustment and not subject to discretionary withdrawal provisions are
summarized as follows:
S-12
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
5. LIFE AND ANNUITY RESERVES AND DEPOSIT FUND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
AMOUNT PERCENT
-------------- -------
<S> <C> <C>
Subject to discretionary withdrawal with adjustment:
With market value adjustment $ 338,886,028 26.5%
------------------------------------------------------------
At book value, less surrender charge 123,141,771 9.6
------------------------------------------------------------
At market value 319,140,374 24.9
------------------------------------------------------------
Subject to discretionary withdrawal without adjustment:
At book value with minimal or no charge or adjustment 487,578,243 38.1
------------------------------------------------------------
Not subject to discretionary withdrawal 10,884,302 .9
------------------------------------------------------------ -------------- ------
Total annuity reserves and deposit fund liabilities, before
reinsurance 1,279,630,718 100.0%
======
Less reinsurance 2,560,424
------------------------------------------------------------ --------------
Net annuity reserves and deposit fund liabilities, including
separate accounts $1,277,070,294
------------------------------------------------------------ ==============
</TABLE>
A reconciliation of the total net annuity reserves and deposit fund
liabilities to the amounts reported in the Company's 1999 Annual Statement
and the Company's Separate Accounts Annual Statement at December 31, 1999 is
as follows:
<TABLE>
<S> <C>
Per 1999 Annual Statement:
Exhibit 8, Section B -- Total (net) $ 10,029,253
------------------------------------------------------------
Exhibit 8, Section C -- Total (net) 1,122,910
------------------------------------------------------------
Exhibit 10, Column 1, Line 19 946,777,757
------------------------------------------------------------ --------------
957,929,920
------------------------------------------------------------
Per Separate Account Annual Statement:
------------------------------------------------------------
Exhibit 6, Column 2, Line 0299999 Page 3, Line 3 319,140,374
------------------------------------------------------------ --------------
319,140,374
--------------
Total net annuity reserves and deposit fund liabilities $1,277,070,294
------------------------------------------------------------ ==============
</TABLE>
Details underlying the balance sheet caption "Other policyholder funds" are
as follows:
<TABLE>
<S> <C> <C>
DECEMBER 31
1999 1998
------------ ------------
Premium deposit funds $920,665,883 $931,230,214
------------------------------------------------------------
Undistributed earnings on participating business 30,544,045 30,772,519
------------------------------------------------------------
Other 138,036 722,578
------------------------------------------------------------ ------------ ------------
$951,347,964 $962,725,311
============ ============
</TABLE>
6. CAPITAL AND SURPLUS
The Company received additional paid-in surplus from Lincoln Life of
$158,407,481 and $156,721,000 in December 1997 and October 1998,
respectively.
Life insurance companies are subject to certain Risk-Based Capital ("RBC")
requirements as specified by the NAIC. Under those requirements, the amount
of capital and surplus maintained by a life insurance company is to be
determined based on the various risk factors related to it. At December 31,
1999, the Company exceeds the RBC requirements.
S-13
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
6. CAPITAL AND SURPLUS (CONTINUED)
The payment of dividends by the Company requires 30 day advance notice to
the Department.
7. EMPLOYEE BENEFIT PLANS
LNC maintains defined benefit pension plans for its employees (including
Company employees) and a defined contribution plan for the Company's agents.
LNC also maintains 401(k) plans, deferred compensation plans and
postretirement medical and life insurance plans for its employees and agents
(including the Company's employees and agents). The aggregate expenses and
accumulated obligations for the Company's portion of these plans are not
material to the Company's statutory-basis statements of operations or
balance sheets for any of the periods shown.
LNC has various incentive plans for key employees, agents and directors of
LNC and its subsidiaries that provide for the issuance of stock options,
stock appreciation rights, restricted stock awards and stock incentive
awards. These plans are comprised primarily of stock option incentive plans.
Stock options granted under the stock option incentive plans are at the
market value at the date of grants and, subject to termination of
employment, expire ten years from the date of grant.
Such options are transferable only upon death and are exercisable one year
from the date of grant for options issued prior to 1992. Options issued
subsequent to 1991 are exercisable in equal increments on the option
issuance anniversary in three to four years following issuance.
As of December 31, 1999, 27,534 shares of LNC common stock were subject to
options granted to Company employees under the stock option incentive plans
of which 8,934 were exercisable on that date. The exercise prices of the
outstanding options range from $21.32 to $50.83. During 1999 and 1998, 3,740
and 137 options, respectively, were exercised. During 1999, 2,400 options
were forfeited.
8. RESTRICTIONS, COMMITMENTS AND CONTINGENCIES
VULNERABILITY FROM CONCENTRATIONS
At December 31, 1999, the Company did not have a concentration of:
1) business transactions with a particular customer, lender or distributor;
2) revenues from a particular product or service; 3) sources of supply of
labor or services used in the business; or 4) a market or geographic area in
which business is conducted that makes it vulnerable to an event that is at
least reasonably possible to occur in the near term and which could cause a
severe impact to the Company's financial condition.
CONTINGENCY MATTERS
The Company is occasionally involved in various pending or threatened legal
proceedings arising from the conduct of business. These proceedings are
routine in the ordinary course of business. In some instances, these
proceedings include claims for compensatory and punitive damages and similar
types of relief in addition to amounts for alleged contractual liability or
requests for equitable relief. After consultation with legal counsel and a
review of available facts, it is management's opinion that the ultimate
liability, if any, under these proceedings will not have a material adverse
effect on the financial position of the Company.
The number of insurance companies that are under regulatory supervision has
resulted, and is expected to continue to result, in assessments by state
guaranty funds to cover losses to policyholders of insolvent or
rehabilitated companies. Mandatory assessments may be partially recovered
through a reduction in future premium taxes in some states. The Company has
accrued for expected assessments net of estimated future premium tax
deductions.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following discussion outlines the methodologies and assumptions used to
determine the estimated fair values of the Company's financial instruments.
Considerable judgment is required to develop these fair values. Accordingly,
the estimates shown are not necessarily indicative of the
S-14
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
amounts that would be realized in a one-time, current market exchange of the
Company's financial instruments.
BONDS AND COMMON STOCK
Fair values of bonds are based on quoted market prices, where available. For
bonds not actively traded, fair values are estimated using values obtained
from independent pricing services. In the case of private placements, fair
values are estimated by discounting expected future cash flows using a
current market rate applicable to the coupon rate, credit quality and
maturity of the investments. The fair values of common stocks are based on
quoted market prices.
MORTGAGE LOANS ON REAL ESTATE
The estimated fair values of mortgage loans on real estate are established
using a discounted cash flow method based on credit rating, maturity and
future income. The rating for mortgages in good standing are based on
property type, location, market conditions, occupancy, debt service
coverage, loan to value, caliber of tenancy, borrower and payment record.
Fair values for impaired mortgage loans are based on: 1) the present value
of expected future cash flows discounted at the loan's effective interest
rate; 2) the loan's market prices; or 3) the fair value of the collateral if
the loan is collateral dependent.
POLICY LOANS
The estimated fair value of investments in policy loans was calculated on a
composite discounted cash flow basis using U.S. Treasury interest rates
consistent with the maturity durations assumed. These durations were based
on historical experience.
CASH AND SHORT-TERM INVESTMENTS
The carrying value of cash and short-term investments approximates their
fair value.
INVESTMENT-TYPE INSURANCE CONTRACTS
The balance sheet captions, "Future policy benefits and claims" and "Other
policyholder funds," include investment type insurance contracts (i.e.,
deposit contracts). The fair values for the deposit contracts are based on
their approximate surrender values.
The remainder of the balance sheet captions "Future policy benefits and
claims" and "Other policyholder funds," that do not fit the definition of
"investment-type insurance contracts" are considered insurance contracts.
Fair value disclosures are not required for these insurance contracts and
have not been determined by the Company. It is the Company's position that
the disclosure of the fair value of these insurance contracts is important
because readers of these financial statements could draw inappropriate
conclusions about the Company's capital and surplus determined on a fair
value basis. It could be misleading if only the fair value of assets and
liabilities defined as financial instruments are disclosed. The Company and
other companies in the insurance industry are monitoring the related actions
of the various rule-making bodies and attempting to determine an appropriate
methodology for estimating and disclosing the "fair value" of their
insurance contract liabilities.
SEPARATE ACCOUNTS
Assets held in separate accounts are reported in the accompanying
statutory-basis balance sheets at fair value. The related liabilities are
also reported at fair value in amounts equal to the separate account assets.
S-15
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The carrying values and estimated fair values of the Company's financial
instruments are as follows:
<TABLE>
<CAPTION>
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
<S> <C> <C> <C> <C>
-------------------------------------------------------------
<CAPTION>
DECEMBER 31
1999 1998
---------------------------------------------------------------
(IN THOUSANDS)
---------------------------------------------------------------
ASSETS (LIABILITIES)
<S> <C> <C> <C> <C>
-----------------------------------------------
Bonds $1,482,593 $1,405,671 $1,435,882 $1,462,743
-----------------------------------------------
Unaffiliated common stocks 161 161 155 155
-----------------------------------------------
Mortgage loans on real estate 197,425 189,179 184,504 185,694
-----------------------------------------------
Policy loans 177,437 190,667 170,373 183,408
-----------------------------------------------
Cash and short-term investments 29,467 29,467 143,547 143,547
-----------------------------------------------
Other invested assets 223 223 60 60
-----------------------------------------------
Investment-type insurance contracts (951,348) (910,752) (962,725) (938,191)
-----------------------------------------------
Separate account assets 328,768 328,768 236,862 236,862
-----------------------------------------------
Separate account liabilities (328,768) (328,768) (236,862) (236,862)
-----------------------------------------------
</TABLE>
10. TRANSACTIONS WITH AFFILIATES
The Company has entered into agreements with Lincoln Life to receive
processing and other corporate services. Fees paid to Lincoln Life for such
services were $22,675,891, $18,504,450 and $3,454,014 in 1999, 1998 and
1997, respectively. The Company has also entered into an agreement with
Lincoln Life to provide certain processing services. Fees received from
Lincoln Life for such services were $1,359,279, $273,952 and $578,003 in
1999, 1998 and 1997, respectively.
The Company has an investment management agreement with an affiliate,
Lincoln Investment Management, Inc., for investment advisory and asset
management services. Fees paid for such investment services were $1,309,426,
$1,501,592 and $558,011 in 1999, 1998 and 1997, respectively.
The Company cedes business to two affiliated companies, Lincoln Life and
Lincoln National Reassurance Company. The caption "Premiums and deposits" in
the accompanying statements of operations has been reduced by $6,269,272 and
$2,095,019 for premiums paid on these contracts in 1999 and 1998,
respectively. The caption "Future policy benefits and claims" has been
reduced by $2,323,435 and $2,583,702 related to reserve credits taken on
these contracts as of December 31, 1999 and 1998, respectively.
11. SEPARATE ACCOUNTS
Separate account premiums, deposits and other considerations amounted to
$109,574,216 and $73,993,993 in 1999 and 1998, respectively. Reserves for
separate accounts with assets at fair value were $320,413,080 and
$229,940,273 at December 31, 1999 and 1998, respectively. All reserves are
subject to discretionary withdrawal at market value. All of the Company's
separate accounts are nonguaranteed. The investment risks associated with
market value changes are borne entirely by the contractholder.
S-16
<PAGE>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- STATUTORY BASIS (CONTINUED)
11. SEPARATE ACCOUNTS (CONTINUED)
A reconciliation of transfers to (from) separate accounts is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
------------------------------
<S> <C> <C>
Transfers as reported in the Summary of Operations of
various Separate Accounts:
Transfers to separate accounts $109,574,216 $ 73,993,993
------------------------------------------------------------ ------------ ------------
Transfers from separate accounts (81,318,409) (40,118,042)
------------------------------------------------------------ ------------ ------------
Net transfer to separate accounts as reported in the
Company's NAIC Annual Statement -- Summary of Operations $ 28,255,807 $ 33,875,951
------------------------------------------------------------ ============ ============
</TABLE>
12. CENTURY COMPLIANCE (UNAUDITED)
The Year 2000 issue was complex and affected many aspects of the Company's
business. The Company was particularly concerned with Year 2000 issues that
related to the Company's computer systems and interfaces with the computer
systems of vendors, suppliers, customers and business partners. From 1996
through 1999 the Company redirected a large portion of internal Information
Technology ("IT") efforts and contracted with outside consultants to update
systems to address Year 2000 issues. Experts were engaged to assist in
developing work plans and cost estimates and to complete remediation
activities.
For the year ended December 31, 1999, the Company identified expenditures of
$124,000 to address this issue. This brings the expenditures for 1996
through 1999 to $208,000. Because updating systems and procedures is an
integral part of the Company's on-going operations, most of the expenditures
shown above are expected to continue after all Year 2000 issues have been
resolved. All Year 2000 expenditures have been funded from operating cash
flows.
The scope of the overall Year 2000 program included the following four major
project areas: 1) addressing the readiness of business applications,
operating systems and hardware on mainframe, personal computer and local
area network platforms (IT); 2) addressing the readiness of non-IT embedded
software and equipment (non-IT); 3) addressing the readiness of key business
partners and 4) establishing Year 2000 contingency plans. The Company
completed these projects prior to year-end.
The Company's businesses have not identified any major problems in their
business processing. Minor problems have been resolved quickly. The
Company's businesses have not experienced any significant interruption in
service to clients or business partners or in reporting to regulators.
S-17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Lincoln Life & Annuity Company of New York
We have audited the accompanying statutory-basis balance sheets
of Lincoln Life & Annuity Company of New York (a wholly owned
subsidiary of The Lincoln National Life Insurance Company) as of
December 31, 1999 and 1998, and the related statutory-basis
statements of operations, changes in capital and surplus, and
cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company
presents its financial statements in conformity with accounting
practices prescribed or permitted by the New York Insurance
Department, which practices differ from accounting principles
generally accepted in the United States. The variances between
such practices and accounting principles generally accepted in
the United States and the effects on the accompanying financial
statements are described in Note 1.
In our opinion, because of the effects of the matter described
in the preceding paragraph, the financial statements referred to
above do not present fairly, in conformity with accounting
principles generally accepted in the Untied States, the
financial position of Lincoln Life & Annuity Company of New York
at December 31, 1999 and 1998, or the results of its operations
or its cash flows for each of the three years in the period
ended December 31, 1999.
However, in our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Lincoln Life & Annuity Company of New York at
December 31, 1999 and 1998, the results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting practices
prescribed or permitted by the New York Insurance Department.
March 10, 2000
S-18
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) List of Financial Statements
1. Part A. The Table of Condensed Financial Information is
included in Part A of this Registration Statement.
2. Part B.
The following financial statements for the Variable Account are
included in Part B of this Registration Statement:
Statement of Assets and Liability -- December 31, 1999
Statement of Operations -- Year ended December 31, 1999
Statement of Changes in Net Assets -- Years ended December 31,
1999 and 1998
Notes to Financial Statements -- December 31, 1999
Report of Ernst & Young LLP, Independent Auditors
3. Part B.
The following statutory-basis financial statements of Lincoln
Life & Annuity Company of New York are included in this
Registration Statement:
Balance Sheets -- Statutory-Basis -- Years ended December 31,
1999 and 1998
Statements of Operations -- Statutory Basis -- Years ended
December 31, 1999, 1998 and 1997
Statements of Changes in Capital and Surplus -- Statutory
Basis -- Years ended December 31, 1999, 1998 and 1997
Statements of Cash Flows -- Statutory Basis -- Years ended
December 31, 1999, 1998 and 1997
Notes to Statutory-basis Financial Statements -- December 31,
1999
Report of Ernst & Young LLP, Independent Auditors
(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. /2/
3(b). Broker-dealer sales agreement. /2/
4(a). Group Variable Annuity I Contract for Lincoln Life & Annuity
Company of New York.
4(b). Group Variable Annuity II Contract for Lincoln Life & Annuity
Company of New York.
4(c). Group Variable Annuity III Contract for Lincoln Life & Annuity
Company of New York.
4(d). Form of endorsement to Group Annuity Contract and Certificate.
/4/
4(e). Form of Group Annuity Endorsement to the Contract. /5/
5(a). Application for Group Annuity Contract.
5(b). Participant Enrollment Form.
6. Copy of certificate of incorporation and by-laws of Lincoln
Life & Annuity Company of New York. /1/
7. Not applicable.
8(a). Form of Service Agreement between Lincoln Life & Annuity
Company of New York and Delaware Management Holdings, Inc./6/
8(b). Fund Participation Agreement/Amendments for American Century
8(c). Fund Participation Agreement/Amendments for Baron
8(d). Participation Agreement between Lincoln Life & Annuity Company
of New York and Dreyfus Life & Annuity Index Fund, Inc. and
Dreyfus Variable Investment Fund. /2/
8(e). Fund Participation Agreement/Amendments for Fidelity
C-1
<PAGE>
8(f). Fund Participation Agreement/Amendments for Janus
8(g). Fund Participation Agreement/Amendments for The Lincoln
National Aggressive Growth Fund, Inc./7/
8(h). Fund Participation Agreement/Amendments for The Lincoln
National Social Awareness Fund, Inc.
8(i). Participation Agreement/Amendments for Neuberger & Berman
8(j). Participation Agreement between Lincoln Life & Annuity Company
of New York and T. Rowe Price International Series, Inc. and T.
Rowe Price Investment Services, Inc. /2/
9. Consent and opinion of Counsel as to the legality of the
securities being registered. /2/
10(a). Consent of Ernst & Young LLP, Independent Auditors.
11. Not applicable.
12. Not applicable.
13(a). Schedule for Computation of Performance Quotations./3/
13(b). Supplement to Schedule for Computation of Performance
Quotations. /4/
14. Not applicable.
15(a). Organizational Chart of Lincoln National Life Insurance Holding
Company System.
15(b). Memorandum Concerning Books and Records.
__________________
/1/ Incorporated herein by reference to the registrant's initial
registration statement filed with the Securities and Exchange Commission on
August 27, 1996 (File No. 333-10805).
/2/ Incorporated herein by reference to Pre-effective Amendment No. 1
on Form N-4 filed by the Lincoln Life & Annuity Variable Account L of Lincoln
Life & Annuity Company of New York with the Securities and Exchange Commission
on September 30, 1996.
/3/ Incorporated herein by reference to Post-effective Amendment No. 1 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on April 30, 1997 (File No. 333-10805).
/4/ Incorporated herein by reference to Post-effective Amendment No. 2 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on May 1, 1998 (File No. 333-10863).
/5/ Incorporated herein by reference to Post-effective Amendment No. 5 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on April 29, 1999 (File No. 333-10805).
/6/ Incorporated herein by reference to Pre-Effective Amendment No. 1
(333-38007) filed on 10/11/99.
/7/ Incorporated herein by reference to Post-Effective Amendment No. 3 on
Form N-4 filed by Lincoln Life & Annuity Account of Lincoln Life & Annuity
Company of New York on September 30, 1998 (File No. 333-10861).
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.
C-2
<PAGE>
<TABLE>
<CAPTION>
Name Positions and Offices with Lincoln Life & Annuity Company of New York
- ---- ---------------------------------------------------------------------
<S> <C>
Joanne B. Collins* President, Treasurer and Director
Troy D. Panning* Second Vice President and Chief Financial Officer
Roland C. Baker Director
1301 S. Meyers Road
Oakbrook Terrace, IL 60161
J. Patrick Barrett Director
Chairman & CEO
Carpat Investments
4605 Watergap
Manlius, NY 13104
Thomas D. Bell, Jr Director
President & CEO
Young & Rebicam Advertising
285 Madison Avenue
New York, NY 10017
Jon A. Boscia*** Director
Kathleen R. Gorman* Assistant Vice President
John H. Gotta***** Director
Barbara S. Kowalczyk*** Director
M. Leanne Lachman Director
Managing Director
Boston Financial
437 Madison Avenue - 18th Floor
New York, NY 10022
Louis G. Marcoccia Director
Senior Vice President
Syracuse University
Skytop Office Building
Skytop Road
Syracuse, NY 13244-5300
John M. Pietruski Director
One Penn Plaza
Suite 3408
New York, NY 10119
Lawrence T. Rowland**** Director
Robert O. Sheppard* Assistant Vice President
Richard C. Vaughan*** Director
C. Suzanne Womack*** Secretary
</TABLE>
- ---------------------------
* 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 Centre Square, West Tower,
1580 Market St., Suite 3900, Philadelphia, PA 19102.
**** Principal business address of each person is 1700 Magnovox Way,
One Reinsurance Place, Fort Wayne, Indiana 46804.
***** Principal business address of each person is 350 Church Street,
Hartford, CT 06103.
Item 26. Persons Controlled by or Under Common Control with Lincoln Life &
Annuity Company of New York ("LLANY") or the Lincoln Life & Annuity Variable
Annuity Account L.
Lincoln Life & Annuity Variable Annuity Account L is a separate account of LLANY
and may be deemed to be controlled by LLANY although LLANY will follow voting
instructions of Contractholders with respect to voting on certain important
matters requiring a vote of Contractholders.
See Exhibit 15(a): The Organizational Chart of Lincoln National Life Insurance
Holding Company System is hereby incorporated herein by this reference.
C-3
<PAGE>
Item 27. Number of Contractholders
As of March 31, 2000, Registrant had 207 Contractholders.
Item 28. Indemnification
Under the Participation Agreements entered into between LLANY 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, and T. Rowe
Price (the "Funds"), LLANY 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 LLANY
against any liability, loss, damages, costs or expenses which LLANY 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) Lincoln Financial Advisors Corporation also acts as the principal
underwriter for Lincoln National Variable Annuity Account L, the VA
Separate Account of UNUM Life Insurance Company of America, and the VA-I
Separate Account OF First UNUM Life Insurance Company.
(b)(1) The following table sets forth certain information regarding the officers
and directors of Lincoln Financial Advisors Corporation:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND ADDRESS WITH LINCOLN FINANCIAL ADVISORS CORPORATION
- ---------------- -------------------------------------------
<S> <C>
J. Michael Hemp***** President and Director
John M. Behrendt** Vice President
Gary D. Giller**** Director
Janet C. Chrzan*** Vice President and Treasurer
Cynthia A. Rose* Secretary
Jeffrey C. Carleton***** Vice President
Lucy D. Gase** Vice President and Assistant Secretary
Matthew Lynch***** Vice President, Chief Financial Officer,
Administrative Officer and Director
C. Gary Shimmin***** Vice President
Michael McMath***** Senior Vice President and Director
</TABLE>
C-4
<PAGE>
* Principal business address of each person is 1300 S. Clinton Street, Fort
Wayne, Indiana 46802-2706.
** Principal business address of each person is 200 East Berry Street, Fort
Wayne, Indiana 46802-2706.
*** Principal business address is Center Square West Tower, 1500 Market
Street-Suite 3900, Philadelphia, PA 19102-2112
**** Principal business address is 7650 Rivers Edge Dr., Suite 250, Columbus,
Ohio 43235.
***** Principal business address of each person is 350 Church Street, Hartford,
CT 06103
(c)
<TABLE>
<CAPTION>
Name of Net Underwriting
Principal Discounts and Compensation Brokerage
Underwriter Commissions on Redemption Commissions Compensation
- ----------- ---------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Lincoln Financial Advisors Corporation None None None 2,725,196
</TABLE>
Item 30. Location of Accounts and Records
Exhibit 15(b) is hereby expressly incorporated herein by this reference.
Item 31. Management Services
None
Item 32. Undertakings and Representations
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.
(d) 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.
(e) Lincoln Life & Annuity Company of New York hereby represents that the fees
and charges deducted under the Contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by Lincoln Life & Annuity Company of New York.
C-5
<PAGE>
SIGNATURES
(a) As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registration certifies that it meets the requirements of the
Securities Act Rule 485(b) for effectiveness of this Amendment and has caused
this Amendment to the Registration Statement to be signed on its behalf, in the
City of Syracuse, and State of New York on this 14th day of April, 2000.
Lincoln Life & Annuity Variable Annuity Account L
(Registrant)
By: Lincoln Life & Annuity Company of New York
By: /s/ Joanne B. Collins
--------------------------------------------
Joanne B. Collins, President
Lincoln Life & Annuity Company of New York
(Depositor)
By: /s/ Joanne B. Collins
--------------------------------------------
Joanne B. Collins, President
(b) As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed for the Depositor by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Joanne B. Collins President, Treasurer April 14, 2000
- ------------------------------ and Director (Principal
Joanne B. Collins Executive Officer)
/s/ Troy D. Panning Second Vice President April 14, 2000
- ------------------------------ and Chief Financial
Troy D. Panning Officer (Principal
Financial Officer and
Principal Accounting
Officer)
/s/ Roland C. Baker Director April 14, 2000
- ------------------------------
Roland C. Baker
/s/ J. Patrick Barrett Director April 14, 2000
- ------------------------------
J. Patrick Barrett
/s/ Thomas D. Bell, Jr. Director April 14, 2000
- ------------------------------
Thomas D. Bell, Jr.
/s/ Jon A. Boscia Director April 14, 2000
- ------------------------------
Jon A. Boscia
/s/ John H. Gotta Director April 14, 2000
- ------------------------------
John H. Gotta
/s/ Barbara S. Kowalczyk Director April 14, 2000
- ------------------------------
Barbara S. Kowalczyk
/s/ M. Leanne Lachman Director April 14, 2000
- ------------------------------
M. Leanne Lachman
/s/ Louis G. Marcoccia Director April 14, 2000
- ------------------------------
Louis G. Marcoccia
/s/ John M. Pietruski Director April 14, 2000
- ------------------------------
John M. Pietruski
/s/ Lawrence T. Rowland Director April 14, 2000
- ------------------------------
Lawrence T. Rowland
/s/ Richard C. Vaughan Director April 14, 2000
- ------------------------------
Richard C. Vaughan
<PAGE>
[LINCOLN FINANCIAL GROUP LOGO]
Lincoln Life & Annuity
Company of New York
P.O. Box 1337
Syracuse, NY 13201-1337
or call: 800-893-7168
GROUP VARIABLE
ANNUITY CONTRACT NO.: EFFECTIVE DATE:
(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.
/s/ Kathleen A. Gorman /s/ Joanne B. Collins
- ------------------------------ ------------------------
Assistant Secretary President
THE ANNUAL MORTALITY AND EXPENSE RISK CHARGE UNDER THIS CONTRACT IS 1.00% 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)
1
<PAGE>
TABLE OF CONTENTS
I. CONTRACT SPECIFICATIONS
1.1 Minimum Contribution Amount
1.2 Separate Account
1.3 Divisions Available Under This Contract
1.4 Limitations 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
2.1 Accumulation 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
Form No.: GAC 96-101 (NY)
2
<PAGE>
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
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
7.7 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
Form No.: GAC 96-101 (NY)
3
<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 Loan Foreclosure
10.9 Deferral Periods
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
Form No.: GAC 96-101 (NY)
4
<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 (American Century Variable Portfolios, Inc.: VP
Balanced)
Growth I Account (Fidelity's VIPF: Growth Portfolio)
Index Account (Dreyfus Life and Annuity Index Fund, Inc.)
International Stock Account (T. Rowe Price International Series, Inc.)
Equity-Income Account (Fidelity's VIPF: Equity-Income Portfolio)
Small Cap Account (Dreyfus Variable Investment Fund: Small Cap
Portfolio)
Global Growth Account (Janus Aspen Series, Worldwide Growth Portfolio)
Mid Cap Value Account (Neuberger & Berman AMT Partners Portfolio)
Mid Cap Growth I Account (Lincoln National Aggressive Growth Fund, Inc.)
Social Awareness Account (Lincoln National Social Awareness Fund, Inc.)
Small Cap Growth Account (Baron Capital Asset Fund)
1.4 LIMITATIONS ON TRANSFERS AND WITHDRAWALS DURING THE ACCUMULATION PERIOD:
Unlimited transfer requests may be made by a Participant in one (1)
calendar year.
1.5 ANNUAL ADMINISTRATION CHARGE:
Twenty-five dollars ($25) per Participant
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 percent (1.00%).
1.7 PLAN NAME:
1.8 EMPLOYER:
Form No.: GAC 96-101 (NY) 5
<PAGE>
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 life does not guarantee the principal amount
or investment results.
Form No.: GAC 96-101 (NY) 6
<PAGE>
ARTICLE II - DEFINITIONS
2.1 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.
2.2 ACCUMULATION UNIT VALUE: The dollar value of an Accumulation Unit in each
Sub-Account on any Valuation Date.
2.3 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), conversion to an annuity, imposition of
charges, payment of a Death Benefit or a combination thereof.
2.4 ANNUITANT: The person receiving annuity payments under the terms of this
Contract.
2.5 ANNUITY 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.
2.6 ANNUITY CONVERSION AMOUNT: The amount of a Participant's Account applied
toward the purchase of an Annuity.
2.7 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.
2.8 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.
2.9 ANNUITY PERIOD: The period concurrent with or following the Accumulation
Period, during which an Annuitant's annuity payments are made.
2.10 ANNUITY 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.
2.11 ANNUITY UNIT VALUE: The dollar value of an Annuity Unit in each Sub-Account
on any Valuation Date.
2.12 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)
Form No.: GAC 96-101 (NY) 7
<PAGE>
designated to receive any applicable remainder of an annuity in the event
of the Annuitant's death during the Annuity Period.
2.13 BUSINESS DAY: A day on which LL&A and the New York Stock Exchange are
customarily open for business.
2.14 CERTIFICATE: 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.
2.15 CONTRIBUTIONS: All amounts deposited by You or the Participant under this
Contract including any amount transferred from another contract.
2.16 DIVISION(S): The Guaranteed Interest Division and/or the Variable
Investment Division named in Section 1.3.
2.17 LL&A: Lincoln Life & Annuity Company of New York, at its Home Office in
Syracuse, New York.
2.18 GENERAL ACCOUNT: All assets of LL&A other than those in the Separate
Account specified in Section 1.2 or any other separate account.
2.19 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.
2.20 GUARANTEED ANNUITY: An annuity for which LL&A guarantees the amount of each
payment as long as the annuity is payable.
2.21 GUARANTEED 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.
2.22 NET WITHDRAWAL AMOUNT: The amount paid to a Participant when a withdrawal
occurs.
2.23 PARTICIPANT: A person who has enrolled under this Contract and maintains a
Participant's Account.
2.24 PARTICIPANT'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.
2.25 PARTICIPATION 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.
Form No.: GAC 96-101 (NY) 8
<PAGE>
2.26 PARTICIPATION 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.
2.27 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.
2.28 PLAN: 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.
2.29 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.
2.30 SEPARATE 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.
2.31 SUB-ACCOUNT(S): An account established in the Variable Investment Division
which invests in shares of a corresponding mutual fund.
2.32 VALUATION 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.
2.33 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.
2.34 VARIABLE ANNUITY: An annuity with payments that increase or decrease in
accordance with the investment results of the selected Sub-Account(s).
2.35 VARIABLE 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.
2.36 YOU or YOUR: The Contractholder named on the face page of this Contract.
Form No.: GAC 96-101 (NY) 9
<PAGE>
ARTICLE III - CONTRIBUTIONS
3.1 INITIAL 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.
3.2 ALLOCATION 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.
3.3 PAYMENT 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.
3.4 CHARACTERIZATION 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.
3.5 MAXIMUM 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.
Form No.: GAC 96-101 (NY) 10
<PAGE>
3.6 VALUATION: 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.
3.7 ANNUAL 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.
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, LL&A 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.
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.
Form No.: GAC 96-101 (NY) 11
<PAGE>
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.
Form No.: GAC 96-101 (NY) 12
<PAGE>
ARTICLE IV - GUARANTEED INTEREST DIVISION
4.1 PARTICIPANT'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.
4.2 INTEREST: 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.
Form No.: GAC 96-101 (NY) 13
<PAGE>
ARTICLE V - VARIABLE INVESTMENT DIVISION
5.1 PARTICIPANT'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.
5.2 ACCUMULATION 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.
5.3 ACCUMULATION 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.
5.4 NET 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;
Form No.: GAC 96-101 (NY) 14
<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.
5.5 MORTALITY 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.
Form No.: GAC 96-101 (NY) 15
<PAGE>
ARTICLE VI - TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
6.1 TRANSFERS 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.
6.2 TRANSFERS DURING ANNUITY PERIOD: An Annuitant may not transfer any part of
the Annuitant's Annuity Conversion Amount.
Form No.: GAC 96-101 (NY) 16
<PAGE>
ARTICLE VII - WITHDRAWALS AND DISTRIBUTIONS
7.1 WITHDRAWALS 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.
7.3 PARTIAL WITHDRAWALS: A Partial Withdrawal of a Participant's Account will
occur when:
(a) A Participant who has an outstanding loan makes a withdrawal; or
Form No.: GAC 96-101 (NY) 17
<PAGE>
(b) A Participant who has no outstanding loans, requests an amount less
than a total withdrawal.
7.4 WITHDRAWAL 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.
7.5 MINIMUM 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.
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
Form No.: GAC 96-101 (NY) 18
<PAGE>
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.
7.6 CONTINGENT 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:
The Participant has died 0%
The Participant has incurred 0%
a disability for which he is
receiving Social Security
payments
The Participant has attained age 0%
fifty-nine and one-half (59 1/2)
The Participant has separated 0%
from service with the Contract-
holder
A Participant has requested a 0%
withdrawal which will not exceed
twenty percent (20%) of his
Participant's Account balance
and no other withdrawal has been
made in that calendar year
(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%
Form No.: GAC 96-101 (NY) 19
<PAGE>
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.
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.
Form No.: GAC 96-101 (NY) 20
<PAGE>
7.7 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 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 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. 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 1.10 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
Form No.: GAC 96-101 (NY) 21
<PAGE>
(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.
7.8 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 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 Deferred 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 Deferred 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 Deferred 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.
Form No.: GAC 96-101 (NY) 22
<PAGE>
ARTICLE VIII - DEATH BENEFITS
8.1 DEATH 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.
8.2 NOTIFICATION 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.
8.3 PAYMENT 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.
Form No.: GAC 96-101 (NY) 23
<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.
8.4 DEATH 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.
Form No.: GAC 96-101 (NY) 24
<PAGE>
ARTICLE IX - ANNUITIES
9.1 ELECTION 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.
9.2 GUARANTEED 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.
9.3 VARIABLE 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
Form No.: GAC 96-101 (NY) 25
<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.
9.4 BASIS 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.
9.5 ANNUITY 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.
9.6 RETIRED 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.
Form No.: GAC 96-101 (NY) 26
<PAGE>
ARTICLE X - LOANS
10.1 GENERAL: 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.
10.2 RESTRICTIONS 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 Participant's 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.
10.3 MINIMUM LOAN AMOUNT: The initial amount of a loan must be at least one
thousand dollars ($1,000).
10.4 NUMBER 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.
Form No.: GAC 96-101 (NY) 27
<PAGE>
10.5 LOAN 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
10.6 EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT: When a Participant takes a loan,
LL&A will subdivide his Participant's Account balance in the Guaranteed
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 (3.0%) 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.
10.7 DEFAULT IN LOAN REPAYMENT: If a Participant fails to make any principal
and interest payment within ninety (90) days of the payment due date, the
entire outstanding loan balance 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.
10.8 LOAN 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 the outstanding loan
balance which includes unpaid principal and interest due and accrued.
In no event shall the amount liquidated exceed the Participant's value in
the Guaranteed Interest Division.
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;
Form No.: GAC 96-101 (NY) 28
<PAGE>
(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.
10.9 DEFERRAL 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.
Form No.: GAC 96-101 (NY) 29
<PAGE>
ARTICLE XI - DISCONTINUANCE AND TERMINATION OF CONTRACT
11.1 CONTRACT 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.
11.2 CONTRACT 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.
11.3 EFFECT 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.
11.4 CONTRACT TERMINATION: This Contract will terminate when there are no
Participant Account balances under this Contract.
Form No.: GAC 96-101 (NY) 30
<PAGE>
ARTICLE XII - GENERAL PROVISIONS
12.1 CONTRACT: 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.
12.2 DEACTIVATION: 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.
12.3 CONTRACT 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.
12.4 CONTRACT INTERPRETATION: Whenever the context so requires, the plural
includes the singular, the singular the plural and the masculine the
feminine.
Form No.: GAC 96-101 (NY) 31
<PAGE>
12.5 INFORMATION, 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.
12.6 MISSTATEMENTS: 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.
12.7 ASSIGNMENT: 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.
12.8 MARKET 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.
12.9 DEFERRAL 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.
12.10 DEDUCTIONS 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.
Form No.: GAC 96-101 (NY) 32
<PAGE>
12.11 FACILITY 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.
12.12 EVIDENCE 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.
12.13 NON-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.
12.14 RECEIPT 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.
12.15 SEPARABILITY 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.
12.16 THE 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
33
<PAGE>
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
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,
(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.
12.17 PAYMENT 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.
12.18 FREE-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.
Form No.: GAC 96-101 (NY) 34
<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
Form No.: GAC 96-101 (NY) 35
<PAGE>
[LINCOLN FINANCIAL GROUP LOGO]
Lincoln Life & Annuity
Company of New York
P.O. Box 1337
Syracuse, NY 13201-1337
or call: 800-893-7168
GROUP VARIABLE
ANNUITY CONTRACT NO.: EFFECTIVE DATE:
(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.
/s/ Kathleen A. Gorman /s/ Joanne B. Collins
- ------------------------------ ------------------------
Assistant Secretary President
THE ANNUAL MORTALITY AND EXPENSE RISK CHARGE UNDER THIS CONTRACT IS 1.00% 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)
1
<PAGE>
TABLE OF CONTENTS
I. CONTRACT SPECIFICATIONS
1.1 Minimum Contribution Amount
1.2 Separate Account
1.3 Divisions Available Under This Contract
1.4 Limitations 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
2.1 Accumulation 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
Form No.: GAC 96-101 (NY)
2
<PAGE>
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
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
7.7 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
IX. ANNUITIES
9.1 Election of Annuity Option
Form No.: GAC 96-101 (NY)
3
<PAGE>
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 Loan Foreclosure
10.9 Deferral Periods
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
Form No.: GAC 96-101 (NY)
4
<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 (American Century Variable Portfolios, Inc.: VP
Balanced)
Growth I Account (Fidelity's VIPF: Growth Portfolio)
Index Account (Dreyfus Life and Annuity Index Fund, Inc.)
International Stock Account (T. Rowe Price International Series, Inc.)
Equity-Income Account (Fidelity's VIPF: Equity-Income Portfolio)
Small Cap Account (Dreyfus Variable Investment Fund: Small Cap
Portfolio)
Global Growth Account (Janus Aspen Series, Worldwide Growth Portfolio)
Mid Cap Value Account (Neuberger & Berman AMT Partners Portfolio)
Mid Cap Growth I Account (Lincoln National Aggressive Growth Fund, Inc.)
Social Awareness Account (Lincoln National Social Awareness Fund, Inc.)
Small Cap Growth Account (Baron Capital Asset Fund)
1.4 LIMITATIONS ON TRANSFERS AND WITHDRAWALS DURING THE ACCUMULATION PERIOD:
Unlimited transfer requests may be made by a Participant each calendar
year.
1.5 ANNUAL ADMINISTRATION CHARGE:
Twenty-five dollars ($25) per Participant
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 percent (1.00%).
1.7 PLAN NAME:
1.8 EMPLOYER:
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.
Form No.: GAC 96-101 (NY) 5
<PAGE>
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 life does not guarantee the principal amount
or investment results.
Form No.: GAC 96-101 (NY) 6
<PAGE>
ARTICLE II - DEFINITIONS
2.1 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.
2.2 ACCUMULATION UNIT VALUE: The dollar value of an Accumulation Unit in each
Sub-Account on any Valuation Date.
2.3 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), conversion to an annuity, imposition of
charges, payment of a Death Benefit or a combination thereof.
2.4 ANNUITANT: The person receiving annuity payments under the terms of this
Contract.
2.5 ANNUITY 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.
2.6 ANNUITY CONVERSION AMOUNT: The amount of a Participant's Account applied
toward the purchase of an Annuity.
2.7 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.
2.8 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.
2.9 ANNUITY PERIOD: The period concurrent with or following the Accumulation
Period, during which an Annuitant's annuity payments are made.
2.10 ANNUITY 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.
2.11 ANNUITY UNIT VALUE: The dollar value of an Annuity Unit in each Sub-Account
on any Valuation Date.
2.12 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.
2.13 BUSINESS DAY: A day on which LL&A and the New York Stock Exchange are
customarily open for business.
Form No.: GAC 96-101 (NY) 7
<PAGE>
2.14 CERTIFICATE: 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.
2.15 CONTRIBUTIONS: All amounts deposited by You or the Participant under this
Contract including any amount transferred from another contract.
2.16 DIVISION(S): The Guaranteed Interest Division and/or the Variable
Investment Division named in Section 1.3.
2.17 LL&A: Lincoln Life & Annuity Company of New York, at its Home Office in
Syracuse, New York.
2.18 GENERAL ACCOUNT: All assets of LL&A other than those in the Separate
Account specified in Section 1.2 or any other separate account.
2.19 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.
2.20 GUARANTEED ANNUITY: An annuity for which LL&A guarantees the amount of each
payment as long as the annuity is payable.
2.21 GUARANTEED 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.
2.22 NET WITHDRAWAL AMOUNT: The amount paid to a Participant when a withdrawal
occurs.
2.23 PARTICIPANT: A person who has enrolled under this Contract and maintains a
Participant's Account.
2.24 PARTICIPANT'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.
2.25 PARTICIPATION 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.
2.26 PARTICIPATION 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
Form No.: GAC 96-101 (NY) 8
<PAGE>
Total Withdrawal as defined in Section 7.2, and Contributions on behalf of
the Participant are resumed under any Contract.
2.27 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.
2.28 PLAN: 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.
2.29 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.
2.30 SEPARATE 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.
2.31 SUB-ACCOUNT(S): An account established in the Variable Investment Division
which invests in shares of a corresponding mutual fund.
2.32 VALUATION 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.
2.33 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.
2.34 VARIABLE ANNUITY: An annuity with payments that increase or decrease in
accordance with the investment results of the selected Sub-Account(s).
2.35 VARIABLE 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.
2.36 YOU or YOUR: The Contractholder named on the face page of this Contract.
Form No.: GAC 96-101 (NY) 9
<PAGE>
ARTICLE III - CONTRIBUTIONS
3.1 INITIAL 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.
3.2 ALLOCATION 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.
3.3 PAYMENT 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.
3.4 CHARACTERIZATION 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.
3.5 MAXIMUM 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.
3.6 VALUATION: 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
Form No.: GAC 96-101 (NY) 10
<PAGE>
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.
3.7 ANNUAL 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.
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, LL&A 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.
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
Form No.: GAC 96-101 (NY) 11
<PAGE>
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.
Form No.: GAC 96-101 (NY) 12
<PAGE>
ARTICLE IV - GUARANTEED INTEREST DIVISION
4.1 PARTICIPANT'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.
4.2 INTEREST: 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.
Form No.: GAC 96-101 (NY) 13
<PAGE>
ARTICLE V - VARIABLE INVESTMENT DIVISION
5.1 PARTICIPANT'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.
5.2 ACCUMULATION 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.
5.3 ACCUMULATION 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.
5.4 NET 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;
Form No.: GAC 96-101 (NY) 14
<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.
5.5 MORTALITY 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.
Form No.: GAC 96-101 (NY) 15
<PAGE>
ARTICLE VI - TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
6.1 TRANSFERS 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.
6.2 TRANSFERS DURING ANNUITY PERIOD: An Annuitant may not transfer any part of
the Annuitant's Annuity Conversion Amount.
Form No.: GAC 96-101 (NY) 16
<PAGE>
ARTICLE VII - WITHDRAWALS AND DISTRIBUTIONS
7.1 WITHDRAWALS 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.
7.3 PARTIAL WITHDRAWALS: A Partial Withdrawal of a Participant's Account will
occur when:
(a) A Participant who has an outstanding loan makes a withdrawal; or
Form No.: GAC 96-101 (NY) 17
<PAGE>
(b) A Participant who has no outstanding loans, requests an amount less
than a total withdrawal.
7.4 WITHDRAWAL 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.
7.5 MINIMUM 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.
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
Form No.: GAC 96-101 (NY) 18
<PAGE>
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 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.
7.6 CONTINGENT 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:
The Participant has died 0%
The Participant has incurred 0%
a disability for which he is
receiving Social Security
payments
The Participant has attained age 0%
fifty-nine and one-half (59 1/2)
The Participant has separated from 0%
service with the Contractholder and is
age fifty-five (55)
The Participant has separated from 0%
service with the Contractholder
A Participant has requested a withdrawal 0%
which will not exceed twenty percent (20%)
of his Participant's Account balance and
no other withdrawal has been made in that
calendar year
(b) For all other amounts subject to a CDSC, the CDSC will be in
accordance with the schedule below.
Form No.: GAC 96-101 (NY) 19
<PAGE>
During Participation Year CDSC Percent
1-5 6%
6-10 3%
11-15 1%
16+ 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.
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.
7.7 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 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 withdrawal payments begin again until the next calendar year.
Form No.: GAC 96-101 (NY) 20
<PAGE>
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 1.10 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.
7.8 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 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 Deferred 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 Deferred Annuity. The form of remittance
will not be an instrument that can be negotiated by the Participant.
Form No.: GAC 96-101 (NY)
21
<PAGE>
(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 Deferred 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.
Form No.: GAC 96-101 (NY) 22
<PAGE>
ARTICLE VIII - DEATH BENEFITS
8.1 DEATH 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.
8.2 NOTIFICATION 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.
8.3 PAYMENT 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.
Form No.: GAC 96-101 (NY)
23
<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.
8.4 DEATH 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.
Form No.: GAC 96-101 (NY)
24
<PAGE>
ARTICLE IX - ANNUITIES
9.1 ELECTION 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.
9.2 GUARANTEED 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.
9.3 VARIABLE 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
Form No.: GAC 96-101 (NY) 25
<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.
9.4 BASIS 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.
9.5 ANNUITY 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.
9.6 RETIRED 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.
Form No.: GAC 96-101 (NY) 26
<PAGE>
ARTICLE X - LOANS
10.1 GENERAL: 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.
10.2 RESTRICTIONS 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 Participant's 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.
10.3 MINIMUM LOAN AMOUNT: The initial amount of a loan must be at least one
thousand dollars ($1,000).
10.4 NUMBER 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.
Form No.: GAC 96-101 (NYA) 27
<PAGE>
10.5 LOAN 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.
10.6 EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT: When a Participant takes a loan,
LL&A will subdivide his Participant's Account balance in the Guaranteed
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 (3.0%) 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.
10.7 DEFAULT IN LOAN REPAYMENT: If a Participant fails to make any principal
and interest payment within ninety (90) days of the payment due date, the
entire outstanding loan balance 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.
10.8 LOAN 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 the outstanding loan
balance which includes unpaid principal and interest due and accrued.
In no event shall the amount liquidated exceed the Participant's value in
the Guaranteed Interest Division.
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;
Form No.: GAC 96-101 (NYA) 28
<PAGE>
(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.
10.9 DEFERRAL 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.
Form No.: GAC 96-101 (NYA) 29
<PAGE>
ARTICLE XI - DISCONTINUANCE AND TERMINATION OF CONTRACT
11.1 CONTRACT 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.
11.2 CONTRACT 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.
11.3 EFFECT 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.
11.4 CONTRACT TERMINATION: This Contract will terminate when there are no
Participant Account balances under this Contract.
Form No.: GAC 96-101 (NY)
30
<PAGE>
ARTICLE XII - GENERAL PROVISIONS
12.1 CONTRACT: 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.
12.2 DEACTIVATION: 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.
12.3 CONTRACT 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.
12.4 CONTRACT INTERPRETATION: Whenever the context so requires, the plural
includes the singular, the singular the plural and the masculine the
feminine.
Form No.: GAC 96-101 (NY) 31
<PAGE>
12.5 INFORMATION, 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.
12.6 MISSTATEMENTS: 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.
12.7 ASSIGNMENT: 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.
12.8 MARKET 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.
12.9 DEFERRAL 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.
12.10 DEDUCTIONS 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.
Form No.: GAC 96-101 (NY) 32
<PAGE>
12.11 FACILITY 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.
12.12 EVIDENCE 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.
12.13 NON-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.
12.14 RECEIPT 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.
12.15 SEPARABILITY 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.
12.16 THE 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.
Form No.: GAC 96-101 (NY) 33
<PAGE>
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
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,
(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.
12.17 PAYMENT 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.
12.18 FREE-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.
Form No.: GAC 96-101 (NY) 34
<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
Form No.: GAC 96-101 (NY) 35
<PAGE>
[LINCOLN FINANCIAL GROUP LOGO]
Lincoln Life & Annuity
Company of New York
P.O. Box 1337
Syracuse, NY 13201-1337
or call: 800-893-7168
GROUP VARIABLE
ANNUITY CONTRACT NO.: EFFECTIVE DATE:
(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.
/s/ Kathleen A. Gorman /s/ Joanne B. Collins
- ------------------------------ ------------------------
Assistant Secretary President
THE ANNUAL MORTALITY AND EXPENSE RISK CHARGE UNDER THIS CONTRACT IS 1.00% 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)
1
<PAGE>
TABLE OF CONTENTS
I. CONTRACT SPECIFICATIONS
1.1 Minimum Contribution Amount
1.2 Separate Account
1.3 Divisions Available Under This Contract
1.4 Limitations 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
2.1 Accumulation 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
Form No.: GAC 96-101 (NY)
2
<PAGE>
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
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 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
Form No.: GAC 96-101 (NY)
3
<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 Loan Foreclosure
10.9 Deferral Periods
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
Form No.: GAC 96-101 (NY)
4
<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 (American Century Variable Portfolios, Inc.: VP
Balanced)
Growth I Account (Fidelity's VIPF: Growth Portfolio)
Index Account (Dreyfus Life and Annuity Index Fund, Inc.)
International Stock Account (T. Rowe Price International Series, Inc.)
Equity-Income Account (Fidelity's VIPF: Equity-Income Portfolio)
Small Cap Account (Dreyfus Variable Investment Fund: Small Cap
Portfolio)
Global Growth Account (Janus Aspen Series, Worldwide Growth Portfolio)
Mid Cap Value Account (Neuberger & Berman AMT Partners Portfolio)
Mid Cap Growth I Account (Lincoln National Aggressive Growth Fund, Inc.)
Social Awareness Account (Lincoln National Social Awareness Fund, Inc.)
Small Cap Growth Account (Baron Capital Asset Fund)
1.4 LIMITATIONS ON TRANSFERS AND WITHDRAWALS DURING THE ACCUMULATION PERIOD:
Unlimited transfer requests may be made between Sub-Accounts by a
Participant each calendar year.
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:
Twenty-five dollars ($25) per Participant
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.
Form No.: GAC 96-101 (NY) 5
<PAGE>
1.6 ANNUAL MORTALITY AND EXPENSE RISK CHARGE APPLICABLE TO VARIABLE INVESTMENT
DIVISION: Annual rate of one percent (1.00%).
1.7 PLAN NAME:
1.8 EMPLOYER:
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 life does not guarantee the principal amount
or investment results.
Form No.: GAC 96-101 (NY) 6
<PAGE>
ARTICLE II - DEFINITIONS
2.1 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.
2.2 ACCUMULATION UNIT VALUE: The dollar value of an Accumulation Unit in each
Sub-Account on any Valuation Date.
2.3 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), conversion to an annuity, imposition of
charges, payment of a Death Benefit or a combination thereof.
2.4 ANNUITANT: The person receiving annuity payments under the terms of this
Contract.
2.5 ANNUITY 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.
2.6 ANNUITY CONVERSION AMOUNT: The amount of a Participant's Account applied
toward the purchase of an Annuity.
2.7 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.
2.8 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.
2.9 ANNUITY PERIOD: The period concurrent with or following the Accumulation
Period, during which an Annuitant's annuity payments are made.
2.10 ANNUITY 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.
2.11 ANNUITY UNIT VALUE: The dollar value of an Annuity Unit in each Sub-Account
on any Valuation Date.
2.12 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.
2.13 BUSINESS DAY: A day on which LL&A and the New York Stock Exchange are
Form No.: GAC 96-101 (NY) 7
<PAGE>
customarily open for business.
2.14 CERTIFICATE: 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.
2.15 CONTRIBUTIONS: All amounts deposited by You or the Participant under this
Contract including any amount transferred from another contract.
2.16 DIVISION(S): The Guaranteed Interest Division and/or the Variable
Investment Division named in Section 1.3.
2.17 LL&A: Lincoln Life & Annuity Company of New York, at its Home Office in
Syracuse, New York.
2.18 GENERAL ACCOUNT: All assets of LL&A other than those in the Separate
Account specified in Section 1.2 or any other separate account.
2.19 GROSS WITHDRAWAL AMOUNT: The amount by which a Participant's Account is
reduced when a withdrawal occurs, including any applicable Annual
Administration Charge.
2.20 GUARANTEED ANNUITY: An annuity for which LL&A guarantees the amount of each
payment as long as the annuity is payable.
2.21 GUARANTEED 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.
2.22 NET WITHDRAWAL AMOUNT: The amount paid to a Participant when a withdrawal
occurs.
2.23 PARTICIPANT: A person who has enrolled under this Contract and maintains a
Participant's Account.
2.24 PARTICIPANT'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.
2.25 PARTICIPATION 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.
2.26 PARTICIPATION 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
Form No.: GAC 96-101 (NY) 8
<PAGE>
Total Withdrawal as defined in Section 7.2, and Contributions on behalf of
the Participant are resumed under any Contract.
2.27 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.
2.28 PLAN: 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.
2.29 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.
2.30 SEPARATE 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.
2.31 SUB-ACCOUNT(S): An account established in the Variable Investment Division
which invests in shares of a corresponding mutual fund.
2.32 VALUATION 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.
2.33 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.
2.34 VARIABLE ANNUITY: An annuity with payments that increase or decrease in
accordance with the investment results of the selected Sub-Account(s).
2.35 VARIABLE 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.
2.36 YOU or YOUR: The Contractholder named on the face page of this Contract.
Form No.: GAC 96-101 (NY) 9
<PAGE>
ARTICLE III - CONTRIBUTIONS
3.1 INITIAL 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.
3.2 ALLOCATION 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.
3.3 PAYMENT 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.
3.4 CHARACTERIZATION 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.
3.5 MAXIMUM 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.
3.6 VALUATION: 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
Form No.: GAC 96-101 (NY) 10
<PAGE>
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.
3.7 ANNUAL 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.
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, LL&A 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.
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
Form No.: GAC 96-101 (NY) 11
<PAGE>
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.
Form No.: GAC 96-101 (NY) 12
<PAGE>
ARTICLE IV - GUARANTEED INTEREST DIVISION
4.1 PARTICIPANT'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.
4.2 INTEREST: 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.
Form No.: GAC 96-101 (NY) 13
<PAGE>
ARTICLE V - VARIABLE INVESTMENT DIVISION
5.1 PARTICIPANT'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.
5.2 ACCUMULATION 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.
5.3 ACCUMULATION 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."
5.4 NET 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;
Form No.: GAC 96-101 (NY) 14
<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.
5.5 MORTALITY 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.
Form No.: GAC 96-101 (NY) 15
<PAGE>
ARTICLE VI - TRANSFERS BETWEEN DIVISIONS AND SUB-ACCOUNTS
6.1 TRANSFERS 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.
6.2 TRANSFERS DURING ANNUITY PERIOD: An Annuitant may not transfer any part of
the Annuitant's Annuity Conversion Amount.
Form No.: GAC 96-101 (NY) 16
<PAGE>
ARTICLE VII - WITHDRAWALS AND DISTRIBUTIONS
7.1 WITHDRAWALS 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), 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 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.
7.3 PARTIAL 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.
Form No.: GAC 96-101 (NY) 17
<PAGE>
7.4 WITHDRAWAL 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.
7.5 MINIMUM 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.
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
Form No.: GAC 96-101 (NY) 18
<PAGE>
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.
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:
The Participant has died 100%
The Participant has incurred 100%
a disability for which he is
receiving Social Security
payments
The Participant has attained age 100%
fifty-nine and one-half (59 1/2)
The Participant has separated from 100%
service with the Contractholder
The Participant has demonstrated 100%
a financial hardship need
The Participant has separated from 100%
service with the Contractholder
and is age fifty-five (55)
(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:
Form No.: GAC 96-101 (NY) 19
<PAGE>
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.
7.7 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 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 withdrawal payments begin again until the next calendar year.
Form No.: GAC 96-101 (NY) 20
<PAGE>
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 1.10 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.
7.8 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 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 Deferred 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 Deferred Annuity. The form of remittance
will not be an instrument that can be negotiated by the Participant.
Form No.: GAC 96-101 (NY)
21
<PAGE>
(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 Deferred 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.
Form No.: GAC 96-101 (NY)
22
<PAGE>
ARTICLE VIII - DEATH BENEFITS
8.1 DEATH 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.
8.2 NOTIFICATION 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.
8.3 PAYMENT 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.
Form No.: GAC 96-101 (NY)
23
<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.
8.4 DEATH 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.
Form No.: GAC 96-101 (NY)
24
<PAGE>
ARTICLE IX - ANNUITIES
9.1 ELECTION 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.
9.2 GUARANTEED 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.
9.3 VARIABLE 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
Form No.: GAC 96-101 (NY)
25
<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.
9.4 BASIS 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.
9.5 ANNUITY 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.
9.6 RETIRED 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.
Form No.: GAC 96-101 (NY)
26
<PAGE>
ARTICLE X - LOANS
10.1 GENERAL: 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.
10.2 RESTRICTIONS 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 Participant's 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.
10.3 MINIMUM LOAN AMOUNT: The initial amount of a loan must be at least one
thousand dollars ($1,000).
10.4 NUMBER 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.
10.5 LOAN 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.
Form No.: GAC 96-101 (NYA)
27
<PAGE>
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
10.6 EFFECT OF LOAN ON PARTICIPANT'S ACCOUNT: When a Participant takes a loan,
LL&A will subdivide his Participant's Account balance in the Guaranteed
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 (3.0%) 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.
10.7 DEFAULT IN LOAN REPAYMENT: If a Participant fails to make any principal
and interest payment within ninety (90) days of the payment due date, the
entire outstanding loan balance 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.
10.8 LOAN 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 the outstanding loan
balance which includes unpaid principal and interest due and accrued.
In no event shall the amount liquidated exceed the Participant's value in
the Guaranteed Interest Division.
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.
Form No.: GAC 96-101 (NYA)
28
<PAGE>
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.
10.9 DEFERRAL 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.
Form No.: GAC 96-101 (NYA)
29
<PAGE>
ARTICLE XI - DISCONTINUANCE AND TERMINATION OF CONTRACT
11.1 CONTRACT 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.
11.2 CONTRACT 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.
11.3 EFFECT 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.
11.4 CONTRACT TERMINATION: This Contract will terminate when there are no
Participant Account balances under this Contract.
Form No.: GAC 96-101 (NY)
30
<PAGE>
ARTICLE XII - GENERAL PROVISIONS
12.1 CONTRACT: 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.
12.2 DEACTIVATION: 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. LL&A will give You not less than ninety (90)
days notice of the date of deactivation.
12.3 CONTRACT 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.
12.4 CONTRACT INTERPRETATION: Whenever the context so requires, the plural
includes the singular, the singular the plural and the masculine the
feminine.
Form No.: GAC 96-101 (NY)
31
<PAGE>
12.5 INFORMATION, 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.
12.6 MISSTATEMENTS: 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.
12.7 ASSIGNMENT: 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.
12.8 MARKET 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.
12.9 DEFERRAL 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.
12.10 DEDUCTIONS 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.
Form No.: GAC 96-101 (NY)
32
<PAGE>
12.11 FACILITY 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.
12.12 EVIDENCE 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.
12.13 NON-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.
12.14 RECEIPT 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.
12.15 SEPARABILITY 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.
12.16 THE 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
Form No.: GAC 96-101 (NY)
33
<PAGE>
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 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,
(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.
12.17 PAYMENT 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.
12.18 FREE-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.
Form No.: GAC 96-101 (NY)
34
<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
Form No.: GAC 96-101 (NY)
35
<PAGE>
[LINCOLN
FINANCIAL GROUP
LOGO]
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
APPLICATION FOR GROUP ANNUITY CONTRACT
WITH
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(HEREIN TERMED "LL&A")
SYRACUSE, NEW YORK
____________________________________ of ________________________________
(herein termed the "Contractholder") (address)
hereby authorizes LL&A to issue a Group Annuity Contract providing retirement
benefits for the Contractholder's Employees, members of an Association, or the
Employees of the Company on whose behalf the above designated Contractholder
serves as Trustee.
Plan Type: ___ 403(b) ____ 401(a) ____ other _______________
It is understood that Participants under the Contract may be subject to the
restrictions on withdrawals imposed by the Internal Revenue Code of 1986, as
amended.
Contributions to the Contract and transfers of value within the Contract shall
be subject to the limitations imposed by the Plan, if any, named in the
Contract.
If a deposit is not made to the Contract within ninety (90) days after the later
of: (1) the date the Application is signed, or (2) the Effective Date of the
Contract, LL&A may, at its option, declare the Contract invalid and deem it null
and void for all purposes, notwithstanding any provision to the contrary in the
Contract. LL&A will provide the Contractholder thirty (30) days notice prior to
declaring this Contract invalid.
It is agreed that this Application together with the Contract comprise the
entire agreement between the Applicant and LL&A.
Form No. 96-100A
1
<PAGE>
By signing this Application the Contractholder designates
_____________________________ of __________________________________
(name) (address)
as Broker for said Contract, and as such to receive any commissions payable with
respect to deposits made to the Company in accordance with the terms and
provisions of the Contract.
Any person who knowingly and with intent to defraud any insurance company or
other person files a statement of claim containing any materially false
information, or conceals for the purpose of misleading, information concerning
any fact material thereto, commits a fraudulent insurance act, which is a
crime, and shall also be subject to a civil penalty not to exceed five thousand
dollars and the stated value of the claim for each such violation.
Dated at ____________________ this ________ day of _______________
By __________________________________
(Contractholder)
__________________________________
(Official Title)
By __________________________________
(Broker)
Applicable to Variable Annuity Contracts only:
It is acknowledged that the Contractholder has received a Prospectus relating to
this Group Variable Annuity Contract prior to the date of this Application.
_____ Check here to request a Statement of Additional Information.
Form No. 96-100A
2
<PAGE>
[LOGO]
Lincoln
---------------
Financial Group
Enrollment/Change Request &
Salary Reduction Agreement
Lincoln Life & Annuity Company of New York New York Variable Annuity
PO Box 1337
Syracuse NY 13201-1337
Tel. 800-893-7168
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Participant Employee's name Soc. Sec. no.
Information ----------------------------------------------------------------------------------------------------------
Address
----------------------------------------------------------------------------------------------------------
* Proof required, City, State, ZIP
refer to the back ----------------------------------------------------------------------------------------------------------
of this form. [ ] Male [ ] Female Marital status Daytime phone
----------------------------------------------------------------------------------------------------------
Your personal Date of birth Date of hire/rehire Evening phone
investment elections ----------------------------------------------------------------------------------------------------------
should be consistent Employer's name
with your primary ----------------------------------------------------------------------------------------------------------
investment GP/ER ID number Group Annuity Contract nos.
objectives. ----------------------------------------------------------------------------------------------------------
[ ] New enrollment Change of: [ ] Name* [ ] Beneficiary
Refer to your [ ] Allocation election [ ] Address/phone [ ] Salary Reduction
variable annuity Select one primary investment objective for your retirement plan.
brochure for [ ] Stability of principal [ ] Growth & income [ ] Growth [ ] Aggressive growth
investment Number of dependents Occupation
objective ---------------------------- ---------------------------------------------
information. Total family income $ Estimated net worth $
--------------------------- -----------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Salary Reduction Check with your payroll department to determine which option they use per pay period.
Information Salary reduction $_____________ or ___ % of pay Date of reduction ________________
Percentages must be You may select up to ten investment funds.
in whole numbers % Asset Manager % Guaranteed % Small Cap
only and must total ---------- ---------- ----------
100%. % Balanced % Index % Small Cap Growth
---------- ---------- ----------
% Equity Income % International % Social Awareness
---------- ---------- ----------
% Global Growth % Mid Cap Growth I
---------- ----------
% Growth I % Mid Cap Value
---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------------
Beneficiary Complete the following information for each beneficiary. (You must have at least one primary.)
Designation Primary's name Soc. Sec. no.
----------------------------------------------------------------------------------------------------------
Percentages must be Relationship Date of birth Percentage
in whole numbers ----------------------------------------------------------------------------------------------------------
only. The total Address
percentages for ----------------------------------------------------------------------------------------------------------
primary beneficiaries City, State, ZIP
and for contingent ----------------------------------------------------------------------------------------------------------
beneficiaries must [ ] Primary [ ] Contingent
each equal 100%. Name Soc. Sec. no.
----------------------------------------------------------------------------------------------------------
Relationship Date of birth Percentage
----------------------------------------------------------------------------------------------------------
Address
----------------------------------------------------------------------------------------------------------
City, State, ZIP
----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Authorization and By signing below, you certify that you have read, understand and agree to the terms of the Salary
Signatures Reduction Information and Agreement sections on this form and have received an Active Life Certificate.
The signature of the employer authorized representative certifies that he/she also agrees to the Salary
Reduction Information section.
Participant's signature Date
----------------------------------------------------------------------------------------------------------
Employer authorized
representative's signature Date
----------------------------------------------------------------------------------------------------------
Plan administrator's
signature (if ERISA) Date
----------------------------------------------------------------------------------------------------------
continued on back
Form LNY1282-94 12/99 Enrollment
White copy - TDA Client Services Yellow copy - Payroll Pink copy - Broker Goldenrod copy - Participant
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Agreement
You agree that:
Variable Annuity Information
. You have read the prospectus for the insurer's variable annuity and the
underlying funds. You also understand that the underlying funds supporting
the insurer's variable annuity are not public funds, but are available only
through insurance contracts.
. The investment objectives and policies are stated in each of the underlying
fund's prospectus.
. You will review your investment selections on a regular basis as your
lifestyle or investment goals may change as you near retirement. As part of
this review you should read current fund prospectuses and financial reports.
You may contact Lincoln Life--New York at any time to receive up-to-date
information about your variable annuity.
. Withdrawals are restricted to the requirements of Section 403(b) of the
Internal Revenue Code as described in the insurer's current variable annuity
prospectus. Withdrawals must also be in accordance with any restrictions
described in your tax deferred annuity plan sponsored by your employer.
. If contributions are received by the insurer without complete and accurate
information, your contributions will be allocated to the Pending Allocation
Account. Once this information is received, the insurer will allocate your
contributions as indicated on the form. After the third monthly notice, if
the insurer has not received this information, the account value will be
returned to the contractholder.
. If you transfer assets to the insurer without a transfer form indicating an
allocation split, the insurer will deposit these assets based on the most
recent investment elections on file.
. Confirmations will be generated once the insurer receives complete enrollment
information. Please review the confirmation carefully and notify the insurer
immediately if any changes are desired. The insurer may elect to send any
confirmations of transactions relating to your account directly to your
employer.
. Any changes to your name and/or beneficiary designations must be in writing.
Proof is required for name changes. Sumbit a copy of a marriage license,
divorce decree, or other court document.
. Returns on the variable accounts are based upon the investment experience of
the insurer's separate account. These amounts will fluctuate and are not
guaranteed as to the dollar amount.
Salary Reduction
. The employer shall reduce your salary by the amount indicated per pay period.
The employer shall forward this amount to the insurer as contributions toward
a 403(b) annuity.
. Payroll reductions will begin on the date indicated. Any change in allocation
election will be effective with the next contribution after receiving this
form in the Syracuse, New York office.
. This agreement is legally binding and irrevocable regarding the amounts
already deferred by both you and the employer while employment continues for
amounts earned while it is in effect.
. This agreement will apply only to amounts earned after this agreement becomes
effective. It will not apply to any amounts earned after it is terminated.
Beneficiary Designation
. If space is needed for additional beneficiaries, attach a separate sheet of
paper with the information requested for each additional beneficiary.
. If you are married or will be married and if your tax deferred annuity plan
provides, the primary beneficiary will be your spouse unless he/she completes
and signs a waiver form provided by your employer.
. If your plan is subject to ERISA, your beneficiary designation must be in
compliance with all provisions of the Retirement Equity Act of 1984 and the
applicable tax deferred annuity plan, which requires a plan administrator's
signature.
. Your beneficiary designation on this form supersedes any prior designation
made in regards to the coverage under this contract.
. If no beneficiary is selected, or if no beneficiary survives you, all death
benefits will be paid according to the contract and any applicable tax
deferred annuity plan.
. Your primary beneficiary will be entitled to the entire value of the account.
Multiple surviving primary beneficiaries will be entitled to equal portions
of the account unless specified otherwise.
. Your contingent beneficiary will be entitled to the entire value of the
account if no primary beneficiary is living. Multiple surviving contingent
beneficiaries will be entitled to equal portions of the account unless
specified otherwise.
- --------------------------------------------------------------------------------
Customer Service
If you have any questions, please contact Lincoln Life at 800 893-7168.
Form LNY1282-94 12/99
<PAGE>
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMIENT is made and entered into as of
September 26, 1996 by and between LINCOLN LIFE & ANNUITY CONTANY 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 investrnent 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 "Contract
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-IA 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 wolfish may be added to Schedule A from time to time (each
such registration statement for a class or classes of contracts fisted 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
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
1
<PAGE>
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 "Investrnent 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 alltomatically 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.
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
2
<PAGE>
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 win
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.
Easter time on the Business Day next following the Trade Date ("T + I"). 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 Issuer to the account designated by the Company on T + 1; PROVIDED,
HOWEVER the Issuer reserves the right to settle redemption 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
3
<PAGE>
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) Except with the prior written permission of the Company, 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 Company sales
literature or other promotional material. The Company agrees to respond to
any request for permission on a prompt and timely basis. If the Company fails
to respond within 10 business 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, 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 a agents or employees, registration statements,
prospectuses, Statements of Additional Information, shareholder reports and
proxy materials, and any other material constituting sales
4
<PAGE>
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 to pay the Administrative Services Fee 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 Distributors 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 this SECTION
6(B), the average aggregate investrnent amount of Company's investment shall
include assets of UNUM Life Insurance Company of America and First UNT-JM
Life Insurance Company acquired by Company.
(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.
(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 reasonably requested by the Company and shall be
mailed to:
5
<PAGE>
LINCOLN LEFE & ANNUITY COWANY OF NEW YORK
120 Madison Street, 17th floor
Syracuse, NY 13202
Attention: Philip Holstein
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 New York Insurance law, and has registered each
Account as a unit investrnent 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.
(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
tirnes when 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 Code. The Distributor further
represents and warrants that it will make every effort to 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 a Fund has
ceased to so qualify or that it might not so qualify in the future and (iv)
that it is registered as a Broker-Dealer under the 1934 Act.
6
<PAGE>
(c) The Distributor 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 Distributor further represents and warrants that the
Issuer is a corporation duly organized and in good standing under the laws of
Maryland.
(d) The Distributor represents and warrants that the Funds have and
maintains a fidelity bond in accordance with Rule 17g-I 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
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 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 8404 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
7
<PAGE>
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. All such materials shall be directed to Dina Tantra, Distributor's
advertising compliance manager (or such other person as Distributor may
designate in writing) by mail at 4500 Main Street, Kansas City, Missouri
64111, or by fax at (816) 340-4074. Such materials shall be accompanied by a
request for approval or comments within a reasonable amount of time, which
shall not be less than 10 business days from the date delivered to
Distributor. The Company agrees to use reasonable efforts to notify
Distributor's advertising compliance manager of the delivery of such
materials (which includes leaving a voice mail message). If Distributor fails
to respond within the time period set forth in the request for review,
Company may use such material as submitted without final approval by
Distributor. If subsequent to approval by Distributor (or the expiration of
the time period set forth in the request for approval), Distributor
reasonably determines any such material is or has become inaccurate,
rnisleading or otherwise inappropriate, it may request that the Company
modify such advertising and sales literature, which the Company will do at
the next reprinting of any such materials. If Distributor determines that
such material should be modified immediately, Distributor shall notify the
Company of such fact and Company shall accommodate Distributor's reasonable
requests. In such instances, Distributor shall pay the Company's reasonable
out-of-pocket expenses in reprinting any such advertising and sales
materials. Notwithstanding anything contained herein, Company shall be
responsible for the compliance of all advertising and sales literature
prepared by the Company with all applicable federal, state and NASD
requirements
(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 Funds' Board
of Directors or by any appropriate governmental entity or self regulatory
organization.
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.
8
<PAGE>
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 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
9
<PAGE>
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
fight 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 Distributor 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 Distributor
with inaccurate information, which causes the Distributor 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 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 fight 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
10
<PAGE>
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 or other promotional material of 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 Distributor 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,
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 fight 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 (H) 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
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 willful 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
11
<PAGE>
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 sarne 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 judgrnent 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 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 and the Issuer on December
21, 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 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
12
<PAGE>
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 SECTION 12(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 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.
(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;
13
<PAGE>
(b) at the option of the Company if the Funds' shares are not
available for any reason to meet the requirement of Contracts as detennined
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 against the 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 or the
Accounts or the Contract Owners;
(d) upon termination of the Distribution Agreement between the Issuer
and Distributor or the Management Agreement between Investors Research and
the Funds. Notice of such termination shall be promptly finished to the
Company. This subsection (d) 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 Distributor with respect
to the Distribution Agreement or the Issuer and the Funds with respect to the
Management Agreement;
(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 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 Contract Owners or (ii) the interests of the Participating
Insurance Companies investing in the Fund;
14
<PAGE>
(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 falls 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
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,
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 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.
15
<PAGE>
(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.
To the Company:
LINCOLN LIFE & ANNUITY CONTANY OF NEW YORK
120 Madison Street, 17th Floor
Syracuse, NY 13202
Attention: Philip Holstein
(315) 477-2845 (office number)
To the Issuer or Distributor:
Twentieth Century Mutual Funds
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 3404051 (office number)
(816) 3404964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 18 shall be deemed to have been delivered on receipt.
16
<PAGE>
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 matters.
17
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
TWENTUTH CENTURY SECURITIES, INC. LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
By: By:
William M. Lyons Name:
Executive Vice President Title:
18
<PAGE>
SCHEDULE A
VARIABLE ANNUITY CONTRACTS
AND VARIABLE LIFE INSURANCE POLICIES
SUPPORTED BY SEPARATE ACCOUNTS
LISTED ON SCHEDULE B
Group Variable Annuity I Contracts
Group Variable Annuity II Contracts
Group Variable Annuity III Contracts
<PAGE>
SCHEDULE B
SEPARATE ACCOUNTS OF LINCOLN LIFE & ANNUITY COMPANY OF NEW
YORK
INVESTING IN THE FUND
Lincoln Life & Annuity Variable Annuity Account L
<PAGE>
AMENDMENT NO. 1 TO FUND PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1 TO FUND PARTICIPATION AGREEMENT (the
"Amendment") is effective as of __________, 1999, by and among LINCOLN LIFE
& ANNUITY COMPANY OF NEW YORK (the "Company"), AMERICAN CENTURY INVESTMENT
MANAGEMENT, INC ("ACIM"), and AMERICAN CENTURY INVESTMENT SERVICES, INC.,
F/K/A TWENTIETH CENTURY SECURITIES, INC. (the "ACIS"). Capitalized terms
not otherwise defined herein shall have the meaning ascribed to them in the
Agreement (defined below).
RECITALS
WHEREAS, the Company and ACIS are parties to that certain Fund
Participation Agreement dated September 26, 1996 (the "Agreement") in
connection with the participation by the Funds in Contracts offered by the
Company to its clients and the parties wish to supplement the Agreement as
provided herein;
WHEREAS, since the date of the Agreement, Twentieth Century
Securities, Inc. has changed its name to American Century Investment
Services, Inc.; and
WHEREAS, since the date of the Agreement, the Funds have changed their
names; and
WHEREAS, since the date of the Agreement, ACIS has ceased being the
Distributor of the Funds; and
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
I. FUNDS UTIFIZED. The second "Whereas" clause of the Agreement is
hereby deleted in its entirety and replaced xvith the following language:
"WHEREAS, the Company wishes to offer as investrnent options
under certain of the Contracts, those mutual funds (each a "Fund" and
collectively, the "Funds") listed on Schedule B hereto, each such Fund
a series of mutual fund shares registered under the Investment Company
Act of 1940, as amended, and issued by American Century Variable
Portfolios, Inc.; and"
2. ASSIGNMENT BY COMPANV. ACIS hereby assigns all of its rights and
obligations under the Agreement to ACIM, and ACIN4 hereby accepts such
assignment. The Company hereby consents to such assignment. After the date of
this Amendment, all references to "Distributor" in the Agreement shall be
deemed to refer to ACIN4.
3. COMPENSATION AND EXPENSES. Section 6(b) of the Agreement is hereby
deleted in its entirety and replaced with the following language:
<PAGE>
(b) ACIM acknowledges that it derives 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, AM will pay the Company a fee (the "Administrative Services Fee")
equal to 25 basis points (0.25%) per annum of the average aggregate amount
invested by the Company under this Agreement, for as long as the average
aggregate market value of the investments by the Company in the Funds exceeds
$50 million. In the event the average aggregate arnount invested by the
Company drops below $50 million, ACIM shall pay Company 20 basis points
(0.20%) per annum of the average aggregate amount invested by the Company.
For purposes of this Section 6(b), the average aggregate investment amount of
Company's investment shall include assets of UNUM Life Insurance Company of
America and First UNTJM Life Insurance Company acquired by Company.
4. SCHEDULES. Schedules A and B to the Agreement are hereby deleted
and replaced in their entirety with Schedules A and B attached hereto.
5. RATIFICATION AND CONFIRMATION OF AGREEMENT. In the event of a
conflict between the terms of this Amendment and the Agreement it is the
intention of the parties that the terms of this Amendment shall control and the
Agreement shall be interpreted on that basis. To the extent the provisions of
the Agreement have not been amended by this Amendment, the parties hereby
confirm and ratify the Agreement.
6. COUNTERPARTS: This Amendment may be executed in two or more
counterparts, each of which shall be an original and all of which together
shall constitute one instrument.
7. FULL FORCE AND EFFECT. Except as expressly supplemented, amended or
consented to hereby, all of the representations, warranties, terms, covenants
and conditions of the Agreement shall remain unamended and shall continue to be
in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. I as
of the date first above written.
LINCOLN LIFE & ANNUITY AMERICAN CENTURY INVESTMENT
COMPANY OF NEW YORK MANAGEMENT, INC.
By: By:
Name: Name:
Title: Title:
AMERICAN CENTURY INVESTMENT
SERVICES, INC.
By:
Name:
Title:
<PAGE>
SCHEDULE A
VARIABLE ANNUITY CONTRACTS
AND VARIABLE LIFE INSURANCE POLICIES
SUPPORTED BY SEPARATE ACCOUNTS
LISTED ON SCHEDULE B
Group Variable Annuity I Contracts
Group Variable Annuity II Contracts
Group Variable Annuity III Contracts
<PAGE>
SCHEDULE B
SEPARATE ACCOUNTS OF LINCOLN LIFE & ANNUITY COMPANY OF NEW
YORK
INVESTING IN CERTAIN FUNDS
SEPARATE ACCOUNT NAME AMERICAN CENTURY VP FUND(S) UTILIZED
Lincoln Life & Annuity Variable
Annuity Account L VP Capital Appreciation and VP Balanced
<PAGE>
AMENDMENT NO. 2 TO FUND PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 2 TO FUND PARTICIPATION AGREEMENT (the "Amendment")
is effective as of May 1, 2000, by and among LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK (the "Company") and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC
("ACIM"). Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Agreement (defined below).
RECITALS
WHEREAS, the Company and ACIM are parties to that certain Fund
Participation Agreement dated September 26, 1996 and amended June 14, 1999 (the
"Agreement") in connection with the participation by the Funds in Contracts
offered by the Company to its clients and the parties wish to supplement the
Agreement as provided herein; and
WHEREAS, the parties desire to amend the Agreement to add new products,
a new separate account and new funds to be made available through the separate
account to the Agreement;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. SCHEDULE A AND SCHEDULE B. Schedules A and B are hereby deleted and
replaced in their entirety with Schedules A and B attached hereto.
2. RATIFICATION AND CONFIRMATION OF AGREEMENT. In the event of a
conflict between the terms of this Amendment and the Agreement, it is the
intention of the parties that the terms of this Amendment shall control and the
Agreement shall be interpreted on that basis. To the extent the provisions of
the Agreement have not been amended by this Amendment, the parties hereby
confirm and ratify the Agreement.
3. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
4. FULL FORCE AND EFFECT. Except as expressly supplemented, amended or
consented to hereby, all of the representations, warranties, terms, covenants
and conditions of the Agreement shall remain unamended and shall continue to be
in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment
No. 2 as of the date first above written.
LINCOLN LIFE & ANNUITY AMERICAN CENTURY INVESTMENT
COMPANY OF NEW YORK MANAGEMENT, INC.
By: By:
---------------------------------- -----------------------------
Name: Troy D. Panning Name:
Title: Chief Financial Officer and -----------------------
2nd Vice President Title:
-----------------------
2
<PAGE>
SCHEDULE A
VARIABLE ANNUITY CONTRACTS
AND VARIABLE LIFE INSURANCE POLICIES
SUPPORTED BY SEPARATE ACCOUNTS
LISTED ON SCHEDULE B
Group Variable Annuity I Contracts
Group Variable Annuity II Contracts
Group Variable Annuity III Contracts
Lincoln CVUL
Lincoln CVUL Series III
<PAGE>
SCHEDULE B
SEPARATE ACCOUNTS OF LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
INVESTING IN CERTAIN FUNDS
SEPARATE ACCOUNT NAME AMERICAN CENTURY VP FUND(S) UTILIZED
Lincoln Life & Annuity Variable VP Capital Appreciation Fund and VP
Annuity Account L Balanced Fund
LLANY Separate Account S for VP Income & Growth Fund and
Flexible Premium Variable VP International Fund
Life Insurance
4
<PAGE>
SCHEDULE B
SEPARATE ACCOUNTS OF LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
INVESTING IN CERTAIN FUNDS
SEPARATE ACCOUNT NAME AMERICAN CENTURY VP FUND(S) UTILIZED
Lincoln Life & Annuity Variable VP Capital Appreciation Fund and VP
Annuity Account L Balanced Fund
LLANY Separate Account S for VP Income & Growth Fund and
Flexible Premium Variable VP International Fund
Life Insurance
<PAGE>
PARTICIPATION AGREEMENT
AMONG
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
AND
BARON CAPITAL FUNDS TRUST
AND
BARON CAPITAL, INC.
THIS AGREEMENT, made and entered into this 28" day of August, 1998 by
and among Baron Capital Funds Trust (and all series thereof a business trust
organized under the laws of the State of Delaware (the "Fund"), and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, an New York insurance corporation
(the "Company"), on its own behalf and on behalf of each separate account of
the Company named in Schedule I to this Agreement as in effect at the time this
Agreement is executed and such other separate accounts that may be added to
Schedule I from time to time in accordance with the provisions of Article XI of
this Agreement (each such account referred to as the "Account"), and Baron
Capital, Inc. (the "Distributor").
WHEREAS, the Fund is engaged in business as an open-end management
investment company and has a class of stock (the "Fund Insurance Shares")
that has been 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 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-IA to register itself as an
open-end management investment company (File No. 33-40839) under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund
Insurance Shares (File No. 811-8505) 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 (unless exempt therefrom) 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 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 refer-red to as "Contract Owners"); and
<PAGE>
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 the Fund Insurance Shares; and
WHEREAS, BAMCO, Inc. (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 Fund Insurance Shares on behalf of
each Account to fund ITS Contracts and the Distributor is authorized to sell
such Fund Insurance Shares to unit investrnent 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
I.I. The Distributor agrees to sell to the Company those Fund
Insurance Shares, which the Company orders on behalf of each Account, executing
such orders on a daily basis in accordance with Section 1.4 of this Agreement.
2
<PAGE>
1.2. The Fund agrees to make Fund Insurance Shares available for
purchase by the Company on behalf of each 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 and deliver 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 shares, if such action is required by
law or by regulatory 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 (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 Fund Insurance Shares held by each Account or the Company,
executing such requests at the net asset value on a daily basis (Company will
expect same day redemption wires unless unusual circumstances evolve which
cause the Fund to have to redeem securities) 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 Insurance 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 each 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, or its designee, 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 the shares on the same day
that it places an order with the Fund to purchase those Fund
Insurance Shares for an Account. Payment for Fund Insurance
Shares will be made by each Account or the Company in Federal
Funds transmitted to the Fund by wire to be received by
11:00 a.m., E.S.T. on the day the Fund is properly notified of the
purchase order for shares. The Fund will confirm receipt of each
trade and these confirmations will be received by the Company via
Fax or Email by 1:00 p.m. E.S.T. If Federal Funds are not received
on time, such funds will be invested, and shares purchased thereby
will-be issued, as soon as practicable.
3
<PAGE>
(c) Payment for shares redeemed by each Account or the
Company will be made in Federal Funds transmitted to the Company
by wire on the same day the Fund is notified of the redemption
order of 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 if securities must be redeemed;
the Company alone shall be responsible for such action.
1.5. Issuance and transfer of Fund Insurance 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 Insurance Shares will be
recorded in an appropriate ledger for each Account or the appropriate
subaccount of each Account.
1.6. The Fund shall furnish notice as soon as reasonably practicable
to the Company of any income dividends or capital gain distributions payable on
any shares. The Company, on its behalf and on behalf of each Account, hereby
elects to receive all such dividends and distributions as are payable on any
Fund Insurance Shares in the form of additional shares. The Company reserves
the right, on its behalf and on behalf of each Account, to revoke this election
and to receive all such dividends in cash. The Fund shall notify the Company of
the number of Fund Insurance Shares 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 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 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 each Account's investment in the
Fund 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
Fund to substitute the shares of another investment company for
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
Section 26(b) of the 1940 Act.
4
<PAGE>
(b) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive and that the Fund
Insurance 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.
(e) The Company shall not, without prior notice to the
Distributor (unless otherwise required by applicable law), take
any action to operate each Account as a management investment
company under the 1940 Act.
1.9. The Fund and the Distributor agree that Fund Insurance Shares
will be sold only to Participating Insurance Companies and their separate
accounts. The Fund and the Distributor will not sell Fund Insurance 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
Insurance Shares will be sold to the general public.
ARTICLE 11. 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 wan-ants 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 Section 4240 of New York Insurance Law, and has registered or,
prior to the issuance of any Contracts, will register- each Account (unless
exempt therefrom) 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 Insurance 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
Insurance Shares are sold. The Fund further represents and warrants that it is
a business trust duly organized and in good standing under the laws of the
State of Delaware.
5
<PAGE>
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. In the event of a
breach of this Section 3.6 by the Fund, it will a) immediately notify the
Company of the breach and b) to adequately diversify each series so as to
achieve compliance with the grace period offered by Regulation 1.817-5.
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.
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 California, if applicable, to the
extent required to perform this Agreement; and with any state-mandated
investrnent 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 brokerdealer under applicable state securities laws;
its operations are in compliance with applicable law, and it will distribute
the Fund Insurance Shares according to applicable law.
2.8. The Distributor, on behalf of the Investrnent 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.
6
<PAGE>
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, and electronic version, 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, as detennined by the
Company. The Fund shall be responsible for the costs of printing
and distributing these materials to Contract owners.
(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 Investrnent 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. Failure of the Fund to respond within 10 days of the
request by the Company shall relieve the Company of the obligation to obtain
the prior written permission of the Fund or the Distributor.
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,
then the Company shall be relieved of the obligation to obtain the prior
written pension of the Fund.
7
<PAGE>
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,
each 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 each 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, then the Fund and the Distributor are
relieved of the obligation to obtain the prior written permission of the
Company.
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-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 Insurance Shares, within
20 days after the filing of such document with the SEC or other regulatory
authorities.
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, within 20 days 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, and statements of
additional information, reports, proxy statements, and 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.
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
8
<PAGE>
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:
(a) vote Fund Insurance Shares attributable to Contract
owners in accordance with instructions or proxies received in
timely fashion from such Contract owners;
(b) vote Fund Insurance Shares attributable to Contract
owners for which no instructions have been received in the same
proportion as Fund Insurance Shares of such series for which
instructions have been received in timely fashion; and
(c) vote Fund Insurance Shares held by the Company on its
own behalf or on behalf of each Account that are not attributable to
Contract owners in the same proportion as Fund Insurance 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 f6rth
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 Insurance 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 Insurance Shares, and any expenses permitted to be paid or
assumed by the Fund pursuant to a plan, if any, under Rule 12b-I under the
1940 Act.
9
<PAGE>
The Fund is responsible for the cost of printing and distributing Fund
Prospectuses and SAls to existing Contractowners. (If for this purpose the
Company may print the Fund Prospectuses and SAIs in a booklet or separate
booklets 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 SAls for new sales; and Account Prospectuses and SAls for
existing Contractowners. The Company shall have the final decision on choice of
printer for all Prospectuses and SAls.
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 each Account's Registration Statement under the 1940 Act
from time to time as required in order to effect the continuous offering of the
Contracts or as may otherwise be required by applicable law. The Company 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 Insurance Shares are sold the continuous offering of Fund
Insurance Shares as described in the then currently effective Fund Prospectus.
The Fund shall register and qualify Fund Insurance 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, t he 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.
10
<PAGE>
(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 June 16, 1998 of the Securities and Exchange
Commission under Section 6c 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.
(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 and reinvesting such assets in a different investment vehicle,
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
11
<PAGE>
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 matter.
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. See. 1-16. The place of arbitration shall Syracuse,
New York. 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
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 Contractowner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company shall withdraw (without charge or penalty) each Accounts 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 Contractowners.
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
12
<PAGE>
Contract if in either case 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 Insurance 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 Insurance 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
13
<PAGE>
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 Insurance 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 willful
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
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
14
<PAGE>
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 Insurance
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 Insurance Shares; or
(c) a rise 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
(d) 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
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3. 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
15
<PAGE>
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 party unless (1) 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 VHI. 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:
(a) at the option of any party upon 120 days advance
written notice to the other parties; or
16
<PAGE>
(b) at the option of the Company if shares of the Fund
are not available to meet the requirements of the Contracts as
detennined 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 each Account, the
administration of the Contracts or the purchase of Fund Insurance
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
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
17
<PAGE>
(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
(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
detennine, 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:
18
<PAGE>
(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.
(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 Insurance 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 Insurance 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 Insurance
Shares available after such termination. If Fund Insurance 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.
19
<PAGE>
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 an 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.
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:
Baron Capital Funds Trust
767 Fifth Avenue
New York, New York, 10153
Attn: David E. Kaplan
cc: Linda S. Martinson, Esq.
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street, 17th Floor
Syracuse, New York 13202
Attn: Robert 0. Sheppard, Esq.
If to the Distributor:
Baron Capital, Inc.
767 Fifth Avenue
New York, New York, 10 153
Attn: David E. Kaplan
cc: Linda S. Martinson, Esq.
20
<PAGE>
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.
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.
Baron Capital Funds Trust
Date: Signature:
Name:
Title:
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Date: Signature:
Name:
Title:
Baron Capital, Inc.
Date: Signature:
Name:
Title:
22
<PAGE>
SCHEDULE L
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of August 28, 1998
LINCOLN LIFE AND ANNUITY VARIABLE ANNUITY ACCOUNT L
LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK VARIABLE ANNUITY ACCOUNT Q
23
<PAGE>
SCHEDULE 2
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule I
As of August 28, 1998
LLANY GROUP VARIABLE ANNUITY - GVA (GROUP VARIABLE ANNUITY)
LLANY GROUP MULTI FUND (GROUP VARIABLE ANNUITY)
24
<PAGE>
SCHEDULE 3
State-mandated Investment Restrictions
Applicable to the Fund
As of August 28, 1998
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 county.
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>
The Participation Agreement (the "Agreement"), dated August 28, 1998,
by and among Baron Capital Funds Trust (and all series thereof) a business
trust organized under the laws of the State of Delaware and Lincoln Life &
Annuity Company of New York, a New York insurance corporation, is hereby
amended as follows:
Schedule I and Schedule 2 of the Agreement are hereby deleted in their
entirety and replaced with the following:
SCHEDULE I
Cumulative Listing of the Separate Accounts
of Lincoln Life & Annuity Company of New York
Investing in the Trust
Amended As of May 1, 1999
Lincoln National Variable Annuity Account C
Lincoln National Variable Annuity Account L
Lincoln Life Flexible Premium Variable Life Account M
Lincoln Life Variable Annuity Account Q
Lincoln Life Flexible Premium Variable Life Account R
Lincoln Life Flexible Premium Variable Life Account S
Lincoln National Variable Annuity Account 53
<PAGE>
SCHEDULE 2
Amended as of May 1, 1999
Cumulative Listing of the
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule I
Amended as of May 1, 1999
eAnnuity
Group Variable Annuity
Lincoln VUL
Group Multi Fund Variable Annuity
Lincoln SVUL
Lincoln CVUL
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to Schedules 1 And 2 to be executed in its name and behalf by its duly
authorized officer on the date specified below.
BARON CAPITAL FUNDS TRUST
Date: By:
Name:
Title:
BARON CAPITAL, INC.
Date: By:
Name:
Title:
LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK
Date: By:
Name:
Title:
<PAGE>
The Participation Agreement (the "Agreement"), dated August 28, 1998,
by and among Baron Capital Funds Trust (and all series thereof) a business
trust organized under the laws of the State of Delaware and Lincoln Life &
Annuity Company of New York, a New York insurance corporation, is hereby
amended as follows:
Schedules 1 and 2 of the Agreement are hereby deleted in their entirety
and replaced with the following:
SCHEDULE 1
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of October 15, 1999
LINCOLN LIFE AND ANNUITY VARIABLE ANNUITY ACCOUNT L
LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK VARIABLE ANNUITY ACCOUNT Q
LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK SEPARATE ACCOUNT R
<PAGE>
SCHEDULE 2
Amended as of October 15, 1999
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
Amended as of October 15, 1999
LLANY GROUP VARIABLE ANNUITY - GVA (GROUP VARIABLE ANNUITY)
LLANY GROUP MULTI FUND (GROUP VARIABLE ANNUITY)
LLANY FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE - SVUL
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
BARON CAPITAL FUNDS TRUST
Date: By:
---------------------- ----------------------
Name:
--------------------
Title:
-------------------
BARON CAPITAL, INC.
Date: By:
---------------------- ----------------------
Name:
--------------------
Title:
-------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
Date: By:
---------------------- ----------------------
Name:
--------------------
Title:
-------------------
<PAGE>
MATERIAL SENT VIA EXPRESS MAIL
Ms. Maribel Soulaine
Paralegal
Baron Capital Inc.
767 Fifth Avenue, 49"' Floor
New York, NY 10 15 3
RE: Baron Fund Participation Agreement (FPA) Amendment
Dear Ms. Soulaine:
I have enclosed two fully executed originals of the FPA Amendment by and among
Baron and Lincoln Life. Lincoln Life had previously signed the amendment. I am
forwarding the three originals of the FPA Amendment between Baron and Lincoln
Life & Annuity Company of New York (LLANY) to our LLANY office for them to
sign.
They will forward to you two fully executed copies. If you have any questions,
please let me know.
Sincerely,
Steven M. Kluever
Assistant Vice President
(219) 455-6565
Copy to: Bob Sheppard (LLANY)
www.lincoinlife.conl
Lincoln Financial Group is the marketing name for Lincoln National Corporation
and its affiliates.
<PAGE>
The Participation Agreement (the "Agreement"), dated August 28, 1998, by
and among Baron Capital Funds Trust (and all series thereof) a business trust
organized under the laws of the State of Delaware and The Lincoln National Life
Insurance Co., an Indiana insurance corporation, is hereby amended as follows:
Schedule 1 and Schedule 2 of the Agreement are hereby deleted in their
entirety and replaced with the following:
SCHEDULE I
Cumulative Listing of the
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Trust
Amended As of May 1, 1999
Lincoln National Variable Annuity Account C
Lincoln National Variable Annuity Account L
Lincoln Life Flexible Premium Variable Life Account M
Lincoln Life Variable Annuity Account Q
Lincoln Life Flexible Premium Variable Life Account R
Lincoln Life Flexible Premium Variable Life Account S
Lincoln National Variable Annuity Account 53
<PAGE>
SCHEDULE 2
Amended as of May 1, 1999
Cumulative Listing of the
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule I
Amended as of May 1, 1999
Multi Fund Individual Variable Annuity
eAnnuity
Group Variable Annuity
Lincoln VUL
Group Multi Fund Variable Annuity
Lincoln SVUL
Lincoln CVUL
Multi Fund - Non-registered - Variable Annuity
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules I and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
BARON CAPITAL FUNDS TRUST
Date: By:
Name:
Title:
BARON CAP
Date: Name:
Title:
LINCOLN NATIONAL LIFE INSURANCE CO.
Date: By:
Name:
Title:
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated August 28, 1998,
and amended October 15, 1999, by and among Baron Capital Funds Trust (and all
series thereof) a business trust organized under the laws of the State of
Delaware and Lincoln Life & Annuity Company of New York, a New York insurance
corporation, is hereby amended as follows:
Schedules 1 and 2 of the Agreement are hereby deleted in their entirety
and replaced with the following:
SCHEDULE 1
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of May 1, 2000
LINCOLN LIFE & ANNUITY VARIABLE ANNUITY SEPARATE ACCOUNT L
LINCOLN LIFE & ANNUITY FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LLANY ACCOUNT Q FOR VARIABLE ANNUITIES
LLANY SEPARATE ACCOUNT R FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LLANY SEPARATE ACCOUNT S FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<PAGE>
SCHEDULE 2
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
Amended as of May 1, 2000
LLANY GROUP VARIABLE ANNUITY - GVA (GROUP VARIABLE ANNUITY)
LLANY GROUP MULTI FUND (GROUP VARIABLE ANNUITY)
LINCOLN SVUL
LINCOLN SVUL II
LINCOLN VUL
LINCOLN CVUL
LINCOLN CVUL SERIES III
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
BARON CAPITAL FUNDS TRUST
Date: By:
-------------------- ----------------------
Name:
--------------------
Title:
-------------------
BARON CAPITAL, INC.
Date: By:
-------------------- ----------------------
Name:
--------------------
Title:
-------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
Date: By:
-------------------- ----------------------
Name: Troy D. Panning
Title: CFO/2nd Vice President
<PAGE>
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 Sit 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
"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
WHEREAS, the Fund filed with the Securities and Exchange Commission
(the "SEC") a registration statement on Form N- I A and the SEC has declared
effective said registration statement; and
WHEREAS, the Fund has obtained an 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
1
<PAGE>
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 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 Under-writer agree as follows:
ARTICLE 1. SALE OF FUND SHARES
I A - 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
2
<PAGE>
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 1, 111, V, VII and Section 2.5 of Article H
of this Agreement is in effect to govern. such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees 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
3
<PAGE>
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.
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 11. 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 Section 4240 of the New York Insurance Laws 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
4
<PAGE>
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 win notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b- I 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- I 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- I 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.
5
<PAGE>
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 individual
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-(I) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Fund and 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
6
<PAGE>
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.
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.
7
<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 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
8
<PAGE>
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- I 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, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. DIVERSIFICATION
9
<PAGE>
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 8
17(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.
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
10
<PAGE>
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 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 detennined 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,
11
<PAGE>
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 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
12
<PAGE>
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of Sections 8. 1 (b) and 8. 1 (c) hereof.
8. 1 (b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8. 1 (c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of. any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8. 1 (d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
13
<PAGE>
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 or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of 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
14
<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including 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 result
from the gross negligence, bad faith or willful misconduct of the Board or any
member THEREOF, ARC RELATED TO THE OPERATIONS OF THE FUND AND:
15
<PAGE>
(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 of other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9. 1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
16
<PAGE>
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 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
17
<PAGE>
(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;
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, 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
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 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
18
<PAGE>
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
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, New York 13202
Attention: Phil Holstein
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
19
<PAGE>
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the 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 insurance
operations of the Company are being conducted in a manner consistent with the
New York 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.
20
<PAGE>
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:
VARIABLE INSURANCE PRODUCTS FUND
By:
J. Gary Burkehead
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By:
Neal Litvack
President
21
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
Lincoln Life & Annuity Variable GAC96-1 11
Annuity Account L GAC91-101
22
<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
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.)
23
<PAGE>
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.
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.
24
<PAGE>
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 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.
25
<PAGE>
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
26
<PAGE>
SCHEDULE A
AMENDED AS OF FEBRUARY 15, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded by Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- -----------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111 Growth - Initial
Annuity Account L GAC91-101 Equity-Income - Initial
Lincoln Life & Annuity Flexible LN615NY - LNY Equity-Income - Initial
Premium Variable Life Account M
Lincoln New York Account N AN426NY Equity-Income - Initial
for Variable Annuities Growth - Initial
Overseas - Initial
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF FEBRUARY 15, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Variable Insurance Series (AVIS)
BT Insurance Funds Trust
Calvert Responsibly Invested Balanced Portfolio
Delaware Group Premium Fund
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Liberty Variable Investment Trust
Lincoln National
MFS Variable Insurance Trust
T. Rowe Price International Series, Inc.
Templeton Variable Products Series Fund
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedules A and C 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.
Date LINCOLN LIFE & ANNUITY
-------------------------- COMPANY OF NEW YORK
By:
--------------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE>
SCHEDULE A
AMENDED AS OF MAY 1, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded by Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- -----------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111; GAC91-101 Growth - Initial
Annuity Separate Account L (GVA I, II, III) Equity-Income - Initial
Lincoln Life & Annuity Flexible LN615NY - LNY Equity-Income - Initial
Premium Variable Life Account M (VUL I)
LN660NY Growth - Service
(VUL) High Income - Service
Lincoln New York Separate AN426NY Equity-Income - Initial
Account N for Variable Annuities (ChoicePlus) Growth - Initial
Overseas - Initial
LLANY Separate Account R for LN650 Growth - Service
Flexible Premium Variable (SVUL) High Income - Service
Life Insurance
LN655 Growth - Service
(SVUL II) High Income - Service
LLANY Separate Account S for LN920NY Growth - Service
Flexible Premium Variable (CVUL) High Income - Service
Life Insurance Overseas - Service
LN925 Growth - Service
(CVUL Series III) High Income - Service
Overseas - Service
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF MAY 1, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Century Variable Products Group, Inc.
American Variable Insurance Series (AVIS)
Baron Capital Funds Trust
BT Insurance Funds Trust
Calvert Responsibly Invested Balanced Portfolio
Delaware Group Premium Fund
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Janus Aspen Series
Liberty Variable Investment Trust
Lincoln National Funds
MFS Variable Insurance Trust
Neuberger&Berman Advisers Management Trust
OCC Accumulation Trust
Oppenheimer Funds
T. Rowe Price International Series, Inc.
Templeton Variable Products Series Fund
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedules A and C 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.
Date LINCOLN LIFE & ANNUITY
-------------------------- COMPANY OF NEW YORK
By:
--------------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE>
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 11, 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 of more of which may
be made available under this Agreement, as may be amended from time to time by
mutual agreement of the parties hereto (each such series hereinafter referred
to as a "Portfolio"); and
WHEREAS, the Fund filed with the Securities and Exchange
Commission (the "SEC") a registration statement on Form N- I A 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
1
<PAGE>
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 certain of the aforesaid variable life and
variable annuity contracts and the Under-writer 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 1. SALE OF FUND SHARES
-------------------
I.I. 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
2
<PAGE>
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 1, 111, V, VII and Section 2.5 of
Article 11 of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees 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
3
<PAGE>
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.
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 11. 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 Section 4240 of the New
York Insurance Laws 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
4
<PAGE>
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 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- I 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- I 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- I 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.
5
<PAGE>
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-(I) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
Bond shall include coverage for larceny and embezzlement and shall be issued
by a reputable bonding company. The Fund and 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 Ill. 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
6
<PAGE>
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.
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.
7
<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 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
8
<PAGE>
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.
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
---------------
9
<PAGE>
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.
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
10
<PAGE>
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 remedies any it-reconcilable
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,
11
<PAGE>
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 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
12
<PAGE>
made in reliance upon information furnished to the Fund by
or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8. 1 (b) and 8. 1
(c) hereof.
8. 1 (b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to the Fund, whichever is applicable.
8. 1 (c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Company in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure to
notify the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice from
the Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8. 1 (d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the Contracts or
the operation of the Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
----------------------------------
13
<PAGE>
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 or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of
the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use
in the Registration Statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of 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
14
<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and
in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but
failure to notify the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. The Underwriter also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named
in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. INDEMNIFICATION BY THE FUN
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
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:
15
<PAGE>
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c)hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Fund, the Underwriter or each
Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Fund of
any such claim shall not relieve the Fund from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Fund to such party of the
Fund's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Fund will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement,
the issuance or sale of the Contracts, with respect to the operation of
either Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9. 1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
16
<PAGE>
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 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
17
<PAGE>
(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;
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, 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 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
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
18
<PAGE>
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.
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, New York 13202
Attention: Phil Holstein
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
19
<PAGE>
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent of
the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the 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 insurance operations of the Company are being conducted
in a manner consistent with the New York Insurance Regulations and any other
applicable law or regulations.
12.7 The fights, 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.
20
<PAGE>
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:
VARIABLE INSURANCE PRODUCTS FUND II
By:
J. Gary Burkhead
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By:
Neal Litvack
President
21
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
Lincoln Life & Annuity Variable GAC96-111
Annuity Account L GAC91-101
22
<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
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.)
23
<PAGE>
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.
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.
24
<PAGE>
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 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.
25
<PAGE>
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
26
<PAGE>
SCHEDULE A
AMENDED AS OF FEBRUARY 15, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded by Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111 Asset Manager - Initial
Annuity Account L GAC91-101
Lincoln Life & Annuity Flexible LN650NY Contrafund - Service
Premium Variable Account R
Lincoln Life & Annuity Flexible LN615NY - LNY Asset Manager - Initial
Premium Variable Life Account M Investment Grade Bond -
Initial
Contrafund - Service
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF FEBRUARY 15, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Baron Capital Funds Trust
BT Insurance Funds Trust
Calvert Responsibiltiy Invested Balanced Portfolio
Delaware Group Premium Fund, Inc.
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Janus Aspen Series
Lincoln National (LN)
MFS-Registered Trademark- Variable Insurance Trust
Neuberger Berman Advisers Management Trust
Templeton Variable Products Series Fund
Twentieth Century's TCI Portfolios, Inc.
T. Rowe Price International Series, Inc.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to Schedules A and C 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.
Date______________________________ LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: _________________________________
Name: Troy D. Panning
Title: CFO/2nd Vice President
Date______________________________ VARIABLE INSURANCE PRODUCTS FUNDS II
By: _________________________________
Name: _______________________________
Title: ______________________________
Date _____________________________ FIDELITY DISTRIBUTORS CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
<PAGE>
SCHEDULE A
AMENDED AS OF MAY 1, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111; GAC91-101 Asset Manager - Initial
Annuity Separate Account L (GVA I, II, III) Contrafund - Initial
Lincoln Life & Annuity Flexible LN615NY Asset Manager - Initial
Premium Variable Life Account M (VUL I) Investment Grade Bond -
Initial
LN660NY Contrafund - Service
(VUL)
LLANY Separate Account R LN650NY Contrafund - Service
for Flexible Premium Variable (SVUL)
Life Insurance
LN655 Contrafund - Service
(SVUL II)
LLANY Separate Account S LN920NY Asset Manager - Service
for Flexible Premium Variable (CVUL) Contrafund - Service
Life Insurance
LN925 Asset Manager - Service
(CVUL Series III) Contrafund - Service
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF MAY 1, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
American Century Variable Products Group, Inc.
American Variable Insurance Series (AVIS)
Baron Capital Funds Trust
BT Insurance Funds Trust
Calvert Responsibiltiy Invested Balanced Portfolio
Delaware Group Premium Fund
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Janus Aspen Series
Lincoln National Funds
MFS-Registered Trademark- Variable Insurance Trust
OCC Accumulation Trust
Oppenheimer Funds
Neuberger Berman Advisers Management Trust
Templeton Variable Products Series Fund
T. Rowe Price International Series, Inc.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedules A and C 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.
Date____________________ LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: _______________________________
Name: Troy D. Panning
Title: CFO/2nd Vice President
Date____________________ VARIABLE INSURANCE PRODUCTS FUNDS II
By: _______________________________
Name: _______________________________
Title: _______________________________
Date____________________ FIDELITY DISTRIBUTORS CORPORATION
By: _______________________________
Name: _______________________________
Title: _______________________________
<PAGE>
FIDELITY FUND PARTICIPATION AGREEMENT
VIP III COMPLETE AGREEMENT
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND III, FIDELITY DISTRIBUTORS CORPORATION
and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the 15th day of
October,1999 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 III, 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
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15)
<PAGE>
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
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act, unless exempt;
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 and variable
life contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act, unless exempt; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("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 certain of the aforesaid variable life insurance 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
1
<PAGE>
receipt by the Fund; provided that the Fund receives notice of such order by
9:00 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.
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 life insurance or 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 one or more investment companies other than the Fund.
2
<PAGE>
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company or its designee 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 unless an exemption from registration is
available and an opinion of counsel to that effect shall have been furnished to
the Fund; that the Contracts will be issued 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 Section 4240 of the New York Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act, unless exempt, 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
3
<PAGE>
1940 Act from time to timeas 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; that it will make every effort to maintain such
treatment; and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, 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.
(b) With respect to Service Class shares, the Fund has adopted a Rule
12b-1 Plan under which it makes payments to finance distribution expenses. The
Fund represents and warrants that it has a board of trustees, a majority of whom
are not interested persons of the Fund, which has formulated and approved the
Fund's Rule 12b-1 Plan to finance distribution expenses of the Fund and that any
changes to the Fund's Rule 12b-1 Plan will be approved by a similarly
constituted board of trustees.
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
4
<PAGE>
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.
5
<PAGE>
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 the Investment
Advisers Act of 1940 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-(l) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. The Fund and 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 (which shall mean, for purposes of this Article III if the Company so
requests, a separate prospectus for each Fund portfolio used in a particular
Account), 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
6
<PAGE>
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 annually 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.
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
7
<PAGE>
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.
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 an offering statement for unregistered contracts, 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
8
<PAGE>
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
regulator5, authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, and to their investments 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.
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
9
<PAGE>
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, 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.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested
10
<PAGE>
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., 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 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
11
<PAGE>
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. l.(a) The Company agrees to indemnify and hold harmless tile 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 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
12
<PAGE>
Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or
any amendment or supplement to any of the foregoing)
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 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 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
13
<PAGE>
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. l.(d) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2.(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or
such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf
of the Company for use in the Registration Statement
or prospectus for the Fund or in sales literature (or
any amendment or supplement to any of the foregoing)
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 untrue statements or
representations
14
<PAGE>
(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 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
15
<PAGE>
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 tile
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3.(a) The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions
of Sections 8.3(b) and 8.3(c) hereof.
8.3.(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
16
<PAGE>
8.3.(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3.(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
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 ninety (90) days
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
<PAGE>
17
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 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: or
(h) termination by the Company by written notice to the Fund and
the Underwriter upon 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 shares of another investment company for the
corresponding shares of a Portfolio in accordance with the
terms of the Contracts; or
(i) termination by written notice to the Company at the option of
the Fund, upon institution of formal proceedings against the
Company and 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
18
<PAGE>
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) termination by written notice to the Fund and the Underwriter,
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 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
Underwriter's obligations and duties hereunder; or
(k) termination by written notice to the Fund and the Underwriter,
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 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
19
<PAGE>
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, one
party's obligation under Article VIII to indemnify the other party 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.
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, Suite 1700
Syracuse, NY 13202
Attention: Troy Panning
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.
20
<PAGE>
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the 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 any insurance commissioner with any information or reports in
connection with services provided under this Agreement which such Commissioner
may request in order to ascertain whether the insurance operations of the
Company are being conducted in a manner consistent with the insurance
regulations and any other applicable law or regulations of that state.
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. The Company
shall promptly notify the Fund and the Underwriter of any change in control of
the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
21
<PAGE>
(a) the Company's annual statement (prepared under
statutory ) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 90
days alter the end of each fiscal year;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any). as soon as practical and in any
event within 45 days after the end of each quarterly
period:
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the
delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the SEC
or any state insurance regulator, as soon as
practical after the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of the
books of the Company, as soon as practical after the
receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
VARIABLE INSURANCE PRODUCTS FUND III
By:
-------------------------------------------
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTION
By:
--------------------------------------------
Kevin J. Kelly
Vice President
22
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
AS OF OCTOBER 15, 1999
<TABLE>
<S> <C> <C>
Separate Account and Date ESTABLISHED BY Form Numbers of Contracts FUNDED BY
BOARD OF DIRECTORS SEPARATE ACCOUNT FIDELITY FUND (CLASS)
Lincoln Life & Annuity Separate LN650NY Growth Opportunities -
Account R (January 29, 1998) Service Class
</TABLE>
23
<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
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)
24
<PAGE>
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
1. 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.
1. The above contents should be received by the Company at least 7 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.
2. 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.
3. 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.
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.
4. 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.
25
<PAGE>
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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 legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
11. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Investment Companies
Available: AIM, Bankers Trust, Baron Capital, Colonial, Delaware, Dreyfus,
Janus, Kemper, Lincoln National Investments, MFS, Neuberger
Berman, Templeton
27
<PAGE>
SCHEDULE A
AMENDED AS OF FEBRUARY 15, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln Life & Annuity Separate LN650NY Growth Opportunities
Account R - Service Class
Lincoln New York Account N AN426NY Growth Opportunities
for Variable Annuities - Initial Class
Lincoln Life & Annuity Flexible LN615NY - LNY Growth Opportunities
Premium Variable Life Account M - Service Class
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF FEBRUARY 15, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Variable Insurance Series (AVIS)
BT Insurance Funds Trust
Baron Capital Funds Trust
Delaware Group Premium Fund
Janus Aspen Series
Liberty Variable Investment Trust
Lincoln National Investments
MFS Variable Insurance Trust
Neuberger & Berman AMT
Templeton Variable Products Series Fund
1
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused these
Amendments to Schedules A and C 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.
Date LINCOLN LIFE & ANNUITY COMPANY
------------------------- OF NEW YORK
By:
----------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS III
-------------------------
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
-------------------------
By: ----------------------------
Name:
----------------------------
Title:
----------------------------
2
<PAGE>
SCHEDULE A
AMENDED AS OF MAY 1, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
LLANY Separate Account R for LN650NY Growth Opportunities
Flexible Premium Variable Life (SVUL) - Service Class
Insurance
LN 655 Growth Opportunities
(SVUL II) - Service Class
Lincoln New York Separate Account AN426NY Growth Opportunities
N for Variable Annuities (ChoicePlus) - Initial Class
Lincoln Life & Annuity Flexible LN660NY Growth Opportunities
Premium Variable Life Account M (VUL) - Service Class
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF MAY 1, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Variable Insurance Series (AVIS)
BT Insurance Funds Trust
Baron Capital Funds Trust
Delaware Group Premium Fund
Janus Aspen Series
Liberty Variable Investment Trust
Lincoln National Investments
MFS Variable Insurance Trust
Neuberger & Berman AMT
OCC Accumulation Trust
Oppenheimer Funds
Templeton Variable Products Series Fund
1
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused these
Amendments to Schedules A and C 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.
Date LINCOLN LIFE & ANNUITY COMPANY
--------------------- OF NEW YORK
By:
-------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS III
----------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
----------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
2
<PAGE>
SCHEDULE A
AMENDED AS OF OCTOBER 15, 1999
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded by Separate Account
- -------------------------------------- --------------------------
<S> <C>
Lincoln Life & Annuity Variable GAC96-111
Annuity Account L GAC91-101
Lincoln Life & Annuity Flexible Premium LN650NY
Variable Account R
</TABLE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedule A 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.
Date LINCOLN LIFE & ANNUITY
------------------------ COMPANY OF NEW YORK
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date VARIABLE INSURANCE PRODUCTS
------------------------ FUNDS II
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
------------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
<PAGE>
SCHEDULE C
AMENDED AS OF OCTOBER 15, 1999
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth Fund
AIM International Equity Fund
AIM V.I. Value Fund
BARON CAPITAL FUNDS TRUST
Baron Capital Asset Fund
BT INSURANCE FUNDS TRUST
EAFE Index Fund
Equity 500 Index Fund
Small Cap Index Fund
Calvert Responsibiltiy Invested Balanced Portfolio
DELAWARE GROUP PREMIUM FUND, INC.
Delchester Series
Devon Series
Emerging Markets Series
REIT Series
Small Cap Value Series
Trend Series
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
Growth Opportunities Portfolio
JANUS ASPEN SERIES
Janus Aspen Series Balanced Portfolio
Janus Aspen Series Worldwide Growth Portfolio
<PAGE>
LINCOLN NATIONAL (LN)
LN Bond Fund
LN Capital Appreciation Fund
LN Equity-Income Fund
LN Global Asset Allocation Fund
LN Money Market Fund
LN Social Awareness Fund
MFS-Registered Trademark- VARIABLE INSURANCE TRUST
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton International Fund - Class 2
Templeton Stock Fund - Class 2
TWENTIETH CENTURY'S TCI PORTFOLIOS, INC.
TCI Growth
TCI Balanced
T. Rowe Price International Series, Inc.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedule C 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.
Date LINCOLN LIFE & ANNUITY
---------------------- COMPANY OF NEW YORK
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date VARIABLE INSURANCE PRODUCTS
----------------------- FUNDS II
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
-----------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
<PAGE>
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 25th day of September, 1998, between JANUS
ASPEN SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), and Lincoln Life & Annuity Company of New York, a
life insurance company organized under the laws of the State of New York (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Accounts").
WITNESSETH:
WHEREAS, the Trust has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the " 1940 Act"), and has registered the offer
and sale of its shares under the Securities Act of 1933, as amended (the " 1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the Securities and Exchange
Commission granting Participating Insurance Companies and their separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b)
of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the
extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless registration
is not required under applicable law) certain variable life insurance policies
and/or variable annuity contracts under the 1933 Act (the "Contracts"); and
WHEREAS, the Company has registered or will register (unless registration
is not required pursuant to Section 3(v)(ii) of the 1940 Act) each Account as a
unit investment trust under the 1940 Act; and
1
<PAGE>
WHEREAS, the Company desires to utilize shares of one or more Portfolios as
an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
SALE OF TRUST SHARES
1.1 The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust.
Shares of a particular Portfolio of the Trust shall be ordered in such
quantities and at such times as determined by the Company to be necessary to
meet the requirements of the Contracts. The Trustees of the Trust (the
"Trustees") 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 Trustees 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.
1.2 The Trust will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3 For the purposes of Sections 1. 1 and 1.2, the Trust hereby appoints
the Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. - Receipt by the Company shall constitute receipt by the Trust
provided that (i) such orders are received by the Company in good order prior to
the time the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 10:00 a.m. New
York time on the next following Business Day. The Trust will confirm receipt of
each trade in a manner mutually agreeable to the Trust and the Company.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the Securities and Exchange Commission.
1.4 Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for no later than 2:00 p.m. New York time on the same
Business Day that the Trust receives notice of the order. The Trust shall use
its best efforts to pay for redemption orders that are transmitted to the
Company in accordance with Section 1.2 no later than 2:30
2
<PAGE>
p.m. New York time on the same Business Day that the Trust receives notice of
the order. Payments shall be made in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. 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 Trust shall notify the Company of the number of shares so. issued as payment
of such dividends and distributions.
1.7 The Trust shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6 p.m. New York time.
1.8 The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Exemptive Order. No shares
of any Portfolio will be sold directly to the general public. The Company agrees
that Trust shares will be used only for the purposes of funding the Contracts
and Accounts listed in Schedule A, as amended from time to time.
1.9 The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting (unless
exempt therefrom) and conflicts of interest corresponding to those contained in
Section 2.8 and Article IV of this Agreement.
ARTICLE 11
OBLIGATIONS OF THE PARTIES
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is subject
on the issuance and transfer of its shares.
3
<PAGE>
2.2 At the option of the Company, the Trust shall either (a) provide the
Company (at the Company's expense) with as many copies of the Trust's current
prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the foregoing,
as the Company shall reasonably request; or (b) provide the Company with a
camera ready copy of such documents in a form suitable for printing. The Trust
shall be responsible for its pro-rated share of the printing costs. The Trust
shall provide the Company with a copy of its statement of additional information
in a form suitable for duplication by the Company. The Trust (at its expense)
shall provide the Company with copies of any Trust-sponsored proxy materials in
such quantity as the Company shall reasonably require for distribution to
Contract owners.
2.3 The Company shall bear the costs (unless Janus Capital Corporation or
the Trust, pursuant to the terms of the letter to Company dated September 25,
1998, is required to bear the costs) of printing and distributing the Trust's
prospectus, statement of additional information, shareholder reports and other
shareholder communications to owners of and applicants for policies for which
the Trust is serving or is to serve as an investment vehicle. The Company shall
bear the costs of distributing proxy materials (or similar materials such as
voting solicitation instructions) to Contract owners. The Company assumes sole
responsibility for ensuring that such materials are delivered to Contract owners
in accordance with applicable federal and state securities laws.
2.4 The Company agrees and acknowledges that the Trust's adviser, Janus
Capital Corporation ("Janus Capital"), is the sole owner of the name and mark
"Janus" and that all use of any designation comprised in whole or part of Janus
(a "Janus Mark") under this Agreement shall inure to the benefit of Janus
Capital. Except as provided in Section 2.5, the Company shall not use any Janus
Mark on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of Janus
Capital. Such consent will not be unreasonably withheld and if no written
objection is received within 10 business days of receipt, approval will be
deemed given. Upon termination of this Agreement for any reason, the Company
shall cease all use of any Janus Mark(s) as soon as reasonably practicable.
2.5 (a) The Company shall furnish, or cause to be furnished, to the Trust
or its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or its investment adviser is named within 20 days
of the filing of such document with the Securities and Exchange Commission. The
Company shall furnish, or shall cause to be furnished, to the Trust or its
designee, each piece of sales literature or other promotional material in which
the Trust or its investment adviser is named, at least ten Business Days prior
to its use. No such material shall be used if the Trust or its designee
reasonably objects to such use within fifteen Business Days after receipt of
such material.
(b) The Trust shall furnish, or cause to be furnished, to the Company
or its designee, a copy of each Trust prospectus or statement of additional
information in which the Company is named within 20 days of the filing of such
document with the Securities and
4
<PAGE>
Exchange Commission. The Trust 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 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 fifteen Business Days after receipt of such material.
2.6 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or its investment
adviser in connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust shares (as such registration statement and
prospectus may be amended or supplemented from time to time), reports of the
Trust, Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee, except as required
by legal process or regulatory authorities or with the written permission of the
Trust or its designee. Such consent will not be unreasonably withheld and if no
written objection is received within 10 business days of receipt, approval will
be deemed given.
2.7 The Trust shall not give any information or make any representations
or statements on behalf of the Company or concerning the Company, the Accounts
or the Contracts other than information or representations contained in and
accurately derived from the registration statement or prospectus for the
Contracts (as such registration statement and prospectus may be amended or
supplemented from time to time), or in materials approved by the Company for
distribution including sales literature or other promotional materials, except
as required by legal process or regulatory authorities or with the written
permission of the Company.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges for
variable policyowners, the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the Accounts, in
shares of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, the
Company will vote shares of the Trust held by the Account and for which no
timely voting instructions from policyowners are received as well as shares it
owns that are held by that Account, in the same proportion as those shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
2.9 The Company shall notify the Trust of any applicable state insurance
laws that restrict the Portfolios' investments or otherwise affect the operation
of the Trust and shall notify the Trust of any changes in such laws.
5
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance company
duly organized and validly existing under the laws of the State of New York and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account (1) has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust in accordance with the provisions of the
1940 Act or, alternatively (2) has not been registered in proper reliance upon
the exclusion from registration under Section 3(c)(ii) of the 1940 Act.
3.3 The Company represents and warrants that the Contracts or interests in
the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws.
3.4 The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.5 The Trust represents and warrants that the Trust shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Trust shall be registered under the 1940 Act prior to any issuance or sale of
such shares. The Trust shall amend its registration statement 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 Trust shall register and qualify its shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust.
3.6 The Trust represents and warrants that the investments of each
Portfolio will comply with Subchapter M and the diversification requirements set
forth in Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code"), and the rules and regulations thereunder. In the event of a breach of
this Section 3.6 by the Trust, it will a) immediately notify the Company of the
breach and b) take the necessary steps to adequately diversify each Portfolio so
as to achieve compliance within the grace period offered by Regulation 1.817-5.
6
<PAGE>
ARTICLE IV
POTENTIAL CONFLICTS
4.1 The parties acknowledge that the Trust's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material irreconcilable
conflict between the interests of the contract owners of all Participating
Insurance Companies. 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 Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3 If it is determined by a majority of the Trustees, or a majority of
its disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) with - drawing
the assets allocable to some or all of the Accounts from the Trust or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or submitting the
question of whether or not 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 (b) establishing a new
registered management investment company or managed separate account.
4.4 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 Trust's election, to
7
<PAGE>
withdraw the affected Account's investment in the Trust 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 Trustees. Any such withdrawal and termination must take place
within six (6) months after the Trust gives written notice that this provision
is being implemented. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for the purchase
and redemption of shares of the Trust.
4.5 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 Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees, Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Company be required 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 Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Exemptive Order) on terms and conditions materially different
from those contained in the Exemptive Order, then the Trust 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.
8
<PAGE>
ARTICLE V
INDEMNIFICATION
5.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless the Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts themselves or
in sales literature generated or approved by the Company on behalf of the
Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article V), 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
indemnity 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 was accurately derived from written information furnished to the
Company by or on behalf of the Trust for use in Company Documents or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Trust Documents as defined in Section 5.2(a)) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined in
Section 5.2(a) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and accurately derived from written information furnished to
the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide
the services or furnish the materials required under the terms of this
Agreement; or
9
<PAGE>
(e) 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.
(f) arise out of (i) a failure by TRUST to substantially provide the
services and furnish the materials under the terms of this Agreement; or
(ii) a failure by a Portfolio(s) invested in by the Separate Account to
comply with the diversification requirements of Section 817(h) of the Code;
or (iii) a failure by a Portfolio(s) invested in by the Separate Account to
qualify as a "regulated investment company" under Subchapter M of the code.
5.2 INDEMNIFICATION BY THE Trust. The Trust agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
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
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Trust) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Trust (or any amendment or supplement
thereto), (collectively, "Trust Documents" for the purposes of this Article
V), 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 indemnity
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 was
accurately derived from written information furnished to the Trust by or on
behalf of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or acquisition of the Contracts or Trust
shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived from
written information furnished to the Company by or on behalf of the Trust;
or
10
<PAGE>
(d) arise out of or result from any failure by the Trust to provide
the services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Trust.
5.3 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice of
service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
ARTICLE VI
TERMINATION
6.1 This. Agreement may be terminated:
(a) by either party for any reason by ninety (90) days advance
written notice delivered to the other party; or
11
<PAGE>
(b) at the option of the Company if shares of the Fund 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
each Account, the administration of the Contracts or the purchase of Fund
shares, or an expected 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 Fund's distributor, the Fund's investment
manager or any subinvestment 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 its 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 Fund's 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; or
(f) upon requisite vote of the Contract owners having an interest in
the affected Portfolios (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 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 contract owners or (ii) the interests of the
Participating Insurance Companies investing in the Fund; or
(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
12
<PAGE>
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
(1) 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 its 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
its distributor, or either of them, shall have suffered a material adverse
change in their respective businesses or financial condition; or (2) the
Fund or its 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 Fund's distributor.
6.2 Notwithstanding any termination of this Agreement, the Trust shall,
at the option of the Company, continue to make available additional shares of
the Trust (or any Portfolio) pursuant to the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement, provided that the Company continues to pay the costs set forth
in Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
13
<PAGE>
ARTICLE VII
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 Trust:
Janus Aspen Series
100 Fillmore Street
Denver, Colorado 80206
Attention: General Counsel
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street, 17th Floor
Syracuse, NY 13202
Attn: Troy D. Panning
ARTICLE VIII
MISCELLANEOUS
8.1 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.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 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.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of Colorado.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer,
14
<PAGE>
agent or holder of shares of beneficial interest of the Trust shall be
personally liable for any such liabilities.
8.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., 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.
8.7 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.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
JANUS ASPEN SERIES
By:
Name:
Title:Assistant Vice President
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By:
Name:
Title: President
15
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Contracts Funded
Date Established by Board of Directors by Separate Account
-------------------------------------- -------------------
Lincoln Life and Annuity Variable GVA 1, 11, 111
Annuity Account L
Lincoln Life Variable Multi Fund Group
Annuity Account Q Variable Annuity
16
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
This Amendment to the Fund Participation Agreement ("Agreement") dated
September 25, 1998, as amended, between Janus Aspen Series, an open-end
management investment company organized as a Delaware business trust (the
"Trust"), and Lincoln Life & Annuity Company of New York, a New York life
insurance company (the "Company") is effective as of ___________, 1999.
AMENDMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree to amend the Agreement as follows:
1. Schedule A of this Agreement shall be deleted and replaced with the
attached Schedule A.
2. All other terms of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Amendment as of the date and year first above written.
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
By:
Name:
Title:
JANUS ASPEN SERIES
By:
Name:
Title:
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and the Contracts Funded
Date Established by Board of Directors by Separate Account
-------------------------------------- -------------------
Lincoln Life & Annuity Variable GVA 1, 11, 111
Annuity Account L
LLANY Account Q for Variable Multi Fund Group
Annuities Variable Annuity
Lincoln Life & Annuity Flexible Premium Lincoln VUL
Variable Life Account M
LLANY Separate Account R Lincoln SVUL
for Flexible Premium
Variable Life Insurance
LLANY Separate Account S for Flexible Lincoln CVUL
Premium Variable Life Insurance
<PAGE>
FUND PARTICIPATION AGREEMENT
BETWEEN
THE LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK
AND
LINCOLN NATIONAL SOCIAL AWARENESS FUND, INC.
THIS AGREEMENT, made and entered into this day of , 1998, by
and between Lincoln National Social Awareness Fund, Inc. a corporation organized
under the laws of Maryland (the "Fund"), and LINCOLN LIFE AND 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"; collectively, the "Accounts").
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 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. 811-3212) under the Investment Company Act of 1940,
as amended (the "1940 Act"), and the Fund shares (File No. 2-80743) 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 (unless exempt therefrom) certain variable annuity
contracts and/or variable life insurance policies 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 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
<PAGE>
WHEREAS, each Account, a validly existing separate account, duly authorized
by 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, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares on behalf of each Account to
fund its Contracts and the Fund is authorized to sell such shares to unit
investment trusts such as the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company and
the Fund agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those 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 shares 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 and deliver such net asset value by 7:00 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 shares, if such action is required by
law or by regulatory 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 (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 (LL will expect same day
redemption wires unless unusual circumstances evolve which cause the Fund to
have to redeem securities) 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 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
2
<PAGE>
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 9:00 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 the shares on the same day
that it places an order with the Fund to purchase those Fund
shares for an Account. Payment for Fund shares will be made by
the Account or the Company in Federal Funds transmitted to the
Fund by wire to be received by 11:00 a.m., E.S.T. on the day the
Fund is properly notified of the purchase order for shares. The
Fund will confirm receipt of each trade and these confirmations
will be received by the Company via Fax or E-mail by 3:00 p.m.
E.S.T. If Federal Funds are not received on time, such funds will
be invested, and shares purchased thereby will be issued, as soon
as practicable.
(c) Payment for shares redeemed by the Account or the
Company will be made in Federal Funds transmitted to the Company
by wire on the same day the Fund is notified of the redemption
order of 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. The Fund shall not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption
proceeds if securities must be redeemed; the Company alone shall
be responsible for such action.
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 as soon as reasonably practicable to the
Company of any income dividends or capital gain distributions payable on any
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 shares in
the form of additional shares of that Fund. 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
shares 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 available to the Company by 7:00 p.m., E.S.T. each Business Day, and in
any event, as soon as reasonably practicable after the net asset value per share
is calculated, and shall calculate such net asset value in accordance with the
then currently effective Fund Prospectus. The Fund shall not be liable for
3
<PAGE>
any information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company to the
Fund.
1.8. (a) The Company may withdraw the Account's investment in the
Fund 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 Contract owners having an interest in the Fund to
substitute the shares of another investment company for 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 Section
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 Fund
(unless otherwise required by applicable law), take any action to
operate the Accounts as management investment companies under the
1940 Act.
1.9. The Fund agrees that Fund shares will be sold only to Participating
Insurance Companies and their separate accounts. The Fund 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 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 Section 4240 of the New York Insurance Law and has registered or,
prior to the issuance of any Contracts, will register each Account (unless
exempt therefrom) 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.
4
<PAGE>
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 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.
2.6. 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. 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 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.
5
<PAGE>
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The Fund 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, and electronic version, 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 Fund and 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, as determined by the
Company. The Fund shall be responsible for the costs of printing
and distributing these materials to Contract owners.
(b) The Fund at its expense shall be responsible for
preparing, printing and distributing its proxy material. The
Company will provide the appropriate Contract owner names and
addresses to the Fund for this purpose.
3.4. The Company shall furnish to the Fund, prior to its use, each piece of
sales literature or other promotional material in which the Fund is named. No
such material shall be used, except with the prior written permission of the
Fund. The Fund agrees to respond to any request for approval on a prompt and
timely basis. Failure of the Fund to respond within 10 days of the request by
the Company shall relieve the Company of the obligation to obtain the prior
written permission of the Fund.
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,
except with the prior written permission of the Fund. The Fund agrees to respond
to any request for permission on a prompt and timely basis. If the Fund does not
respond within 10 days of a request by the Company, then the Company shall be
relieved of the obligation to obtain the prior written permission of the Fund.
3.6. 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
6
<PAGE>
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, then the Fund is relieved of the obligation to
obtain the prior written permission of the Company.
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-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, within 20 days after the filing
of such document with the SEC or other regulatory authorities.
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, within 20 days 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.
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.
7
<PAGE>
ARTICLE IV. Voting
4.1 Subject to applicable law and the requirements of Article VII, the Fund
shall solicit voting instructions from Contract owners;
4.2 Subject to applicable law and the requirements of Article VII, the
Company shall:
(a) vote Fund shares attributable to Contract owners in
accordance with instructions or proxies received in timely
fashion from such Contract owners;
(b) vote Fund shares 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 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 Contractowners. (If for this purpose the
Company decided to print the Fund Prospectuses and SAIs in a booklet or separate
booklets 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 Contractowners.)
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 Contractowners. The Company shall have the final decision on choice of
printer for all Prospectuses and SAIs.
ARTICLE VI. COMPLIANCE UNDERTAKINGS
8
<PAGE>
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 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.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. 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 Section 6e-3(T) of the 1940
Act, 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.
(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
9
<PAGE>
whatever steps are necessary to remedy the material
irreconcilable conflict. These steps could include: (i)
withdrawing the assets allocable to some or all of the affected
Accounts from the Fund and reinvesting such assets in a different
investment vehicle, 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 particular group (i.e., variable annuity Contract owners,
variable life insurance policy owners, or variable Contract
owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (ii)
establishing a new registered mutual fund or management separate
account; or (iii) taking such other action as is necessary to
remedy or eliminate the material irreconcilable 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 and to seek reimbursement from the Fund
for the reasonable costs and expenses of resolving the conflict.
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 Contract owners.
(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 matter. 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
was responsible for the conflict, then the Board shall notify the
Company immediately of that determination. The Fund shall assure
the Company that it (the Fund) or that
10
<PAGE>
other Participating Insurance Company as applicable, shall, at
its sole cost and expense, take whatever steps are necessary to
eliminate the conflict.
(e) Nothing in Sections 7.2(b) or 7.2(c) shall constitute a
waiver of any right of action which the Company may have against
other Participating Insurance Companies for reimbursement of all
or part of the costs and expenses of resolving 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. 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. However, 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
in either case an offer to do so has been declined by a vote of a majority of
affected Contract owners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless the Fund and each person who controls or is associated with the
Fund (other than another Participating Insurance Company) 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 with the
prior written consent of the Company 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 a
person authorized in writing to do so on behalf of the Fund) for
use in the Contracts Registration Statement, Contracts Prospectus
or in
11
<PAGE>
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 Article I;
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.
8.2. 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 with the prior written consent of the Fund 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:
12
<PAGE>
(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 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 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 Fund to the Company (or a person authorized in
writing to do so on behalf of the Fund); 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
Sections 2.4 and 6.1 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 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 to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification
13
<PAGE>
("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 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 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 Maryland,
without giving effect to the principles of conflicts of law.
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:
(a) at the option of any party upon 120 days advance written
notice to the other parties; or
14
<PAGE>
(b) at the option of the Company if shares of the Fund 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;
(d) at the option of the Company upon institution of formal
proceedings against the Fund, the investment advisor or any sub-
investment advisor, by the NASD, the SEC, or any state securities
or insurance commission or any other regulatory body; or
(e) upon requisite vote of the Contract owners having an
interest in the Fund (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 the Fund in accordance with the terms of the Contracts; or
(f) 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
(g) 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
(h) 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
(i) 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
(j) at the option of the Fund if the Contracts cease to
qualify as annuity
15
<PAGE>
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
(k) at the option of the Fund if the Fund shall determine,
in its 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 the Fund; or
(l) at the option of the Company, if the Company shall
determine, in its sole judgment exercised in good faith, that:
(1) the Fund shall have suffered a material adverse change in its
business or financial condition; or (2) the Fund 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
(m) automatically 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 Company or the Fund, as the case may be.
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 the other party 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.
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement, the Fund 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
16
<PAGE>
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) 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, 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 new or existing Separate Accounts investing
in the Fund. The provisions of this Agreement shall be equally applicable to
each such separate account and each such class of contracts or policies, unless
the context otherwise requires. Any such amendment must be signed by the parties
and must bear an effective date for that amendment.
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:
Lincoln National Social Awareness Fund, Inc.
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Kelly D. Clevenger
17
<PAGE>
If to the Company:
Lincoln Life and Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
Attn: Troy Panning
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.
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.
ARTICLE XIV. PRIOR AGREEMENTS
This Fund Participation Agreement, as of its effective date, hereby
supersedes any and all prior agreements to purchase shares between Lincoln Life
and Annuity Company of New York and the Fund.
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.
LINCOLN NATIONAL SOCIAL AWARENESS FUND, INC.
Signature:
-----------------------------------------------
18
<PAGE>
Name: Kelly D. Clevenger
----------------------------------------------------
Title: President
---------------------------------------------------
LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK
Signature:
-----------------------------------------------
Name: Phillip Holstein
----------------------------------------------------
Title: President, Treasurer & Director, Lincoln Life and
Annuity Company of New York
---------------------------------------------------
#78515
SCHEDULE 1
Lincoln National Social Awareness Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of______________
LINCOLN LIFE AND ANNUITY VARIABLE ANNUITY ACCOUNT L
LLANY ACCOUNT Q VARIABLE ANNUITY
SCHEDULE 2
Lincoln National Social Awareness Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of______________
GVA I, II, III
GROUP MULTI FUND
19
<PAGE>
AMENDMENT TO
SCHEDULE 1
Lincoln National Social Awareness Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of October 15, 1999
LINCOLN LIFE AND ANNUITY VARIABLE ANNUITY ACCOUNT L
LLANY ACCOUNT Q VARIABLE ANNUITY
LLANY SEPARATE ACCOUNT R
<PAGE>
AMENDMENT TO
SCHEDULE 2
Lincoln National Social Awareness Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of October 15, 1999
GVA I, II, III
GROUP MULTI FUND
LLANY FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE - SVUL
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
LINCOLN NATIONAL SOCIAL AWARENESS FUND, INC.
Signature:
--------------------------------------------------
Name: Kelly D. Clevenger
-------------------------------------------------------
Title: President
------------------------------------------------------
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Sgnature
---------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
<PAGE>
AMENDMENT TO
SCHEDULE 1
Lincoln National Social Awareness Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of May 1, 2000
LINCOLN LIFE AND ANNUITY VARIABLE ANNUITY SEPARATE ACCOUNT L
LINCOLN LIFE AND ANNUITY FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LLANY ACCOUNT Q FOR VARIABLE ANNUITIES
LLANY SEPARATE ACCOUNT R FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LLANY SEPARATE ACCOUNT S FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<PAGE>
AMENDMENT TO
SCHEDULE 2
Lincoln National Social Awareness Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 2000
GVA I, II, III
GROUP MULTI FUND
LINCOLN SVUL
LINCOLN SVUL II
LINCOLN VUL
LINCOLN CVUL
LINCOLN CVUL SERIES III
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
LINCOLN NATIONAL SOCIAL AWARENESS FUND, INC.
Signature:
--------------------------------------------------
Kelly D. Clevenger
President
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Signature
--------------------------------------------------
Troy D. Panning
CFO/2nd Vice President
<PAGE>
The Fund Participation Agreement (the "Agreement"), dated November 2, 1998,
by and among Lincoln Life & Annuity Company of New York and Lincoln National
Social Awareness Fund, Inc. is hereby amended as follows:
Page 2, the second paragraph is replaced in its entirety with the following:
"WHEREAS, the Company has registered or will have registered each Account
with the SEC (unless exempt therefrom) as a unit investment trust under the 1940
Act before any Contracts are issued by that Account; and"
Page 4, Article 2.1 is replaced in its entirety with the following:
"The Company represents and warrants (a) that the Contracts are registered
under the 1933 Act or will be so registered before the issuance thereof
(unless exempt therefrom), (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 Section
4240 of the New York Insurance Law, and has registered or, prior to the
issuance of any Contracts, will register each Account (unless exempt
therefrom) 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."
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to the
Fund Participation Agreement to be executed in its name and behalf by its duly
authorized officer on the date specified below.
LINCOLN NATIONAL SOCIAL
AWARENESS FUND, INC.
Date: By:
Name: Kelly D. Clevenger
-----------------------
Title: President
-----------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
Date: By:
Name: Joanne B. Collins
-----------------------
Title: President
-----------------------
<PAGE>
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 25th day of September, 1998, by and between
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST ("TRUST"), a Delaware business trust,
ADVISERS MANAGERS TRUST ("MANAGERS TRUST"), a New York common law trust,
NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT"), a New York
corporation, and LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ("LIFE COMPANY"), a
life insurance company organized under the laws of the State of New York.
WHEREAS, TRUST and MANAGERS TRUST are registered with the Securities and
Exchange Commission ("SEC") under the Investment Company Act of 1940, as amended
("40 Act") as open-end, diversified management investment companies; and
WHEREAS, TRUST is organized as a series fund comprised of several
portfolios ("Portfolios"), the currently available of which are listed on
Appendix A hereto; and
WHEREAS, MANAGERS TRUST is organized as a series fund, comprised of several
portfolios ("Series"), the currently operational of which are listed on Appendix
A hereto; and
WHEREAS, each Portfolio of TRUST will invest all of its net investable
assets in a corresponding Series of MANAGERS TRUST; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies ("Participating Insurance Companies") and also offers its
shares to certain qualified pension and retirement plans; and
WHEREAS, TRUST has received an order from the SEC, dated May 5,1995 (File
No. 812-9164), granting Participating Insurance Companies and their separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b)
of the '40 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the
extent necessary to permit shares of the Portfolios of the TRUST to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having one or more Portfolios of the TRUST as one or more of the
underlying funding vehicles for such Variable Contracts; and
WHEREAS, N&B MANAGEMENT is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended, and as a broker-dealer
under the Securities Exchange Act of 1934, as amended; and
<PAGE>
WHEREAS, N&B MANAGEMENT is the administrator and distributor of the shares
of each Portfolio of TRUST and investment manager of the corresponding Series of
MANAGERS TRUST; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST, MANAGERS TRUST and N&B MANAGEMENT agree as follows:
Article 1. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Portfolios as listed in Appendix B for investment
of proceeds from Variable Contracts allocated to the designated Separate
Accounts, such shares to be offered as provided in TRUST's Prospectus.
1.2 TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
LIFE COMPANY shall be the designee of TRUST for receipt of such orders from LIFE
COMPANY and receipt by such designee shall constitute receipt by TRUST; provided
that TRUST receives notice of such order by 9:30 a.m. New York 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 TRUST calculates its net asset
value pursuant to the rules of the SEC.
1.3) TRUST agrees to redeem for cash, on LIFE COMPANY's request, any
full or fractional shares of TRUST held by LIFE COMPANY, executing such
requests on a daily basis at the net asset value next computed after receipt
by TRUST or its designee of the request for redemption. For purposes of this
Section 1.3, LIFE COMPANY shall be the designee of TRUST for receipt of
requests for redemption from LIFE COMPANY and receipt by such designee shall
constitute receipt by TRUST; provided that TRUST receives notice of such
request for redemption by 9:30 a.m. New York time on the next following
Business Day.
1.4 TRUST shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of TRUST. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. TRUST shall notify
LIFE COMPANY of the number of shares so issued as payment of such dividends and
2
<PAGE>
distributions. LIFE COMPANY reserves the right to elect to receive any such
income dividends or capital gain distributions in cash.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:00 p.m. New York time.
If TRUST provides LIFE COMPANY with materially incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery by TRUST or N&B MANAGEMENT
to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by LIFE COMPANY by 9:30 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof. TRUST shall provide
written confirmations of all purchase or redemption orders of TRUST shares to
LIFE COMPANY by 2:00 p.m. New York time on the Business Day that such purchase
or redemption orders are received by the TRUST in accordance with the terms of
Sections 1.2 and 1.3 hereof
1.7 If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall wire the redemption
proceeds to LIFE COMPANY on the day the order is transmitted by LIFE COMPANY,
unless doing so would require TRUST to dispose of portfolio securities or
otherwise incur additional costs, but in such event, proceeds shall be wired to
LIFE COMPANY within seven days and TRUST shall notify the person designated in
writing by LIFE COMPANY as the recipient for such notice of such delay by 3:00
p.m. New York Time the same Business Day that LIFE COMPANY transmits the
redemption order to TRUST. If LIFE COMPANY's order requests the application of
redemption proceeds from the redemption of shares to the purchase of shares of
another fund administered or distributed by N&B MANAGEMENT, TRUST shall so apply
such proceeds the same Business Day that LIFE COMPANY transmits such order to
TRUST.
3
<PAGE>
1.8 Notwithstanding Section 1.7, TRUST 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 40 Act and any rules thereunder.
1.9 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to certain qualified pension and
other retirement plans, all in accordance with the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury
Regulation 1.817-5. Shares of the Portfolios of TRUST will not be sold directly
to the general public.
1.10 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the 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 of Trustees of TRUST, acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
deemed necessary and in the best interests of the shareholders of such
Portfolios.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance company
duly organized and validly existing under the laws of New York and that it has
legally and validly established each Separate Account as a segregated asset
account under such laws, and that LIFE COMPANY, the principal underwriter for
the Variable Contracts, is registered as a broker-dealer under the Securities
Exchange Act of 1934.
2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 19'33 (the "33 Act"), unless an
exemption from registration is available, prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws,
including any applicable state insurance law suitability requirement.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
4
<PAGE>
2.5 LIFE COMPANY represents and warrants that it shall deliver such
prospectuses, statements of additional information, proxy statements and
periodic reports of the Trust as may be required to be delivered under
applicable federal or state law and interpretations of federal and state
securities regulators thereunder in connection with the offer and sale of the
Variable Contracts.
2.6 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such shares. TRUST shall amend its registration statement under the '33 Act and
the '40 Act from time to time as required in order to effect the continuous
offering of its shares. TRUST shall register and qualify its shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by TRUST.
2.7 TRUST represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance within the grace period afforded by
Regulation 1.817-5.
2.8 TRUST represents and warrants that each Portfolio invested in by the
Separate Account is currently qualified as a "regulated investment company"
under Subchapter M of the Code, that it will make every effort to maintain such
qualification and will notify LIFE COMPANY immediately upon having a reasonable
basis for believing it has ceased to so qualify or might not so qualify in the
future.
Article 111. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes to which an issuer is subject on the issuance and transfer of its
shares.
3.2 TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the following TRUST (or individual Portfolio) documents,
and any supplements thereto, to existing Variable Contract owners of LIFE
COMPANY:
5
<PAGE>
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
LIFE COMPANY will submit any bills for printing, duplicating and/or
mailing costs, relating to the TRUST (or individual Portfolio) documents
described above, to TRUST for reimbursement by TRUST. LIFE COMPANY shall monitor
such costs and shall use its best efforts to control these costs. LIFE COMPANY
will provide TRUST on a semi-annual basis, or more frequently as reasonably
requested by TRUST, with a current tabulation of the number of existing Variable
Contract owners of LIFE COMPANY whose Variable Contract values are invested in
TRUST. This tabulation will be sent to TRUST in the form of a letter signed by a
duly authorized officer of LIFE COMPANY attesting to the accuracy of the
information contained in the letter. If requested by LIFE COMPANY, the TRUST
shall provide such documentation (including a final copy of the TRUST's
prospectus as set in type or in camera-ready copy) and other assistance as is
reasonably necessary in order for LIFE COMPANY to print together in one document
the current prospectus for the Variable Contracts issued by LIFE COMPANY and the
current prospectus for the TRUST. For purposes of this Article 111, if LIFE
COMPANY so requests, TRUST will provide a separate prospectus for each TRUST
Portfolio used in a particular Separate Account, provided such prospectus is
contained in the TRUST's currently effective registration statement. Should LIFE
COMPANY wish to print any of these documents in a format different from that
provided by TRUST, LIFE COMPANY shall provide Trust with sixty (60) days' prior
written notice and LIFE COMPANY shall bear the cost associated with any format
change.
3.3 TRUST will provide, at its expense, LIFE COMPANY with the following
TRUST (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective Variable Contract owners of LIFE COMPANY:
(i) camera-ready copy of the current prospectus for printing by the LIFE
COMPANY;
(ii) camera-ready copies of the individual Portfolio prospectuses filed
as part of the TRUST's registration statement;
(iii) a copy of the statement of additional information suitable for
duplication;
(iv) camera-ready copy of proxy material suitable for printing; and
(v) camera-ready copy of the annual and semi-annual reports for printing
by the LIFE COMPANY.
6
<PAGE>
3.4 TRUST will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios within 20 days
after the filing of each such document with the SEC or other regulatory
authority. LIFE COMPANY will provide TRUST with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account and the TRUST
within 20 days after the filing of each such document with the SEC or other
regulatory authority.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish or will cause to be furnished, to TRUST
and N&B MANAGEMENT, each piece of sales literature or other promotional material
in which TRUST, MANAGERS TRUST or N&B MANAGEMENT is named, at least ten (10)
Business Days prior to its intended use. No such material will be used if TRUST,
MANAGERS TRUST or N&B MANAGEMENT objects to its use in writing within five (5)
Business Days after receipt of such material.
4.2 TRUST and N&B MANAGEMENT will furnish, or will cause to be
furnished, to LIFE COMPANY, each piece of sales literature or other promotional
material in which LIFE COMPANY or its Separate Accounts are named, at least
ten (10) Business Days prior to its intended use. No such material will be used
if LIFE COMPANY objects to its use in writing within five (5) Business Days
after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement, prospectus or offering statement for such Variable
Contracts, as such registration statement, prospectus or offering statement may
be amended or supplemented from time to time, or in reports of the Separate
Accounts or reports prepared for distribution to owners of such Variable
Contracts, or in sales literature or other promotional material approved by LIFE
COMPANY or its designee, except with the written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.
7
<PAGE>
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers, Inc.
rules, the '40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The Board of Trustees of TRUST and MANAGERS TRUST (the "Boards")
will monitor TRUST and MANAGERS TRUST, respectively, (collectively the "Funds"),
for the existence of any material irreconcilable conflict between the interests
of the Variable Contract owners of Participating Insurance Company Separate
Accounts investing in the Funds. A material irreconcilable conflict may arise
for a variety of reasons, including: (a) state insurance regulatory authority
action; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling, or
any similar action by insurance, tax, or securities regulatory authorities; (c)
an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of the Funds. are being managed; (e) a
difference in voting instructions given by variable annuity and variable life
insurance contract owners or by contract owners of different Participating
Insurance Companies; or (f) a decision by a Participating Insurance Company to
disregard voting instructions of Variable Contract owners.
5.2 LIFE COMPANY will report any potential or existing conflicts to the
Boards. LIFE COMPANY will provide each appropriate Board with all information
reasonably necessary for it to consider any issues raised in carrying out its
responsibilities under the Conditions set forth in the notice issued by the SEC
for the Funds on April 12, 1995 (the "Notice") (Investment Company Act Release
No. 21003), which LIFE COMPANY has reviewed. LIFE COMPANY will inform each
appropriate Board whenever Variable Contract owner voting instructions are
disregarded by LIFE COMPANY. These responsibilities will be carried out with a
view only to the interests of the Variable Contract owners.
5.3 If a majority of the Board of a Fund or a majority of its
disinterested trustees or directors, determines that a material irreconcilable
conflict exists, affecting the LIFE COMPANY, LIFE COMPANY, at its expense and to
the extent reasonably practicable (as determined by a
8
<PAGE>
majority of disinterested trustees or directors), will take any steps necessary
to remedy or eliminate the material irreconcilable conflict consistent with the
terms and conditions set forth in the Notice.
If a material irreconcilable conflict arises because of LIFE COMPANY's
decision to disregard Variable Contract owner voting instructions, and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at the election of the relevant Fund, to withdraw its
Separate Account's investment in such Fund, and no charge or penalty will be
imposed as a result of such withdrawal. The responsibility to take such remedial
action shall be carried out with a view only to the interests of the Variable
Contract owners.
For the purposes of this Section 5.3, a majority of the disinterested
members of the applicable Board shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the relevant Fund or N&B MANAGEMENT (or any other investment adviser of the
Funds) be required to establish a new funding medium for any Variable Contract.
5.4 Any Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.5 No less than annually, LIFE COMPANY shall submit to the Boards such
reports, materials or data as such Boards may reasonably request so that the
Boards may fully carry out the obligations imposed upon them by these
Conditions. Such reports, materials, and data shall be submitted more frequently
if deemed appropriate by the applicable Boards, provided that such request shall
not be unreasonable.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners participating in registered Separate Accounts so long
as the SEC continues to interpret the '40 Act as requiring pass-through voting
privileges for such Variable Contract owners. This condition will apply to
UIT-Separate Accounts investing in TRUST and to managed separate accounts
investing in MANAGERS TRUST to the extent a vote is required with respect to
matters relating to MANAGERS TRUST. Accordingly, LIFE COMPANY, where applicable,
will vote shares of a Fund held in its registered Separate Accounts in a manner
consistent with voting instructions timely received from its Variable Contract
owners. LIFE COMPANY will be responsible for assuring that each of its
registered Separate Accounts that participates in any Fund calculates voting
privileges in a manner consistent with other participants as defined in the
Conditions set forth in the Notice ("Participants"). The obligation to calculate
voting privileges in a manner consistent with all other registered Separate
Accounts investing in a Fund will be a contractual obligation of all
Participants under the agreements governing participation in the Funds. Each
Participant will vote shares held in a given registered Separate Account for
which it has not
9
<PAGE>
received timely voting instructions, as well as shares it owns, in the same
proportion as its votes those shares in that Account for which it has received
voting instructions.
6.2 If and to the extent 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 '40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Order,
then TRUST, MANAGERS TRUST and/or the Participants, as appropriate, shall take
such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless TRUST, MANAGERS TRUST, N&B MANAGEMENT and each of their
Trustees, directors, officers, employees and agents and each person, if any, who
controls TRUST or MANAGERS TRUST or N&B MANAGEMENT within the meaning of Section
15 of the '33 Act (collectively, the "Indemnified Parties" for purposes of this
Article VII) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of LIFE COMPANY, which
consent shall not be unreasonably withheld) or litigation (including 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 offer, sale or acquisition of TRUST's shares
or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Variable
Contracts or contained in the Variable Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to LIFE COMPANY by or on behalf of TRUST for use
in the registration statement or prospectus for the Variable
Contracts or in the Variable Contracts or sales literature
(or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the
Variable Contracts or TRUST shares; or
(b) arise out of or as a result of untrue statements or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature of TRUST not supplied by LIFE COMPANY,
10
<PAGE>
or persons under its control) or wilful misfeasance, bad
faith or negligence of LIFE COMPANY or persons under its
control, with respect to the sale or distribution of the
Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of TRUST or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to TRUST for inclusion
therein by or on behalf of LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to
substantially provide the services and furnish the materials
under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
TRUST, whichever is applicable.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from LIFE COMPANY to such party of
LIFE COMPANY's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
LIFE COMPANY will not be liable to such party under this Agreement
11
<PAGE>
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.4 INDEMNIFICATION BY N&B MANAGEMENT. N&B MANAGEMENT agrees to
indemnify and hold harmless LIFE COMPANY and each of its directors, officers,
employees, and agents and each person, if any, who controls LIFE COMPANY within
the meaning of Section 15 of the '33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article VII) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of N&B MANAGEMENT which consent shall not be unreasonably
withheld) 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
offer, sale or acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or sales literature
of TRUST (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 N&B MANAGEMENT or
TRUST by or on behalf of LIFE COMPANY for use in the
registration statement or prospectus for TRUST or in sales
literature (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale
of the Variable Contracts or TRUST shares; or
(b) arise out of or as a result of untrue statements or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature for the Variable Contracts not supplied by N&B
MANAGEMENT or persons under its control) or wilful
misfeasance, bad faith or negligence of TRUST or N&B
MANAGEMENT or persons under their control, with respect to
the sale or distribution of the Variable Contracts or TRUST
shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable
Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not
12
<PAGE>
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to LIFE COMPANY for
inclusion therein by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to substantially
provide the services and furnish the materials under the
terms of this Agreement; or (ii) a failure by a Portfolio(s)
invested in by the Separate Account to comply with the
diversification requirements of Section 817(h) of the Code
and the regulations thereunder; or (iii) a failure by a
Portfolio(s) invested in by the Separate Account to qualify
as a "regulated investment company" under Subchapter M of
the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by N&B MANAGEMENT in
this Agreement or arise out of or result from any other
material breach of this Agreement by N&B MANAGEMENT.
7.5 N&B MANAGEMENT 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
LIFE COMPANY.
7.6 N&B MANAGEMENT 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 N&B MANAGEMENT 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 N&B MANAGEMENT of
any such claim shall not relieve N&B MANAGEMENT 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, N&B MANAGEMENT shall be entitled to participate
at its own expense in the defense thereof N&B MANAGEMENT also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from N&B MANAGEMENT to such party of N&B MANAGEMENT's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and N&B MANAGEMENT
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.
13
<PAGE>
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the
date hereof upon 90 days' notice, unless a shorter time is
agreed to by the parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not
reasonably available to meet the requirements of the
Variable Contracts as determined by LIFE COMPANY. Prompt
notice of election to terminate pursuant to this Section
8.2(b) shall be furnished by LIFE COMPANY, said termination
to be effective ten days after receipt of notice unless
TRUST makes available a sufficient number of shares to
reasonably meet the requirements of the Variable Contracts
within said ten-day period;
(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST or N&B MANAGEMENT by the SEC, or
any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in LIFE
COMPANY's reasonable judgment, materially impair TRUST's
ability to meet and perform TRUST's obligations and duties
hereunder or N&B MANAGEMENT's ability to manage any
Portfolio. Prompt notice of such election to terminate shall
be furnished by LIFE COMPANY with said termination to be
effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the National
Association of Securities Dealers, Inc., or any other
regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in TRUST's reasonable
judgment, materially impair LIFE COMPANY's ability to meet
and perform its obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by TRUST
with said termination to be effective upon receipt of
notice;
(e) In the event TRUST's shares are not registered, issued or
sold in accordance with applicable state or federal law, or
such law precludes the use of such shares as the underlying
investment medium of Variable Contracts issued or to be
issued by LIFE COMPANY. Termination shall be effective upon
such occurrence without notice;
14
<PAGE>
(f) At the option of TRUST if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if TRUST reasonably believes
that the Variable Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by
LIFE COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of LIFE COMPANY within ten
days after written notice of such breach is delivered to
TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of TRUST within ten days
after written notice of such breach is' delivered to LIFE
COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered (unless an exemption from registration is
available), issued or sold in accordance with applicable
federal and/or state law. Termination shall be effective
immediately upon such occurrence without notice;
At the option of LIFE COMPANY, with respect to a Portfolio,
upon the vote of Variable Contract Owners and written
approval of LIFE COMPANY to substitute shares of another
investment company for the shares of any Portfolio in
accordance with the terms of the Variable Contracts,
provided LIFE COMPANY has given TRUST forty-five (45) days'
notice of the date of such substitution;
(k) In the event this Agreement is assigned without the prior
written consent of LIFE COMPANY, TRUST, MANAGERS TRUST and
N&B MANAGEMENT, termination shall be effective immediately
upon such occurrence without notice;
(1) At the option of LIFE COMPANY if a Portfolio fails to satisfy
the diversification requirements set forth in Section 2.7
hereof and does not cure such failure within the grace
period afforded by Regulation 1.817-5. Termination shall be
effective immediately upon notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, TRUST will continue to make available additional
TRUST shares (limited to shares of the Portfolios designated in
Appendix B), as provided below, at the option of LIFE COMPANY for so
15
<PAGE>
long as LIFE COMPANY desires pursuant to the terms and conditions of this
Agreement, for all Variable Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if LIFE COMPANY so elects for TRUST to make
additional TRUST shares available, the owners of the Existing Contracts or LIFE
COMPANY, whichever shall have legal authority to do so, shall be permitted to
reallocate investments in TRUST, redeem investments in TRUST and/or invest in
TRUST upon the payment of additional premiums under the Existing Contracts. In
the event of a termination of this Agreement pursuant to Section 8.2 hereof,
LIFE COMPANY, as promptly as is practicable under the circumstances, shall
notify TRUST and N&B MANAGEMENT whether LIFE COMPANY elects for TRUST to
continue to make TRUST shares available after such termination. If TRUST shares
continue to be made available after such termination, the provisions of this
Agreement shall remain in effect. The parties agree that this Section 8.3 shall
not apply to any terminations of this Agreement by the TRUST, MANAGERS TRUST or
N&B MANAGEMENT pursuant to Sections 8.2(f),(h),(i) or (k) hereof.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to LIFE COMPANY's assets held in the Separate
Accounts), and LIFE COMPANY shall not prevent Variable Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Variable Contracts, until thirty (30) days after the LIFE COMPANY shall have
notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to TRUST, MANAGERS TRUST or N&B MANAGEMENT:
Neuberger&Berman Management Incorporated
605 Third Avenue
New York, NY 10158-0006
Attention: Ellen Metzger, General Counsel
If to LIFE COMPANY:
Lincoln Life & Annuity Company of New York
120 Madison Street, 17" Floor
Syracuse, New York 13202
Attention: Troy D. Panning
16
<PAGE>
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.'
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10.5 The parties agree that the assets and liabilities of each Series are
separate and distinct from the assets and liabilities of each other Series. No
Series shall be liable or shall be charged for any debt, obligation or liability
of any other Series. No Trustee, officer or agent shall be personally liable for
such debt, obligation or liability of any Series or Portfolio and no Portfolio
or other investor, other than the Portfolio or other investors investing in the
Series which incurs a debt, obligation or liability, shall be liable therefor.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers, Inc. and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
MANAGERS TRUST, N&B MANAGEMENT and the LIFE COMPANY.
17
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
NEUBERGER&BERMAN
ADVISERS MANAGEMENT TRUST
By:
Name:
Title:
ADVISERS MANAGERS TRUST
By:
Name:
Title:
NEUBERGER&BERMAN
MANAGEMENT INCORPORATED
By:
Name:
Title:
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By:
Name:
Title:
18
<PAGE>
APPENDIX A
Neuberger&Berman Advisers Corresponding Series of
Management Trust and its Series (Portfolios Advisers Managers Trust (Series)
- ------------------------------------------- --------------------------------
Balanced Portfolio AMT Balanced Investments
Growth Portfolio AMT Growth Investments
Guardian Portfolio AMT Guardian Investments
International Portfolio AMT International Investments
Limited Maturity Bond Portfolio AMT Limited Maturity Bond
Investments
Liquid Asset Portfolio AMT Liquid Asset Investments
Mid-Cap Growth Portfolio AMT Mid-Cap Growth Investments
Partners Portfolio AMT Partners Investments
Socially Responsive Portfolio AMT Socially Responsive
Investments
19
<PAGE>
APPENDIX B
Separate Accounts Selected Portfolios
- ----------------- -------------------
Lincoln Life and Annuity Variable Partners
Annuity Account L
Lincoln Life & Annuity Company Partners
Of New York Variable Annuity Mid-Cap Growth
Account Q
20
<PAGE>
AMENDMENT NO. I TO THE
FUND PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1, dated as of October 15,1999 among LINCOLN LIFE &
ANNUITY COMPANY OF NEW YORK ("LIFE COMPANY), and NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST ("TRUST"), ADVISERS MANAGERS TRUST ("MANAGERS TRUST"), and
NEUBERGER BERMAN MANAGEMENT INC. ("NB MANAGEMENT"), is made to the Fund
Participation Agreement, dated as of September 25,1998, among LIFE COMPANY,
TRUST, MANAGERS TRUST and NB MANAGEMENT (the "Agreement"). Terms defined in the
Agreement are used herein as therein defined.
WHEREAS, the parties desire to amend Appendix B to the Agreement to
add a new Separate Account.
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the parties agree as follows:
1. Appendix B of the Agreement is hereby deleted and replaced with new
Appendix B attached hereto.
2. Except as modified hereby, all other terms and conditions of the Agreement
shall remain in full force and effect.
3. This Amendment No. 1 may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same First Amendment.
NEUBERGER BERMAN NEUBERGER BERMAN
ADVISERS MANAGEMENT TRUST MANAGEMENT INC.
By By:
Name: Name:
Title: Title:
ADVISERS MANAGERS TRUST LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
By By:
Name: Name:
Title: Title:
<PAGE>
APPENDIX B
Separate Accounts Selected Portfolios
- ----------------- -------------------
Lincoln Life and Annuity Variable Partners
Annuity Account L
Lincoln Life & Annuity Company Partners
Of New York Variable Annuity Mid-Cap Growth
Account Q
Lincoln Life & Annuity Separate Partners
Account R for Flexible Premium Mid-Cap Growth
Variable Life Insurance
2
<PAGE>
AMENDMENT TO THE
FUND PARTICIPATION AGREEMENT
This AMENDMENT, dated as of May 1, 2000, between THE LINCOLN NATIONAL
LIFE INSURANCE COMPANY, a life insurance company organized under the laws of the
State of Indiana ("LIFE COMPANY"), and NEUBERGER BERMAN ADVISERS MANAGEMENT
TRUST, a Delaware business trust ("TRUST"), ADVISERS MANAGERS TRUST, a New York
common law trust ("MANAGERS TRUST"), and NEUBERGER BERMAN MANAGEMENT INC., a New
York corporation ("NB MANAGEMENT"), is made to the Fund Participation Agreement,
dated as of September 18, 1998, among LIFE COMPANY, TRUST, MANAGERS TRUST and NB
MANAGEMENT (the "Agreement"). Terms defined in the Agreement are used herein as
therein defined.
WHEREAS, the parties wish to amend Appendix B to the Agreement to add
new Separate Accounts.
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the parties agree as follows:
1. Appendix B of the Agreement is hereby deleted and replaced with new
Appendix B attached hereto.
2. Except as modified hereby, all other terms and conditions of the
Agreement shall remain in full force and effect.
3. This Amendment may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same Amendment.
NEUBERGER BERMAN NEUBERGER BERMAN
ADVISERS MANAGEMENT TRUST MANAGEMENT INC.
By:_______________________________ By:_______________________
Name: Peter E. Sundman Name: Daniel J. Sullivan
Title: President Title: Senior Vice President
1
<PAGE>
ADVISERS MANAGERS TRUST THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By: ______________________
By:_______________________________ Name: Steven M. Kluever
Name: Peter E. Sundman Title: Second Vice President
Title: President
2
<PAGE>
APPENDIX B
Separate Accounts Selected Portfolios
- ----------------- -------------------
Lincoln National Variable Annuity Partners
Account C Mid-Cap Growth
Lincoln National Variable Annuity Partners
Account L Mid-Cap Growth
Lincoln Life Variable Annuity Partners
Account Q Mid-Cap Growth
Lincoln National Variable Annuity Mid-Cap Growth
Account 37
Lincoln National Variable Annuity Partners
Account 38
Lincoln National Variable Annuity Partners
Account 53 Mid-Cap Growth
Lincoln National Flexible Partners
Premium Life Account M Mid-Cap Growth
Lincoln National FlexiblePremium Partners
Variable Life Account R Mid-Cap Growth
Lincoln National FlexiblePremium Partners
Variable Life Account S Mid-Cap Growth
3
<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 Post Effective Amendment No. 7 to the Registration Statement (Form N-4
No. 333-10805) and the related Statement of Additional Information appearing
therein and pertaining to Lincoln Life & Annuity Variable Annuity Account L, and
to the use therein of our reports dated (a) March 10, 2000, with respect to the
statutory-basis financial statements of Lincoln Life & Annuity Company of New
York, and (b) March 24, 2000, with respect to the financial statements of
Lincoln Life & Annuity Variable Annuity Account L.
Fort Wayne, Indiana
April 10, 2000
<PAGE>
PC Docs 12752 3/8/99
ORGANIZATIONAL CHART OF THE
LINCOLN NATIONAL INSURANCE HOLDING COMPANY SYSTEM
All the members of the holding company system are corporations, with
the exception of, Delaware Distributors, L.P and Founders CBO, L.P.
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| Lincoln National Management Corporation |
| | 100% - Pennsylvania - Management Company |
|
|--| City Financial Partners Ltd. |
| | 100% - England/Wales - Distribution of life|
| | assurance & pension products |
|
|--| LNC Administrative Services Corporation |
| | 100% - Indiana - Third Party Administrator |
|
|--|Lincoln National Financial Institutions Group, Inc.|
| |(fka 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. |
| |--| (fka Financial Services Department, Inc.) |
| | | 100% - Indiana - Insurance Agency |
| |
| | | Financial Investments, Inc. |
| |--| (fka 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 |
<PAGE>
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--|Lincoln National Financial Institutions Group, Inc.|
| |(fka The Richard Leahy Corporation) |
| | 100% - Indiana - Insurance Agency |
| |
| |--| Personal Financial Resources, Inc. |
| | | 100% - Arizona - Insurance Agency |
| |
| |--| Personal Investment Services, Inc. |
| | 100% - Pennsylvania - Insurance Agency |
|
|--| LincAm Properties, Inc. |
| | 50% - Delaware - Real Estate Investment |
|
| | Lincoln Life and Annuity Distributors, Inc. |
|--| (fka Lincoln Financial Group, Inc.) |
| | 100% - Indiana - Insurance Agency |
| |
| |--| Lincoln Financial Advisors Corporation |
| | | (fka LNC Equity Sales Corporation) |
| | | 100% - Indiana - Broker-Dealer |
| |
| | |Corporate agencies: Lincoln Life and Annuity Distributors, |
| | | Inc. ("LLAD")has subsidiaries of which LLAD 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 |
|
|__| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| |
| |--| Lincoln National Investment Companies, Inc.|
| | |(fka Lincoln National Investments, Inc.) |
| | | 100% - Indiana - Holding Company |
<PAGE>
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|__| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| |
| |--| Lincoln National Investment Companies, Inc.|
| | |(fka Lincoln National Investments, Inc.) |
| | | 100% - Indiana - Holding Company |
| | |
| | |--|Delaware Management Holdings, Inc.|
| | | | 100% - Delaware - Holding Company|
| | | |
| | | |--| DMH Corp. |
| | | | | 100% - Delaware - Holding Company |
| | | |
| | | |--| Delaware International Advisers Ltd.|
| | | | | 81.1% - England - Investment Advisor |
| | |
| | |--| Delaware Management Trust Company |
| | | | 100% - Pennsylvania - Trust Service|
| | | |
| | | |__| Delaware International Holdings, Ltd. |
| | | | | 100% - Bermuda - Mktg & Admin Services|
| | | | |
| | | | |--| Delaware International Advisers, Ltd.|
| | | | | 18.9% - England - Investment Advisor |
| | | |
| | | |__| Delvoy, Inc. |
| | | | | 100% - Minnesota - Holding Company |
| | | | |
| | | | |--| Delaware Management Company, Inc. |
| | | | | | 100% - Delaware - Holding Company |
| | | | | | ________________________________________
| | | | | |--|Delaware Management Business Trust |
| | | | | | |100% - Delaware - Investment Advisor |
| | | | | | |consists of: |
| | | | | | |Delaware Management Company Series |
| | | | | | | and Delaware Investment Advisers
Series |
| | | | | |
| | | | | |--| Delaware Distributors, L.P. |
| | | | | | |98%-Delaware-MutualFund Distrib. |
| | | | | | |& Broker/Dealer |
| | | | | | |1%Equity-Delaware Capital |
| | | | |Management, Inc. |
| | | | |1% Equity-Delaware Distributors, |
| | | | |Inc.(G.P) |
| | | | | |
| | | | | |--| Founders Holdings, Inc. |
| | | | | | | 100% - Delaware - General
| | | | | | | Partner |
| | | | | |
| | | | | |--| Founders CBO, L.P. |
| | | | | | |1%-Delaware-Investment |
| | | | | | | Partnership |
| | | | | | |99% held by outside |
| | | | | | |investors |
| | | | | |
| | | | | |--|Founders CBO Corporation|
| | | | |100%-Delaware-Co-Issuer |
| | | | |with Founders CBO |
<PAGE>
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|__| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| |
| |--| Lincoln National Investment Companies, Inc.|
| | |(fka Lincoln National Investments, Inc.) |
| | | 100% - Indiana - Holding Company |
| | |
| | |--|Delaware Management Holdings, Inc.|
| | | | 100% - Delaware - Holding Company|
| | | |
| | | |--| DMH Corp. |
| | | | | 100% - Delaware - Holding Company |
| | | |
| | | |__| Delvoy, Inc. |
| | | | | 100% - Minnesota - Holding Company |
| | | | |
| | | | |--| Delaware Distributors, Inc.
| | | | | | | 100% - Delaware - General Partner |
| | | | | | |
| | | | | |--| Delaware Distributors, L.P. |
| | | | | | |98%-Delaware-Mutual Fund Distributor & |
| | | | | | |Broker/Dealer |
| | | | | |1% Equity-Delaware Capital |
| | | | | |Management, Inc. |
| | | | | |1% Equity-Delaware Distributors, Inc.|
| | | | | |(G.P) |
| | | | | |
| | | | |--| Delaware Capital Management, Inc. |
| | | | | |(fka Delaware Investment Counselors, Inc.)|
| | | | | | 100% - Delaware - Investment Advisor |
| | | | | | |
| | | | | |--| Delaware Distributors, L.P. |
| | | | | | | 98%-Delaware-Mutual Fund Distributor & |
Broker/Dealer |
| | | | | | |1% Equity-Delaware Capital
| | | | | | | Management, Inc. |
| | | | | | | 1% Equity-Delaware Distributors, |
| | | | | | | Inc. |
| | | | |--| Delaware Service Company, Inc. |
| | | | |100%-Delaware-Shareholder Services & |
| | | | |Transfer Agent |
| | | | | |
| | | | |__| Retirement Financial Services, Inc. |
| | | | | |(fka Delaware Investment & Retirement
| | | | | | Services,Inc.) |
| | | | | | 100% - Delaware - Registered Transfer
| | | | | | Agent & I/A |
| | |
| | |--| Lynch & Mayer, Inc. |
| | | | 100% - Indiana - Investment Adviser |
| | | |
| | | |--| Lynch & Mayer Securities Corp. |
| | | | 100% - Delaware - Securities Broker |
| | |
| | | | Vantage Global Advisors, Inc. |
| | |--| (fka Modern Portfolio Theory Associates, Inc.)|
| | | | 100% - Delaware - Investment Adviser |
<PAGE>
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|__| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| |
| | | Lincoln Investment Management, Inc. |
| |--| (fka Lincoln National Investment Management Company) |
| | | 100% - Illinois - Mutual Fund Manager and |
| | | Registered Investment Adviser |
|
|--| The Lincoln National Life Insurance Company |
| | 100% - Indiana |
| |
| |--|AnnuityNet, Inc. |
| | | 100% - Indiana - Distribution of annuity products|
| | |
| | |--| AnnuityNet Insurance Agency, Inc. |
| | | | 100% - Indiana - Insurance Agency |
| |
| |--|Lincoln National Insurance Associates, Inc.|
| | | (fka Cigna Associates, Inc.) |
| | | 100% - Connecticut - Insurance Agency |
| | |
| | |--|Lincoln National Insurance Associates of Alabama, Inc. |
| | | | 100% - Alabama - Insurance Agency |
| | |
| | | | Lincoln National Insurance Associates of Massachusetts,|
| | | | Inc. (fka Cigna Associates of Massachusetts, Inc.) |
| | |--| 100% - Massachusetts - Insurance Agency |
| |
| |--|Sagemark Consulting, Inc. |
| | | (fka Cigna Financial Advisors, Inc.) |
| | | 100% - Connecticut - Broker Dealer |
| |
| |--| First Penn-Pacific Life Insurance Company |
| | | 100% - Indiana |
| |
| |--| Lincoln Life & Annuity Company of New York |
| | | 100% - New York |
| |
| |--| 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. |
| |--| (fka Lincoln National Putnam Master Fund, Inc.) |
| | | 100% - Maryland - Mutual Fund |
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| The Lincoln National Life Insurance Company |
| | 100% - Indiana |
| |
| | | Lincoln National Growth and Income Fund, Inc. |
| |--| (fka Lincoln National Growth Fund, Inc.) |
| | | 100% - Maryland - Mutual Fund |
| |
| |--| Lincoln National Health & Casualty Insurance Company |
| | | 100% - Indiana |
| |
| |--| Lincoln Re, S.A. |
| | | 1% Argentina - General Business Corp |
| | | (Remaining 99% owned by Lincoln National |
| | | Reassurance Company) |
| |
| |--| 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 |
| |
| |--| Lincoln Re, S.A. |
| | | 99% Argentina - General Business Corp |
| | | (Remaining 1% owned by Lincoln National Health|
| | | & Casualty Insurance Company) |
| |
| |--| 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 |
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| Lincoln National Reinsurance Company Limited |
| | (fka Heritage Reinsurance, Ltd.) |
| | 100% ** - Bermuda |
| |
| | | 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.) |
|
|--| 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 |
| | | (fka One Olympic Way Financial Services Limited) |
| | | 100% - England/Wales - Sales Services |
| |
| |--| 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 |
| |
| |--| Lincoln Financial Advisers Limited |
| | | (fka: Laurentian Financial Advisers Ltd.) |
| | | 100% - England/Wales - Sales Company |
| |
| |--| Lincoln Financial Group PLC |
| | | (fka: Laurentian Financial Group PLC) |
| | | 100% - England/Wales - Holding Company |
| | |
| | |--| Lincoln ISA Management Limited |
| | | | (fka Lincoln Unit Trust Management Limited; |
| | | | Laurentian Unit Trust Management Limited) |
| | | | 100% - England/Wales - Unit Trust Management |
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| |
| |--| Lincoln Financial Group PLC |
| | | (fka: Laurentian Financial Group PLC) |
| | | 100% - England/Wales - Holding Company |
| | |
| | |--| Lincoln Milldon Limited |
| | | |(fka: Laurentian Milldon Limited) |
| | | | 100% - England/Wales - Sales Company |
| | |
| | |--| Laurtrust Limited |
| | | 100% - England/Wales - Pension Scheme Trustee (Inactive) |
| | |
| | |--| Lincoln Management Services Limited |
| | | |(fka: Laurentian Management Services Limited) |
| | | | 100% - England/Wales - Management Services |
| | | |
| | | |--|Laurit Limited |
| | | | |100% - England/Wales - Data Processing Systems |
| |
| |--| Liberty Life Pension Trustee Company Limited |
| | | 100% - England/Wales - Corporate Pension Fund (Dormat) |
| |
| |--| LN Management Limited |
| | | 100% - England/Wales - Administrative Services (Dormat) |
| | |
| | |--| UK Mortgage Securities Limited |
| | | | 100% - England/Wales - Inactive |
| |
| |--| 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 General Insurance Co. Ltd. |
| | | 100% - Accident & Health Insurance |
| |
| |--|Lincoln Assurance Limited |
| | | 100% ** - England/Wales - Life Assurance |
| | | |
| | | |--|Barnwood Property Group Limited |
| | | | |100% - England/Wales - Property Management Co|
| | | | |
| | | | |--| Barnwood Developments Limited |
| | | | | | 100% England/Wales - Property Development|
| | | | |
| | | | |--| Barnwood Properties Limited |
| | | | | | 100% - England/Wales - Property Investment |
| | | |
| | | |--|IMPCO Properties G.B. Ltd. |
| | | | |100% - England/Wales - Property Investment
| | | | |(Inactive) |
| | | |
| | |--| Lincoln Insurance Services Limited |
| | | | 100% - Holding Company |
| | | |
| | | |--| British National Life Sales Ltd.|
| | | | | 100% - Inactive |
| | | |
| | | |--| BNL Trustees Limited |
| | | | | 100% - England/Wales - Corporate Pension |
| | | | | Fund (Inactive) |
| | | |
| | | |--| Chapel Ash Financial Services Ltd. |
| | | | | 100% - Direct Insurance Sales |
<PAGE>
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| | |
| |--| Lincoln Unit Trust Managers Limited |
| | | 100% - England/Wales - Investment Management |
| | |
| |--| LIV Limited (fka Lincoln Investment Management Ltd.)|
| | | 100% - England/Wales - Investment Management Services |
| | |
| | |--| CL CR Management Ltd. |
| | | 50% - England/Wales - Administrative Services |
| |
| |--| Lincoln Independent Limited |
| | |(fka: Laurentian Independent Financial Planning Ltd.) |
| | | 100% - England/Wales - Independent Financial Adviser |
| | |
| |--| Lincoln Investment Management Limited |
| | |(fka: Laurentian Fund Management Ltd.) |
| | | 100% - England/Wales - Investment Management |
| |
| |--| LN Securities Limited |
| | | 100% - England/Wales - Nominee Company |
| |
| |--| Niloda Limited |
| | | 100% - England/Wales - Investment Company |
| |
| |--| Lincoln National Training Services Limited |
| | | 100% - England/Wales - Training Company |
| |
| |--| Lincoln Pension Trustees Limited |
| | | 100% - England/Wales - Corporate Pension Fund |
| |
| |--| Lincoln Independent (Jersey) Limited |
| | | (fka Lincoln National (Jersey) Limited) |
| | | 100% - England/Wales - Dormat |
| |
| |--| Lincoln National(Guernsey) Limited |
| | | 100% - England/Wales - Dormat |
| |
| |--| Lincoln SBP Trustee Limited |
| | | 100% - England/Wales |
<PAGE>
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
|
| | Linsco Reinsurance Company |
|--| (fka 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.) |
| |
| | | Solutions Holdings, Inc. |
| |--| 100% - Delaware - General Business Corporation |
| | |
| | |--|Solutions Reinsurance Limited |
| | | | 100% - Bermuda - Class III Insurance Co|
|
| | Seguros Serfin Lincoln, S.A. |
|--| 49% - Mexico - Insurance |
|
| | 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
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 LIFE AND ANNUITY DISTRIBUTORS, INC.
CORPORATE AGENCY SUBSIDIARIES
1) Lincoln Financial Group, Inc. (AL)
2) Lincoln Financial and Insurance Services Corporation (Walnut Creek, CA)
3) 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) 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) Lincoln Financial Services and Insurance Brokerage of New England, Inc.
(fka: Lincoln National of New England Insurance Agency, Inc.)
(Worcester, MA)
12) Financial Consultants of Michigan, Inc. (Troy, MI)
13) Lincoln Financial Group of Missouri, Inc. (fka: John J. Moore &
Associates, Inc.) (St. Louis, MO)
14) Beardslee & Associates, Inc. (Clifton, NJ)
15) Lincoln Financial Group, Inc. (fka: Resources/Financial, Inc.
(Albuquerque, NM)
16) Lincoln Cascades, Inc. (Portland, OR)
17) Lincoln Financial Group, Inc. (Salt Lake City, (UT)
<PAGE>
Summary of Changes to Organizational Chart:
JANUARY 1, 1995-DECEMBER 31, 1995
SEPTEMBER 1995
a. Lincoln National (Jersey) Limited was incorporated on September 18, 1995.
Company is dormat and was formed for tax reasons per Barbara Benoit,
Assistant Corporate Secretary at Lincoln UK.
JANUARY 1, 1996-DECEMBER 1, 1996
MARCH 1996
a. Delaware Investment Counselors, Inc. changed its name to Delaware Capital
Management, Inc. effective March 29, 1996.
AUGUST 1996
a. Lincoln National (Gernsey) Limited was incorporated on August 9, 1996;
company is dormat and was formed for tax reasons.
SEPTEMBER 1996
a. Morgan Financial Group, Inc. changed its name to Lincoln National Sales
Corporation of Maryland effective September 23, 1996.
OCTOBER 1996
a. Addition of Lincoln National (India) Inc., incorporated as an Indiana
corporation on October 17, 1996.
NOVEMBER 1996
a. Lincoln National SBP Trustee Limited was bought "off the shelf" and was
incorporated on November 26, 1996; it was formed to act ast Trustee for
Lincoln Staff Benefits Plan.
DECEMBER 1996
a. Addition of Lincoln National Investments, Inc., incorporated as an Indiana
corporation on December 12, 1996.
JANUARY 1, 1997-DECEMBER 31, 1997
JANUARY 1997
a. Delaware Management Holdings, Inc., Lynch & Mayer, Inc. and Vantage Global
Advisors, Inc. were transferred via capital contribution to Lincoln
National Investments, Inc. effective January 2, 1997.
b. Lincoln National Investments, Inc. changed its name to Lincoln National
Investment Companies, Inc. effective January 24, 1997.
c. Lincoln National Investment Companies, Inc. changed its named to Lincoln
National Investments, Inc. effective January 24, 1997.
JANUARY 1997 CON'T
<PAGE>
d. The following Lincoln National (UK) subsidiaries changed their name
effective January 1, 1997: Lincoln Financial Group PLC (fka Laurentian
Financial Group PLC); Lincoln Milldon Limited (fka Laurentian Milldon
Limited); Lincoln Management Services Limited (fka Laurentian Management
Services Limited).
FEBRUARY 1997
a. Removal of Lincoln National Financial Group of Philadelphia, Inc. which was
dissolved effective February 25, 1997.
MARCH 1997
a. Removal of Lincoln Financial Services, Inc. which was dissolved effective
March 4, 1997.
APRIL 1997
a. Acquisition of Dougherty Financial Group, Inc. on April 30, 1997. Company
then changed its name to Delvoy, Inc. The acquisition included the mutual
fund group of companies as part of the Voyager acquisition. The following
companies all then were moved under the newly formed holding company,
Delvoy, Inc. effective April 30, 1997: Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital Management, Inc., Delaware
Service Company, Inc. and Delaware Investment & Retirement Services, Inc.
b. Acquisition of Voyager Fund Managers, Inc. and Voyager Fund Distributors,
Inc. on April 30, 1997; merger is scheduled for May 31, 1997 for Voyager
Fund Managers, Inc. into Delaware Management Company, Inc. and Voyager Fund
Distributors, Inc. is to merge into Delaware Distributors, L.P.
c. Removal of Aseguradora InverLincoln, S.A. Compania de Seguros y Reaseguros,
Grupo Financiero InverMexico. Stock was sold to Grupo Financiero
InverMexico effective April 18, 1997.
MAY 1997
a. Name change of The Richard Leahy Corporation to Lincoln National Financial
Institutions Group, Inc. effective May 6, 1997.
b. Voyager Fund Managers, Inc. merged into Delaware Management Company, Inc.
effective May 30, 1997 at 10:00 p.m. with Delaware Management Company, Inc.
surviving.
c. On May 31, 1997 at 2:00 a.m., Voyager Fund Distributors, Inc. merged into a
newly formed company Voyager Fund Distributors (Delaware), Inc.,
incorporated as a Delaware corporation on May 23, 1997. Voyager Fund
Distributors (Delaware), Inc. then merged into Delaware Distributors, L.P.
effective May 31, 1997 at 2:01 a.m. Delaware Distributors, L.P. survived.
JUNE 1997
a. Removal of Lincoln National Sales Corporation of Maryland -- company
dissolved June 13, 1997.
b. Addition of Lincoln Funds Corporation, incorporated as a Delaware
corporation on June 10, 1997 at 2:00 p.m.
c. Addition of Lincoln Re, S.A., incorporated as an Argentina company on June
30, 1997.
<PAGE>
JULY 1997
a. LNC Equity Sales Corporation changed its name to Lincoln Financial Advisors
Corporation effective July 1, 1997.
b. Addition of Solutions Holdings, Inc., incorporated as a Delaware
corporation on July 27, 1997.
SEPTEMBER 1997
a. Addition of Solutions Reinsurance Limited, incorporated as a Bermuda
corporation on September 29, 1997.
OCTOBER 1997
a. Removal of the following companies: American States Financial Corporation,
American States Insurance Company, American Economy Insurance Company,
American States Insurance Company of Texas, American States Life Insurance
Company, American States Lloyds Insurance Company, American States
Preferred Insurance Company, City Insurance Agency, Inc. and Insurance
Company of Illinois -- all were sold 10-1-97 to SAFECO Corporation.
b. Liberty Life Assurance Limited was sold to Liberty International Holdings
PLC effective 10-6-97.
c. Addition of Seguros Serfin Lincoln, S.A., acquired by LNC on 10-15-97.
DECEMBER 1997
a. Addition of City Financial Partners Ltd. as a result of its acquisition by
Lincoln National Corporation on December 22, 1997. This company will
distribute life assurance and pension products of Lincoln Assurance
Limited.
b. Removal of Lynch & Mayer Asia, Inc. which was dissolved December 24, 1997.
JANUARY 1998
a. Addition of Cigna Associates, Inc., Cigna Financial Advisors, Inc. and
Cigna Associates of Massachusetts, Inc., acquired by The Lincoln National
Life Insurance Company on January 1, 1998. Cigna Associates of
Massachusetts is 100% owned by Cigna Associates, Inc.
b. Removal of Lincoln National Mezzanine Corporation and Lincoln National
Mezzanine Fund, L.P. Lincoln National Mezzanine Corporation was dissolved
on January 12, 1998 and Lincoln National Mezzanine Fund, L.P. was cancelled
January 12, 1998.
c. Corporate organizational changes took place in the UK group of companies on
January 21, 1998: Lincoln Insurance Services Limited and its subsidiaries
were moved from Lincoln National (UK) PLC to Lincoln Assurance Limited;
Lincoln General Insurance Co. Ltd. was moved from Lincoln Insurance
Services Limited to Lincoln National (UK) PLC.
d. Addition of AnnuityNet, Inc., incorporated as an Indiana corporation on
January 16, 1998 and a wholly-owned subsidiary of The Lincoln National Life
Insurance Company.
JUNE 1998
<PAGE>
a. Name Change of CIGNA Financial Advisors, Inc. to Sagemark Consulting, Inc.
effective June 1, 1998.
b. Name Change of CIGNA Associates, Inc. to Lincoln National Insurance
Associates, Inc. effective June 1, 1998.
c. Addition of Lincoln National Insurance Associates of Alabama, Inc.,
incorporated as a wholly-owned subsidiary of Lincoln National Insurance
Associates, Inc. as an Alabama domiciled corporation.
d. Dissolution of LUTM Nominees Limited effective June 10, 1998.
e. Dissolution of Cannon Fund Managers Limited June 16, 1998.
f. Dissolution of P.N. Kemp Gee & Co. Ltd. June 2, 1998.
JULY 1998
a. Name change of CIGNA Associates of Massachusetts, Inc. to Lincoln National
Insurance Associates of Massachusetts, Inc. effective July 22, 1998.
SEPTEMBER 1998
a. Removal of Lincoln Financial Group of Michigan, Inc., voluntarily dissolved
September 15, 1998.
b. Name change of Lincoln Financial Group, Inc. to Lincoln Life and Annuity
Distributors, Inc. on September 29, 1998.
c. Removal of Lincoln European Reinsurance S.A. -- company dissolved September
30, 1998.
d. Removal of Lincoln Funds Corporation -- company voluntarily dissolved
September 30, 1998.
OCTOBER 1998
a. Addition of AnnuityNet Insurance Agency, Inc., incorporated as an Indiana
corporation October 2, 1998., a wholly-owned subsidiary of AnnuityNet, Inc.
b. Removal of Lincoln National (India) Inc., voluntarily dissolved October 26,
1998.
DECEMBER 1998
a. Removal of The Insurers' Fund, Inc., voluntarily dissolved December 10,
1998.
b. Addition of Lincoln National Management Corporation, a Pennsylvania
corporation and a wholly-owned subsidiary of Lincoln National Corporation,
incorporated on December 17, 1998.
JANUARY 1999
Lincoln Unit Trust Management changed its name on January 5, 1999 to Lincoln ISA
Management Limited.
FEBRUARY 1999
Removal of Lincoln Southwest Financial Group, Inc. -- company's term of
existence expired July 18, 1998.
<PAGE>
BOOKS AND RECORDS
LINCOLN LIFE & ANNUITY VARIABLE ANNUITY ACCOUNT L
RULES UNDER SECTION 31 OF THE INVESTMENT COMPANY ACT OF 1940
Records to Be Maintained by Registered Investment Companies, Certain Majority-
Owned Subsidiaries Thereof, and Other Persons Having Transactions with
Registered Investment Companies.
Reg. 270.31a-1. (a) Every registered investment company, and every underwriter,
broker, dealer, or investment advisor which is a majority-owned subsidiary of
such a company, shall maintain and keep current the accounts, books, and other
documents relating to its business which constitute the record forming the basis
for financial statements required to be filed pursuant to Section 30 of the
Investment Company Act of 1940 and of the auditor's reports relating thereto.
LN-Record Location Person to Contact Retention
- --------- -------- ----------------- ---------
Annual Reports Finance Eric Jones Permanently, the first two
To Shareholders years in an easily
accessible place
Semi-Annual Finance Eric Jones Permanently, the first two
Reports years in an easily
accessible place
Form N-SAR Finance Eric Jones Permanently, the first two
years in an easily
accessible place
(b) Every registered investment company shall maintain and keep current the
following books, accounts, and other documents:
Type of Record
- --------------
(1) Journals (or other records of original entry) containing an itemized daily
record in detail of all purchases and sales of securities (including sales and
redemptions of its own securities), all receipts and deliveries of securities
(including certificate numbers if such detail is not recorded by custodian or
transfer agent), all receipts and disbursements of cash and all other debits and
credits. Such records shall show for each such transaction the name and
quantity of securities, the unit and aggregate purchase or sale price,
commission paid, the market on which effected, the trade date, the settlement
date, and the name of the person through or from whom purchased or received or
to whom sold or delivered.
Purchases and Sales Journals
- ----------------------------
Daily reports CSRM Kathleen Adamson Permanently, the first two
of securities (Portland) years in an easily
transactions Finance Eric Jones accessible place
Portfolio Securities
- --------------------
C-Port Purchase/ Finance Eric Jones Permanently, the first two
Sales Reports years in an easily
accessible place
<PAGE>
LN-Record Location Person to Contact Retention
- --------- -------- ----------------- ---------
Receipts and Deliveries of Securities (units)
- ---------------------------------------------
Not Applicable.
Daily Journals CSRM (Portland) Kathleen Adamson Permanently, the first two
Finance Eric Jones years in an easily
accessible place
(2) General and auxiliary ledgers (or other record) reflecting all asset,
liability, reserve, capital, income and expense accounts, including:
(i) Separate ledger accounts (or other records) reflecting the following:
(a) Securities in transfer;
(b) Securities in physical possession;
(c) Securities borrowed and securities loaned;
(d) Monies borrowed and monies loaned (together with a record of the
collateral therefore and substitutions in such collateral);
(e) Dividends and interest received;
(f) Dividends receivable and interest accrued.
Instructions. (a) and (b) shall be stated in terms of securities quantities
only; (c) and (d) shall be stated in dollar amounts and securities quantities as
appropriate; (e) and (f) shall be stated in dollar amounts only.
General Ledger
- --------------
LNL trial Finance Eric Jones Permanently, the first two
Balance (5000 years in an easily
series) accessible place
Securities in Transfer
- ----------------------
Not Applicable.
Securities in Physical Possession
- ---------------------------------
Not Applicable.
Securities Borrowed and Loaned
- ------------------------------
Not Applicable.
Monies Borrowed and Loaned
- --------------------------
Not Applicable.
Dividends and Interest Received
- -------------------------------
LNL Trial Finance Eric Jones Permanently, the first two
Balance (5000 years in an easily
series) accessible place
LN-Record Location Person to Contact Retention
- --------- -------- ----------------- ---------
Dividends Receivable and Interest Accrued
- -----------------------------------------
<PAGE>
LNL Trial Finance Eric Jones Permanently, the first two
Balance (5000 years in an easily
series) accessible place
(ii) Separate ledger accounts (or other records) for each portfolio security,
showing (as of trade dates), (a) the quantity and unit and aggregate price for
each purchase, sale, receipt, and delivery of securities and commodities for
such accounts, and (b) all other debits and credits for such accounts.
Securities positions and money balances in such ledger accounts (or other
records) shall be brought forward periodically but not less frequently than at
the end of fiscal quarters. Any portfolio security, the salability of which is
conditioned, shall be so noted. A memorandum record shall be available setting
forth, with respect to each portfolio security accounts, the amount and
declaration, ex-dividend, and payment dates of each dividend declared thereon.
Ledger Account for each portfolio Security
- ------------------------------------------
Daily Report Finance Eric Jones Permanently, the first two
Of Securities years in an easily
Transactions (Daily accessible place
Trade File)
(iii) Separate ledger accounts (or other records) for each broker-dealer, bank
or other person with or through which transactions in portfolio securities are
affected, showing each purchase or sale of securities with or through such
persons, including details as to the date of the purchase or sale, the quantity
and unit and aggregate prices of such securities, and the commissions or other
compensation paid to such persons. Purchases or sales effected during the same
day at the same price may be aggregated.
Not Applicable.
(iv) Separate ledger accounts (or other records), which may be maintained by a
transfer agent or registrar, showing for each shareholder of record of the
investment company the number of shares of capital stock of the company held.
in respect of share accumulation accounts (arising from periodic investment
plans, dividend reinvestment plans, deposit of issued shares by the owner
thereof, etc.), details shall be available as to the dates and number of shares
of each accumulation, and except with respect to already issued shares deposited
by the owner thereof, prices of each such accumulation.
Shareholder Accounts
- --------------------
Master file Finance Eric Jones Permanently, the first two
Record (Daily CSRM (Portland) Kathleen Adamson years in an easily
Trade File & Leg accessible place
Syst Client Rpt)
(3) A securities record or ledger reflecting separately for each portfolio
security as of trade date all "long" and "short" positions carried by the
investment company for its own account and showing the location of all
securities long and the off-setting position to all securities short. The
record called for by this paragraph shall not be required in circumstances
under which all portfolio securities are maintained by a bank or banks or a
member or members of a national securities exchange as custodian under a
custody agreement or as agent for such custodian.
<PAGE>
LN-Record Location Person to Contact Retention
- --------- -------- ----------------- ---------
Not Applicable
(4) Corporate charters, certificates of incorporation or trust agreements, and
bylaws, and minute books of stockholders' and directors' or trustees' meetings;
and minute books of directors' or trustees' committee and advisory board or
advisory committee meetings.
Corporate Documents
- -------------------
Memorandum Legal Janet Lindenberg Permanently, the first two
Establishing SA years in an easily
accessible place
(5) A record of each brokerage order given by or in behalf of the investment
company for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such record shall include the name of the broker, the
terms and conditions of the order and of any modification or cancellation
thereof, the time of entry or cancellation, the price at which executed, and the
time of receipt of report of execution. The record shall indicate the name of
the person who placed the order in behalf of the investment company.
Order Tickets
- -------------
UIT applica- CSRM (Portland) Kathleen Adamson Six years, the first two
tions and Finance Eric Jones years in an easily
daily reports accessible place
of securities
transactions
(6) A record of all other portfolio purchase or sales showing details
comparable to those prescribed in paragraph 5 above.
Commercial Paper
- ----------------
Not Applicable.
(7) A record of all puts, calls, spreads, straddles, and other options in which
the investment company has any direct or indirect interest or which the
investment company has granted or guaranteed; and a record of any contractual
commitments to purchase, sell, receive or deliver securities or other property
(but not including open orders placed with broker-dealers for the purchase or
sale of securities, which may be cancelled by the company on notices without
penalty or cost of any kind); containing at least an identification of the
security, the number of units involved, the option price, the date of maturity,
the date of issuance, and the person to whom issued.
Record of Puts, Calls, Spreads, Etc.
- ------------------------------------
Not Applicable.
(8) A record of the proof of money balances in all ledger accounts (except
shareholder accounts), in the form of trial balances. Such trial balances shall
be prepared currently at least once a month.
<PAGE>
LN-Record Location Person to Contact Retention
- --------- -------- ----------------- ---------
Trial Balance
- -------------
LNL Trial Finance Eric Jones Permanently, the first two
Balance (5000 years in an easily
series) accessible place
(9) A record for each fiscal quarter, which shall be completed within 10 days
after the end of such quarter, showing specifically the basis or bases upon
which the allocation of orders for the purchase and sale of portfolio securities
to named brokers or dealers and the division of brokerage commissions or other
compensation on such purchase and sale orders among named persons were made
during such quarter. The record shall indicate the consideration given to (a)
sales of shares of the investment company by brokers or dealers, (b) the
supplying of services or benefits by brokers or dealers to the investment
company, its investment advisor or principal underwriter or any persons
affiliated therewith, and (c) any other considerations other than the technical
qualifications of the brokers and the dealers as such. The record shall show the
nature of their services or benefits made available, and shall describe in
detail the application of any general or specific formula or other determinant
used in arriving at such allocation of purchase and sales orders and such
division of brokerage commissions or other compensation. The record shall also
include the identifies of the person responsible for the determination of such
allocation and such division of brokerage commissions or other compensation.
Not Applicable.
(10) A record in the form of an appropriate memorandum identifying the person or
persons, committees, or groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee or group, a record
shall be kept in the names of its members who participated in the authorization.
There shall be retained a part of the record required by this paragraph any
memorandum, recommendation, or instruction supporting or authorizing the
purchase or sale of portfolio securities. The requirements of this paragraph are
applicable to the extent they are not met by compliance with the requirements of
paragraph 4 of this Rule 31a1(b).
Advisory Legal Products and Six years, the first two
Agreements Distribution, years in an easily
LNL Law Division accessible place
(11) Files of all advisory material received from the investment advisor, any
advisory board or advisory committee, or any other persons from whom the
investment company accepts investment advice publications distributed generally.
Not Applicable.
(12) The term "other records" as used in the expressions "journals (or other
records of original entry)" and "ledger accounts (or other records)" shall be
construed to include, where appropriate, copies of voucher checks,
confirmations, or similar documents which reflect the information required by
the applicable rule or rules in appropriate sequence and in permanent form,
including similar records developed by the use of automatic data processing
systems.
Correspondence CSRM (Portland) Kathleen Adamson Six years, the first two
years in an easily
accessible place
<PAGE>
LN-Record Location Person to Contact Retention
- --------- -------- ----------------- ---------
Proxy State- CSRM (Portland) Kathleen Adamson Six years, the first two
ments and years in an easily
Proxy Cards accessible place
Pricing Sheets Finance Eric Jones Permanently, the first two
years in an easily
accessible place
Bank State- Treasurers Rusty Summers Six years, the first two
ments years in an easily
accessible place
March 24, 2000
